Council asks for budget to pay SRP amortization

CEBU, Philippines - The Cebu City government is sche-duled to pay its loan amortization with the Land Bank of the Philippines next week but no amount has been appropriated yet, prompting the City Council to request the executive department to submit a supple-mental budget.

Councilor Margarita Osmeña, chairperson of the committee on budget and finance, said the South Road Properties loan amortization was not included in the P6.4 billion 2016 Annual Budget that the council had passed. The city government is scheduled to pay P180 million amortization on February 20.

 “We all know that the initiative in proposing a budget must come from the executive department. We therefore urge them to propose a supplemental budget so that we can immediately act on it. Let us not allow our political vanity to take over. Again, let me borrow another phrase ‘Together we can Make it happen,’” she said.

Osmeña said there are various sources of funds which the city can use to fund the SB-1 this year for the amortization. She cited for one, the P1.5 billion approved allocation last year for the drainage projects that has not been implemented yet.

“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.

She asked the executive department to use funds that are “free from any legal encumbrances” to fund the SB-1 this year.

She is referring not to utilize the P8.35 billion SRP money that the city got from three developers who bought the 45.2 hectare-lot at SRP, saying there is still case pending before the Court of Appeals questioning the validity of the sale.

“The SRP loan is a government to government transaction between the Philippines and Japan coursed through JICA (Japan International Cooperation Agency) 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,” Osmeña said.

“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.

On January 26, LBP Vice Pre-sident Elsie Fe Tagupa sent a billing statement to then acting mayor Edgardo Labella for the amortization.

Tagupa, in the billing statement, said the city needs to pay around 440 million Japanese yen by February 20. The amount, he said represents the 299.8 million yen for the principal loan and 140 million yen for the interest.

For the city’s 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 money exchange rate at 0.41 peso to a yen, the city has to pay around P182 million on February 20 and around P178.6 million by August 20.

City Councilor Noel Eleuterio Wenceslao said the executive department through the Local Finance Committee has “deliberately” excluded the appropriation for the loan payment this year.

Wenceslao said the executive department was hopeful that the P2.8 billion SB-1 last year will be approved.

However, it did not pass in the Council because of the case filed by Romulo Torres.

Even though the case was dismissed by the Regional Trial Court, the opposition-dominated City Council rejected the additional budget which aims to wipe out the city’s outstanding loan.

The SRP money in question was the lone source of fund under the P2.8 billion SB-1 last year.

But Osmeña said the prepayment of the outstanding balance of the SRP loan is not yet an “obligation.”

“February 20 is coming up. We have 10 days. The loan amortization is a statutory and contractual obligation. But the prepayment is not obligatory,” she said.

In 1996, the city entered into an agreement with Japan International Cooperation Agency (JICA) for the Y12.315 billion or around P4.65 billion loan to finance the reclamation of what is now known as the SRP. As of now, the city still owes JICA over P2.3 billion and is due in 2025.— (FREEMAN)