Loan requirements eased for disaster-struck LGUs

CEBU, Philippines - The World Bank and the national government have waved some of the stiff requirements in availing loans for local government units ravaged by calamities.

This was disclosed by Land Bank of the Philippines assistant vice president Elsie Tagupa who explained that normally, they require for an LGU that wants to loan to have a current Seal of Good Housekeeping from the Department of Interior and Local Government.

For the Cebu City government, the last time it was able to secure the seal was in 2011 owing to the Commission on Audit’s “adverse opinion” for at least three consecutive years following the “irregularity, insufficiency and omissions on the various records” of the city government’s transactions.

In an executive session yesterday afternoon, Tagupa said the grantors — the World Bank and the Government of the Philippines- “have waved some requirements, including the requirement for the SGH, because of the exigency to have the structures ruined by disasters reconstructed and rehabilitated.”

The LGUs, Tagupa said have to secure a declaration of state of calamity to avail of the loan.

She cited that the program, which is called Support for Strategic Local Development and Investment Project aims for the reconstruction, rehabilitation, expansion and upgrading of basic local infrastructure LGUs affected by disasters such as super typhoon Yolanda and the 7.2-magnitude earthquake in October 2013.

With the exemption, the city may loan 10 percent of the total project cost or P120 million from World Bank and 90 percent grant from the national government through the LBP, as a conduit bank, for the construction of a new Cebu City Medical Center.

The loan interest, Tagupa said ranges from 7 to 9 percent per annum for the 12-year term based on the diminishing balance.

To pay the loan, it was clarified by Councilor Margarita Osmeña that it is not 20 percent of the city’s Internal Revenue Allotment that would be used as collateral for the loan.

“It is the portion of the loan amortization of the year that has to be serviced to pay for the loan that would be collaterized by corresponding IRA amount,” she said.

Tagupa explained that the 20 percent Development Fund will be sourced out for loan payment.

“But, the 20-percent DF doesn’t mean the LGU cannot use it. It is there, you can use it but it just that didto ta magkuha in case dili ka-issue og check on due date so we just have to get the authority na mo-debit mi from that account to ensure that the loan will not passed due or turned sour,” she said

The process, however, doesn’t end here as the national government will still validate the requirements submitted, such as letter of intent, Detailed Engineering Design including the project cost, and project profile or site development plan, among others.  — (FREEMAN)