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SRP loan payment supposedly due Saturday: Rama gets reprieve from LBP, JICA

May B. Miasco/RHM (The Freeman) - February 17, 2016 - 9:00am

CEBU, Philippines - Cebu City Mayor Michael Rama announced yesterday that the Land Bank of the Philippines has agreed to extend payment of P180M as amortization of the city’s South Road Properties loan due this Saturday, February 20, to August this year.

With this, he assured that the city government will not default on its biannual loan payment even if there is no appropriation for it in the 2016 annual budget.

 “LBP national has already given their imprimatur for deferment…. I would like to thank (LBP) president Gilda Pico for agreeing on a deferment of the payment.  Instead of February 20, it will be somewhere on August 2016,” he told a press conference.

He made the announcement at a restaurant near Mactan Shrine in Lapu-Lapu City, where he and delegates of the Global Network of Magellan Cities had a visit for a series of activities, including the Battle of Mactan re-enactment.

“There is nothing to talk about even for amortization because payment is deferred….  If payment is deferred, we don’t talk about that in the meantime,” he said when asked what would happen comes August.

He said that in securing a deferment of payment, he said he wrote and then met with LBP officials and that the deferment had the concurrence of the Japan International Cooperation Agency.

“I’ve asked in a formal letter to them for the deferment…. I also appeared formally and delivered it (letter) and have JICA sign (it),” Rama said, and thank LBP and JICA officials for showing “generosity, humanitarian consideration and empathy” to the city.

“With our discussion with (JICA’s) Yamada San… I expressed to them intensely, profoundly the need to extend (a) just (and) reasonable consideration on the matter,” he said.

Rama said he told both LBP and JICA that if not for the political skirmishes in the city, the loan would have been already paid last year since all the requirements for the proposed debt prepayment to JICA has been completed.

The executive department included P2.3 billion, which represented the full payment for the SRP loan, in the P2.8-billion 2015 Supplemental Budget-1, but the City Council has refrained from discussing the proposal due to a case filed by one Romulo Torres stopping the city from using the proceeds of the sale of SRP lots identified as fund source for SB-1.

SB-1 was also the reason why the executive department did not propose the inclusion of the SRP loan amortization due this Saturday in the 2016 annual budget.

Sought for comment on Rama’s announcement, City Councilor Margarita Osmeña, who heads the City Council’s Committee on Budget and Finance, said she was happy over the recent development.

“That’s good because  it saves us from, I mean, at least we’re not in default. That was the issue, that we might be in default. That’s good, that’s good to know,” she said.

Rama, though, remained firm on stand that the loan should be paid in full and not in staggered basis, which it has been doing for the past several years, since it has the funds to do so.

“The issue has to be resolved, we have to pay. We can pay and there is a provision that we have to pay it all.  Why should we come out with amortization (payments)?” he said.

The city government 1995 contracted a Y12,315,000,000.00 (P2.83 billion that time) loan for the then South Reclamation Project with JICA, with LBP serving as conduit bank.

During the City Council session yesterday, City Councilor Gerardo Carillo, in a privilege speech, asked colleagues to set aside their political differences and approve the appropriation for the SRP loan’s full payment.

He mentioned Article 6.6 of the subsidiary agreement with LBP, which states that  “the borrower shall not sell or dispose 51 percent of the 330 hectares at South Reclamation Project while the loan is still in force and unless the proceeds, shall be used to pay the lender and OECF in full.”

He warned that the city has already sold more than the 51 percent of the SRP and therefore should already pay the loan in full.

“It has then becoming a contractual obligation to settle the entire Loan Obligation we have with JICA. Moreover, the City has more than P8B in our coffers coming from the sale of SRP,” he said.

“It is but proper that this [city council] extends authority to the chief executive to settle the entire amount of P2.4B coming from the sale of SRP so that the (city’s) coffers will bleed no longer with the gargantuan amortization payment,” he added. — (FREEMAN)

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