Cebu City Mayor Michael Rama is requesting the Land Bank of the Philippines (LBP) to waive a P43 million penalty for the pre-termination of the city’s loan for the South Road Properties (SRP).
In a letter to LBP Vice President Elsie Fe Tagupa dated November 4, Rama said pre-payment is allowed as long as the Japan International Cooperation Agency (JICA) agrees.
“Your assistance upon the matter will greatly aid the City of Cebu in realizing its objective of a debt-free city and achieving better service for the city’s constituency,” Rama wrote.
Rama also asked the LBP to endorse a request for the loan prepayment to the Bangko Sentral ng Pilipinas (BSP) and JICA.
LBP earlier told the city that the total amount due for the SRP loan is P2,357,416,225. The amount already includes the P43,088,002 prepayment penalty.
In 1995, the city took out a 12.315-billion yen, or around P4.65 billion at the time loan from JICA to develope the 300-hectare SRP reclamation . The loan was to mature in 2025 with an annual interest of 11 percent. The city still owes around P2.4 billion. Every year, the city allocates around P500 million to pay its obligation.