Forex bloats unpaid SRP loan balance
Delaying the prepayment of the South Road Properties (SRP) loan balance would mean bigger foreign exchange losses for the city government.
City Accountant Mark Rossel Salomon said that if the city will now pay the balance, which is around P2.35 billion, it will have to pay an additional amount of P136.8 million in foreign exchange loss. But this could increase in the future if the balance is not settled immediately.
“If we pay the loan now, this is the loss that we will suffer. But if we delay the payment, it is expected to increase because if you look at the trend of the peso-dollar exchange, it is increasing,” he explained.
In fact, losses from the increasing foreign exchange rates have been taking its toll on the city’s coffers.
Based on records from the Accounting Office, the original loan amount in 1996 was only P4.65 billion.
From then until 2015, the city has already paid a total of P3 billion in terms of the principal loan amount which means that the balance should have been around P1.6 billion if the foreign exchange rate did not increase.
But records show that the principal loan balance is still at P2.35 billion.
On top of that, the city has paid a total of P2.56 billion in interest alone from 1995 to 2015.
Cebu City Mayor Michael Rama described these losses over the year as “outrageous, horrific and incredulous.”
In a Feb. 15 letter to City Administrator Lucelle Mercado, he said that as of Dec. 31, 2015, the City of Cebu suffered an unrealized loss in the amount of P136,865,872.42.
It is considered unrealized there being no actual payment made but the amount will be added to the total outstanding balance of the loan.
In an interview, Salomon explained that based on their records, as of the end of 2014, the outstanding balance of the SRP loan was at P2.44 billion.
In 2015, the city paid a total of P230.7 million as amortization for the principal loan. This means that the loan balance should have been P2.21 billion.
But based on their computation of the foreign exchange rate as of Dec. 21, 2015, the loan balance was still at P2.35 billion.
On top of the principal loan payment last year, the city also paid interest amounting to P115.4 million for 2015 alone.
Disclaimer: The comments uploaded on this site do not necessarily represent or reflect the views of management and owner of Cebudailynews. We reserve the right to exclude comments that we deem to be inconsistent with our editorial standards.
