QuestionsQuestions (Republic Act No. 4860)
To authorize the President to obtain/contract foreign loans and credits (or incur foreign indebtedness) needed to finance approved economic development purposes or projects, and to guarantee, for the Republic, foreign loans/bonds of government-owned or controlled corporations for such development purposes.
The President of the Philippines is authorized, in behalf of the Republic of the Philippines, to contract foreign loans, credits, and indebtedness.
Foreign governments, agencies/instrumentalities of foreign governments, foreign financial institutions, or other international organizations, belonging to countries with which the Philippines has diplomatic relations.
At least seventy-five percent (75%) shall be spent for purposes/projects that are revenue-producing and self-liquidating.
The foreign loans may cover working capital and operational expenses not exceeding twenty percent (20%) of the loan.
For roads, bridges, irrigation, portworks, river control, airports, and power, the amount shall not exceed seventy percent (70%) of the loan.
Excluding interests, it must not exceed one billion US dollars (or its equivalent in other foreign currencies).
It cannot exceed two hundred fifty million (US dollars or equivalent) in the fiscal year of approval and two hundred fifty million every fiscal year thereafter.
Loans must be incurred only for particular projects in accordance with the approved economic program; after plans are prepared by concerned offices/agencies, recommended by the National Economic Council and the Monetary Board of the Central Bank, and approved by the President.
It authorizes the President to guarantee, on agreed terms and conditions, foreign loans extended to, or bonds issued by, corporations owned or controlled by the government for economic development purposes.
At least seventy-five percent (75%) shall be spent for revenue-producing and self-liquidating purposes/projects.
The total amount of such loans/bonded indebtedness that may be guaranteed shall not be more than five hundred million US dollars (or its equivalent in other foreign currencies) at the exchange rate prevailing when the guarantee is made.
The government-owned/controlled financial institutions must re-lend to Filipinos or to Filipino-owned/controlled corporations and partnerships where at least 66 2/3% of outstanding and paid-up capital is held by Filipinos at the time the loan is incurred, and this proportion must be maintained until fully paid. If the capital ownership requirement is not met while any amount remains outstanding, the entire loan becomes immediately due and demandable, with penalties/interests plus an additional special penalty of 2% on the total amount due.
Implementation is subject to Executive Order No. 236 (Feb. 13, 1957) and as amended by Executive Order No. 26 (May 26, 1966), which prescribe procedures for planning development finances, issuance of government securities, and disbursement of proceeds. They are adopted by reference and made integral part of RA 4860, provided they are not inconsistent with the Act.
Within thirty (30) days after the opening of every regular session, the President must report to Congress the amount of loans/credits/indebtedness contracted and guarantees extended, the purposes/projects for which they were used, the guarantees extended, and the loans that may be re-lent to Filipino-owned/controlled corporations.
Congress must appropriate the necessary amounts from funds in the National Treasury not otherwise appropriated to cover payment of principal and interest as they become due.
Upon its approval.