Oops, no budget item for SRP loan payment
The viaduct, a passageway over water, connects Cebu City with the 300-hectare reclamation project called the South Road Properties. (CDN PHOTO/TONEE DESPOJO)
CEBU City will have to catch up next year and pay about P200 million as the remaining balance of its loan for the South Road Properties (SRP) by the deadline on February 20.
Otherwise, the city stands to pay a penalty of two percent per day or around P4 million daily in interest subject to foreign currency changes.
The payment was not included in the P6.4 billion annual budget for 2016 approved by the City Council yesterday.
Fortunately, both sides of the council agreed to have the mayor submit a supplemental budget for the purpose as early as January.
Who forgot to propose it?
Councilor Noel Wenceslao, a former banker and ally of Mayor Michael Rama, raised the omission.
“Since this is a stautory obligation, we can make an insertion in the 2016 annual budget because we will suffer a hug penalty if we won’t be able to pay,”he said.
Councilor Margot Osmeña, who heads the committee on budget and finance, asked why the matter was raised late when the council was already approving the annual budget.
“It’s done. That’s why we had a series of budget hearings for the past two months. It was never brought up then,” she said.
“Not to pass the buck, but I think we should all have been responsible. That should have been brought up before, not today,” she added.
After a recess, councilors decided not to make an insertion in the annual budget. Instead, they proposed that the executive department just submit a supplemental budget as early as January so funds can be allocated for the SRP amortization.
It may be difficult to declare savings so early in January next year so Osmeña suggested that the executive department find other sources like continuing appropriations to fund this.
The city government pays the Land Bank of the Philippines (LBP) a diminishing amount every February 20 and August 20 for the SRP loan extended by Japan funders.
The Rama administration set the goal of pre-paying the SRP loan but has been unable to get a supplemental budget for this passed since August due to poiltical disagreement with the majority bloc, which refuses to touch income from proceeds of the sale of SRP lots.
The Mayor’s Office did not propose an amount for the principal and interest payments for the SRP loan when it submitted a proposed P8.9 billion annual budget.
Wenceslao saidCity Budget Officer Marietta Gumia told him they didn’t include the loan amortization of P2.4 billion in the proposal because this was already included in a proposed P2.8-billion Supplemental Budget 1 (SB1).
The SB1 has been shelved six times by the City Council due to legal questions about the auction of SRP lots.
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