Cagayan de Oro City Gov’t to End Year with P1.2 Billion in Debts

November 25, 2008

By Lizanilla J. Amarga
The City Government of Cagayan de Oro is estimated to close its books this year with a standing P1.21 billion debt due to the newly approved P500 million loan from the Philippine Veterans Bank.
Because of this, city hall officials are now moving to have debt servicing as the having the largest percentage increase in the entire budget — from 15 percent in the 2008 budget to 18 percent in the P1.4 billion Proposed 2009 Annual Budget Ordinance.
Officials are also pushing to slice-out the budget for Social Security, Social Services and Welfare from 21 percent or P196 million in the 2008 budget to 11 percent or P161.98 million for 2009.
In the proposed 2009 Annual Budget Ordinance, City Mayor Constantino Jaraula and City Accountant Wilma Rugay said City Hall has a total long term obligation and indebtedness of P1.54 billion.
In the Statement of Long Term Obligation and Indebtedness, both officials reported the previous payments made that reduced the debt balance to amount to only P1.21 billion by the end of this year.
Still, they are now asking the City Council to increase the budget allocation for debt servicing by three percent in the proposed P1.4 billion budget for 2009 or from P195.2 million or 15 percent of the P1.3 billion annual budget in 2008 to P252.5 million or 18 percent of the P1.4 billion annual budget for next year.
Records show that the three percent increase in debt servicing is the largest increase among all the other budget items in the 2009 Proposed Annual Budget Ordinance.
The 2009 Proposed Budget Ordinance is only pushing for two budget items in the general fund to be subject to percentage increases – the three percent in debt servicing and the one percent or from 21 percent in 2008 to 22 percent in 2009.
The budget for General Public Services remains at 30 percent in the 2008 and 2009 budget ordinances and Health, Nutrition and Population Control also remained at 12 percent.
The 2009 Proposed Annual Budget documents reveal that the P252.5 million in debt servicing will go to five different creditors or institutional programs in 2009.
Around P7.9 million will have to be paid for City Hall’s debt from PREMIUMED II pegged at P42.71 million and having a 2008 yearend balance of P29.58 million and P45 million will have to be paid to Land Bank of the Philippines (LBP) for the P346.66 million for the construction of the Westbound Terminal and Markets which has a yearend debt balance of P183.12 million.
Records show that City Hall needs to pay LBP around P80 million by 2009 for its P400 million loan still with LBP for the construction of the South Diversion Road and Balulang-Taguanao PCDG Bridge with an ending balance of P287.53 million.
Moreover, records show that the City Government’s third loan with LBP amounting to P250 million for the construction of the Kagay-an Bridge will have a 2008 ending balance of P231.14 million and that an amount of P50 million will be due next year.
Then the P500 million new loan from the Philippine Veterans Bank which will have a closing balance of P475 million of which the City Government will have to pay the amount due of P70 million by next year.
The P500 million amount is earmarked to buy back the Cogon Public Market and the Carmen Public Market, build a new legislative building and for the purchase of heavy equipment.