Cebu’s P674M loan plan raises doubts on surplus

CEBU CITY—If the city posted a surplus of P1 billion last year, why is it planning to borrow P674 million from banks for its infrastructure projects this year?

City treasurer Tessie Camarillo could not explain to the city council during a closed-door meeting on Wednesday where the surplus money went when the term of Mayor Tomas Osmeña ended on June 30, 2010.

Camarillo said the city no longer enjoyed a surplus and that her office recommended to acquire loans from depository banks to fund infrastructure projects listed in the proposed Supplemental Budget 2 (SB2).

She said she was still going over the city records after she took over the post from Ofelia Oliva, who was recalled by the Department of Finance in July.

Mayor Michael Rama, however, said he didn’t know if Osmeña really left the city with a surplus of P1 billion.

“We keep on talking about P1 billion, but did it really exist? They should present proof that such a fund existed,” he told a news conference on Thursday.

Rama said Oliva should be made to explain what happened to the money and how it was spent because he took over as mayor only last year. He warned that he would file charges against her if she had committed any wrongdoing.

“There may be surplus funds before, but now no more,” said Councilor Margot Osmeña, chair of the budget committee and wife of the past mayor. “Whatever we have in the bank now was already committed to the general fund.”

Councilor Osmeña insisted that the city was not going bankrupt and may still have “unspent funds somewhere.”

She said several lump-sum appropriations were included in the P4.5-billion annual budget.

Rama has submitted the proposed SB2 amounting to P1.147 billion to fund, among other items, drainage improvement projects (P200 million), renovation of the burnt Carbon Market Unit 2 (P100 million), construction of public infrastructure at the City Hall block of the South Road Properties (P67.5 million). It also allocated P85 million for senior citizens’ assistance—an increase in  Christmas cash gift from P2,000 to P3,000, and P2,000 cash as birthday gift.

Rama also sought P647 million for infrastructure projects. But since the city doesn’t have the money, the City Treasurer’s Office suggested that it secure bank loans.

According to Osmeña, Vice Mayor Joy Young asked Camarillo during a briefing to explain why a bank loan was needed when the city has P2 billion in time deposits at Philippine Veteran’s Bank (PVB), Land Bank of the Philippines (LBP), Banco de Oro (BDO) and Postal Bank (PB).

The biggest of its cash deposits is with PVB was earning a yearly interest of six percent.

Camarillo told the city council that Oliva had placed part of the P2 billion in the banks as time deposits to earn interest, with most of the funds in short terms and the rest in a 5-year period.

But the money had been earmarked under the general budget.