CoA scrutinizes Toledo City’s borrowing practices

State auditors have questioned municipal officials in Toledo City, Cebu, over the local government’s decision to incur P388.7 million in bank loans for infrastructure projects despite holding more than P1 billion in idle bank deposits.

In its 2025 annual financial audit report, the Commission on Audit (CoA) questioned the economic justification for debt financing when municipal coffers maintained substantial liquid reserves.

“Why the city borrowed money for infrastructure while maintaining substantial bank deposits,” auditors wrote, citing that Toledo City’s cash reserves had already reached P600 million by March 2025, a sum sufficient to self-finance planned public works without incurring interest expenses.

State auditors further raised concerns regarding fiscal management after finding that out of P265.82 million allocated under the city’s 20 percent development fund for 15 priority projects in 2025, municipal authorities fully implemented only two.

“Was the borrowing economically justified when the city already had substantial funds available?” the report added, stressing that capital allocation and credit management remain strict matters of public accountability.

City Mayor Marjorie “Joie” Perales did not immediately respond to requests for comment regarding the audit observations.