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Thursday, June 08, 2006
Cebu City to get P200M credit from LBP to improve cash flow
Cebu City Hall will get a P200-million credit line with Land Bank of the Philippines to improve its cash flow and to have funds “in case it wants to spend for various investment projects.”
City Administrator Francisco Fernandez assured that the amount will not be used outright as it will only be a “standby fund” until the City collects all its revenues by yearend.
He was quick to say that getting another loan from Land Bank does not mean that the City has already depleted its coffers.
“That’s not the point. It’s not really a cash situation. It’s just a fund management to accommodate accounting system. We need to have funds to appropriate because all our expected revenues to support our budget would come in December yet,” he told Sun.Star Cebu last night.
Asked what specific investment project the City has in mind for the P200 million loan, Fernandez said there are no “specific items yet.”
Flexibility
“But we will have the flexibility by the time we have the list of projects,” he added.
City Hall is still paying its P6.3-billion loan for the South Reclamation Project (SRP) to Land Bank, as the conduit of the Japan Bank for International Cooperation (JBIC).
It began paying last year for the principal and it will continue to do so in the next 25 years, unless the City can sell the SRP lots to investors and earn enough to pay the loan before the term ends.
Fernandez said that the existing SRP loan will not affect the City’s credit line with Land Bank because the P6.3 billion loan (12.292yen) is guaranteed by the National Government.
Besides, it was Land Bank itself that signified its willingness to grant the City the credit line facility.
Also, Land Bank will take care of the papers needed for the loan, which needs to be processed outside Cebu City, Fernandez added.
The City Council yesterday approved a resolution authorizing Mayor Tomas Osmeña to “represent, negotiate and enter into the agreement” with Land Bank for the P200-million credit line.
The move, initiated by Councilor Jose Daluz III, was based on Section 297 of the Local Government Code allowing local government units to avail itself of loans with any government domestic bank to finance the construction and improvement of public facilities and infrastructure, among others. (GAC)
For Bisaya stories from Cebu. Click here. (June 8, 2006 issue)
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