MANILA - The House of Representatives approved on 3rd and final reading House Bill 7311, setting standards for the contracting of loans and grants with bilateral and multilateral partners.
According to its congressional fact sheet, the bill will expand the country's Official Development Assistance (ODA) portfolio which is critical for fiscal stability and funding of long-term priorities.
The bill enables private and commercial institutions to fund the ODA through the blended financing approach.
It provides that the donor government shall issue a guarantee covering at least 75 percent of the commercial component of the loan.
It also requires that the lending government, bilateral or multilateral agency, or international or multilateral institution shall guarantee the timely release of funds committed by their partner-private or commercial institutions.
It also reduces the ODA grant component from 25 percent to 15 percent to attract more ODA, considering that it remains more attractive as a financing option than alternatives; Removes the 40 percent requirement for the weighted average grant element of all ODA loans.
It allows local government units to access ODA loans and tax reliefs and authorizes the Department of Finance to determine the rate and terms that are concessional.
However, the bill retains the terms and conditions for ODA contracted prior to these amendments, but permits unutilized balances to be used for other loan agreements. It also requires that all ODA projects shall be subject to evaluation and approval of the National Economic and Development Authority — Investment Coordination Committee taking into consideration the project's compliance with environmental, social, and governance standards.
The House will submit the bill to the Senate.
House of Representatives, HB 7311, House Bill 7311, ODA, official development assistance, aid