CEBU CITY: The Bangko Sentral ng Pilipinas (BSP) has approved the Cebu City Government’s plan to pay off a P2.4-billion balance on a loan it took out to develop the South Road Properties (SRP).
In a letter to Mayor Michael Rama dated Nov. 25, BSP Officer-In-Charge Rosalina Tan said the Monetary Board approved the City Government’ proposal, subject to several requirements.
The central bank required that foreign exchange purchases for the prepayment of the SRP loan be made on staggered basis, starting from the date on the central bank’s letter of authority up to the actual prepayment date.
The foreign exchange purchases should not exceed $30 million (over P1.4 billion based on an exchange rate of P47.10 to $1).
The central bank also required the city government to get the approval of the Land Bank of the Philippines (LBP) on the plan to pay off the loan before it matures in 2025.
The state-owned bank does not oppose the city’s plan as it was LBP president Gilda Pico who endorsed Cebu City’s proposal to central bank Governor Amando Tetangco Jr.
In 1995, Cebu City borrowed 12.315 billion yen from the Japan International Cooperation Agency (JICA) to develop the 300-hectare reclamation project, now known as SRP.
The LBP served as conduit bank for the loan.
At that time, the peso equivalent of the loan was P4.65 billion.
The Cebu City Accounting Office said that at an annual interest rate of 11 percent, Cebu City has to pay more than P500 million a year in interest alone.