REPUBLIC ACT NO. 4860 August 8, 1966
AN ACT AUTHORIZING THE PRESIDENT OF THE PHILIPPINES TO OBTAIN SUCH FOREIGN LOANS AND CREDITS, OR TO INCUR SUCH FOREIGN INDEBTEDNESS, AS MAY BE NECESSARY TO FINANCE APPROVED ECONOMIC DEVELOPMENT PURPOSES OR PROJECTS, AND TO GUARANTEE, IN BEHALF OF THE REPUBLIC OF THE PHILIPPINES, FOREIGN LOANS OBTAINED OR BONDS ISSUED BY CORPORATIONS OWNED OR CONTROLLED BY THE GOVERNMENT OF THE PHILIPPINES FOR ECONOMIC DEVELOPMENT PURPOSES INCLUDING THOSE INCURRED FOR PURPOSES OF RE-LENDING TO THE PRIVATE SECTOR, APPROPRIATING THE NECESSARY FUNDS THEREFOR, AND FOR OTHER PURPOSES
Sec. 1. The President of the Philippines is hereby authorized in behalf of the Republic of the Philippines to contract such loans, credits and indebtedness with foreign governments, agencies or instrumentalities of such foreign governments, foreign financial institutions, or other international organizations, with whom, or belonging to countries with which, the Philippines has diplomatic relations, as may be necessary and upon such terms and conditions as may be agreed upon, to enable the Government of the Republic of the Philippines to...
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AN ACT AUTHORIZING THE PRESIDENT OE THE PHILIPPINES TO OBTAIN SUCH FOREIGN LOANS AND CREDITS
Republic Act No. 4860
Summary of Republic Act No. 4860
Authority to Obtain Foreign Loans and Credits for Economic Development
- The President is authorized to obtain foreign loans, credits, and indebtedness from foreign governments, agencies, institutions, or organizations to finance economic development projects and purposes. (Section 1)
- At least 75% of the loans must be spent on revenue-producing and self-liquidating projects like electrification, irrigation, river control, telecommunication, housing, highways, bridges, airports, ports, harbors, school buildings, waterworks, air navigation facilities, and fishing industry development. (Section 1)
- The foreign loans can be used to cover foreign exchange requirements, equipment costs, technical services, supplies not available locally at competitive prices, and up to 20% of peso costs excluding working capital and operational expenses. For roads, bridges, irrigation, ports, river control, airports, and power projects, the loan amount cannot exceed 70%. (Section 1)
- The President can issue bonds for sale in international markets, with the income being fully tax-exempt in the Philippines. (Section 1)
Loan Limits and Approval Process
- The total amount of loans, credits, and indebtedness (excluding interest) cannot exceed $1 billion or its equivalent in other currencies. (Section 2)
- In the fiscal year of approval, the loan limit is $250 million, and $250 million for every fiscal year thereafter. (Section 2)
- Loans can only be incurred for specific projects in accordance with the approved economic program, after project plans are prepared, recommended by the National Economic Council and Monetary Board, and approved by the President. (Section 2)
Government Guarantee for Loans to Government-Owned Corporations
- The President can guarantee foreign loans or bonds issued by government-owned or controlled corporations for economic development purposes like those mentioned in Section 1, including the rehabilitation and modernization of the Philippine National Railways, Land Bank capital requirements, electrification, irrigation, river control, telecommunication, housing, highways, airports, ports, harbors, school buildings, waterworks, air navigation, fishing industry, iron and nickel exploitation, and others. (Section 3)
- At least 75% of the guaranteed loans must be spent on revenue-producing and self-liquidating projects. (Section 3)
- The total amount of guaranteed loans for government financial institutions to re-lend to the private sector cannot exceed $500 million or its equivalent. (Section 3)
- The financial institutions must re-lend to Filipinos or Filipino-owned or controlled corporations and partnerships with at least 66.67% Filipino ownership, which must be maintained until the loan is fully paid. Failure to meet the ownership requirement makes the entire loan immediately due and demandable, with penalties and interest plus an additional 2% special penalty. (Section 3)
Implementation and Reporting
- The implementation is subject to Executive Order No. 236 (as amended by Executive Order No. 26) regarding procedures for development finance planning, securities issuance, disbursement, and the Fiscal Policy Council and Technical Committee on Development Finance. (Section 4)
- The President must report to Congress within 30 days after the opening of every regular session on the amount of loans, credits, indebtedness contracted, guarantees extended, purposes and projects, and loans re-loaned to Filipino-owned entities. (Section 5)
- Congress shall appropriate the necessary funds to cover the payment of principal and interest on the loans, credits, or indebtedness. (Section 6)
Authority to Obtain Foreign Loans and Credits for Economic Development
- The President is authorized to obtain foreign loans, credits, and indebtedness from foreign governments, agencies, institutions, or organizations to finance economic development projects and purposes. (Section 1)
- At least 75% of the loans must be spent on revenue-producing and self-liquidating projects like electrification, irrigation, river control, telecommunication, housing, highways, bridges, airports, ports, harbors, school buildings, waterworks, air navigation facilities, and fishing industry development. (Section 1)
- The foreign loans can be used to cover foreign exchange requirements, equipment costs, technical services, supplies not available locally at competitive prices, and up to 20% of peso costs excluding working capital and operational expenses. For roads, bridges, irrigation, ports, river control, airports, and power projects, the loan amount cannot exceed 70%. (Section 1)
- The President can issue bonds for sale in international markets, with the income being fully tax-exempt in the Philippines. (Section 1)
Loan Limits and Approval Process
- The total amount of loans, credits, and indebtedness (excluding interest) cannot exceed $1 billion or its equivalent in other currencies. (Section 2)
- In the fiscal year of approval, the loan limit is $250 million, and $250 million for every fiscal year thereafter. (Section 2)
- Loans can only be incurred for specific projects in accordance with the approved economic program, after project plans are prepared, recommended by the National Economic Council and Monetary Board, and approved by the President. (Section 2)
Government Guarantee for Loans to Government-Owned Corporations
- The President can guarantee foreign loans or bonds issued by government-owned or controlled corporations for economic development purposes like those mentioned in Section 1, including the rehabilitation and modernization of the Philippine National Railways, Land Bank capital requirements, electrification, irrigation, river control, telecommunication, housing, highways, airports, ports, harbors, school buildings, waterworks, air navigation, fishing industry, iron and nickel exploitation, and others. (Section 3)
- At least 75% of the guaranteed loans must be spent on revenue-producing and self-liquidating projects. (Section 3)
- The total amount of guaranteed loans for government financial institutions to re-lend to the private sector cannot exceed $500 million or its equivalent. (Section 3)
- The financial institutions must re-lend to Filipinos or Filipino-owned or controlled corporations and partnerships with at least 66.67% Filipino ownership, which must be maintained until the loan is fully paid. Failure to meet the ownership requirement makes the entire loan immediately due and demandable, with penalties and interest plus an additional 2% special penalty. (Section 3)
Implementation and Reporting
- The implementation is subject to Executive Order No. 236 (as amended by Executive Order No. 26) regarding procedures for development finance planning, securities issuance, disbursement, and the Fiscal Policy Council and Technical Committee on Development Finance. (Section 4)
- The President must report to Congress within 30 days after the opening of every regular session on the amount of loans, credits, indebtedness contracted, guarantees extended, purposes and projects, and loans re-loaned to Filipino-owned entities. (Section 5)
- Congress shall appropriate the necessary funds to cover the payment of principal and interest on the loans, credits, or indebtedness. (Section 6)