National Housing Authority
        All Local Governments and the Ministry of Local Governments
        The Philippine National Bank and all Government Banks
        The Ministry of the Budget
        Local Water Utilities Administration
        National Electrification Administration
        Ministry of Human Settlements
        Ministry of Education and Culture
        Ministry of Health
        Ministry of Finance
        Government Service Insurance System Social Security System
        Armed Forces of the Philippines and Police Authorities

(a)    In view of the increasing cost of borrowed funds utilized by the government to expand the implementation of the Slum Improvement and Sites and Services Development Program; the interest rate that may be charged beneficiaries of the above-program shall correspond to the cost of the funds used by government for the purpose plus a spread of not more than 2% to cover other expenses such as the cost of the estate management and project administration. The cost of funds shall be determined by the weighted average of the contribution of the funding agency providing the borrowed funds and that of the Philippine government. For this purpose funds from the Philippine Government shall be assumed to cost only 9% per annum.

(b)    In consideration of the preference of project beneficiaries that the land tenure for projects under the program should allow immediate ownership of the land by them, freehold and lease with option to purchase are the land tenure schemes for projects under the program. Project beneficiaries shall be given the option to select from the above schemes taking into consideration the capacity to meet the payments to be made under each scheme.

(c)    All provisions of LOIs Nos. 555 and 686 to the extent that they are not consistent with the principles, guidelines and provisions of this Letter of Instructions are hereby amended.

Since 19.07.98.