New P25M loan for city secured for salaries
THE cash-strapped Dagupan City government is poised to avail of another P25 million loan from the Land Bank of the Philippines chargeable to its Internal Revenue Allotment from 2000 to 2001 due from the national government.
This was gleaned from a resolution passed by the city council during its special session last Wednesday ratifying the terms and conditions of the loan proposed to the city by LandBank to the city.
Vice Mayor Alvin Fernandez explained that the city government opted to borrow from the Land Bank instead of encashing its P25 million IRA which will be paid out by the government at a discounted rate of P17 million or a difference of P8 million.
He said a loan will enable the city government to get the full amount of its IRA share still due from the national government without forking P8 million in interests to any financial institution that would advance the money.
The provincial government had opted to monetize its delayed IRA share to pay for the additional compensation allowance of its employees.
Since the national government has indicated it could not pay the IRA share of the LGUs on time it has tapped financial institutions to monetize these on a rediscounting basis
The Department of Finance and of the Union of Local Authorities of the Philippines, represented by governors and city and municipal mayors, had endorsed this arrangement.
The LGUs who agree not to monetize their due IRA, will receive their payments on a staggered basis over a seven-year period.
Fernandez said the city opted for a bank loan instead to cover the P25 million due from IRA and enable the city government to receive its scheduled its P25 million IRA in full in order to finance its different projects included in the development plan for this year.
The new loan will effectively put the city in debt by P375 million, following its earlier loan of more than P300 million for the construction of the Malimgas Public Market and P50 million for the purchase of a dredging machine.
The city council earlier passed a resolution last month expressing its sentiment against monetization, stressing that LGUs should not be penalized for wanting to receive its IRA share on time. – AQL
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