BY GEROME DALIPE IV
ILOILO City – The City Council has approved Mayor Jerry Treñas’ request to secure a P 300-million loan from the Development Bank of the Philippines (DBP).
The loan will be used to finance the completion of the redevelopment of three major public markets: Jaro Big Public Market, La Paz Public Market, and Arevalo Market.
The city councilors unanimously approved the report of the Committee on Appropriations chaired by Councilor Rex Marcus Sarabia.
“After careful study of the factual and legal antecedents of the endorsement, the Committee finds that the same be given due course,” it stated.
In an interview, Sarabia said the council previously approved the term loan agreement which is the requisite document of their latest resolution.
“Here, we already have the approved terms and conditions, loan agreement, deed of assignment, and promissory note. These are the continuing requirements for the release of our P300-million loan,” stressed Sarabi.
The City Budget Office clarified that despite the additional loans, Iloilo City’s debt servicing remains at a manageable 6.75 percent, well below the 20 percent threshold set by the Local Government Code.
This indicates that the city maintains fiscal responsibility while pursuing its housing and development programs.
The Department of Budget and Management (DBM) has issued Joint Memorandum Circular No. 2 dated April 13, 2011, which provides guidelines on the appropriation and utilization of no less than twenty percent (20%) of the Internal Revenue Allotment (IRA) for development projects.
The memo was issued in compliance with Section 287 of the Local Government Code, which every LGU shall appropriate in its annual budget no less than twenty percent (20%) of its annual internal revenue allotment for development projects.
Last month, the City Council passed a resolution granting Treñas the authority to sign the approved terms and conditions from the DBP.
This agreement grants the City Government a 15-year term loan amounting to P300 million to fund the Phase 2 construction of the Jaro Big Public Market, La Paz Public Market, and Arevalo Public Market.
Following this approval, the mayor sought to pass a new resolution, which the City Council authorized Treñas to apply, negotiate, and borrow the P300 million.
“This amount is specifically intended to fund the further development of these critical public infrastructure projects,” the committee report read.
The latest resolution also authorizes the mayor to sign and execute the loan agreement, deed of assignment, promissory note, and other related documents as required under the DBP’s approved terms and conditions.
Under the agreement, the loan carries a fixed interest rate of four percent per annum, which is dependent upon maintaining a minimum average daily balance of P3 billion of the City’s current or savings account with DBP.
A grace period of three years on principal repayments is included, after which the loan will be repaid in quarterly installments.
“In the event of any default or failure by the City Government to make a payment by the agreed-upon schedule, an interest rate of twenty-four percent (24%) per annum shall be imposed on any overdue amounts,” the report read.
Hence, should the City Government fail to remit a scheduled payment for one (1) month, the twenty-four percent (24%) interest shall be assessed solely on the overdue amount for that specific month, under the 2021 Monetary Operations Report (MORB) issued by the Bangko Sentral ng Pilipinas (BSP).
City Hall lawyer Fydah Sabando pointed out during the committee hearing the City Government will utilize the loan proceeds within the one-year timeframe.
The above loan, with a four percent fixed interest rate, is payable for 15 years. The mayor had secured P1.75 billion from DBP for the renovation of five public markets and the construction of a parking building.
The P300 million loan will be allotted for Jaro Big Market worth P100 million; La Paz Public Market (P80 million), and P120 million for the Arevalo Public Market.
In the report, the Committee on Appropriations noted the funds will be used for finishing work at the markets such as painting walls, wiring, plumbing, and installing windows and doors that are necessary before the full operations of the markets.
The city government had also secured additional loans of P180 million for the construction of the Iloilo Slaughterhouse and P200 million for land procurement for the city’s housing program./PN
