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Regulations

Request for Monetary Board (MB) Opinion on Domestic Government Borrowings

Guidelines for Processing Requests for Monetary Board (MB) Opinion on the Monetary and Balance of Payments Implications of Domestic Government Borrowings

The requirement for all government entities to request for the prior opinion of the MB on their proposed borrowings is mandated by law, under Section 123 of Republic Act (R.A.) No. 7653, otherwise known as the New Central Bank Act, which was signed into law on 14 June 1993. The specific provision states that:

Whenever the Government, or any of its political subdivisions or instrumentalities, contemplates borrowing within the Philippines, the prior opinion of the Monetary Board shall likewise be requested in order that the Board may render an opinion on the probable effects of the proposed operation on monetary aggregates, the price level and the balance of payments.

The said provision requires the National Government, its political subdivisions or instrumentalities to request the MB to render its opinion on the monetary and balance of payments (BOP) implications of the proposed borrowing before undertaking any credit operation. This section of the New Central Bank Act stems from the role of the BSP as the government’s advisor on official credit operations. It enables the BSP to monitor trends in the debt of the entire public sector and assess their impact on the monetary sector and external payments position of the economy.

A. General Procedures

  1. The borrowing government entity or proponent shall request, in writing, for the prior MB opinion on the monetary and BOP implications of its proposed borrowing, including the submission of the required supporting documents and information.

  2. The BSP shall acknowledge receipt of the request, with an initial evaluation of the documents and information submitted. In case of incomplete submission, the BSP shall require that the deficiency or lacking documents and information be complied with or submitted.

  3. Once the proponent has submitted all the required documents and information, the matter shall be elevated to the MB for an opinion on the probable monetary and BOP implications of the proposed loan.

  4. The proponent shall be informed in writing of the MB’s decision on its request for opinion. The letter includes a reminder to the proponent that:

    a. The MB opinion is valid only for six months from the date of issue; and

    b. A post-borrowing report on the final terms and conditions and on the utilization of the proceeds of the borrowing be submitted to the BSP within 30 days after the full release of the loan proceeds.
  5. No opinion will be issued by the MB in cases where the borrowing/loan has already been partially or fully disbursed.

  6. Extension of the six-month validity period of the MB opinion may be granted based on meritorious reasons and subject to submission of supporting documents as may be prescribed by the BSP.

B. Required supporting documents and information

 

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For local government units (LGUs)

For government-owned and –controlled corporations (GOCCs)

  1. Letter of request for MB opinion with information on the proposed loan
  2. Board Resolution which approves the proposed loan, its purpose and terms and conditions (Pro-forma Board Resolution) or Corporate Secretary’s certificate on the corresponding Board Resolution (Pro-forma Corp Sec certificate) (Annexes 5 and 6)
  3. DOF endorsement and willingness to provide NG guaranty, if applicable
  4. Endorsement/clearance of the proposed borrowing by the head of the line department or government agency that have oversight functions over the proponent, if applicable
  5. Latest audited financial statements
  6. Data on the year-to-date outstanding borrowings
  7. Indication of the lending bank on the source of the funds to be lent to the GOCC
  8. Summary of borrowing costs (Pro-forma borrowing cost breakdown) (Annex 7)
  9. Post borrowing report (Pro-forma post-borrowing report; Pro-forma post-bond flotation report) (Annexes 8 and 9)

For local water districts (LWDs)

  1. Letter request for MB opinion with information on the proposed loan
  2. Board Resolution which approves the proposed loan, its purpose and terms and conditions (Pro-forma Board Resolution) or Board Members’ certificate on the corresponding Board Resolution (Pro-forma Corp Sec certificate) (Annexes 5 and 6)
  3. DOF report on the consolidated liabilities of LWDs
  4. Endorsement/clearance of the proposed borrowing from the Local Water Utilities Administration (LWUA)
  5. Latest audited financial statements
  6. Data on the year-to-date outstanding borrowings
  7. Indication of the lending bank on the source of the funds to be lent to the LWD
  8. Summary of borrowing costs (Pro-forma borrowing cost breakdown) (Annex 7)
  9. Post borrowing report (Pro-forma post-borrowing report; Pro-forma post-bond flotation report) (Annexes 8 and 9)

For state universities and colleges (SUCs)

  1. Letter request for MB opinion with information on the proposed loan
  2. Board Resolution which approves the proposed loan, its purpose and terms and conditions (Pro-forma Board Resolution) or Board Members’ certificate on the corresponding Board Resolution (Pro-forma Corp Sec certificate) (Annexes 5 and 6)
  3. Endorsement/clearance of the proposed borrowing from the Department of Budget and Management (DBM)
  4. Endorsement/clearance of the proposed borrowing from the Commission on Higher Education (CHEd)
  5. Latest audited financial statements
  6. Data on year-to-date outstanding borrowings
  7. Indication of the lending bank on the source of the funds to be lent to the SUC
  8. Summary of borrowing costs (Pro-forma borrowing cost breakdown) (Annex 7)
  9. Post borrowing report (Pro-forma post-borrowing report; Pro-forma post-bond flotation report) (Annexes 8 and 9)


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