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LETTER OF INSTRUCTIONS
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LETTER OF INSTRUCTIONS NO. 1242 -
PROVIDING A MEASURE TO FACILITATE GUARANTEE PAYMENTS UNDER THE MASAGANA
99 PROGRAM |
Central Bank of the Philippines
Ministry of Agriculture
Philippine National Bank
Philippine Crop Insurance Corporation
Other Institution Concerned
WHEREAS, the Masagana 99 has brought about not only rice self-sufficiency but also export capability and consequently socio-economic stability for the country;
WHEREAS, the government is committed to guarantee supervised credit losses in support of the Masagana 99 Program;
WHEREAS, a significant number of banks which participated in the M-99 are adversely affected by a high level of loan arrearages and it is necessary to restore the good credit standing of said banks;
WHEREAS, there is a need to allow rice farmers continued access to bank credit which, for one reason or another, has been denied them for failure to meet their obligations under the Masagana 99 Program.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby direct:
1.
The Ministry of the Budget to cause the appropriation of and to allot
the amount of P450 million over a period of three years which shall be
constituted into a special revolving Trust Fund to be administered by
the Philippine Crop Insurance Corporation for the payment of claims of
the Philippine National Bank and the rural banks which participated in
the Masagana 99 Program, to the extent of 85 per cent of the past due
Masagana 99 loans; Provided, however, that such loans (a) have been in
arrears for three (3) years or more as of the date of effectivity of
this LOI, and (b) were not the subject of previous advances/payments
from the Agricultural Guarantee Fund;
The Ministry of the Budget shall
release to the Philippine Crop Insurance Corporation the initial amount
of P150 million out of the sum allotted for the Trust Fund on or before
July 31, 1982, P150 million in 1983, and P150 million in 1984.
2. The
Philippine Crop Insurance Corporation to pay out the Trust Fund within
a period of 3 years an amount equivalent to 85 per cent of the
outstanding balance of past due M-99 loans referred to in Sec. 1
hereof, in accordance with the following schedule: 25% for the first
year, 30% for the second year; and 30% for the third year: Provided,
however, that such claims shall be supported with a schedule of loans
duly certified under oath by the lending institutions that such loans
are eligible under conditions stipulated under Item 1 hereof: Provided,
further, that such claim are favorably endorsed by the Central Bank.
3. The
above-mentioned past due loans for the farmers, inclusive of interest
but exclusive of penalties and other changes, shall be restructured for
a period of five (5) years by the banks concerned. Thereafter, no
interest, penalties and other charges shall be imposed on such
restructured loans.
4. The Central
Bank to restructure over a period of three (3) years past due M-99
Bills Payable inclusive of interest but exclusive of penalties. Such
Bills Payable shall correspond to restructured M-99 loans of farmers
under Sec. 3 hereof. Thereafter, no interest and penalties shall be
imposed on such restructured Bills Payable. The Central Bank shall
formulate the mechanics for the implementation of this LOI.
5. The Central
Bank and the Philippine National Bank to hold in custody promissory
notes covered by this program for and in behalf of the Philippine Crop
Insurance Corporation as administrator of the Trust Fund.
6. The
Philippine National Bank and rural banks to continue collection of
amortization on farmers' loans and to remit such collections to the
Trust Fund in such amount and in such manner as may be prescribed by
the Philippine Crop Insurance Corporation.
7. The
Philippine Crop Insurance Corporation to (a) formulate and adopt
guidelines necessary to implement the objectives of the Trust Fund,
including its investment, consistent with the provisions of this LOI
and the applicable Central Bank circular; and (b) render annual reports
on the status of the Trust Fund to be submitted to the President,
copies thereof to be furnished the Central Bank, the Ministry of
Agriculture, the Ministry of the Budget and other agencies concerned.
8. The Central
Bank and the Philippine Crop Insurance Corporation to enter into a
Memorandum of Agreement covering the expenses to be incurred in
administering the Program which shall be chargeable against the Trust
Fund.
This Letter of Instruction shall take effect immediately.
Done in the City of Manila, this 21st day of May, in the year of Our Lord, nineteen hundred and eighty-two.
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