CEBU, Philippines — After 22 years, the Cebu City government has incurred P1 billion net foreign exchange loss in paying for the South Road Properties loan.
In a privilege speech, City Councilor Jocelyn Pesquera said the city government has P2 billion outstanding balance of the loan to the Overseas Economic Cooperation Fund (OECF) and Land Bank of the Philippines.
“In 1996, the city has incurred the Y12.315 billion loan or about P3.1 billion for the reclamation of the SRP,” she told members of the City Council.
As of February 2018, Pesquera said she was told that the outstanding balance of the loan is P1.97 billion if using the conversion directly from yen to peso. But, as of now, the city is still buying US dollar to yen to peso to pay off the loan.
Pesquera added former mayor Michael Rama already got approval from different agencies to pre-terminate the SRP loan in 2015.
“Because the SRP loan has drained the city’s coffers, former mayor Michael Rama proposed in 2015 the following options: full payment of the loan or conversion of the loan from yen to peso,” she said.
If payment or conversion was made in 2015, Pesquera said the city government could have saved P820.9 million, P348 million interest, P4.9 million doc stamps, P20,082 bank charges, and P467.5 million forex loss.
With this, Pesquera said the city government should pre-terminate the loan or pay off the outstanding balance to “lessen the burden” of paying hefty interests and other charges.
The City Council approved her resolution requesting Mayor Tomas Osmeña and executive department to include the pre-termination of the loan for next year’s Annual Budget.
The outstanding balance is yet to be settled in 2025.
Councilor Margarita Osmeña recalled that the move to pre-terminate the loan in 2015 was not approved because the source of fund was from the 45.2-hectare lot sale proceeds.
Also, she said there was a civil case filed by a certain Romulo Torres who asked the court to stop the city government from using the proceeds of the sale of 45.2-hectare property at the SRP.
During that time, Osmeña said the city cannot enter into new loan agreement because of the “adverse” opinion from the Commission on Audit in the previous year’s transactions.
The total amount paid by the city government after 22 years of paying off amortization of the loan is at P6.558 billion which includes P3.7 billion principal amount, P2.8 billion interest, P26 million document stamps, P51,968 bank charges, P1 billion forex loss, and excluding the one percent guarantee fee of Department of Finance up to 2016.
Pesquera said she got the records from the Office of the City Accountant.
City Accountant Arlene Rentuza said the net foreign exchange loss was due to the fluctuation of foreign current rates since the city availed of the loan.
Rentuza said there were instances that the city incurred losses and there were also instances that the city gained. (FREEMAN)