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FOURTEENTH CONGRESS OF THE 
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First Regular Session 
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REPUBLIC OF THE PHILIPPINES 
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S NO. 
236 
Introduced by Senator Antonio “Sonny” F. Trillanes IV 
EXPLANATORY NOTE 
Debt may be defined as the current use of future revenue. Viewed from this perspective every 
government must be more prudent and discerning in committing future revenues to pay for its 
current expenditures. 
National Government debt has more than doubled from P1.33 trillion in 1996 to P2.88 trillion in 
2001. Conservatively, NG debt could reach P3.20 trillion by 2003. (An Analysis of the 
President‘s Budget for FY2003* CPBO, House of Representatives, p. 19) 
Moreover, the escalating debt service payments in the General Appropriations Act causes alarm 
for it has effectively crowded out expenditures for social services and physical infrastructures. 
Debt service payments in absolute amount and as a percentage of the total budget has increased 
dramatically starting in 1998 after steadily declining from 1992 to 1997. From P78.0 billion or 
15.9% of expenditures in 1997, interest payments increased to PI75 billion or 24.6% in 2001. For 
2003, an amount of P223.2 billion or 28.5% is allocated for interest expense. (An Analysis 
of the President’s Budget for FY 2003, CPBO, House of Representatives, p.20) 
Because of mandatory interest payments, there is little room for expenditures in the national 
budget for urgent social and physical infrastructures needed to stimulate the economy. 
There is therefore urgent need for the development of a formal debt policy to establish a 
threshold level for public debt. The setting and imposition of a debt cap ensures that debt service 
payments continue to be affordable within the context of budget priorities. 
In view of the foregoing, approval of this bill is strongly recommended. 
A N T ~ N I ~  
“SONNY” F. TRILLANES IV 
Senator 
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FOURTEENTH CONGRESS OF THE 
) 
First Regular Session 
) 
REPUBLIC OF THE PHILIPPINES 
) 
SENATE 
S NO. 
36 
Introduced by Senator Antonio “Sonny” F. Trillanes IV 
AN ACT 
PROVIDING FOR A CAP ON PUBLIC DEBT TO ENSURE LONG-TERM 
FINANCIAL SUSTAINABILITY THROUGH FISCAL DISCIPLINE 
Be in enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. Title. - This Act shall be known as the ”Debt Cap Act’! 
SEC. 2. Declarntion of Poliqy. - It is hereby declared a policy of the State to 
adopt fiscal discipline in all areas of government operations. As such, government shall 
endeavor at all times to live within its means by minimizing deficit spending to levels 
that will ensure fiscal sustainability. In so doing, government debt shall be maintained 
within levels that will balance the interests of present and future generations and will 
preserve the ability of government to access future resources at reasonable terms. 
SEC. 3. DeJnition of Term. -When used in this Act: 
a) “Debt” or “Indebtedness” refers to funds from repayable sources including 
loans secured by the government from financial institutions and other sources, 
whether internal or external to finance development projects and/or budget 
support. 
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b) "Gross Domestic Product" refers to the standard economic measurement of 
the size of the economy. It is the total value of the production of goods and 
services within the country. Nominal GDP refers to the value of the Gross 
Domestic Product in current pesos. 
c) "Government - Owned and/or Controlled Corporation" refers to any agency 
organized as a stock or non-stock corporation, vested with functions relating 
to public needs whether government or proprietary in nature, and owned by 
the government directly or through its instruments either wholly, or where 
applicable as in the case of stock corporations, to the extent of at least fifty- 
one (51) percent of its capital stock. d) "National Government" refers to the 
entire machinery of the central government, as distinguished from the 
different forms of local governments. 
SEC. 4. Debt Cap. - Within five (5) years from the enactment of this Act, the 
consolidated outstanding debt of the National Government and of government-owned 
and/or controlled corporations shall not exceed, at any one time, an amount equivalent to 
One Hundred percent (100%) of the country's nominal Gross Domestic Product. Within 
another five years and thereafter, said outstanding debt shall not exceed Eighty percent 
(80%) of the country's Gross Domestic Product: Provided, That in no case within this 
second five-year period will the level of outstanding debt exceed One Hundred percent 
(100%) of Gross Domestic Product. 
SEC. 5. Ilwceptioons to Debt Cap. - The following indebtedness shall be deemed 
excluded from the computation of total amount of indebtedness subject to the debt cap: 
a) Loans and other forms of indebtedness incurred by the Bangko Sentral ng 
Pilipinas, the Central Bank Board of Liquidators, government financial 
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institutions and government-owned andor controlled corporations 
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performing related financial intermediation operations; 
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b) Indebtedness incurred to address unforeseen calamities as declared by the 
President: Provided, that the utilization of the proceeds therefrom shall be 
subject to appropriations approved by Congress. 
SEC. 6. Debt Cap Implementation Plan. - The Department of Finance shall 
prepare a Debt Cap Implementation Plan to carry out the provisions of this law. Said Plan 
shall be submitted to both Houses of Congress through the House Committee on 
Appropriations and Committee on Banks and Financial Intermediaries, and the Senate 
Finance Committee and Committee on Banks, Financial Institutions and Currencies 
within three (3) months from the issuance and official publication of the implementing 
rules and regulations of this Act. 
SEC. I. Institutions Jikempted from the Debt Cap. - Institutions mentioned 
under Section 5 hereof shall report their annual level of outstanding debt from all sources, 
foreign or domestic, regardless of maturity, to both Houses of Congress, through the 
House Committee on Appropriations and Committee on Banks and Financial 
Intermediaries, and the Senate Finance Committee and Committee on Banks, Financial 
Institutions and Currencies. 
SEC. 8. Implementing Rules and Regulations. - The Department of Finance, in 
coordination with the Department of Budget and Management and the National 
Economic and Development Authority, shall promulgate the implementing rules and 
regulations for the implementation of this Act within sixty (60) days from its publication 
in two newspapers of general circulation. 
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SEC. 9. Separability Clause. - If for any reason, any section or provision of this 
Act is declared unconstitutional or invalid, other sections or provisions which are not 
affected thereby shall continue to be in full force and effect. 
SEC. 10. Repealing Clause. - All laws, orders, decrees, rules and regulations 
inconsistent with the provisions of this Act are hereby repealed or modified accordingly. 
SEC.ll. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
complete publication in at least two (2) newspapers of general circulation in the 
Philippines. 
Approved, 
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