The Cebu City Government has moved the target date for full payment of the outstanding balance of 960 million pesos of the loan used for the construction of the South Road Properties (SRP) from August 19 to August 29, 2022.
Attorney Jerome Castillo, Special Assistant to the Mayor’s Office, told SunStar Cebu on Tuesday August 9 that they have completed securing the documents that would make their payment legal but are still awaiting the Certificate of Full Compliance, which will be issued by the Office. local government finances.
Castillo believes the certificate will be issued before the new target date.
Castillo said earlier that the 960 million pesos was the city’s only remaining loan and that settling that bond would leave the city debt-free.
In 1995, the Cebu City government received a loan of 12.315 billion yen, equivalent to 4.65 billion pesos at the time, from the Japan International Cooperation Agency (Jica) through the Land Bank of the Philippines (Landbank) to construct the SRP, a 300- hectare reclamation project. The loan is repayable in 30 years, i.e. until 2025.
But Castillo said paying the outstanding balance before its due date would save the city money on interest payments.
The loan was 4.65 billion pesos when the exchange rate was 24.19 pesos to the US dollar in 1995. But with the dollar now at 55.54 pesos, the loan has now more than doubled since it is based on the value of the dollar and not the Japanese yen.
” It is high time. It is in line with good fiscal management that we are paying it now in order to spare the city another economic shock,” Castillo said.
He added that the city could have saved nearly 1 billion pesos in interest payments if the balance of 2.4 billion pesos in 2015 had been paid as Rama wanted. The US dollar was then only 44.80 pesos.
In addition to the vulnerability of the foreign loan valuation to exchange rate fluctuations, the city pays Landbank, Jica’s intermediary bank, a guarantee fee of 1% of the city’s outstanding loan balance for the year, to be paid to the Ministry of Finance, the guarantor of a loan.
During his tenure as mayor in 2015, Rama began working on early repayment of the loan. From 2016 to 2019, however, Tomas Osmeña’s administration stopped working on it, Castillo said.
“Let’s avoid other economic effects, especially since we can’t dictate the terms of the global economy as well,” Castillo said.
From 1995 to February 2022, Cebu City paid 8.29 billion pesos, including 4.8 billion pesos for principal, 3.1 billion pesos for interest, 35.9 million pesos for documentary stamps and 279.1 million pesos for warranty costs. (LMY, CTL)