Land Bank borrowings to finance Davao citys stimulus program

Jun. 14, 2009

By CJ Kuizon
Davao Today

DAVAO CITY The city government is borrowing money from the Land Bank of the Philippines (LBP) to finance its stimulus package supposedly to cushion the impact of the global economic crisis on the local economy.

Lawyer Wendell Avisado, city administrator, said the 2.8 billion pesos the city borrowed from the LBP this year will finance a local stimulus package, a large chunk of which will be spent on road infrastructure and the citys traffic signal system. Of the total, 1.58 billion pesos, or 56 per cent, will build roads and bridges and other infrastructures while 705 million pesos will shoulder the cost of the third phase of the citys traffic lights system.

Avisado said the citys 2.8 billion peso-stimulus fund is a local version of the national governments stimulus package intended to create more jobs and minimize the impact of the crisis.

Without the crisis, the city would have borrowed less money, Avisado said.

Avisado admitted that the traffic system will not directly help the people but it will add on to the citys existing infrastructure and will serve as a come-on to investors. If you are an investor and a local government unit (LGU) is spending a lot of money on public expenditure, chances are, youd be thinking there is more money in the economy of that city.

As early as July 2008, Davao Mayor Rodrigo Duterte created a crisis management task force to come up with fiscal priorities to offset the effects of the crisis. Duterte realized that the global crunch was coming and wanted to make the most of the citys available funds to avoid duplication of projects and prioritize only high-impact projects that seek to eliminate poverty and promote economic growth.

Aside from the 754 million peso road projects, the stimulus package for infrastructure will also include 831 million pesos for new schoolrooms and other buildings, drainage, electrification and water systems and small bridges. Among the road projects, the 15.4 million ongoing Maa to Calinan road makes up the biggest.

Avisado said the local government will see to it that more jobs will be generated by the projects. “We will hire people directly, he said.

“The administration will implement the project, so that we can use the mark-up (or the margin) to hire more people,” he said. When the project is done through a contractor, the project cost is reduced by at least 30-35 percent because of the margin of profit that a contractor expects.

He said the city also sets aside 100 million pesos for the city shelter program. The city plans to buy a suitable area and grant qualified Davaoeos access to an omnibus long term loan-facility, allowing them a chance to own land. He said the city seeks to reach people with a monthly income of 7000 pesos or less to qualify for the citys housing program.

The rest of the stimulus fund will be spent on the purchase of more garbage trucks and other equipment, the improvement of roads leading to the sanitary landfill, the repair of the public cemetery and the setting up of a public crematorium.

The city approved a regular budget of 3.2 billion pesos this year. Avisado said that the city is spending a lot on the traffic systems because many intersections within the city still do not have traffic lights, particularly in the growth areas of Toril and Calinan. Once completed, the city will have 65 signalized traffic intersections, 16 closed-circuit television (CCTVs) cameras installed in 16 strategic locations and traffic operation centers (TOCs). (CJ Kuizon/

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