THIRTEENTH CONGRESS OF THE REPUBLIC 
} 
OF THE PHILIPPINES 
I 
First Regular Session 
I 
S. No. 
!. .. 
Introduced by Senator S. R. Osmefia 111 
EXPLANATORY NOTE 
Section 21, Article XI1 of the 1987 Constitution states : "Foreign 
loans may only be incurred in accordance with law and the regulations of 
the monetary authority ..." 
The Constitution further provides in Section 20, Article VI1 that "The 
President may contract or guarantee foreign loans on behalf of the 
Republic of the Philippines with the prior concurrence of the Monetary 
Board subject to such limitations as may be provided by law ..." 
The limitations on foreign borrowings is critical in view of the 
automatic appropriations for debt service in the national budget. 
This 
means that once a debt is incurred, servicing such debt takes priority 
over other 
competing applications 
of the government's 
financial 
resources, including infrastructure, education, public services, and other 
social development programs. 
In order to ensure that the social and economic benefits from 
foreign loans incurred justify their precedence over other social and 
economic programs, this bill provides for the following: 
1) A debt ceiling of equivalent to five percent (5%) of the country's 
Gross National Product (GNP) 
2) The concurrence of Congress will be required if the debt 
ceiling is to be exceeded; 
3) Foreign loans shall be contracted or guaranteed solely to 
finance economic and social infrastructure programs in line with 
the national development program, to be contracted only by the 
President in behalf of the Republic of the Philippines, and with 
the prior concurrence of the of the Monetary Board; 
4) Bilateral Agreements involving 
official 
assistance such as 
grants and commodity credit arrangements or indebtedness 
which the President is authorized to enter into shall not be valid 
and effective unless concurred in by at least 2/3 
of the 
members of the Senate pursuant to Section 21, Article VI1 of the 
Constitution. 


In view of the foregoing, the immediate approval of this bill is 
earnestly requested. 
- 
/. 
kucd 
SERGIO OSMENA 111 
Senator 


THIRTEENTH CONGRESS OF THE REPUBLIC 
} 
OF THE PHILIPPINES 
1 
First Regular Session 
1 
,.. 
,. 
S E N A T E  
.,a 
S. No. 
. 
490 
Introduced by Senator S. R. Osmeiia 111 
AN ACT 
PROVIDING FOR A CEILING ON ALL PUBLIC DEBTS OF THE 
REPUBLIC OF THE PHILIPPINES AND FOR OTHER PURPOSES 
Be it enacted by fhe Senate and House of Representatives of the 
Philippines in Congress assembled: 
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SECTION 1. Title . - This Act shall be known as the "Public Debt 
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Ceiling Act of 2004." 
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a) Public Debt - all debts incurred by the National Government as 
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well as GOCC which include foreign borrowings, 
assumed 
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liabilities (foreign and domestic), bonds, treasury bills and like 
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instruments 
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b) Emergency Loan - loan which is incurred to meet an existing 
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emergency which directly affects the public interest. 
The 
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existence of an emergency shall be determined by the President 
SECTION 2. Definifioh of Terms. - 
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c) Government-owned and Controlled Corporations or GOCCs - 
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and programs 
upon the advice of the Secretary of Finance. 
are those directly chartered under special laws. 
d) Vital Undertakings - refers to economic and social infrastructure 


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SECTION 3. Purpose of Contracting and Guaranteeing Foreign 
Loans. - 
shall be contracted or guaranteed solely to 
finance VITAL UNDERTAKINGS in line with the national development 
program 
Foreign loans 
SECTION 4. 
Who may Contract or Guarantee. - 
Only the 
President with the prior concurrence of the Monetary Board may contract 
or guarantee both foreign and domestic debts on behalf of the Republic of 
the Philippines. 
SECTION 5. Debt Ceiling. - A ceiling is hereby imposed on the 
TOTAL PUBLIC DEBT of the Philippines to the amount equivalent of five 
percent (5%) of the previous year's Gross National Product (GNP) which 
may not be exceeded at anytime except with the concurrence of Congress. 
SECTION 6. Exclusions to the Ceilings. - The President of the 
Philippines, upon recommendation of the Monetary Board, whenever 
required pursuant to a general rescheduling, restructuring or re-financing 
of the external debt of the Philippines by foreign creditors, may exclude 
specific categories of external debt from the limits set by Section 2 of this 
Act. 
SECTION 7 . 
Bilateral Agreements. - 
Bilateral Agreements 
involving official assistance such as grants and commodity credit 
arrangements or indebtedness which:the President is authorized to enter 
into and conclude under Republic Act No. 4860, as amended, shall not 
be valid and effective unless concurred in by at least two-thirds of all the 
Members of the Senate. 
SECTION 8. Reportorial Requirement. - The Bangko Sentral ng 
Pilipinas shall, within thirty (30) days from the end of every quarter of the 
calendar year, submit to the Congress a complete report of its decisions on 
applications for loans to be contracted or guaranteed by the Government or 


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government owned and controlled corporations which would have the 
effect of increasing the foreign debt. 
Information as to the terms and conditions of foreign loans obtained 
or guaranteed by the Government shall be made available for inspection 
subject to reasonable rules and regulation prescribed by the Bangko 
Senfral ng Pilipinas. 
SECTION 9. 
lmplementing Rules and Regulations. - 
The 
Monetary Board of the Bangko Sentral ng Pilipinas shall formulate and 
implement the necessary guidelines pursuant to this Act. 
SECTION 10. Penalties. Any violation of the provisions of this Act 
shall, in addition to other penalties imposed by law, subject the public 
officials or persons responsible for such violation to an imprisonment of not 
less than twelve (12) years of a fine of not less than 
Five Hundred 
Thousand Pesos (&500,000.00). 
SECTION' 11. 
Repealing Clause - The following laws, decrees 
and executive order shall henceforth considered repealed: 
1) Presidential Decree No. 1961 - 
An Act 
authorizing the 
President of the Philippines on behalf of the President of the 
Republic of the Philippines, and authorizing the Central Bank of 
the Philippines, to enter into Foreign Currency Loan, Deposit 
and Guarantee Agreements and Arrangements in support of 
the National Economic Recovery Program, 
and for other 
purposes; 
2) Presidential Decree No. 1977 - Amending Presidential Decree 
No, 1961. 
3) Presidential Decree No., 1685 - Amending Presidential Decree 
Numbered Thirteen Hundred Nine Authorizing the Central Bank 
of the Philippines to engage in special borrowing and lending 
operations; 


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4) Presidential Decree No. 1938 - further amending Presidential 
Decree numbered Thirteen hundred nine, 
as amended by 
Presidential Decree numbered sixteen hundred and eighty five 
authorizing the Central Bank of the Philippines to engage in 
special borrowing and lending operations; sll laws, decrees, 
orders, rules and regulations or parts thereof inconsistent with 
this Act are hereby repealed or amended accordingly. 
5) Executive Order No. 
218 - extending the applicability of 
Presidential Decree No. 1962 as amended, to the 1987-1992 
Philippine Financing Package and the Foreign Currency Loans, 
Credits and Indebtedness Made, Guaranteed and Insured by 
Foreign Government s and their agencies maturing on or after 
January 1, 1987 through December 31, 1992, 
subject to 
limitations: and 
6) Republic Act No. 254 - an act authorizing the Secretary of 
Finance to borrow to meet public expenditures authorized by 
law, and for other purposes, as amended. 
All laws, decrees, orders, proclamations, rules and regulations or 
parts thereof which are inconsistept with any of the provisions of this Act 
are hereby repealed or modified accordingly. 
SECTION 12. Separability Clause. - If any provision of this Act or 
the application thereof is held invalid or unconstitutional, the validity of 
other provisions shall continue to be in full force and effect. 
SECTION 13. €ffectivity Clause - This Act shall take effect fifteen 
(15) days following its complete publication in at least two (2) national 
newspapers of general circulation. 
Approved,