Loan and indebtedness ceilings
- Section 2 limits the total amount of loans, credits, and indebtedness the President may incur excluding interests to one billion United States dollars or its equivalent in other foreign currencies at the exchange rate prevailing when incurred.
- Section 2 further limits annual incurrence: the total loans, credits, and indebtedness incurred under the Act must not exceed two hundred fifty million in the fiscal year of the approval of this Act, and two hundred fifty million every fiscal year thereafter, in United States dollars or its equivalent in other currencies.
- Loans, credits, and indebtedness under Section 2 must be incurred only for particular projects under the government’s approved economic program.
- The projects require that plans be prepared by the relevant offices or agencies, then be recommended by the National Economic Council and the Monetary Board of the Central Bank of the Philippines, and finally be approved by the President of the Philippines.
Presidential guarantees for government corporations
- Section 3 authorizes the President to guarantee foreign loans extended directly to, or bonds for sale in international markets issued by, corporations owned or controlled by the Government of the Philippines.
- The guaranteed loans and/or bonded indebtedness must be for industrial, agricultural, or other economic development purposes or projects authorized by law, including those enumerated in Section 1.
- Section 3 expressly covers guarantees for projects including rehabilitation and modernization of the Philippine National Railways, cash capital requirements of the Land Bank, electrification, irrigation, river control and drainage, telecommunication, housing, construction and/or improvement of highways, airports, ports and harbors, school buildings, waterworks and artesian wells, air navigation, development of the fishing industry, and iron and nickel exploitation and development, and others.
- At least seventy-five percent must be spent for purposes or projects that are revenue-producing and self-liquidating.
- Section 3 permits the guarantee of loans and/or bonded indebtedness of government-owned or controlled corporations, including those incurred by government-owned or controlled financial institutions for re-lending to the private sector, with the total amount not exceeding five hundred million United States dollars or its equivalent in other foreign currencies at the exchange rate prevailing when the guarantee is made.
- Where the proceeds are for re-lending, government-owned or controlled financial institutions must re-lend to Filipinos or to Filipino-owned or controlled corporations and partnerships whose outstanding and paid-up capital held by Filipinos is at least sixty-six and two-thirds per centum at the time the loan is incurred, and that proportion must be maintained until the loan is fully paid.
- If, while any amount remains outstanding, the capital ownership requirement is not met, the entire loan becomes immediately due and demandable, together with all penalties and interests, plus an additional special penalty of two per centum on the total amount due.
Governing procedures and adopted rules
- Section 4 makes implementation subject to Executive Order No. 236 dated February 13, 1957, which prescribes procedures for planning of development finances, issuance of government securities, and disbursement of proceeds and creates the Fiscal Policy Council and the Technical Committee on Development Finance.
- Section 4 also incorporates Executive Order No. 26 dated May 26, 1966, as amended, provided these are not inconsistent with the Act.
- Section 4 adopts these executive issuances by reference and makes them an integral part of the Act for implementation.
Required presidential reporting
- Section 5 requires the President to report to Congress within thirty days after the opening of every regular session.
- The report must state the amount of loans, credits and indebtedness contracted, and the guarantees extended.
- The report must also specify the purposes and projects for which the loans, credits, and indebtedness were incurred and for which the guarantees were extended.
- Section 5 requires reporting on loans that may be re-loaned to Filipino-owned or controlled corporations and similar purposes.
Congressional appropriations for repayment
- Section 6 directs that Congress shall appropriate the necessary funds from the National Treasury not otherwise appropriated.
- The appropriations are for payment of the principal and interest on the loans, credits, and indebtedness as and when they become due.
Effectivity
- Section 7 provides that the Act takes effect upon its approval.
- The Act was approved on September 8, 1966.