BSP okays Cebu City Hall loan payment scheme

THE Bangko Sentral ng Pilipinas (BSP) approved Cebu City Hall’s plan to prepay its outstanding loan for the South Road Properties (SRP).

City Hall only needs the approval of the Japan International Cooperation Agency (JICA) for the prepayment and eventually the passage of the city’s P2.8 billion Supplemental Budget 1 (SB1) which includes the P2.3 billion prepayment.

In a letter  to Mayor Michael Rama dated November 25, BSP officer-in-charge for International Operations Department Rosalina Tan said the Monetary Board approved the city’s request through a resolution dated November 13.

The BSP set some conditions for their approval including a limit on the foreign exchange purchases that the city can make in a day to prepay the loan which is in Japanese Yen.

Tan said in her letter that the city’s outstanding loan balance is now at 5.996 billion Yen or approximately 48.7 million US dollars.

“Foreign exchange purchases for the prepayment shall be made on staggered basis from date of Bangko Sentral ng Pilipinas’ (BSP) letter-authority up to actual prepayment date, with purchases not exceeding US$30 million per day,” she said.

City Legal Officer Jerone Castillo, a member of the city’s Local Finance Committee (LFC), said since the SRP loan is in yen, the city needs to buy currency exchange.

Since the limit is 30 million US dollars and the city’s balance is at 48.7 million US dollars, Castillo said the city could probably get two tranches to pay the loan.

Aside from the limit, BSP also wants the city government to comply with  conditions also set by Cebu City Resolution No. 13-0469-2015 dated August 26 authorizing Rama to prepay the loan; the Bureau of Local Government Finance (BLGF) letter dated September 26; and all pertinent laws and regulations, orders, decisions, judgment, decrees issued by agencies and other bodies.

After the prepayment, the city government should also submit copies of the notice of prepayment to the Land Bank of the Philippines (LBP) and proofs of prepayments made to the BSP, through the International Operations Department, within five banking days from date of transaction.

Mayor Rama gave copies of the BSP’s letter to reporters yesterday.

“As far as I’m concerned, the case has been won. Second, naa bay mamayad ug utang nga balibaran (Is there anyoe who would refuse payment of a debt?),” he said. Rama said the City Council should  know what to do as well.

The council still hasn’t approved the SB1 since there was a case filed by Romulo Torres questioning the sale of the SRP lots, which is the sole fund source of the additional budget. But the Regional

Trial Court has just recently dismissed Torres’ case.

“Now that everything has been put on the table,   if the council still will be stubborn,  what would that show? I don’t have to state the obvious,” Rama said.