House probe on multibillion peso LGU loans sought

MANILA, Philippines - Three congressmen have sought a congressional inquiry into billions of pesos worth of loans contracted by local government units (LGUs).

In Resolution 1196, Representatives Mark Llandro Mendoza of Batangas, Enrique Cojuangco of Tarlac and Joselito Mendoza of Bulacan said the unabated contracting of loans by LGUs, if not checked, could result in the collapse of these local units.

“There have been reported increases in the case of LGUs with bad loans and long-term indebtedness, extending beyond the term limits of contracting local officials and eventually inherited by succeeding administrations,” the three congressmen said.

“These borrowings have negative economic implications on the contracting LGUs and their constituents, as they remain the liabilities of the LGUs even after the term of the contracting officials,” they said.

They also cited a report of the Commission on Audit (COA) that the life of the projects financed through loans and the terms of office of the contracting officials were not considered in determining the length of loan repayment.

Some repayment terms reportedly extended to as long as 17 years, when local officials are limited to three terms or a maximum of nine years.

“The national government should consider establishing appropriate guidelines for LGU loans and borrowings to avoid contracting loans beyond their paying capacity and ensure that these loans are used for the intended purposes,” the resolution’s authors said.

The congressmen also cited reports that some loans have been misused.

Quoting a COA report, DILG Secretary Jesse Robredo has said 182 governors and mayors have misappropriated 20 percent of their IRA funds that was supposed to be used for development purposes.

Out of the 182, 80 LGU officials used the money instead for salaries, maintenance of facilities, travel, celebration of festivities, and financial assistance, he said.

“The COA reported that 102 other LGUs did not implement or fully implement development projects as shown by an unutilized balance of a total of P650.6 million,” Robredo said.