Published — July 13, 2022
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
After reading “Executive Powers of the President: Borrowing Power and the Philippine Foreign Debt”, read also “Executive Powers of the President: Veto Power”
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The President may contract or guarantee foreign loans on behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board.
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The President does not need the prior approval by the Congress because the Constitution places the power to check the President’s power on the Monetary Board.
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Information on foreign loans obtained or guaranteed shall be made available to the public.
The President may contract foreign debt or loans, provided that there is prior concurrent of the Monetary Board.
The law says:
The President may contract or guarantee foreign loans on behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board, and subject to such limitations as may be provided by law. The Monetary Board shall, within thirty 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 government-owned and controlled corporations which would have the effect of increasing the foreign debt, and containing other matters as may be provided by law. (Section 20, Article VII, 1987 Constitution of the Philippines)
What are the requisites for contracting and guaranteeing foreign loans?
This includes, first, the concurrence of the Monetary Board (Section 20, Article VII, 1987 Constitution), second, subject to the limitations as may be provided by law (Section 2, Article XII, 1987 Constitution), and third, information on foreign loans obtained or guaranteed shall be made available to the public. (Section 2, Article XII, 1987 Constitution)
It is important to note that the President does not need the prior approval by the Congress because the Constitution places the power to check the President’s power on the Monetary Board. But Congress may provide guidelines and have them enforced through the Monetary Board.
According to the Bureau of the Treasury, the National Government’s (NG) total outstanding debt was registered at P12.76 trillion as of end-April 2022. The NG domestic debt amounted to P8.93 trillion while the NG external debt amounted to P3.83 trillion. The increment to external debt was due to the net availment of external loans amounting to P28.56 billion and the effect of Peso depreciation against the USD amounting to P31.50 billion. (Bureau of the Treasury Press Release: National Government Debt Recorded at P12.76 Trillion as of end-April 2022)
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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