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LETTER OF INSTRUCTIONS
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LETTER OF INSTRUCTIONS NO. 592 -
STRENGTHENING THE MECHANISM FOR THE EVALUATION, APPROVAL AND
COUNTERPARTING OF PROJECTS PROPOSED FOR FOREIGN FINANCING |
The Secretary of Economic Planning
The Acting Commissioner of the Budget
The Governor, Central Bank of the Philippines
The Acting Chairman, Commission on Audit
All Department Secretaries and other Heads of
National Government agencies
All chairman and Head of Government Owned or
Controlled Corporations
WHEREAS, it is necessary to limit borrowings of government only to those projects of highest priority as established in the national development plan;
WHEREAS, an integrated approach to projects requiring foreign financing is called for, involving the agencies of government concerned with the international Balance of Payments, the rate of implementation of the development plan, the size and allocation of the government expenditure program, and domestic and foreign borrowing ceilings;
WHEREAS, R.A. No. 4860 as amended by P.D. No. 81 establishes the framework for the foreign borrowings of national government and its component agencies.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, do hereby issue the following instructions:
1.0 Functions
1.1.
A Permanent NEDA Committee on Foreign-Assisted Projects is hereby
created, for purposes of evaluating and recommending on all projects of
the national government, including government owned or controlled
corporations, that require foreign financing assistance. The
Committee's evaluation shall include the following aspects:
1.1.1
Priority rating of the project within the context of the national
development plan;
1.1.2 Terms
and conditions of the proposed financing;
1.1.3 Effect
on the international Balance of Payments position;
1.1.4 Peso
requires of the project, in terms of the current and capital outlays
needing peso support directly or indirectly from the national
government; and
1.1.5 Impact
of the proposed project on foreign and domestic debt ceilings.
1.3 The Committee shall prepare a foreign borrowing program updated each year and covering the foreign exchange, budgetary, and other aspects of the foreign borrowing program.
1.4 A status report of the fiscal, monetary and Balance of Payments implications of foreign assisted projects, both ongoing and in process of development, shall be submitted to the President within sixty (60) days from date hereof.
2.0 Organization
2.1
The Committee shall be composed of the Secretary of Finance as Chairman
and as members, the Secretary of Economic Planning, the Commissioner of
the Budget and the Governor of the Central Bank. It shall be a
sub-committee of the National Economic and Development Authority,
reporting to the President as NEDA Chairman.
2.2 The
Committee shall be assisted in its work by a Technical Board consisting
of persons on part time detail from the various Departments/Agencies
represented on the Committee, including representatives of the Office
of the Secretary of Finance, the Management of External Debt and
Investment Accounts Department (MEDIAD) and the Department of Economic
Research of the Central Bank, the Programs and Projects Staff of NEDA,
the Budget Technical Service and the Budget Operations Offices of the
Budget Commission, and the Bureau of the Treasury. The Technical Board
shall be headed by the representative of the Department of
Finance.
2.3 The
expenses of the Committee and its Technical Board shall be charged to
the Feasibility Studies Fund, including reasonable allowances and/or
honoraria in lieu of overtime compensation.
2.4 The
Committee on Major National Projects is hereby abolished and its
records, funds and other assets and liabilities shall be transferred to
the Permanent Committee on Foreign Assisted Projects.
3.0 Operating Procedure
3.1
All foreign borrowing proposals of the government, government agencies
and government owned or controlled corporations, including government
financial institutions, shall be evaluated by the Committee. It shall
require as basis for action, among others:
(a)
Central Bank Monetary approval in principle as to purpose and credit
terms among others, and
(b) Budget Commission approval
in principle as to availability of funds for capital and current
operating expenditures associated with the project, including
appropriations for loan proceeds.
3.3 The Committee is empowered to conduct hearings and otherwise evaluate project proposals of government departments and agencies and of the government owned or controlled corporations.
3.4 All government agencies and corporations are directed to extend all possible assistance and cooperation in order to achieve the purposes of integrated project identification and development and of full coordination on foreign-assisted projects.
3.5 The results of Committee evaluation and its recommendation shall be submitted to the President, whose action shall constitute the basis for authority to (a) negotiate financing requirements and (b) make forward commitments on debt maturity, budget requirements pertaining to loan availments and peso costs, and other aspects of the project.
3.6 Actual negotiations for foreign credits and/or accommodations shall be conducted by the Secretary of Finance and/or the Central Bank Governor or their duly authorized representatives as chief or co-chief negotiations together with the representatives of the government agencies and government financial institutions or entities concerned as may be approved by the President upon recommendation of the Committee.
3.7 The agencies concerned shall design and implement record systems that adequately monitor or anticipate the financial implications of all approved projects, including the following:
3.7.1
Bureau of the Treasury — loan proceeds and repayments
3.7.2 Central
Bank — loan maturity schedules and foreign exchange requirements
3.7.3 Budget
Commission — peso requirements for expenditures requiring budget
support and appropriations.
4.1
All proceeds of foreign loans, whether in cash or in kind, shall be
provided for in the appropriations laws, accounted for and recorded in
the books of the Bureau of the Treasury, and shall be the subject of
release in accordance with existing auditing, accounting and budgeting
rules and regulations.
All proceeds of foreign loans,
whether in cash or in kind that have already been availed of by the
various recipient agencies concerned shall be duly recorded in the
accounts of the Bureau of Treasury.
4.2 The
amounts authorized and needed to service the foreign loans incurred by
bureaus, offices and agencies of the National Government, for and in
the name of the Republic of the Philippines, shall be released to the
Bureau of the Treasury.
4.3 The
Commission on Audit shall assist the Committee in the development and
promulgation of the necessary accounting rules and regulations for the
proper handling and recording of the proceeds of foreign loans as well
as the servicing thereof.
4.4 The
Committee shall coordinate with the Heads of the various departments,
bureaus, offices and/or instrumentalities of the National Government
who are recipients of foreign loans, in gathering the data necessary
for the handling and recording of such foreign loans.
5.0 Rules and Regulations
The
Committee shall issue the implementing rules and regulations necessary
to give effect to this Letter of Instructions.
6.0 Repealing Clause
The
provisions of LOI No. 109, 158 and 451 and of all executive orders,
Letters of Instructions, rules and regulations or parts thereof which
are inconsistent with the provisions of these instructions are hereby
superseded and/or modified accordingly.
DONE in the City of Manila, this 5th day of September, in the year of Our Lord, nineteen hundred and seventy-seven.
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