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Wednesday, May 11, 2005
City to correct loan records, show larger amount, like bank
By Gingging A. Campaña
Sun.Star Staff Reporter
Cebu City Hall is correcting the under-reporting of foreign loans and interest payments for the South Reclamation Project (SRP) and trying to reconcile these with records of the Land Bank of the Philippines.
The local finance committee will ask the City Council today to appropriate P1.62 billion from its general fund to cover the differences of the loan expenditures in the last three years.
This way, City Hall’s book of accounts will show that the release of its loan payments corresponds to the actual currency exchange rate of the yen at the time of the expenditure, said SRP manager Nigel Paul Villarete.
He also said that with the adjustments in the entries, no cash will be needed.
The City Accounting Office still pegs the City’s debt from the Japan Bank for International Cooperation (JBIC) for the SRP loan at P2.8 billion, the equivalent amount when the peso was still worth 4.4 yen in 1996.
Villarete said that by “appropriating P1.62 billion, the recorded SRP loan payables will now be P4.3 billion more or less.”
Keeps changing
This amount will reconcile with that of the records of Land Bank, which is using the exchange rate of the yen “30 days prior to the debiting at the Bank of Tokyo during the disbursement.”
But Elsie Tagupa of the Land Bank’s lending center has revealed to the City Council that with the yen already at P.52 at the current exchange rate, taking into account the value fluctuation, the City’s loan already ballooned to P6.39 billion last month.
As to why the City should record P4.3 billion, Villarete said Land Bank only gave the equivalent amount (P6.39 billion) based on the current exchange rate at the time when they appeared before the council.
“I’m sure tomorrow or by the time we pay our loan amortization on Aug. 20, the amount will be different because the exchange rate is always changing,” he told Sun.Star Cebu yesterday.
The amount even excludes the P689-million capitalized interest, which represents the second loan at 1.28 billion yen. This amount, in the city accounting records, was entered as expenditure.
Supplemental
The council will take up in its session today the 2005 first supplemental budget, which totaled P1.66 billion.
The City usually appropriates its first supplemental budget within the first quarter of the fiscal year.
But no extra budget has been passed until the local finance committee, which Villarete also heads, submitted its proposal yesterday.
Although there is no required schedule for the submission of supplemental budgets, Villarete said, “The City is stuck at this time and careful in using fresh funds as it is expected to start paying for its loan in August.”
“It depends on how our finances are going specially when you are in a skin and bones system. We can’t predict when the supplemental budget is coming. The source is usually fresh funds from increases in government revenues,” he told reporters earlier yesterday.
The City Government got its first loan of 12.292 billion yen from JBIC, through Land Bank in 1996.
Careful
It was used to finance the 295-hectare SRP, a portion of which was being disputed by neighboring Talisay City.
The second loan for the accrued interest during the construction period amounts to 1.28 billion yen.
He admitted, though, that City Hall is “careful” this year “in appropriating new funds,” as it still has to pay over P300 million in its SRP loan amortization to Land Bank on Aug. 20.
As to the correction of the SRP-loan records, Villarete said it is being done to comply with the recommendations of the Commission on Audit (COA) in its previous annual audit reports.
COA had recommended in its 2003 Annual Audit Report that the City Government use the current conversion rate used by Land Bank, JBIC’s conduit bank.
COA noted that Cebu City under-reported its foreign loans by P1.71 billion in 2002. It also failed to record its loan releases in 2003 year.
State auditors had blamed this lapse to the City’s adoption of a fixed exchange rate of the yen when it got the loan in 1996.
The understatement of the City’s loans also baffled the City Council, which even wanted to hire somebody knowledgeable in foreign loans to assist the City in computing its actual debt, factoring in currency value fluctuations.
(May 11, 2005 issue)
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