Cebu City to pay off SRP loan in August, become debt-free

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THE Cebu City Government will be debt-free should the loan used during the construction of the South Road Properties (SRP) be paid in August as planned.

Lawyer Jerome Castillo, special assistant of the office of the mayor, told SunStar Cebu Monday, June 6, 2022, that the budget and all necessary documents have already been secured and are ready for submission to the Bureau of Local Government Finance (BLGF) in Manila.

Castillo said their target date for the full payment of the P960 million outstanding balance is Aug. 19.

“We will just inform the mayor that the date is fixed, and then if he elects to have a ceremonial payoff, it is also good for the purposes of transparency to the public,” said Castillo.

According to Castillo, this is the only remaining loan of the city, and settling this obligation would imply that the city is now debt-free.

“Yes, that would be the consequence. We are zero debt because we have cleared all. This one is the only existing loan. We are debt-free,” said Castillo.

In 1995, the city government received a 12.315 billion yen loan, equivalent to P4.65 billion at that time, from the Japan International Cooperation Agency through Landbank to construct the SRP, a 300-hectare reclamation project.

The loan is payable in 30 years or until 2025. But by settling it ahead of its due date, the City will be able to save money by avoiding the loan’s interest, said Castillo.

As of February 2018, the City had already paid around P6 billion, P3.7 billion of which was for the principal and P2.8 billion for the interest, among other fees.

Castillo said settling the loan will improve the credit rating of the city and enable it to easily avail of loans for future programs and projects.

“When you are able to pay your loan on time, it speaks well of your credit capability or credit standing... That speaks well of the capability of the City,” said Castillo.

The lawyer said this milestone should be attributed to Mayor Michael Rama, who began working on the prepayment of the loan during his term as mayor in 2015.

During the time of the late mayor Edgardo Labella in 2019, Labella was eager to pay off the loan entirely to get rid of the 1.5 percent interest rate of the loan, with the remaining balance of P1.7 billion.

After Labella’s untimely demise in November 2021, Rama, who ascended as mayor, included the payment of the SRP loan in his “21-gun salute projects” to honor the legacy of the late city mayor.

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