What are the details of the Kalinga LGU loan? LBP-CAR discusses 999M Rise Up Loan

Tabuk City, Kalinga―Land Bank of the Philippines (LBP)–CAR Manager Ramon Badiola during a recent forum provided details on the thorough process of the approved loan of the provincial government amounting to PhP999 million through the Restoration and Invigoration Package for a Self-sufficient Economy towards Up growth for Local Government Units or RISE UP LGUs.

The PhP999 million is intended to finance the upgrading and completion of various health care facilities, road improvement projects, and disaster preparedness equipment that are aligned to the program’s goal to revive the economy of the province.

What is RISE UP LGUs Lending Program of Landbank?

Badiola remarked that the RISE UP lending program, launched in July 2020, supports the LGUs in the implementation of their economic stimulus plan to revive the local economy in the aftermath of the CoViD-19 pandemic.

LBP, he said, is among the implementers of the national government economic stimulus plan and shall provide among others one billion pesos fund to subsidize the payment of interest of new and existing loans secured by the LGUs from the bank through Republic Act No. 11494 otherwise known as Bayanihan to Recover as One Act that was enacted on September 11, 2020.

He disclosed that for the program the bank has allocated P80 billion as initial funds for the RISE UP lending program and that as of June 30, a total of P60 billion was already reserved for the approved loans of the different LGUs nationwide

“For Mountain Province, Kalinga and Apayao, we have allocated or approved loans for almost 3.25B for RISE UP lending program to include the loan of the provincial government of Kalinga,” he remarked.

Hence, the LBP also allocated P1 billion appropriation from the national to subsidize payment of interest. Of which, the interest rate of all outstanding loans of LGUs availing from 2021-2022 are subsidized, 2% of the interest is subsidized by the national government while the other 2% shall be shouldered by the borrower.

Conceptualization of the approved loan for development projects

Ramon Badiola related that the proposed loan has undergone detailed and series of communication, negotiation, presentation of ideas.

“Baka isipin niyo overnight lang ito, matagal itong trabahong ito kasi nga there were series of communication, negotiation, presentation of ideas para sa ganun malaman ng provincial government na kung anu-ano yung program ng Land Bank that will help the LGU in realization of their projects,” he explained.

He narrated that the negotiation started on January 14, 2020, when the bank sent the first letter to the Governor presenting the LBP programs to LGUs then another letter on March 03, 2020, and September 02, 2020, for the third letter.

On September 15, the fourth time a letter was sent was affirmed by the Governor and a presentation about the Rise Up lending program was done.

Furthermore, on May 11, he said that only then the authority was granted to the Provincial Governor to negotiate and contract a loan with LBP.

In a resolution crafted by the Sangguniang Panlalawigan, it indicated the projects that can be availed through the program and the corresponding loan amount for each project.

Of which he pointed that the proposed loan of the provincial government has a legal basis under the 1991 Local Government Code section 295, the power of LGUs to create indebtedness and to enter into credit and other financial transactions.

Based on the 2021 Internal Revenue Allotment (IRA), Kalinga has an IRA of P1.3 billion that is an additional average locally sourced revenue for the last 3 years.

“So that total annual revenue is projected at P1.3B, to get the gross paying capacity of the provincial government we multiplied by 20% the total IRA and average locally sourced revenue so we get P260.32M yan po yung maximum debt service ceiling. Hindi po tayo makakatapos ng isang project na malaki kasi hahati-hatiin yan to allocate those entire requirements for all sectors,” he cited.

This, he said, will bridge the gap of 20% of the IRA to finance high-impact projects that are listed in the annual investment plan, public investment program, and medium-term development plan.

Projects under the Term Loans

· Term Loan 5

P539 million is for the upgrading and improvement of 3 provincial roads; namely, Bulanao-Laya-Balong road with sub loan of P300 million, Cabaritan-Dugpa-Bayao road with sub loan of P194 million, and the Pantikian road of P45 million.

· Term loan 6

Term loan 6 amounting to P290 million is for the completion of 3 hospital buildings; namely, Kalinga Children’s Ward and Wellness for P200 million, completion of Tanudan District Hospital with P40 million and completion of Lubuagan District Hospital with P30 million.

· Term loan 7 and 8

Another is the Term loan 7 of P60 million for the construction of infirmary building in Pasil and Tinglayan at P30 million each and Term loan 8 for the construction of motor pool building in Pasil and Rizal at P10 million each.

· Term loan 9

Lastly, Term loan 9 is for the acquisition of 18 units of various brand-new equipment for the infrastructure, maintenance, and disaster preparedness amounting to P90 million.

Badiola illustrated that as for the tenor or the net of the loan to pay, for term loans 5-8 is 15 years inclusive of 3 years grace period on principal to maximize the 20% of LGU to use for other priority projects.

Mode of loan release

The Landbank–Kalinga Manager revealed that the loan amount shall be released in cash.

For term loans 5-8, the first release is a mobilization fund equivalent to 15% of the approved loan or contract amount, whichever is lower upon completion of the documentary requirements and compliance with the pre-release requirements.

He added that the succeeding releases shall be based on the terms of reference stipulated in the supply agreement or contract agreement upon submission of progress report signed by the Provincial Engineering and duly approved by Local Chief Executive subject to validation and inspection of LBP.

Badiola said the final release shall be equivalent to a minimum of 10% of the approved loan or contract amount, whichever is lower, subject to submission of the requirements. This includes a Certificate of Acceptance by LGU authorized signatory, signifying their acceptance of the fully completed project, and a progress monitoring report issued by Land Bank showing 100% project completion.

Meantime, he justified that availing the loan amount for development projects under the program has gone through numerous conditions to comply, submit, and process until such time it is granted.

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