City to receive P31.9-M back-IRA thru back-to-back loan agreement
The award of the withheld Internal Revenue Allotment (IRA) share of the city of Iloilo during the time of former president Joseph Estrada totaling P31,901,113 couldn't have come at a better time, when the city government needs no less than P95 million to sustain its operations till year's end. To expedite the use of such funds, the Sangguniang Panlungsod in its regular session last Wednesday passed a resolution granting Mayor Jerry Treñas the authority to negotiate, apply and enter into a back-to-back loan agreement against 100% of the "back IRA" with any bank.
Iloilo City Councilor Perla Zulueta, who explained to her colleagues the proposed resolution, said that the city was given a choice whether to withdraw the entire amount by entering into a 100% back-to-back loan agreement with any bank or that it be paid through staggered payments of some P4.5 million annually for seven years.
"I understand Mayor Treñas formed a committee to study the options available to the city government for it to be able to choose the one which would be most beneficial to the city and they came up with a recommendation to the mayor in favor of the back-to-back loan. Although the IRA is deposited at the Land Bank of the Philippines, we found it best not to specify a particular bank with which to enter into the loan agreement to give the city a freer hand to choose which bank would offer us the best terms," said the veteran city legislator, dubbed the "Iron Lady of the City Council" for her uncompromising stand against graft and corruption in government.
Aside from Land Bank, also being considered as a possible lender bank for the 100% back-to-back loan of the city's back-IRA is the Development Bank of the Philippines (DBP), another government bank.
It was learned that based on Land Bank prevailing loan rates, the city would be paying an annual interest of some P1.7 million at 9.25% interest for the duration of the loan agreement.
The release of the said money to the local government units (LGUs) came in the wake of the decision of the Supreme Court declaring as illegal Estrada's move of withholding the LGUs' IRA share.