Republic of the Philippines
HOUSE OF REPRESENTATIVES
‘Quezon City

FIFTEENTH CONGRESS
First Regular Session

House Bill No.__2 184

Introduced by Rep. Eulogio “Amang” R. Magsaysay

EXPLANATORY NOTE

The Constitution states: “Foreign loans may only be incurred in
accordance with law and the regulations of the monetary authority...” (Section
21, Article Xil). Further, the Constitution provides: “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...” (Section 20, Article VII).

However, over the years, these provisions have been overused and
abused to support the country’s financial requirements. Instead of intensifying
efforts to increase revenue collections, government has consistently depended
‘on domestic and foreign loans to support its programs, an act inconsistent with
the Filipino virtues of prudence and frugality. Loans, which are against the
interest of the Filipino people, have been allegedly contracted and kick back
money pocketed by unscrupulous government officials. This practice aggravates
the suffering of the majority of our people and elevates the greed of villains. Such
over-dependence on and abuse of foreign borrowings has resulted to the
ballooning public debt of the national government over the years. In 2009, total
public debt amounted to Php4.4 trillion, a considerable increase from Php4.2
trillion and Php3.7 trillion in 2008 and 2007, respectively.

Furthermore, the Philippine government religiously abides by the policy on
automatic appropriation for debt and debt guarantee items forced upon us by
international financial institutions. At least 40% of our country's annual
appropriations that should be appropriated for the implementation of vital projects
such as education, health, food security and infrastructure, to name a few,
instead goes to debt servicing. This policy is a direct assault on our sovereignty
and injustice to those who have less in life.

Good governance necessitates a healthy and prudent fiscal management
--- the judicious use of the country’s resources and setting its priorities right. It
calls for the government to live within its means. The House of Representatives
is burdened by this standard.

The country should primarily rely on the efficient collection of revenues
and stump out graft and corruption rather than being perennially dependent on
foreign borrowings. A first step toward this direction is imposing debt cap or debt
ceiling, which this bill aims to establish. This bill also sets the parameters by
which foreign loans can be contracted by the President and penalizes
government officials who violate the provisions thereof.

The immediate passage of this bill is earnestly sought.

My
EULOGIO “AMANG” R. MAGSAYSAY


FIFTEENTH CONGRESS OF THE)
REPUBLIC OF THE PHILIPPINES —)
First Regular Session )

House of Representatives

House Bill No.__2184

Introduced by Rep. Eulogio “Amang” R. Magsaysay

AN ACT

PROVIDING FOR A CEILING ON ALL PUBLIC DEBTS OF THE REPUBLIC

OF THE PHILIPPINES AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines
in Congress assembled:

Act’,

SECTION 1. Title. — This Act shall be known as the “Public Debt Ceiling

SECTION 2. Definition of Terms. —

a) Public Debt — all debts incurred by the National Government as well as
by government-owned-and-controlled corporations (GOCCs), which
include foreign borrowings, assumed liabilities (foreign and domestic),
bonds, treasury bills and like instruments.

b)

Emergency Loan — loan, which is incurred to meet an existing
emergency, which directly affects the public interest. The existence of
an emergency shall be determined by the President upon the advice of
the Secretary of Finance.

c) Government-Owned-and-Controlled Corporations (GOCCs) - those

directly chartered under special laws.

d) Vital Undertakings — refer to those economic and social infrastructures
and programs.

SECTION 3. Purpose of Contracting and Guaranteeing Foreign

Loans. — Foreign loans shall be contracted or guaranteed solely to finance vital

undertakings in line with the national development program


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 of Php4.4 Trillion, which may not
exceed at anytime except with the concurrence of two-thirds of all Members of
Congress, voting separately

SECTION 6. Exclusions to the Ceiling. — The President of the
Philippines, upon the 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 of Php4.4. Trillion, provided two-thirds
of all Members of Congress, voting separately, concurs with said exclusion.

SECTION 7. Bilateral Agreements. — Bilateral agreements involving
official assistance such as loans, credits and 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 Congress, voting separately.

SECTION 8. Reportorial Requirements. — The Bangko Sentral ng
Pilipinas, within thirty (30) days from the end of every quarter of the calendar
year, submit to Congress a complete report of its decisions on applications for
loans to be contracted or guaranteed by the government or by the government-
‘owned-and-controlled corporations which would have the effect of increasing the
public debt.

Information as to the terms and conditions of public loans or guarantees
shall be made available for inspection, subject to reasonable rules and
regulations prescribed by the Bangko Sentral ng Pilipinas.

SECTION 9. Implementing Rules and Regulations. — The Monetary
Board of the Bangko Sentral ng Pilipinas shall, within ninety (90) days from the
promulgation of this Act, issue the necessary implementing rules and regulations

for its effective implementation


SECTION 10. Penalties. — Any violation of the provisions of this Act, 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 or a fine of not less than Php500,000.00, or both at the discretion of the
court.

SECTION 11. Repealing Clause. - The following laws, decrees and
executive orders shall henceforth be considered repealed:

1. Presidential Decree No. 1961 — An Act Authorizing the President of the
Philippines on behalf 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 No,
4309 Authorizing the Central Bank of the Philippines to Engage in
‘Special Borrowings and Lending Operations;

4. Presidential Decree No. 1938 — Further Amending Presidential Decree
No. 1309, As Amended by Presidential Decree No. 1685, Authorizing
the Central Bank of the Philippines to Engage in Special Borrowings
and Lending Operations;

5. Executive Order No. 218 — Extending the Applicability of Presidential
Decree No. 1961, As Amended, to the 1987-1992 Philippine Financing
Package and the Foreign Currency Loans; and

6. Republic Act No. 245 — An Act Authorizing the Secretary of Finance to
Borrow to Meet Public Expenditures Authorized by Law, and for other
Purposes, As Amended

All other laws, decrees, orders, proclamations, rules and regulations or
parts thereof which are inconsistent with any of the provisions of this Act are

hereby repealed or modified accordingly.


SECTION 12. Separability Clause. — if any provision in 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 8. Effectivity Clause. — This Act shall take effect fifteen (15)
days after its publication in the Official Gazette or in at least two (2) national

newspapers of general circulation, whichever comes earlier.

Approved,