CREATING A SPECIAL REVOLVING FUND FOR PURPOSES OF FOREIGN ASSISTED PROJECTS APPLICABLE TO LOCAL GOVERNMENTS

WHEREAS, it is the stated policy of the National Government
to promote self-reliance of local governments in undertaking then”
socio-economic development programs;

WHEREAS, in pursuance of this national policy, various
international institutions are providing assistance to the Local Governments,
thru the National Government;
Whereas, there is a need to establish an
effective system to make available to the Local Governments these international
assistance;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution do hereby
order and decree:

SECTION 1. The Municipal Development Fund—There is
hereby created a Revolving Fund to be known as the Municipal Development Fund,
hereinafter called MDF, which shall be made available to Local Governments
(provinces, cities/municipalities) thru the Ministry of Finance. The Ministry of
Finance and local government concerned shall enter into appropriate agreement
setting forth the terms and conditions thereof.

SEC. 2. Sources and Operations of Fund—The MDF
shall be capitalized and funded by proceeds of foreign loans, assistance or
grants which are to be made available to the Local Government for specific
purposes, project components and activities set forth in international
agreements, entered or to be entered into by the Government of the Philippines
with foreign governments and international institutions (IBRD, ADB, USAID, etc).
Foreign loans and assistance released and credited to the MDF shall be covered
by Advice of Allotment and Cash Disbursement Ceiling. Funds from the MDF shall
be made available to the local governments as loans which shall be treated as
trust fund and amortized by the local governments, out of their general fund
sources. The amortization (interests and principal) made by the local
governments to the MDF shall form part of and accrue to the MDF and shall be
made automatically available for relending to finance other similar projects of
the local governments. The local governments shall include in their
annual/supplemental budget the proceeds of loan from the MDF, their utilization
as well as amortization.

SEC. 3. For purposes of the proceeding and following section
of this Decree, a Central Project Office (CPO) under the policy directions of a
Steering Committee or similar appropriate organizations shall be established as
required in international agreements, provided that MOF, OBM, MLG, MPWH and NEDA
shall be members in the said Committee. Financial policies, lend terms and
technical requirements for MDF financing shall be approved by the committee in
accordance with the provisions af international agreement.

SEC. 4. Administration of Fund—The Ministry of
Finance shall administer the MDF provided that the Land Bank, Development Bank
of the Philippines or the Bureau of Treasury may be designated by the. Minister
of Finance as the depository, disbursing and collecting agent of the MDF subject
to the terms, conditions and guidelines as the Minister of Finance may prescribe
and in accordance with the provisions of international and other implementing
agreement.

SEC. 5. Detailed implementing guidelines and procedures for
the Month and the provisions of this Decree shall be promulgated by the Steering
Committee and in accordance with the provisions of international agreement
entered or to be entered into by the Philippine Government in respect of
MDF.

SEC. 6. Any existing provisions of law, rules, regulations
or other issuances in conflict or are inconsistent herewith are hereby repealed
or modified accordingly.

SEC. 7. This decree shall take effect upon approval.

Done in the City of Manila, this 29th day of March, 1984.

			(Sgd.) FERDINAND E. MARCOS President of the Philippines
	By the President:
	(Sgd.)JUAN C. TUVERA
		Presidential Executive Assistant