City Hall spends more for debts than health, loans to stand at P1.2B

June 2, 2008

cagayan de oro city hall

By Lizanilla J. Amarga

The City Government of Cagayan de Oro is already paying more for its debts than its health and nutrition needs based on its 2008 Budget Ordinance yet yesterday the City Council just approved an ordinance to obtain a P500 million loan agreement with Philippine Veterans Bank (PVB).

The P500 million loan is intended to buy-back the Cogon and Carmen public markets which are under separate Build-Operate-Transfer (BOT) contracts, for the construction of a legislative building and the purchases of heavy equipments.

The amount as to how much of the P500 million loan will go to each of the above three items were not indicated as the loan agreement that the city councilors approved to be signed by Mayor Constantino Jaraula was not presented during the regular session yesterday.

The move will thus raise the existing debt of the city to around P1.2 billion with the existing P690 million debt and this additional P500 million loan.

The opposition city councilors raised no objections to the P500 million loan ordinance during the first reading.

However, opposition City Councilor Roger Abaday asked for a deferment of the approval on second reading of the same P500 million loan ordinance as he begged that a copy of the actual P500 million loan agreement with PVB be first produced before the City Council before the third and final reading.

Abaday’s move, however, did not bear fruit. He and City Councilor Teodulfo Lao were outvoted during the City Council regular session yesterday.

Minority Floor Leader City Councilor Zaldy Ocon joined the PaDayon Pilipino majority city councilors in voting in favor of authorizing Jaraula to enter into a P500 million loan agreement with PVB from first reading to the third and final reading.

The Majority led by City Councilor Ramon Tabor and City Councilor Emmanuel Abejuela, the proponent of the ordinance, contended that the City Government is “capable of paying its debts” otherwise PVB would not have agreed to allow the City Government to loan out P500 million or offer more loans to it.

City Councilor President Elipe said the existing loan is only P690 million for 2008 and that borrowing capacity of the City Government is about P1.4 billion.

“So we still have around P800 million available as credit allowance,” he said.

Abaday and Lao argued that the P500 million loan agreement ordinance is not about whether or not City Hall can pay its debts or can pay more its future debts but at what expense these debts are being paid and to be paid.

Abaday pointed out that the approved P1.3 billion 2008 City Budget Ordinance last December 2007 already allocates 15 percent of the total P1.3 billion or P195.2 million to Debt Servicing for 2008 while only 12 percent of the total P1.3 billion or only P157.3 million is allocated Health, Nutrition and Population Control for 2008.

He said this means that more of the City Government’s budget for this year 2008 is already being used to pay-off its debts rather than for the health, nutrition and population of its city constituents.

“There is no question as to whether City Hall is capable of paying or not. But the question is are we borrowing at the expense of the health, nutrition and lives of our people?,” he told his colleagues.

Indeed, a copy of the 2008 Budget Ordinance obtained by Gold Star Daily confirmed Abaday’s arguments.

Also, it showed that 30 percent of the P1.3 billion or P399.5 million is being allocated for General Public Services; 12 percent of the P1.3 billion or P177.3 million for Health, Nutrition, Population; 15 percent of the P1.3 billion or P196 million for Social Security, Social Services and Welfare; 21 percent of the P1.3 billion or P274 million is for Economic Services; 15 percent of the P1.3 billion or P195.2 million is for Debt Servicing; five percent of the P1.3 billion or P65 million is for the Calamity Fund; and two percent of the P1.3 billion or P22.2 million is for Other Purposes.

A letter from Jaraula to the City Council which was also attached to the P1.3 billion Budget Ordinance particularly regarding debt servicing reads that the 15 percent is not illegal yet.

“This is well within the codal limitation of 20 percent,” the mayor’s letter reads last December 2007.

Administration city councilors yesterday claimed that the standing debt of the city is still within P690 million although this amount does not include the P250 million incurred for the construction of the 5^th Kagay-anon Bridge yet.

Lao for his part asked that a feasibility study be first conducted as to whether City Hall can still pay for this P500 million loan and the mode of paying back this loan be indicated in the loan agreement with PVB.

He said it must also be made clear to the people how this additional P500 million loan on top of the existing P800 million loan will be paid.

“The vendors were very excited about the redevelopment of Cogon and Carmen public markets but now look at how they are suffering. We just want to know how the City Government plans to repay the banks. Yes, we can pay but at whose expense?,” he said.

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Written by admin · Filed Under Cagayan de Oro