NDC Agri-Agra ERAP Bonds for Rural Development

The order is issued to strengthen enforcement of Presidential Decree No. 717 (Agri-Agra Law) and to address government priority programs for agricultural and agrarian development.
PD 717 requires the banking sector to allocate at least 25% of loanable funds for agricultural credit in general, with 10% of such loanable funds made available to agrarian reform beneficiaries as defined in PD 717.
The order recognizes expanded banking compliance modes under these laws:
- Section 9, Republic Act No. 7721.
- Section 11(b), Republic Act No. 7835.
- Section 8, Republic Act No. 7900.
The order authorizes issuance of the bonds by relying on Section 9 of Presidential Decree No. 1648, the Revised Charter of the National Development Company (NDC), which authorizes NDC to issue tax-exempt bonds and securities guaranteed by the government upon recommendation of the Secretary of Finance (DOF) and approval of the President.
The order is implemented through coordination among BSP, DOF, DAR, and NDC under the executive’s authority to implement PD 717.

The order declares that enforcement of PD 717 must be strengthened to support the credit requirements of the agricultural and agrarian sectors. (Section 2)
The Bangko Sentral ng Pilipinas (BSP) must intensify enforcement of PD 717 for the banking sector. (Section 2)
The BSP must institute the necessary penalties for noncompliance with PD 717. (Section 2)
The order establishes an alternative compliance mechanism: the banking sector’s purchase or underwriting of the designated bonds serves as compliance with PD 717. (Section 3)

NDC is authorized to issue NDC Agri-Agra Economic Recovery through Agricultural Productivity (ERAP) Bonds in a total amount of up to Fifty Billion Pesos (P50,000,000,000.00). (Section 3)
The bonds issued under the authorization are guaranteed by the Republic of the Philippines. (Section 3)
NDC must determine and fix the bond features in consultation with DOF, and the bond features must be competitive with existing bonds and securities in circulation in the Philippine market. (Section 3)
The banking sector’s purchase or underwriting of these bonds is deemed compliance with PD 717. (Section 3)

Proceeds from the issuance of the bonds are called the Fund and are jointly managed by NDC and DAR. (Section 4)
The Fund must be used exclusively for the development of agriculture and agrarian sectors. (Section 4)
The Fund must support the implementation of identified development priority projects of NDC and the Department of Agriculture and Agrarian Reform for these sectors. (Section 4)
The Fund may be used for priority projects such as rice production joint ventures, establishment of food chains, and livestock and agri-processing support services and facilities, among similar undertakings. (Section 4)
NDC must act as DAR’s corporate arm in mobilization and utilization of the Fund consistent with NDC’s mandate as the government corporate vehicle. (Section 4)

The BSP, in close coordination with DOF, DAR, and NDC, must promulgate implementing rules and regulations necessary to effectively implement and improve compliance by the banking sector with PD 717 and this Executive Order. (Section 5)
The implementing rules must also use alternative modes of fund utilization to improve the efficiency and effectiveness of projects in these sectors. (Section 5)
Alternative modes of fund utilization include guarantees, concessional co-financing loans, equity or quasi-equity, and quasi-debt instrument in project trusts bonds or securities of qualified project enterprises. (Section 5)
The implementing framework must also cover “such other models” determined by NDC and DAR. (Section 5)

Interest income on the Agri-Agra ERAP Bonds is exempt from the payment of taxes. (Section 6)
The exemption is tied to Section 9, PD 1648. (Section 6)

All issuances, executive or administrative orders, and/or rules and regulations, or parts of them, that are inconsistent with this Executive Order are repealed or modified accordingly. (Section 7)