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Friday, December 16, 2005
City Council approves reduced 2006 budget
By Gingging A. Campaña
Sun.Star Staff Reporter
The Cebu City Council has approved the City Government’s 2006 annual budget but reduced it by P303.25 million so as not to exceed the 20 percent debt cap set by the Department of Budget and Management (DBM).
Next year’s budget now stands at P2.28 billion instead of the proposed P2.56 billion.
The adjustment was made after Acting Budget Officer Marietta Gumia presented the proposed P2.56-billion budget, which carried a debt-servicing load of P722.6 million or 32 percent of the entire appropriation, which is beyond the debt-servicing limit of 20 percent.
Apart from that of the South Reclamation Project (SRP), which the City got from the Japan Bank for International Cooperation (JBIC), the City will also be paying amortization and interests for domestic borrowings it incurred to build its annex building, the condominium and the P26-million Pardo Public Market.
Exemption
Gumia said that while the total debt repayments and interests went beyond the ceiling, the budget office will seek DBM’s exemption.
But Councilor Jocelyn Pesquera, head of the committee on budget and finance and author of the ordinance covering the proposed 2006 annual budget, will not push for its approval until the City gets the exemption.
So, it was agreed during a budget hearing last Dec. 13 that the computation of the interest payments be adjusted to the recent peso-dollar exchange rate to keep the debt service within the 20 percent limit.
The City Accounting Office computes the repayments of the SRP loan (12.315 billion yen) at the current rate of the yen to the dollar and from the dollar to the peso, Gumia explained.
From the original computation of converting one yen, which is US$.010 to P56 to the dollar, the budget office used the conversion of one yen to US$.0084 based on the recent P55 to the dollar.
With the adjustments, instead of paying P314.18 million for the interests of the SRP loan, the City only allocated P254.6 million or decreased it by P59.5 million. It still allocated P129.39 million for the principal.
And, instead of the P212.37-million budget for the anticipated loss on foreign exchange, the City only appropriated P10 million.
Also, the allocated P45 million to repay the City’s loan from Land Bank of the Philippines (LBP) for the SRP’s real estate mortgage documentation was reduced to P22.10 million. And, instead of the P5-million budget for the interest repayments for the documentation loan, only P945,000 was allocated.
But Gumia said they will still seek DBM’s exemption.
“We are hoping that the DBM will grant the exemption because this includes foreign borrowings and we can’t control the currency exchange rate, which keeps on fluctuating. Besides, we wanted reconsideration because the City Government is paying a P50-million guarantee fund to the Department of Finance yearly for releasing the SRP loan to Cebu City,” she told Sun.Star Cebu.
Foreign debt
The City is set to pay LBP P2.67 million in amortization and P585,605 in interests for the P24-million condominium and P6.6 million for the principal and P3.23 million in interests for the P59.4 million annex building.
As to the foreign debt, depending on the currency exchange rate, the City Accounting Office listed a balance of P4.15 billion for the SRP. But this does not include the SRP-related fees incurred in availing of the loan.
LBP has pegged the City’s SRP loan at P6.3 billion on the current exchange rate of the peso to the yen.
The committee and budget and finance held a series of budget hearings starting last Oct. 25 with various departments.
Pesquera, in her committee report, said questions were raised on whether the project revenues submitted by the local finance committee are doable. Acting City Treasurer Tessie Camarillo has included in the expected sources of income the P735.5 million proceeds from the sale of 30 hectare of the SRP.
Camarillo reportedly said they will definitely implement the revised schedule of market values, which is contained in City Ordinance 99. This way, they will be able to meet their target collections.
But the committee on budget said the 65 percent projection of the realty taxes is “below par.”
During the budget’s deliberation, Pesquera read the amendments and the increased and reduced appropriations.
The P5-million allocated for families affected by the SRP was reduced by P2 million. Appropriations for the retirement benefits, which totaled P10 million, were reduced by half. The P14-million lump sum appropriation for the conversion of leaves to cash was also reduced by half.
The P5 million allocated for the rehabilitation of the Guadalupe River was also reduced by P2 million. The lump sum appropriation for the rental of multicabs, which totaled P17 million was decreased by P 3million.
Some P5 million was deducted from the P25.78-million budget for the City’s aid to various barangays.
(December 16, 2005 issue)
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