Loans

Loans

Section 22. Foreign and Domestic Loans; Bills, Bonds, Notes and Obligations

1. a. Loans, Credits, and Other Forms of Indebtedness

The contracting of loans, credits, and other forms of indebtedness by the Bangsamoro Government shall be for Bangsamoro’s development and the people’s welfare.

Subject to acceptable credit worthiness, such loans may be secured from domestic and foreign lending institutions, except foreign and domestic loans requiring sovereign guaranty, whether explicit or implicit, which would require the approval of the Central68 Government.

The Bangsamoro Parliament may authorize the Chief Minister to contract such domestic or foreign loans. The loans so contracted may take effect upon approval by a majority of all the members of the Bangsamoro Parliament.

The Central Government shall assist the Bangsamoro Government in complying with the requirements for a speedy issuance of the sovereign guaranty, to finance local infrastructure and other socio-economic development projects in accordance with the Bangsamoro Development Plan.

Within 30 days from the submission of the Bangsamoro Government of its application for sovereign guaranty, the Bangsamoro Government shall be informed by the Central Government on the actions taken on the application. The application shall be resolved with dispatch.

2. b. Bills, Bonds, Notes, Debentures and Obligations

The Bangsamoro Government is also authorized to:

• issue treasury bills, bonds, debentures, securities, collaterals, notes, obligations, and other debt papers or documents
• redeem or retire the same, pursuant to law enacted by the Bangsamoro Parliament.

Said authority may be exercised in order to finance self-liquidating, income producing development or livelihood projects pursuant to the priorities established in the aforementioned development plan.

3. c. Payment of Loans and Indebtedness

The Bangsamoro Government shall appropriate in its annual budget such amounts as are sufficient to pay their loans and their indebtedness incurred.

Section 23. Overseas Development Assistance (ODA)

The Bangsamoro Government can get ODA directly. The Bangsamoro Parliament may enact legislation governing ODA.69

Grants and Donations

Section 24. Grants and Donations

Grants and donations from foreign and domestic donors received by the Bangsamoro Government for the development and welfare will only be used for development and welfare.

Donations and grants exclusively for education, health, youth and culture, and economic development, may be deducted in full from the taxable income of the donor or grantor.

Economic Agreements and Conventions

Section 25. Economic Agreements

The Bangsamoro government may enter into economic agreements and receive benefits and grants derived therefrom subject to the reserved powers of the Central Government over foreign affairs.

Section 26. Cultural Exchange, Economic and Technical Cooperation

Consistent with the reserved powers of the Central Government, the Bangsamoro Government may establish linkages for cultural exchange, economic and technical cooperation with countries with diplomatic relations with the Philippines, with assistance of Philippine embassies or consulates, or through some other arrangements with Central Government supporting such undertakings.

Section 27. Benefits from Conventions

The Bangsamoro shall be entitled to benefits resulting from conventions to which the Central Government is a party.

Such benefits shall be equitable and shall consider the available human and material resources and comparative advantage of the Bangsamoro, as well as its socio-economic conditions and needs.70

Government Owned and/or Controlled Corporations (GOCCs) and Financial Institutions

Section 28. GOCCs and Financial Institutions

The Bangsamoro shall have the power to create GOCCs and financial institutions through the necessary modalities, and in accordance with a law on GOCCs to be passed by the Parliament.

These Bangsamoro Government-created GOCCs shall be duly registered with the Securities and Exchange Commission or established under legislative charter by the Bangsamoro Parliament, and shall be recognized even outside the Bangsamoro. Revenues derived from their operations shall pertain to the Bangsamoro.

Section 29. Existing GOCCs Operating Exclusively in the Bangsamoro

The Bangsamoro Government shall have the authority and control over existing GOCCs and financial institutions operating exclusively in the Bangsamoro, after determination by the intergovernmental fiscal policy board of its feasibility. Such transfer shall be effected through the necessary changes on the GOCCs’ governing boards.

Section 30. Southern Philippine Development Authority and Al-Amanah Islamic Investment Bank

Within 6 months from the establishment of the BTA, the Intergovernmental Fiscal Policy Board shall determine the participation of the Bangsamoro in the ownership and management of Al-Amanah Islamic Investment Bank of the Philippines and the Southern Philippines Development Authority as provided in P.D. 690 as amended by P.D. 1703 and the mode of transfer of ownership to the Bangsamoro Government.

Section 31. Existing GOCCs in the Bangsamoro

The Bangsamoro Government shall be represented in the board of directors or in the policy-making bodies of GOCCs that operate a substantial portion of their businesses directly or through their subsidiaries in the Bangsamoro or where the Bangsamoro has substantial interest.

The Intergovernmental Fiscal Policy Board (IGFPB) shall determine the extent of participation. In no case shall the Bangsamoro have less than one seat in the governing board of such entities.71

The share of the Bangsamoro Government from the results of operations of GOCCs and subsidiaries operating in the Bangsamoro shall be based on a formula determined by the Intergovernmental Fiscal Policy Board under Section 36 of this Basic Law. Sharing in the Exploration, Development and Utilization of Natural Resources

Section 32. Sharing in Exploration, Development and Utilization of Natural Resource

Central Government income from taxes derived from the exploration, development and utilization of all natural resources within the Bangsamoro shall be allocated as follows:

• For non-metallic minerals (sand, gravel, and quarry resources), such revenues shall pertain fully to the Bangsamoro and its local government units
• For metallic minerals, seventy-five percent (75%) shall pertain to the Bangsamoro
• For fossil fuels (petroleum, natural gas, and coal) and uranium, the same shall be shared equally between the Central and Bangsamoro Governments.

Such sharing scheme shall be applicable to the natural resources found in the land mass that comprise the Bangsamoro territory as well as the waters that are within the territorial jurisdiction of the Bangsamoro.

Section 33. Share of the Constituent Local Government Units

The share of the Bangsamoro Government in the revenues referred to in the immediately preceding section shall include those for its constituent local government units. The Bangsamoro Parliament shall enact a law detailing the shares of such local government units.

Section 34. Share of Indigenous Communities

Indigenous peoples shall have an equitable share from the revenues generated from the exploration, development and utilization of natural resources that are found within the territories covered by a native72 title in their favor. The share shall be provided for in a law to be passed by the Bangsamoro Parliament.

The Bangsamoro Parliament shall enact a law that shall provide in detail said sharing system, including the percentage of the shares of the indigenous peoples and communities, and the mechanisms therefor.

Intergovernmental Fiscal Policy Board

Section 35. Intergovernmental Fiscal Policy Board

There is hereby created an Intergovernmental Fiscal Policy Board (IGFPB) that shall address revenue imbalances and fluctuations in regional financial needs and revenue-raising capacity of the Bangsamoro.

Section 36. Functions

The IGFPB shall undertake the following functions:

• Recommend the necessary fiscal policy adjustments by undertaking a periodic review of the taxing powers, tax base and rates of the Bangsamoro Government, wealth sharing arrangements, sources of revenues vis-à-vis the development needs of the Bangsamoro
• Address disputes between the Central Government and the Bangsamoro Government involving the collection of capital gains tax, documentary stamp tax, donor’s tax and estate tax in the Bangsamoro
• Determine the extent of participation of the Bangsamoro Government in the board of directors or the policy-making bodies of GOCCs that operate a substantial portion of their businesses directly or through their subsidiaries in the Bangsamoro or where the Bangsamoro has substantial interest;
• Determine the participation of the Bangsamoro Government in the results of operations of government-owned and/or controlled corporations and its subsidiaries73 operating in the Bangsamoro. The Board shall also determine a formula for the share of the Bangsamoro Government from the results of said operations;
• Determine the participation of the Bangsamoro in the ownership and management of Al-Amanah Islamic Investment Bank of the Philippines and the Southern Philippines Development Authority (SPDA) to the Bangsamoro; and
• Recommend the exercise by the Bangsamoro Government of additional fiscal powers in order to attain the highest form of fiscal autonomy.

Section 37. Composition

The Board shall be composed of the heads and/or representatives of the appropriate ministries and offices in the Bangsamoro Government.

The Central Government shall likewise be represented in the Board by the Secretary of Finance and such other officials as may be necessary.

Once full fiscal autonomy has been achieved by the Bangsamoro, it may no longer be necessary to have a representative from the Central Government to sit in the Board.

Section 38. Meetings and Annual Report.

The Board shall meet at least once in 6 months and shall adopt its own rules of procedure for the conduct of its meetings.

An annual report shall be submitted by the Board to the Central Government and the Bangsamoro Government.

Section 39. Full Disclosure Policy

The Bangsamoro Government hereby adopts a policy of full disclosure of its budget and finances, and bids and public offerings and shall provide protocols for the guidance of local authorities in the implementation of said policy, which shall include, among others the posting of the Summary of Income and Expenditures. The same policy shall apply to its constituent local government units, as may be provided in a law to be enacted by the Bangsamoro Parliament.

Section 40. Additional Fiscal Powers

The IGFPB may recommend the exercise by the Bangsamoro of additional fiscal powers in order to reach full fiscal autonomy.

Such recommendations shall be proposed to Congress or the appropriate agency of the Central Government that has the power to effect such recommendations.