14th Congress of the Republic 
) 
of the Philippines 
1 
First Regular Session 
) 
s. No. 1145 
Introduced by Senator Aquilino Q. Pimentel, Jr. 
EXPLANATORY NOTE 
Debt service has greatty drained our national coffers. 
In the meantime, we need all available resources to accelerate 
development and economic growth. And the social services, education, health, 
social welfare, shelter and other basic needs must be allocated their rightful share 
in order to improve the quality of life of our people. 
Debt services must, therefore, be limited to an amount commensurate 
with our capacity to pay; what our economy can afford without sacrificing in any 
manner the k g e r  concern - the raising of our people’s standard of life and 
living, the aIleviation of poverty, generation of more productive employment, 
promotion of Equity and Social justice and attainment of sustainable economic 
growth. 
This bill proposes the following: 
1. Amend Section 2 of R.A. No. 4860 by providing for a concise, clear, 
fixed and verifiable and transparent definition of “debt service 
burden” and ”foreign exchange receipts.” The fact that the previous 
administration circumvented this law by playing around with the 
various definitions of debt service burden should serve as a lesson. 
This suggested amendment would prevent any future manipulation of 
the law. 
2. Amend Section 2 of R.A. No. 4860 by providing “that during the 
critical economic recovery period 1987 - 1992 inclusive, the external 
debt service shall not exceed ten per centum of merchandise trade or 
commodity export receipts.” 
3. Repeal Section 7 of the P.D. No. 1961, as amended by P.D. No. 1977, 
which exempts from the 20% ceiling specific categories of external 
debt contracted or obtained in connection with general rescheduling, 
refinancing or restructuring of foreign currency loans, credits and 
indebtedness. 
4. Amend Section 5 of R.A. No. 4860 by incorporating a new paragraph 
requiring the Monetary Board of the Central Bank to publish in 


newspapers of general circulation the details of all foreign loans 
incurred within 30 days after they are incurred. This shall be in 
addition to, and not in lieu of, the current provision in Section 20, 
Article 7 of the 1987 Constitution which requires the President to 
submit to Congress a report on all foreign loans incurred after the 
opening of every regular session. At present, Section 5 of R.A. 4860 
only requires the submission by the President to the Congress of a 
report on the amounts of foreign loans contracted, within 30 days after 
the opening of every regular session. 
The latter is also in line with the government’s thrust on transparency and 
full public accountability. 


14th Congress of the Republic 
) 
of the Philippines 
1 
First Regular Session 
) 
S E N A T E  
S.NO. 1145 
Introduced by Senator Aquilino Q. Pimentel, Jr, 
AN ACT 
AMENDING 
CERTAIN 
SECTIONS 
OF 
REPUBLIC 
ACT 
AND 
PRESIDENTIAL 
DECREE 
NUMBERED 
NINETEEN 
HUNDRED SIXTY ONE, AS AMENDED, RELATING TO 
FOREIGN BORROWING 
NUMBERED FORTY-EIGHT HUNDRED SIXTY, AS AMENDED, 
Be it enacted bv the Senate and House of Representatives of the Philippines in Congress 
assenzbled: 
SEC. 1. Section 2 of Republic Act No. 4860, as amended, is hereby 
amended by adding another paragraph after paragraph 2 thereof to read as 
follows: 
"The Central Bank of the Philippines shall promulgate and 
enforce such measares as shall be necessary to reduce the external 
debt service requirement to an annual level not exceeding 
TWENTY per centum of the foreign exchange receipts of the 
immediately preceding year [provided that whenever necessary in 
connection with a general rescheduling, restructuring or 
refinancing of the external debt of the Philippines by foreign 
creditors, the President of the Philippines, upon recommendation 
of the Monetary Board of the Central Bank of the Philippines, may 


exclude specific categcn.es of external debt from such ceiling.] 
provided that during the critical economic recovery period 1987 - 
1992 inclusive, the external debt service shall not exceed ten per 
centum of merchandise trade or commodity export receipts. 
"FOR PURPOSES OF DETERMINING THE DEBT SERVICE 
CEILING PROVIDED FOR IN THE PRECEDING PARAGRAPH, 
THE TERMS "DEBT SERVICE BURDEN AND "FOREIGN 
EXCHANGE RECEEPTS' ARE HEREBY DEFINED AS FOLLOWS 
(a)DEBT SERVICE BURDEN - SHALL INCLUDE THE 
PRINCIPAL AND INTEREST PAYMENTS ON SHORT, 
MEDIUM AND LONG-TERM MONETARY AND NON- 
MONETARY CREDITS; INTEREST PAYMENTS ON 
SHORT-TERM 
LIABILITIES; 
INTERNATIONAL 
MONETARY FUND CREDITS; AND PAYMENTS 
UNDER SUCH RESCHEDULING AND NEW MONEY 
AGREEMENTS THAT THE GOVERNMENT HAVE 
ENTERED OR WILL ENTER INTO WITH FOREIGN 
CREDITORS. 
(b) FOREIGN EXCHANGE RECEIPTS - SHALL INCLUDE 
CURRENT ACCOUNT RECEIPTS AS RECORDED IN 
THE BALANCE OF PAYMENTS, DURING THE 
IMMEDIATELY PRECEDING YEAR." 
SEC. 2. Section 5 of the same Act is hereby amended by adding a second 
paragraph therein to read as follows: 
"THE MONETARY BOARD OF THE CENTRAL BANK OF 
THE PHILIPPINES SHALL PUBLISH IN NEWSPAPERS OF 


GENERAL CIRCULATION THE SOURCE, AMOUNT, PURPOSE, 
TERMS AND CONDITIONS OF ALL FOREIGN LOANS AND 
CREDITS SECURED AND GUARANTEES EXTENDED WITHIN 
THIRTY DAYS AFTER THE APPROVAL OF THE PERTINENT 
LOAN OR GUARANTEE AGREEMENTS.” 
SEC. 3. section7 of Presidential Decree No. 1961, as amended by P.D. No. 
1977, which authorizes the President of the Philippines, upon recommendation 
of the Central Bank of the Philippines, to excIude specific categories of external 
debt contracted under the provisions of said Decree, is hereby repealed. 
SEC. 4. A11 Acts or parts of Acts, Presidential Decrees or parts thereof and 
Executive orders, rules and regulations which are inconsistent with the 
provisions of this Act, are hereby repealed or amended accordingly. 
SEC. 5. This Act shall take effect upon its approval. 
Approved,