City pays P33M SRP"guarantee fee"

CEBU, Philippines - The Cebu City Government yesterday paid P33 million in guarantee fee to the Department of Finance through the Land Bank of the Philippines (LBP) for its loan for the Metro Cebu Development Project - South Road Properties.

The City has so far paid nearly P500 million in guarantee fee which goes to the National Government.

The city pays the guarantee fee to the LBP once a year or every December, then LBP remits the amount to the finance department.

The guarantee fee represents two percent of the outstanding loan balance, which was pegged at 8.994 billion Japanese Yen (JPY) as of August 20.

So far, the City has paid JPY 4,456,626,216.70 billion since 1996.

The balance of JPY 8.994 billion is for the Principal Loan or Loan No. 1. The city has paid in full Loan No. 2, which represented the two-percent pass-on interest of LBP as the conduit bank and Loan No. 3, which represented the interest for the three-year grace period given to the City for the second loan.

Early this year, the City Government requested the DOF to waive the guarantee fee so the money may be used for other purposes such as basic services.

However in March, the DOF refused to grant their request because the guarantee fee is a standard requirement when local government units borrow from foreign funding agencies.

The City acquired its loan from the Japan Bank for International Cooperation (JBIC) for the construction of the 300-hectare SRP. (FREEMAN)