The House ways and means committee on Monday approved a substitute bill allowing foreign privately-owned firms to lend money to the Philippines through the Official Development Assistance (ODA).
Currently, ODA funding sources are limited to governments and government-run institutions.
The measure amends the 1996 ODA law by stating that donor governments, bilateral or multilateral agency, or international or multilateral lending institution may mobilize financing from private or commercial institutions in funding the loan or grant.
In the case of bilateral ODA agreements, the donor government will issue a guarantee covering at least 85% of the commercial component of the loan.
Likewise, the bill provides that such a bilateral or multilateral agency, or international or multilateral lending institution will ensure the timely release of funds committed by such private or commercial institutions.
In addition, the approved proposed bill provides that in no case that the effective interest rate and the terms on the loan or loan component, including private or commercial financing mobilized by bilateral or multilateral partners, exceed seven percent or the rate, terms, and grant component determined by the Department of Finance as concessional.
Further, the bill changed the current law by providing that ODA must be administered with the objective of promoting sustainable social and economic development, welfare of the Philippines as well as human security of the Philippines.
A week before the bill’s approval at the committee level, France’s Ambassador to the Philippines Michèle Boccoz on Monday said Philippine limitations prevented the country from securing big-ticket development projects such as the €25 million shipyard project backed by a French company.
“For my own country, this situation [of limited ODA fund portfolio] is a significant obstacle to many projects that are in the pipeline at the moment. For example, the investment of a French company into developing a shipyard in the Philippines, a €25 million project, could be creating jobs and could also be an opportunity to have or to strengthen competencies or to translate competencies and create closer relations,” Boccoz said.
The 1996 ODA law defines ODA as a loan or loan and grant that complies with the following requirements:
· must be administered with the objective of promoting sustainable social and economic development and welfare of the Philippines;
· must be contracted with governments of foreign countries with whom the Philippines has diplomatic, trade relations or bilateral agreements or which are members of the United Nations, their agencies and international or multilateral lending institutions;
· only availed of when there are no available comparable financial institutions.—LDF, GMA Integrated News
