City eyes P3B LBP loan offer
Cebu City Mayor Tomas Osmeña is planning to avail of the P3-billion loan with the Land Bank of the Philippines (LBP) to fund various infrastructure, drainage and road concreting projects.
If pursued, City Hall will have to increase its annual allocation for debt servicing.
City Hall now allocates at least P500 million per year as repayment for its P2-billion loan balance with the Japan International Cooperation Agency (JICA).
The city government availed of a P6-billion loan with JICA for the implementation of its South Reclamation Property now known as the South Road Properties (SRP).
During their October 24 session, council members passed a resolution by Councilor Margot Osmeña to authorize her husband and Mayor Osmeña to negotiate with LBP on the terms of the P3-billion loan.
Councilor Osmeña’s resolution was passed despite questions raised by the opposition bloc on the necessity of the loan.
Opposition Councilor Jose Daluz III would have wanted an executive session called with LBP officials to discuss the terms of the loan offer before authorizing mayor Osmeña to negotiate with bank officials.
“My point is borrowing should be the last resort especially since these are generic infrastructure projects. What specific infrastructure projects are we going to fund? Maybe we can find funding in our general fund first. If not, then we can borrow,” he said during the council session.
Councilor Osmeña said the council needed to authorize Mayor Osmeña to negotiate the loan terms with LBP first. If negotiations succeed, the mayor will then go back to the council for another authority in the form of an ordinance, this time to avail of the loan offer.
“This is just an offer. We don’t have to take it. We’ll just see what it’s all about. I personally don’t see any harm done if we’re just looking at the offer. It wasn’t asked for. It was offered by Land Bank,” said Councilor Osmeña, head of the council’s committee on budget and finance.
LBP wrote Mayor Osmeña on October 5 to make an offer of their existing credit facility that may be used to fund drainage systems improvement and road concreting and other projects included in the city’s Annual Investment Plan (AIP).
The loan offer has a maximum term of 15 years.
Councilor Osmeña said this is not the first time that a Local Government Unit (LGU) like Cebu City would avail of a bank loan to fund priority projects. She said that Makati City has also availed of a loan with LBP.
Opposition Councilor Raymond Alvin Garcia and Jocelyn Pesquera share the opinion that loan availment will only be an added burden to the city because of the need to pay millions worth of interest.
Garcia asked the administration bloc to first look into available fund sources before considering outside sources.
Garcia said the city still has around P9 billion from the sales of land at the South Road Properties (SRP) which former mayor Michael Rama earned in 2015 and which Mayor Osmeña does not want to touch.
Opposition Councilors Eduardo Rama Jr. and Joel Garganera shared the sentiments of the Barug Team Rama allies, but their number was not enough to prevent passage of Councilor Osmeña’s resolution.
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