The Dumaguete City Council is set to deliberate on an unprecedented ₱2.185 billion borrowing package requested by Mayor Manuel "Chiquiting" T. Sagarbarria, a massive fiscal proposal that would nearly double the city's annual income and establish a significant debt burden for residents.
Documents indicate that the proposal, which seeks an addendum to the city's 2026 Annual Investment Program (AIP), received approval from the City Development Council (CDC) on April 13, 2026. The measure is now scheduled for its first reading during the City Council's April 28 agenda session.
If approved, the loan will finance two major infrastructure projects: a new four-storey public market in Barangay Poblacion 3 worth ₱1.948 billion, and a twin two-storey City Hall extension with parking facilities in Barangay Poblacion 4 valued at ₱237 million.
Unprecedented Debt Scale for Second-Class City
The scale of the proposed debt represents an extraordinary financial commitment for the newly reclassified second-class city. Dumaguete reported an annual income of approximately ₱1.218 billion in 2024, making the proposed loan nearly 1.8 times the city's entire yearly revenue.
Based on the Philippine Statistics Authority's 2024 population estimate of 142,171 residents, the borrowing would translate to a debt burden of approximately ₱15,369 for every citizen of Dumaguete. The loan amount also exceeds the city's entire 2025 Annual Investment Program, which was publicly indexed at ₱1.4 billion.
Mayor Sagarbarria's request explicitly states that the projects will be financed through general fund borrowings, pending the council's authority to negotiate with government depository banks.
Economic Pressures Mount as Borrowing Proposal Emerges
The massive borrowing proposal comes amid mounting economic challenges for local residents. Headline inflation accelerated to 4.1% in March 2026, driven primarily by increases in transport, housing, and utilities costs.
Rising global oil prices have already prompted the city government to implement a local fuel-subsidy program this April, highlighting the financial strain facing Dumaguete residents and businesses.
Provincial Borrowing Controversy Casts Shadow
The Mayor's multi-billion-peso borrowing proposal draws inevitable comparisons to a controversial financial maneuver recently executed by his son, Negros Oriental Governor Manuel L. Sagarbarria, at the provincial level.
In February 2024, the provincial government entered into loan agreements totaling ₱5.85 billion with the Land Bank of the Philippines and the Development Bank of the Philippines to fund mega-projects, including the ₱3.3 billion Negros Oriental Medical City and a ₱1.46 billion Government Center.
However, the recently released 2024 Commission on Audit (COA) Annual Audit Report revealed significant procedural violations in the provincial borrowing process.
State Auditors Flag Missing Feasibility Studies
COA findings showed that Governor Sagarbarria and the provincial Bids and Awards Committee proceeded with the ₱5.85 billion borrowing without conducting mandatory feasibility studies or cost-benefit analyses, constituting a direct violation of the Government Procurement Reform Act (R.A. 9184).
State auditors issued stern warnings regarding the provincial loan, noting that the annual amortization of ₱179.3 million will consume nearly 30% of the province's 20% Development Fund. This creates what auditors described as a "substantial debt servicing burden" that restricts funding for other basic services and constrains future administrations.
Critics are now monitoring the Dumaguete City Council's deliberations to determine whether the city's ₱2.185 billion proposal will undergo the rigorous feasibility and economic viability assessments that the provincial government bypassed.
Multiple Regulatory Approvals Required
Even if the City Council grants Mayor Sagarbarria the authority to negotiate, the loan faces several regulatory hurdles before finalization.
Under Philippine local-government finance rules, the city must secure a Certificate of Net Debt Service Ceiling and Borrowing Capacity from the Bureau of Local Government Finance (BLGF). Additionally, the Department of Finance requires a favorable opinion from the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) before any loan agreement can be executed.
The Local Government Code imposes strict limitations, mandating that a local government unit's annual appropriations for debt service cannot exceed 20% of its regular income. The city must demonstrate compliance with this ceiling if it assumes the ₱2.185 billion debt obligation.
Infrastructure Promises Versus Fiscal Responsibility
The proposed projects represent significant infrastructure improvements for Dumaguete. The four-storey public market in Barangay Poblacion 3 would modernize commercial facilities, while the City Hall extension with parking in Barangay Poblacion 4 addresses administrative space needs.
However, the financial magnitude raises questions about long-term fiscal sustainability and the burden placed on future city administrations and residents.
Council Deliberations Begin This Week
The City Council's scheduled April 28 first reading will mark the beginning of formal legislative deliberations on the borrowing proposal. Council members will need to balance infrastructure development goals against fiscal prudence and debt sustainability.
The deliberations occur against the backdrop of the provincial government's borrowing controversy, providing a cautionary example of the potential consequences of inadequate due diligence in major financial commitments.
All attention now focuses on how Dumaguete's local legislators will evaluate the trade-offs between promised infrastructure improvements and the reality of assuming a massive, generational financial obligation that significantly exceeds the city's current fiscal capacity.
Photo credit: Breaking News Negros Oriental file photo