Purpose Maturity Annual Amortization
Balance
Term (in years) Date Principal* Interest** Total
Installation of 9 07/29/33 66,591,938.90 9,513,134.12 2,996,637.26 12,509,771.38
Solar Streetlights 9 07/29/33 44,392,991.37 6,341,855.92 1,997,684.61 8,339,540.53
(1st – 3rd release) 9 07/29/33 208,488,262.03 29,784,037.44 8,636,554.86 38,420,592.30
Design and Build 15 12/16/39 494,984,999.99 38,075,769.24 22,274,324.99 60,350,094.23
for the
Construction of
the Negros
Oriental Medical
City
Total ₱1,162,093,298.05 ₱127,794,627.12 ₱51,563,699.38 ₱179,358,326.50
*Principal repayment after the two-year grace period.
**Based on the interest due for CY 2025.
9.13 While the use of the IRA as security or collateral has been a common practice
among LGUs to finance developmental projects, assigning 20% of the IRA for
loan repayment significantly reduces the Provincial Government’s flexibility in
utilizing its Development Fund.
9.14 The annual principal loan amortizations, starting after the two-year grace period
for loans released in CY 2024, totaling ₱127,794,627.12, and the interest of
₱51,563,699.38 for CY 2025, for a total of ₱179,358,326.50, represent 28.69%
of the 20% Development Fund allocation from the annual IRA. Notably, this
figure does not yet include the amortization for loans that will be released by
these financial institutions in the coming years.
9.15 This high percentage reflects a substantial debt servicing burden, which limits
the resources available for other infrastructure, social services, and development
initiatives, as a significant portion of funds is now diverted to debt repayment.
9.16 Additionally, the interest expense for CY 2025, as projected from the
amortization schedules, amounting to ₱51,563,699.38, represents a
considerable cost component of the total loan repayments. This high interest
expense underscores the financial strain placed on the Provincial Government,
as a significant portion of the repayment does not contribute to the principal
reduction but is instead allocated to servicing the cost of borrowing. Such an
arrangement further limits the Provincial Government’s capacity to fund other
essential projects, which may delay or scale back other programs that could
benefit the community.
9.17 Furthermore, as gleaned from the loan terms provided, some repayment periods
extend far beyond the three-year term of the local officials who approved these
loans, creating a disconnect between the official’s accountability period and the
long-term financial obligations incurred, potentially shifting the burden to
succeeding administrations.
9.18 While the aforementioned infrastructure projects were added to the Annual
Investment Program, considering the loans payable profile, and incidental
expenses besetting the Province presented in the preceding paragraphs, it is
indeed imperative to inform the public what satisfactorily convinced
Management of its crucial decision in financing and to invest such huge amount
of people’s money in that project. Transparency regarding the anticipated
benefits and the expected returns from such a major investment is equally
important.
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