QuestionsQuestions (PRESIDENTIAL DECREE NO. 150)
PD No. 150 amends Republic Act No. 4860, as amended (the Foreign Borrowing Act). Its purpose is to provide flexibility in tapping foreign funding and to accommodate anticipated changes in lending policies of international financial organizations aimed at financing local project costs.
The President of the Philippines is authorized, in behalf of the Republic, to contract loans and enter into bilateral agreements involving official assistance (including grants and commodity credit arrangements or indebtedness), subject to the Act’s conditions.
The President may contract loans, credits (including supplier’s credit), deferred payment arrangements, and conclude bilateral agreements involving grants and commodity credit arrangements or indebtedness.
Foreign governments with diplomatic/trade relations or members of the UN; their agencies/instrumentalities/financial institutions; reputable international organizations; and non-governmental or international lending institutions or firms extending supplier’s credit or deferred payment arrangements.
Industrial, agricultural, or other economic and social development projects and feasibility studies authorized by law, including those enumerated in Annex ‘A’ (lists 1, 2, 3, and 4), and projects recommended by NEDA and approved by the President.
At least seventy-five percent (75%) of the loans, credits, or indebtedness authorized under paragraph (A) must be spent for projects which are income-generating.
The loans may be used for direct and indirect foreign exchange requirements and peso costs of the project, including studies, technical surveys, equipment, machineries, supplies, construction, installation, and related technical services.
It provides that whenever necessary, part of the proceeds of such loans/credits/indebtedness shall be used for environmental, health, and ecological management and control.
The President may lend the proceeds to government-owned or controlled corporations to finance development projects authorized by their charters or by law, and the proceeds must be used for direct/indirect foreign exchange requirements and peso costs, including project studies and related technical services.
DBP administers the foreign loan proceeds for relending to individuals, partnerships, cooperatives, associations, or private corporations whose capital stock (if not fully subscribed) is open to subscription by the general public, to meet foreign exchange requirements and peso costs for specified economic development projects.
Total authorized borrowing for relending to the private sector must be allocated by NEDA to maintain proper balance among industrial, public utility, and agricultural projects. Also, private-sector proceeds cannot be re-loaned to entities in arrears for three or more installments for causes other than force majeure or beyond control, and proceeds cannot be used for any purpose other than that for which granted.
Failure to meet three amortization payments when due for causes other than force majeure (or beyond control) renders the entire obligation due and demandable for any balance, and the debtor must pay a special penalty of 2% of the total amount due.
Upon recommendation of the Secretary of Finance, in consultation with NEDA and approval of the President, loan agreements and contracts involving availment/utilization of proceeds may provide for exemption from taxes, charges, or other levies.
PD No. 150 provides that it shall take effect immediately.
Section 3 modifies or repeals any inconsistent provisions of RA 4860 (as amended) and other pertinent laws to the extent of inconsistency with PD No. 150.