Measures for a Comprehensive Government Effort to Attain Balance of Payment Targets
Letter of Instructions No. 1329

May 31, 1983



TO : The Prime Minister and the Executive Committee
The Heads of Ministries and Government Owned or Controlled Corporations
All Others Concerned

WHEREAS, the Philippines is engaged in a program of structural adjustment in order to ensure that the workings of the economy is fully appropriate to the more volatile and competitive international environment and to the realities of the world energy situation; cdtai

WHEREAS, the principal features of the adjustment program, among others, are to increase the efficiency and the export competitiveness of Philippine industry, to improve energy self-reliance, to increase the efficiency of savings mobilization and investment project selection;

WHEREAS, various policy measures have already been adopted for the purpose, including the acceleration of the energy program, gradual relaxation of the few remaining foreign exchange controls on imports, simplification and reduction of tariff levels, lifting of interest rate ceilings, and greater flexibility in the foreign exchange rate to prevent the overvaluation of the peso;

WHEREAS, the Philippines had a high Balance of Payments deficit in 1982 and it is necessary to reduce it in 1983;

WHEREAS, it is necessary to carefully screen new foreign borrowings in view of the existing level of the country's international debt which is already more than $17 billion and in view of the debt service ratio which is close to the statutory limit of 20 percent;

WHEREAS, the measures adopted are acknowledged to mean a temporary slowdown in growth while the economy adjusts, preparatory to higher growth when the process is complete and as the world economy recovers;

WHEREAS, it is necessary for all agencies of government to adopt all possible measures to see to it that foreign exchange receipts are maximized and foreign exchange outflows are minimized and to keep international debt to a minimum, thus ensuring the attainment of structural adjustment program objectives and the preservation of the country's international credit standing;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, pursuant to the powers vested in me by Law, do hereby Order and Instruct the design and implementation of the following measures:

A. Compliance

1. The Prime Minister and the Executive Committee shall oversee the design and implementation of the measures necessary to comply with this Letter. In its work, the guidelines and the specific instructions herein addressed to the various Ministries/Offices/Agencies shall be specifically monitored and amplified as necessary.

2. The Committee shall identify other possible measures that will achieve the same result and report same to the President with its recommendations.

3. Agencies of Government, particularly those referred to herein, shall assist the Executive Committee in its work. aisa dc

B. Generally Applicable Measures

1. All projects of the national government, local government units, government owned or controlled corporations including their subsidiaries, and state universities and colleges (collectively referred to herein as "government"), shall be reassessed with the intention of:

a. Limiting projects with significant imported components only to the most urgent and essential and postponing to future years all other projects;

b. Financing the import requirements of government only from official development assistance sources or export credits; and

c. Postponing the acquisition of equipment or other project inputs which are imported or which have significant imported components, whether these are directly imported or procured locally from indentors of manufacturers representatives;

2. Government agencies shall limit demand for foreign financing of their activities. The Central Bank shall strictly observe the existing ceiling on new external debt and no government agency shall go to the international capital markets for major new borrowings until further notice;

3. Government funds shall not be disbursed for any non-vital activities, whether undertaken by government itself or by private or quasi-public groups which would involve the purchase and disbursement of foreign exchange, whether directly or indirectly. These shall include such activities as cultural, sports, goodwill or other similar missions. Funds for these shall be raised by sponsors preferably from foreign sources. The Central Bank shall discourage private and public enterprises or individuals from making contributions that will involve the disbursement of foreign exchange;

4. The Central Bank shall see to it that financial institutions, both government and private, make no exceptions, even for government agencies, from existing foreign exchange regulations applicable to advances or sales, of foreign exchange, including those for the importation of the banned items, capital outflows, or gifts or donations.

C. Specific Measures

Office of the President

1. The Presidential Executive Assistant shall strictly control and limit the overseas travel of government personnel, including travel of non-government employees that are supported with government funds;

2. The Board of Energy and the Ministry of Energy shall monitor and evaluate the peso cost of energy imports, with particular emphasis on the status of the Oil Stabilization Fund and the impact of the changing peso-dollar rate;

3. The Office of Budget and Management shall conduct a review of all overseas offices of government agencies, including government owned or controlled corporations and their subsidiaries. The review shall cover the staffing patterns and expenditures of foreign missions, attache offices, or subsidiaries as the case may be. It shall be done with the aim of reducing or eliminating the personnel component in places that are unable to produce the necessary results. Trade and tourism related offices shall be evaluated on the basis of results produced, specifically exports or tourism receipts, as the case may be; cdtai

4. The Office of Budget and Management shall study existing controls over the use of government funds appropriated in the General Appropriations Act or the Public Works and Highways Acts, for the purchase or foreign exchange for imported commodities or other items, with the intention of instituting a control mechanism that will see to compliance with this Letter,

Ministry of Agriculture

5. The Ministry of Agriculture shall review existing policy and procedure governing the export of agriculture items, for the purpose of removing unnecessary requirements and facilitating exports;

Ministry of Energy

6. The Ministry of Energy shall review existing oil inventories and supply contracts, in order to reduce inventories to a minimum level and to terminate the less critical supply contracts;

Ministry of Finance

7. The Bureau of Customs, working with the Central Bank, the Ministry of National Defense, the Ministry of Foreign Affairs, the local government units concerned, and all other appropriate agencies of government, shall strictly enforce existing regulations on the export of logs. All agencies shall see to it that full shipments and values are reflected as exports and foreign exchange receipts.

Ministry of Foreign Affairs

8. The Ministry of Foreign Affairs shall assist the Office of Budget and Management on the review of the staffing and expenditures of all foreign offices of the government, including subsidiaries of government corporations;

9. The Ministry of Foreign Affairs shall review the membership of the Philippine government and its instrumentalities, in international organizations, for the purpose of limiting such memberships only to the most beneficial ones, in order to save on dues and other requirements;

Ministry of Human Settlements

10. The KKK Secretariat shall establish export and foreign exchange generation targets for the program;

Ministry of Labor and Employment

11. The Ministry of Labor and Employment shall expedite the formation of a one-stop processing center for overseas workers and shall otherwise adopt such measures as may be necessary to facilitate the employment of Filipino workers overseas; cd i

Ministry of Natural Resources

12. The Ministry of Natural Resources shall review the existing regulations and procedures governing the export of fisheries and aquatic resources and of other products within its jurisdiction, with the aim of facilitating such exports and maximizing the foreign exchange receipts from this source;

Ministry of Tourism

13. The Ministry of Tourism shall analyze the actual foreign exchange receipts from the tourism program that is received by the banking system and shall identify and implement, in coordination with the appropriate agencies, such measures as may be necessary to increase same;

14. The Ministry of Tourism shall study the feasibility of increasing the travel tax, as a means of discouraging unnecessary foreign travel and encouraging domestic tourism;

Ministry of Trade and Industry

15. The Ministry of Trade and Industry shall lead an aggressive export drive, in order that domestic producers may be able to take full advantage of the anticipated world recovery;

D. Government Corporations

Fertilizer and Pesticide Authority

1. The Fertilizer and Pesticide Authority shall review domestic fertilizer requirements, the capability of local industry to service same and existing inventory levels, for the purpose of limiting inventory to the minimum level and of reducing the level of current imports;

National Food Authority

2. The National Food Authority shall review domestic requirements, manufacturing capability and inventory levels of food and feed products and shall see to it that inventory levels and current imports are kept to the minimum level;

3. The National Food Authority shall establish export targets and shall set maximum inventory levels on food items that it procures in order to maximize exports and minimize the need for foreign or domestic financing; cda

Philippine Coconut Authority and Philippine Sugar Commission.

4. The Philippine Coconut Authority and the Philippine Sugar Commission shall assist in the identification of such measures as may be necessary to increase foreign exchange receipts from the exports of coconut and sugar products as the case may be;

DONE in the City of Manila, this 31st day of May, Nineteen Hundred and Eighty-Three.