Cebu City to pay P960-M loan balance for South Road Properties in August

CEBU, Philippines – The Cebu City government will pay its P960-million loan balance for the construction of the South Road Properties (SRP) by August.

The SRP is former city mayor Tomas Osmeña’s mixed-use development project. Proceeds from the project were used to fund the city’s pandemic response in 2021.

Lawyer Jerome Castillo, the city consultant for finance and special assistant to Cebu City Mayor Mike Rama, told Rappler on Tuesday, June 7, that the city now has the required documents and budget for the full payment of its P4.5-billion loan from the Japan International Cooperation Agency (JICA) that it contracted in 1995.

“The target date is August 19 as we have already consulted with the Landbank of the Philippines for the full payment,” he said.

According to Castillo, the city secured money for the loan payment from the city’s 2022 budget and a supplemental budget approved by the City Council.

“The first is the provision from the annual budget worth P200 million and the supplemental budget, which is another P800 million, to cover the remaining balance,” Castillo said.

The remainder of the secured budget after paying off the SRP loan will be returned to the city for future use, he said.

Castillo said that once the loan is fully paid, the city could be considered “officially debt-free.”

Savings

In 2015, Rama pursued the payment for the 30-year SRP loan and negotiated its prepayment with Landbank.

According to Castillo, Rama’s primary goal for the prepayment was to ensure that the city would have enough savings to use in the future.

“When we computed it in 2015, it would have been several hundreds of millions we could have saved had we pushed through with the prepayment,” Castillo said.

The plan did not push through due to a change in administration in 2016 and the lack of requirements and authorization from Bangko Sentral ng Pilipinas and the City Council, Castillo added.

“Now, we are still saving less than a hundred million,” he added.

Castillo recommended a ceremonial payment for transparency purposes.

Earlier in April, Cebu City Mayor Mike Rama vowed that the city would pay off its remaining debt for the South Road Properties (SRP) before the end of his term. 

Rama was reelected in May, winning over former City councilor Margot Osmeña.– Rappler.com