CEBU CITY, Philippines — The Cebu City Council is reviewing an offer by the Land Bank of the Philippines (LBP) for a P5 billion standby loan.
This loan package was offered to all local government units (LGU) as part of the Bayanihan We Heal as One Act 2 to help the towns and cities recover from the economic impact of the Coronavirus Disease 2019 (COVID-19) pandemic.
Majority Floor Leader, Councilor Raymond Alvin Garcia, who also chairs the committee on budget and finance, filed a resolution on January 20, 2021, at the City Council to authorize the mayor to take on the loan.
In the resolution filed by Garcia, he stated that the money can be used for pandemic recovery, flood control, housing, education, social services, health, and food security.
The council refused to approve the offer immediately and opted to call LandBank representatives to discuss the loan offer and the payment options should the city government decide to acquire the loan.
“We did not ask for the loan, LandBank offered this to the city as part of the Bayanihan Act 2. This does not mean we don’t have the funds anymore,” said the councilor.
Garcia clarified that with the improving tax collection and the remaining more or less P4 billion from the proceeds of the 2015 sale of South Road Properties (SRP) lot, the city has an ample amount in its coffers.
The city government does not actually need the loan, but the City Council will still consider the offer as the P5 billion is actually in a form of a standby loan facility.
This means that the city government will only pay what it actually borrows out of the P5 billion.
If the city chooses to use only P1 billion of the loan, it will repay only that amount. The rest of the P4 billion can be used some other time.
Since the loan can be tricky, the City Council has asked LandBank to clarify the payment options for such so that the city will know the liabilities of taking such a loan.
As for Councilor Garcia, he personally believes the city should take advantage of the loan.
The city may not need it today but may need it someday. The standby loan facility is also an advantage for the city because the government has access to P5 billion but will only repay what it will actually use.
Garcia hopes that the council members will see the benefit of the loan and be open to this kind of support from LandBank. /rcg