Friday, July 13, 2007 Bulk of 3rd budget to pay off debts
CEBU City Hall is now ready to pay its second amortization this year for its P6.3 billion loan for the South Road Properties (SRP).
This if the City Council immediately acts on this year’s third supplemental budget (SB3), which totaled P172.44 million. More than half of the amount is solely for debt-servicing.
The council and concerned departments of the executive branch will meet on Monday for a budget hearing before the legislative body tackles the appropriation for final deliberation.
58 percent
As proposed by Mayor Tomas Osmeña, P101.1 million, or 58 percent of the appropriation will be paid to the Land Bank of the Philippines, the conduit of Japan Bank for International Cooperation (JBIC), which financed the South Reclamation Project now South Road Properties.
Payment is due on Aug. 20. The City’s next schedule of amortization, which is released semi-annually, is in February yet.
The 295-hectare SRP was built using borrowed funds of 12.292 billion yen from JBIC. The amount at the time of release in 1995 was equivalent to P2.8 billion.
But fluctuations of the peso-dollar-yen exchange rate greatly affected the City’s cash position. In 2005, Land Bank pegged the amount at P6.3 billion when the exchange rate was P50 to the dollar.
After making four payments of Y299.8 million per schedule since 2005, the City actually shelled out an equivalent amount of P1.221 billion for its foreign debt.
Of the amount, P668.377 million was for the interest alone.
The City is paying JBIC a two percent interest based on remaining balance for the next 20 years.
Interest alone
SPR manager Nigel Paul Villarete earlier said the City spends P1 million a day for the interest alone.
Emma Compra of the City Treasurer’s Office said the P101.1 million that the executive department is asking represents additional appropriation required to cover foreign exchange rate loss.
That is because this year’s Annual Budget allocation of P129.399 million for the principal and P254 million as interest payment for the SRP was computed based on the exchange rate at the time the loan was made in 1995.
Acting City Treasurer Tessie Camarillo said the SB 3 will be charged against the “additional realized income” or the excess amount after annual budget appropriations are subtracted from the realized income, of the general fund.
Special account
That excludes P390,000 from the special account of the City abattoir appropriated for employees stationed there.
Aside from the SRP loan payment, the SB 3 covers P25 million for the second phase of the legislative building’s renovation, which the mayor earlier said was “very hard to swallow” last September.
First phase of the renovation was awarded to Dakay Construction and Development Corp. for P65.48 million.
But the City needs about P60 million more for brand new furniture, fixtures and air-conditioning as well as landscaping for the City Hall park that will reach the Magellan’s Park across the legislative building.
Additional civil works cover the elevator shaft and machine room, relocation of fire suppression pump room and additional support for wired glass on the building’s canopy, and electrical, civil and plumbing works.
March
As early as March last year, the mayor already lamented that the City is spending a lot of money on the project.
Changing his mind, however, he approved a P12-million allocation for the second phase that was included in the fifth SB at the end of 2006.
Also, the mayor asked for P43.449 million for his office’s maintenance and other operating expenses as well as miscellaneous expenses for capital gains tax and documentary stamps of the sale of City Hall’s Block 10.
A P2.5-million assistance will go to the Cultural and Historical Affairs Commission that renovated the Dr. Jose Rizal Museum and Library building along Osmeña Blvd.
The proposed supplemental budget was also referred to the council committee on budget and finance for its comments and recommendation. (RHM)
