‘Line of credit is public debt’

Posted on Jun 19 2019

Call it a line of credit or what you will, but Attorney General Edward Manibusan insists it should be considered a public debt.

The Torres administration had asked the Marianas Public Land Trust for $15 million it plans to use to pay the Settlement Fund and bonds obligation but refuses to call it a debt, insisting on the term “line of credit.”

That led to the submission of two questions to the Office of the Attorney General’s Office. In response, Manibusan said the line of credit is a public debt that will be funded by the revenues from the MPLT investment income, which is remitted annually to the CNMI government for legislative appropriation.

Manibusan, however, said the line of credit could not be considered as operating expenses. “Disaster relief and recovery expenses are extraordinary and unexpected expenses that are not normal government operating expenses within the meaning of Section 4 of Article X of the Commonwealth Constitution,” he said in a letter to Finance Secretary David Atalig.

Atalig earlier sent two questions to Manibusan to comment on: 1. Is the line of credit from MPLT a public debt as defined by the [CNMI] Constitution? and, if so; 2. Is the purpose of the public debt to pay for disaster relief and recovery expenses considered operating expenses which are prohibited under the Constitution?

Manibusan said Section 3, Public Debt Authorization, states that public debt “may not be authorized or incurred without the affirmative vote of two-third of the members in each house of the Legislature.”

He added Section 4, Public Debt Limitation, says “public indebtedness other than bonds or other obligations of the government payable solely from the revenues derived from a public improvement or undertaking may not be authorized in excess of 10 percent of the aggregate assessed valuation of the real property within the Commonwealth.”

“Public indebtedness may not be authorized for operating expenses of the Commonwealth government or its political subdivisions,” states Section 4.

MPLT board member Pedro R. Deleon Guerrero, meanwhile, is hoping to incorporate an indemnification clause that would protect the trustees from any legal liability, if ever they decide to approve the government’s line of credit request.

Atalig sought Manibusan’s legal guidance, recognizing that future income revenues, which MPLT remits to the general fund annually, would cover the line of credit in a five- to seven-year period.

Deleon Guerrero, however, is still worried about Manibusan’s opinion. “I don’t feel very comfortable with the interpretation that is coming from the AG. To protect us trustees, we need to have indemnification if and when there are questions to that effect, that we will be protected and that should be under the agreement if and when the trustees decide go ahead and approve the request of LOC,” he said.

He said the indemnification clause is important due to the way the AG’s opinion was presented. “The way [the] AG’s opinion in reference to yes ‘you can disburse this fund under such situation’ [but] I have to iensure that we are protected. That’s why I recommended that provision, that the indemnification clause be included in the contract agreement.”

Deleon Guerrero said the MPLT board continues to deliberate, discuss, and weigh all pros and cons before making a decision whether to approve the government’s LOC request or not. “I think we’re getting there [but] we have many concerns. …One of [the concerns] is the conditions the AG cited. Which is something that has to be addressed, based on letter, is that in granting the full faith and credit to the CNMI government, it must not exceed the 10 percent of the appraised value of the CNMI’s properties.”

He said the AG’s recommendation is for the real properties of the Commonwealth be assessed and evaluated. The CNMI, however, doesn’t have any information on the value of its properties.

“So, for the Legislature to approve the full faith and credit of the CNMI government it should fall in that percentage. And we don’t have that. So, we will require the government to make such assessment in entertaining this.”

Jon Perez | Reporter
Jon Perez began his writing career as a sports reporter in the Philippines where he has covered local and international events. He became a news writer when he joined media network ABS-CBN. He joined the weekly DAWN, University of the East’s student newspaper, while in college.
Disclaimer: Comments are moderated. They will not appear immediately or even on the same day. Comments should be related to the topic. Off-topic comments would be deleted. Profanities are not allowed. Comments that are potentially libelous, inflammatory, or slanderous would be deleted.