Letter of Instructions No. 1442
TO : The Minister, Ministry of Finance
The Minister, Office of Budget and Management
The Governor, Central Bank of the Philippines
The Chairman, Philippine National Oil Company
The President, National Power Corporation
The Administrator, National Electrification Administration
The Administrator, National Irrigation Administration
The Administrator, Local Water Utilities Administration
The Administrator, Export Processing Zone Authority
The General Manager, Philippine Ports Authority
The General Manager, National Housing Authority
The General Manager, Light Rail Transit Authority
The General Manager, Philippine National Railways
The General Manager, Metro Manila Transit Corporation
The General Manager, National Development Company
The General Manager, Metropolitan Waterworks and Sewerage System
WHEREAS, the Economic Adjustment Program for 1984-1986 calls for the stabilization of the country’s external sector through the adoption of appropriate monetary and fiscal policies and measures;
WHEREAS, the control of liquidity in the domestic monetary system is an essential element of the overall stabilization effort of the Government, particularly in the drive to strengthen the balance of payments and reduce inflation;
WHEREAS, it is important to assure foreign creditors that the country intends to honor all its obligations;
WHEREAS, the National Government and the thirteen non-financial public sector corporations named above have made provisions for the payment of their matured and maturing foreign obligations in accordance with their stated original maturities in their respective budgets up to the year 1985;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and direct that:
(1) This Letter of Instruction shall apply to the National Government and the thirteen non-financial public sector corporations named above.
(2) The National Treasury, and the non-financial public sector corporations named above shall deposit the peso equivalent of all their foreign exchange obligations in arrears, including penalties, if any, as October 15, 1984 and still outstanding, computed on the basis of the exchange rate prevailing on the date of deposit, in a blocked account with the Central Bank not later than December 28, 1984. It is understood that all foreign exchange obligations not subject to rescheduling falling due after October 15, 1984 shall be settled as they mature.
(3) The National Treasury and non-financial public sector corporations named above shall likewise deposit in a blocked account with the Central Bank the peso equivalent of principal amortizations, interest and penalties on their foreign obligations subject to rescheduling falling due on or before December 31, 1985 except where agreements have been reached for the financing of the Nuclear Power Program. The peso deposit shall be made on the date of original maturity, regardless of the new maturities which may result from rescheduling. Pesos for amortizations, interest and penalties which fell due before the effectivity date of this Letter of Instruction shall be deposited not later than December 28, 1984. The deposit shall be calculated on the basis of the exchange rate prevailing on the date of the deposit and the amount due at the original maturity.
(4) Suppliers’ credit in arrears as of October 15, 1984 and still outstanding that are not subject to rescheduling will be covered by regulations to be issued by the Central Bank on the matter.
(5) For the foreign exchange obligations in arrears which are not subject to rescheduling, as mentioned in paragraph 2, the Central Bank shall thereupon assume the foreign liability for which the peso equivalent has been deposited with it, including all interests accruing thereafter. For the foreign exchange obligations subject to rescheduling as mentioned in paragraph 3 above, the Central Bank shall thereupon extend forward exchange cover for the portion with which the peso equivalent has been deposited with it.
(6) In the case of foreign obligations covered by foreign exchange cover contracts to the Central Bank, the pesos shall be delivered on the maturity date and at the exchange rate stipulated in the foreign exchange cover contracts.
(7) Pesos shall be deposited by the non-financial public sector corporations above named with the Central Bank through commercial banks.
(8) The Central Bank shall adopt a separate scheme for the Philippine National Bank, including the National Investment and Development Corporation, the Development Bank of the Philippines and the Philippine Export and Foreign Loan Guarantee Corporation.
(9) All the concerned entities are hereby instructed to undertake the appropriate steps to effect the above measures.
This Letter of Instructions shall take effect immediately.
Done in the City of Manila, this 15th day of December, in the year of Our Lord, nineteen hundred and eighty-four.
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