Councilor Margot Osmena says a supplemental budget must be passed so the city can pay the P180 million South Road Properties loan amortization to the Landbank of the Philippines on February 20. (CDN PHOTO/LITO TECSON)
Nine days from now, Cebu City Hall has to pay around P180 million to the Land Bank of the Philippines (LBP) as amortization for the city’s loan on the South Road Properties (SRP).
But the problem is there is no appropriation for the loan amortization under the city’s approved P6.4-billion budget this year.
This was pointed out by Councilor Margarita Osmeña, who heads the council’s committee on budget and finance, in a privilege speech during the council’s regular session yesterday.
“The SRP loan is a government-to-government transaction between the Philippines and Japan coursed through JICA under the Official Development Program. There are other LGUs in this program too. There has never been an instance when any LGU has defaulted in its payment,” she said in her speech.
“Should this happen, all are affected. The country’s risk taking may deteriorate. We certainly do not want to be the reason for this catastrophe,” she added.
The council then passed a resolution by Osmeña to urge the executive department to submit a Supplemental Budget 1 (SB1) immediately to cover for the loan amortization.
Aside from the due on February 20, another due for the amortization is coming up on August 20, which means the city needs to appropriate around P375 million for the entire year.
Last January 26, LBP Vice President Elsie Fe Tagupa already sent a billing statement to then-acting mayor Edgardo Labella for the SRP loan due on the 20th.
Based on the billing statement, the city needs to pay around 440 million Japanese yen by February 20. This represents 299.8 million yen for the principal loan and 140 million yen for the interest.
The same billing statement also said that for the August 20 due, the city has to pay 431.9 million Japanese yen – which includes 299.8 million yen for the principal loan amount and 132 million yen for the interest.
Based on yesterday’s one yen to 0.41 peso exchange rate, the city has to pay around P182 million on February 20 and around P178.6 million by August 20.
In her speech, Osmeña pointed out that there are several other sources of funds which the city can use to fund the SB1 for the loan prepayment including the P1.5 billion approved allocation last year for drainage projects.
“A portion of the continuing appropriations for unimplemented projects perhaps in this case specifically for example the 2015 P1.5 billion for drainage projects can be used to cover the SRP amortization payment as this is undeniably, absolutely urgent and necessary. After all, this has been used as a source of funds for previous supplemental budgets,” Osmeña said.
During the discussion, Councilor Noel Wenceslao said he learned from the executive department that they deliberately didn’t include an appropriation for the loan payment this year since they were thinking that last year’s P2.6 billion SB1 would be approved by the council.
The SB1 included a P2.4 billion appropriation for the proposed prepayment of the entire SRP loan balance.
But this was not acted upon by the council, despite several attempts by the minority bloc, since they said the lone fund source for the SB1, which is the sale of the two SRP lots, is the subject of a pending case filed by Romulo Torres in court.
“February 20 is coming up. We have 10 days. The loan amortization is a statutory and contractual obligation. But the prepayment is not obligatory,” Osmeña said.