105 OG No. 35, 5261 (Aug. 31, 2009)
WHEREAS, in order to
expand available credit financing sources for Local Government Units
(LGUs) and free up limited financing sources to LGUs with the most
need, the Department of Finance (DOF), pursuant to its mandate under
the Philippine Development Forum (PDF), formulated in 2006, the LGU
Financing Policy Framework of the Philippines (LGU Financing Framework)
which declared as policy a segmented approach for the credit financing
program of LGUs based On the varying levels of credit worthiness and
credit need, thus qualifying the. most creditworthy LGUs to avail not
only of government but also non-government, commercial or other sources
of capital;
WHEREAS, the LGU
Financing Framework envisions lower income LGUs having greater access
to Municipal Development Fund financing, with moderately credit worthy
LGUs having greater access to Government Financial Institution
financing, and with the most credit worthy LGUs (First Tier LGUs)
having direct access to domestic or international commercial or other
financing;
WHEREAS, Section 296
of Republic Act No. 7160, otherwise known as the Local Government Code,
authorizes LGUs to create indebtedness and avail of credit facilities
to finance local infrastructure and other socio-economic development
projects in accordance with approved local development plans and public
investment programs;
WHEREAS,
Section 297 of the Local Government Code allows LGUs to source
financing not only from government or domestic private banks but also
from other lending
institutions;
WHEREAS, Section
298 of the Local Government Code allows LGUs to acquire property, plant
and equipment under a supplier’s credit, deferred payment plan, or
other financial schemes;
WHEREAS,
Section 299 of the Local Government Code allows LGUs to issue bonds,
notes, and other evidences of indebtedness to finance self-liquidating,
income producing development or livelihood
projects;
WHEREAS, Section 300 of
the Local Government Code allows LGUs to secure loans from other
LGUs;
WHEREAS, Section 301 of the
Local Government Code allows LGUs to source additional financing from
loans secured by the National Government from. foreign financial
institutions or other international funding agencies pursuant to the
power of the President to directly or indirectly relend such loans to
LGUs;
WHEREAS, the loans and
credits secured by LGUs under the aforestated provisions of the Local
Government Code are to accrue directly to the LGUs
concerned;
WHEREAS, in light of
the current global financial crisis, there is an urgent need to
reallocate the resources of the National Government for its own
priority projects and to thus, rationalize and revitalize the sources
from which LGUs can fund their projects, pursuant to their powers under
the Local Government Code and in accordance with the LGU Financing
Framework.
NOW, THEREFORE, I, GLORIA
MACAPAGAL-ARROYO, President of the Philippines, by virtue of
the powers vested in me by law, do hereby
order:
SECTION 1. The Department
of the Interior and Local Government (DILG) and the Department of
Finance (DOF) are hereby directed to implement the LGU Financing
Framework and shall, for this purpose, ensure that First Tier LGUs be
allowed and assisted to directly contract loans not only with
Government Financial Institutions (GFIs) and the Municipal Development
Fund Office (MDFO) but also with multilateral financial institutions
created by multilateral treaties or agreements to which the Philippines
is a signatory (MFIs): Provided, that other agencies of the government,
including the Department of Justice (DOJ), the Department of Education
(DepEd), and the Department of Public Works and Highways (DPWH), are
likewise directed to provide and extend full support to the DILG and
DOF so as to allow the full and immediate implementation of the LGU
Financing Framework; Provided further, that any such loan obtained by
any such qualified First Tier LGU shall be on a stand-alone basis
without any direct or indirect National Government guarantee; Provided
further, that the DOF shall formulate the necessary Implementing Rules
and Regulations to ensure prudent borrowing of these
LGUs.
SECTION 2. All other rules,
regulations, and issuances, or parts thereof, which are inconsistent
with this Executive Order are hereby deemed repealed or modified
accordingly.
SECTION 3. This
Executive Order shall take effect
immediately.
Done in the City of
Manila, this 9
th day of June, in the year of our
Lord, Two Thousand and Nine
(Sgd.) GLORIA M.
ARROYO
By the
President:
(Sgd.) EDUARDO R.
ERMITAExecutive
Secretary