City Hall sets aside P2.4B for SRP loan payment

CEBU City Hall has set aside P2.4 billion from its account under the Land Bank of the Philippines for the prepayment of the South Road Properties (SRP) loan.

“We earmarked P2.4 billion because we have this much and we are capable of paying,” City Treasurer Diwa Cuevas said in yesterday’s press conference with Mayor Michael Rama and City Administrator Lucelle Mercado.

Landbank approved  Rama’s request to defer to Aug. 20 the payment of the amortization due tomorrow, Feb. 20, on the condition that the city government allow the “tagging and earmarking” of the amount due, plus charges, against the city’s deposit account.

The Feb. 20 amortization has a peso equivalent of around P173 million.

Rama showed reporters a copy of the letter from Landbank-Cebu Lending Center Vice President Elsie Fe Tagupa approving his request to defer payment to Aug. 20 this year.

“The most important thing that we have achieved is there’s nothing to worry about anymore. Why are we so worried? Who are worried? I’m not worried. Why? Because we have the money,” Rama said.

The city government entered into a subsidiary loan agreement with the Landbank for the development of the SRP.

With Landbank’s approval of his request, Rama said it also means that the Japan International Cooperation Agency (JICA) will not consider Landbank in default if no payment is made on the due date.

He said JICA and Landbank have different sets of payment due dates.

Councilor Margot Osmeña remained adamant that paying the entire loan balance is unnecessary at the moment.

“Landbank’s decision clearly proves that the stand of the city council majority is right. Prepaying the SRP loan is not an obligation. Why should Mayor Rama insist on prepaying the loan in full when Landbank has even deferred the latest amortization?” Osmeña said in a post in her official Facebook page.

She also said if the SRP loan agreement really provides that the entire balance should be paid if more than 51 percent of the entire 330-hectare property has been sold, then a demand letter should have already been sent by Landbank.

If this is also the case, Osmeña said the executive department should have included an appropriation for the payment of the outstanding loan balance in the annual budget this year instead of just insisting on the Supplemental Budget 1 of last year.

Osmeña said using the SB1 last year for this year would be disallowed by the Commission on Audit.