South Road Properties taken in 2006 (CDN FILE PHOTO)
The Cebu City government is studying the possibility of borrowing P3.2 billion from a bank to buy out the city’s standing loan with the Japan International Cooperation Agency (JICA).
The Land Bank of the Philippines (LBP) acts as a conduit of the city’s loan with JICA for the South Reclamation Project now known as the South Road Properties (SRP).
“I don’t think there is a need to get JICA’s approval for that so long as we pay our loan to them,” Mayor Michael Rama said.
Three banks – the Development Bank of the Philippines, Philippine National Bank and the Land Bank of the Philippines – offered to grant the city’s loan with an annual interest rate of 4 percent to 4.5 percent.
Rama said the proposals are being evaluated by City Administrator Lucelle Mercado, acting City Treasurer Diwa Cuvas, Jose Daluz III and Jocelyn Pesquera.
“Let the group do their job and the mayor will make his evaluation later,” Rama said.
A source close to the mayor said that they are preparing a supplemental budget for P3.2 billion for this purpose.
The budget would be sourced from the loan buyout with a chosen bank “to make sure that the loan amount will only be spent for the intended purpose.”
Rama confirmed plans of presenting supplemental budget no. 2 to the City Council.
“But this will depend on what bank will be chosen and what they are proposing compared to our demands,” he said.
Cebu City availed of a P7 billion loan with JICA payable in 25 years or until 2025 for the reclamation project.
The city was the first local government in the country allowed to contract the big foreign loan, an obligation previously backed only by the Philippine government. Cebu City still has an unpaid loan balance of P3.2 billion and allocates at least P500 million a year for its repayment.
Cebu City Mayor Michael Rama shows a sample of projects planned for the nine-hectare Kawit Island at the South Road Properties (SRP) during a media forum at the SRP senior citizens’ center. (CDN PHOTO/TONEE DESPOJO)
Rama said he’s unhappy with the 11 percent interest that the city is paying for its JICA loan and another P50 million guarantee fee the city pays the national government every year.
He said he plans to visit the Japanese Embassy in Manila to discuss the interest rate.
“When they granted us their loan, it was not meant to oppress the local government but to bring a better future for the LGU,” Rama said.
Related Stories:
Kawit project to settle city’s loan balance
Multi-billion project at SRP eyed