Business
Capitol, DBP Seal Agreement for P1.5 Billion Loan
Cebu Gov. Hilario P. Davide III and the Development Bank of the Philippines (DBP), through its chairman Alberto Romulo, signed a memorandum of agreement (MOA) for the P1.525-billion 10-year omnibus loan that will be used for the construction of a 20-storey resource center inside the Capitol Compound.
Romulo said that this deal with the Capitol is one of the most important projects that the bank is supporting in Cebu.
“A legacy that I make for the province of Cebu and for ages to come,” said Romulo.
“You are our partner in the development of Cebu, and I thank DBP for the generous interest rate of 2.9 percent yearly,” replied Davide.
The MOA signing was held at the Governor’s Office last June 1, witnessed by DBP president and chief executive officer Cecilia Borromeo and executive vice president Anthony Robles.
The loan has a fixed interest rate of 2.9 percent per annum.
Under the agreement, the Capitol will start paying the interest from the first month up to the 36th month; and the principal amount will be paid on the 37th up to 120th month.
Davide assured the Cebuanos and the taxpayers that they will not bear the burden of paying the loan.
In a worst-case scenario that the resource center will not earn, Davide said that the loan payments will be taken from the Internal Revenue Allotment (IRA) that the Province will receive from the National Government.
He said that the Provincial Government is expected to get an additional IRA in 10 years of at least P2.617 billion. Of this amount, five percent is earmarked as disaster fund.
“Increase lang na sa IRA ha, not the actual IRA,” said Davide.
He said the amount is more than enough to pay for the loan and its interest.
Davide said that fund allocations for basic services that will be sourced from IRA will remain untouched.
Davide said that there are already two financial institutions, which he opted not to divulge yet, that already expressed interest to lease the ground floor of the resource building. He added that the building’s basement and three other levels will be designated as pay-parking areas, which is another source of revenue.
Provincial Budget Officer Danny Rodas said that within the 10-year period, Capitol would pay a total of P1.760 billion, including the interest, to the DBP.
For 2018, the IRA of the Capitol is P3.121 billion.
Rodas projected an increase of seven percent, or P3.340 billion in 2019. The IRA increase in 2017 was P218.505 million.
“Summing up all IRA increases for 10 years, we arrive at a P2.6 billion figure and 95 percent of that is P2.486 billion,” said Rodas
