Olongapo SubicBay BatangGapo Newscenter

Sunday, November 02, 2008

Cebu City tops liabilities list, Olongapo at #8 with P1.402Billion

ALTHOUGH the Cebu City Government has the biggest liabilities among all cities in the country, City Administrator Francisco Fernandez said this was not a cause for worry, since the amount represents an investment that could earn billions more.

The Commission on Audit (COA), in its report for fiscal year 2007, listed Cebu City as having the biggest total liabilities among all cities, amounting to P5.739 billion.

The bulk of the amount was incurred in the 295-hectare reclamation project known as the South Road Properties (SRP), financed through a loan from the Japan Bank for International Cooperation (JBIC).

Emma Villarete, assistant city treasurer, told Sun.Star Cebu that after the Aug. 20 payment, the City was left with a 10.193-billion yen loan. Computed using the Oct. 31 exchange rate (Y1=$0.010148, $1=P48.94), the loan amounts to $103.44 million, or P5.062 billion.

The figures frequently change, depending on the exchange rate. The City pays for its foreign loan every February and August.

P663M in 2009

For 2009, the executive department has asked for a P663.45-million allocation, included in the proposed P2.62-billion annual budget, to pay for the SRP loan.

Villarete said the City is paying 2.3 percent interest for the consultancy component and 2.7 percent interest for the civil works component of its JBIC loan.

But the Land Bank of the Philippines, acting as conduit institution, also charges 2 percent as overhead so that the total consultancy interest charge is 4.3 percent and the civil works interest charge is 4.7 percent.

The COA listed Cebu City as having the biggest debt (P5.739 billion) among the cities, followed by Manila (P3.71 billion), Caloocan (P2.923 billion), Quezon (P2.413 billion), Makati (P2.082 billion), Parañaque (P1.931 billion), Pasay (P1.569 billion), Olongapo (P1.402 billion), Mandaluyong (P1.371 billion), and Davao (P1.244 billion).

But in a separate interview, Fernandez said the City could earn at least P30 billion from the sale of the SRP if it offers the lot at P10,000 per square meter.

“Ang nakaayo aning gobyerno, makakwarta pa siya sa sale sa yuta, makakwarta pa gyud siya sa gamit sa yuta tungod sa (Government will earn not only from the sale of the land, but also from) business taxes, jobs created, and a lot of things,” he said.


Among others, the City is negotiating with Filinvest Land Inc. (FLI), which wants to buy a 10-hectare lot at the SRP for P2 billion, and to develop 40 hectares in a joint venture agreement with the City.

The City has already accepted the unsolicited proposal of FLI.

The agreement will only be finalized, however, once it goes through the Swiss challenge and the contract is approved by the City Council and signed by the mayor.

The COA also reported that Cebu City ranks seventh among cities with the biggest current assets, seventh among local government units (LGUs) with substantial amounts of cash in bank, and fifth among cities with the biggest equity.

The City also ranks seventh among LGUs with the highest gross income, and the same ranking among LGUs with the highest share of the Internal Revenue Allotment.

While Cebu City spent P1.733 billion last year, ranking ninth among all LGUs, it ranked fifth, with P711 million, among LGUs with the biggest net income.

Net effect

In terms of net income, Cebu City even overtook Cebu Province, which earned P314.49 million last year.

Cebu Province has a total equity of P15.549 billion, however, while Cebu City only has P5.177 billion.

(COA published its findings as advertisements in Friday’s issue of the Philippine Daily Inquirer.)

On reports that Japan has reduced its interest rates to three percent from five percent the other day to spur economic growth, Fernandez said it remains to be seen if this will have an impact on the City’s foreign loan.

“The next payment is in February (2009) so we will see by then if that has a good effect on our loans. But that is good news,” he said.

Villarete said it remains to be seen if Japan’s move will have an effect on the City’s JBIC loan, because the contracted loan interest is even lower than three percent. By Rene H. Martel - Sun.Star Staff Reporter

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