Question & AnswerQ&A (Republic Act No. 4860)
The main purpose of Republic Act No. 4860 is to authorize the President of the Philippines to obtain foreign loans and credits or incur foreign indebtedness to finance approved economic development projects, and to guarantee foreign loans obtained by government-owned or controlled corporations for such purposes.
The President of the Philippines is authorized, on behalf of the Republic, to contract foreign loans and credits for financing economic development projects.
At least seventy-five percent of the foreign loans must be spent on revenue-producing and self-liquidating projects such as electrification, irrigation, river control, telecommunication, housing, construction of highways and bridges, airports, ports and harbors, school buildings, waterworks, air navigation facilities, and development of the fishing industry.
The President is authorized to incur loans, credits, and indebtedness up to one billion United States dollars or its equivalent in other foreign currencies.
The total loans, credits, and indebtedness incurred shall not exceed two hundred fifty million US dollars or its equivalent every fiscal year after the first year, which also has a limit of two hundred fifty million.
They must re-lend the proceeds to Filipinos or Filipino-owned or controlled corporations and partnerships where at least sixty-six and two-thirds percent of the outstanding and paid-up capital is Filipino-owned, and this ownership requirement must be maintained until the loan is fully paid.
The entire loan becomes immediately due and demandable, including all penalties, interests, plus an additional special penalty of two percent on the total amount due.
Within thirty days after the opening of every regular session, the President must report the amount of loans, credits, and indebtedness contracted, guarantees extended, and the purposes and projects therefor, including any re-lending to Filipino-owned or controlled corporations.
Foreign loans shall cover foreign exchange requirements or liabilities related to equipment, technical services, and supplies not obtainable in the Philippines at competitive prices, and part of peso costs excluding working capital and operational expenses which should not exceed twenty percent of the loan.
Executive Order No. 236 (February 13, 1957), as amended by Executive Order No. 26 (May 26, 1966), prescribing procedures for planning development finances, issuing government securities, and disbursing proceeds, is adopted and forms an integral part of the Act.