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PIA Press Release
2010/12/04

LGUs, biggest Land Bank borrowers

by Rudolph Ian G. Alama

Davao City (4 December) -- The Local Government Units are among the biggest clients of Land Bank loans in Davao Region.

And these loans are used for infrastructure projects like farm-to-market roads, a traffic signalization system, a modern landfill and a coliseum.

According to Charlotte Conde, head of the LBP's Davao Lending Center, total exposure by the bank in the region to LGUs amounted to P4.9 billion.

One of the biggest borrowers is Davao City which has a loan of P1-billion, being paid quarterly.

Conde said that among the projects of the City Government funded by the Land Bank is the modern Traffic Signalization System, drainage system and a modern sanitary landfill.

Davao City has been an excellent client, citing the very satisfactory repayment of its obligations, Conde said.

Another client LGU is Davao del Sur which has availed of a P500-million loan for a coliseum that can host PBA (Philippine Basketball Association) Games.

Davao del Norte has availed of Land Bank loan for its farm-to-market roads and water systems in the barangays.

Conde said that LGUs are best sectors when it comes to repayment. One significant criterion for an LGU's repayment capacity is through their Internal Revenue Allotment or IRA.

According to Conde, Land Bank loans are used for infrastructure particularly those identified in the LGU's Medium Term Development Plan. Discouraged are loans for salaries and supplemental budgets and those to pay loans from other Government Financial Institutions.

Depending on the amount of loan average interest rates for these LGUs hover at around 7.5% to 8%. (PIA-XI) [top]

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