The Commission on Audit estimated that Cebu City faced a P14.44 billion cash shortage as of Dec. 31, 2025, noting the City held P4.76 billion in cash against much higher financial obligations.
Auditors warned that this potential deficit could delay priority projects and the payment of valid bills, urging the City to tighten fiscal controls and prioritize projects backed by available cash.
The City Budget Office disputed the audit findings as a “paper deficit,” citing conflicting figures in the report and proposing millions in deductions for funds already removed or obligations already recorded.
THE Commission on Audit (COA) has warned that Cebu City may not have enough cash to cover its debts, approved projects and other spending commitments.
State auditors estimated that the City Government lacked about P14.44 billion in cash as of Dec. 31, 2025.
In its 2025 audit report, COA noted that the City had P4.76 billion in cash but owed P5.95 billion. It also counted P3.45 billion for approved capital projects and P9.8 billion in funds carried over from previous years.
The P14.44-billion figure does not mean the money was lost or already spent. It is COA’s estimate of how much more cash the City would need to fully cover its obligations and approved spending.
Funds carried over from previous years remain available for projects or expenses that have not yet been completed or paid.
Payments may be delayed
COA said the cash shortage could delay projects and the payment of valid bills and other obligations.
“The existence of a substantial potential cash deficit exposes the City to significant fiscal risks, including the inability to settle valid obligations, delays or non-implementation of priority programs and projects and possible violation of statutory prohibitions against cash overdrafts (which occur when a bank account shows a negative balance because withdrawals or payments exceed the available funds),” it said.
State auditors cited laws that require government offices to make sure money is available before entering into contracts or approving expenses.
They said the City’s budget, treasury and accounting offices gave several possible reasons for the shortage. Among them were the approval of budgets that were larger than actual collections and the continued carrying over of unused funds from one year to the next.
COA seeks tighter controls
Funds carried over from previous years should be supported by available cash, according to COA.
It added that without enough cash, the City could approve more projects than it can afford and struggle to pay its obligations.
COA asked the Office of the Mayor and the Local Finance Committee to check the City’s actual cash position and take steps to improve collections and control spending.
It also recommended giving priority to projects the City can afford, reviewing old unpaid obligations and regularly matching the records of the budget, treasury and accounting offices.
Budget Office disputes figures
In its April 14, 2026 response, the City Budget Office (CBO) questioned COA’s decision to count the full amount set aside for capital projects. It said this created a “paper deficit” that did not reflect the City’s actual financial condition.
The office said capital projects are carried out depending on available cash and the timing of revenue collections.
CBO also said the amount for current capital projects should be reduced by P640.2 million because the funds had already been removed through a city ordinance.
It also sought the deduction of P735.29 million in obligations already recorded and P2.77 billion in disaster funds proposed for closing.
Report shows conflicting totals
COA stood by its position that funds carried over from previous years must have enough cash support. It asked the City to submit documents supporting its proposed deductions.
The City Treasurer’s Office said in an April 22 response that it closely monitored cash flow to avoid a deficit.
It said the Local Finance Committee had recommended removing unused funds for 2025 capital projects and limiting spending to what the City could afford.
The audit report, however, contains conflicting figures. One paragraph puts the possible cash shortage at P14.428 billion, while the section heading and a table list P14.443 billion.
Another table lists P9.07 billion in funds carried over from previous years, but the final calculation uses P9.805 billion. / KAL