U.N. CHIEF BACKS RP DEBT-FOR-EQUITY SWAP
MANILA, August 29, 2005 (STAR) By Jess Diaz - United Nations Secretary-General Kofi Annan has endorsed the Philippine proposal for a global debt-for-equity program aimed at meeting the UN Millennium Development Goal of cutting the world’s poverty in half, Speaker Jose de Venecia said yesterday.
De Venecia’s program proposes to convert 50 percent of the debt-service receipts of lending institutions and multinational commercial banks into "equity development and anti-poverty projects that poor countries are undertaking to meet their national MDG goals over 2005-15."
The Philippines will present its proposed large-scale global debt-for-equity conversion to the United Nations next month, the Speaker said.
Quoting from Annan’s letter to him, De Venecia said the UN chief called his debt-for-equity proposal a "creative way of approaching the issue –and you may wish to share it widely."
"Your proposal to broaden the scale of debt swaps would help provide debt relief and release additional funds for financing sustainable activities that are key to achieving the Millennium Development Goals," he quoted the UN chief further.
De Venecia told a news conference that President Arroyo will submit the proposal to world leaders when she attends the UN Global Summit on Sept. 12-14 in New York City.
"This proposed debt relief is the first of its kind. It will be a Philippine initiative, and co-sponsored by the 99 other heavily indebted nations throughout the world," he said.
De Venecia said the proposal has also gained the support of Italian Prime Minister Silvio Berlusconi and the German government.
He said the Philippine proposal is "crucial and urgently necessary" given the fact that the 100 mostly heavily indebted nations service over $2.3 trillion in debt stock.
"Typically, debt-ridden states must sacrifice budget allocations for education, health care, housing and development projects in the name of fiscal responsibility and continued access to international capital markets," he said.
He said in the case of the Philippines, which has a foreign debt of roughly $55 billion, debt servicing will cost Filipinos at least P245 billion this year and more than P300 billion next year.
"We will be paying $4.5 billion in debt amortization on our foreign debt in 2005. If, say, half of this total amount were freed under our proposal, the Philippines would have the equivalent of P120 billion worth of anti-proverty projects - enough to ensure it is able to meet all its Millenium Development Goals (Whose principal objective is to cut world poverty by half in 2015)," he stressed.
He pointed out that the Philippine proposal does not call for debt condonation, debt moratorium or debt discount.
"What we propose to the Paris Club, the G-8 countries, the international Monetary Fund-World Bank, regional development banks like the Asian Development Bank, and commercial banks is that they convert 50 percent of their debt service receipts into equity in development and anti-poverty projects," he said.
He added that such projects can include reforestation, mass housing, energy development, eco-tourism, irrigation, food production, and wealth-creation undertakings.
De Venecia revealed that he will address a world conference of heads of parliament at the UN on Sept 9, during which he will seek support for the Philippine debt relief initiative.
After the UN conference, he will submit the proposal to the IMF-World Bank upon the latter’s invitation, he said.
"If the global community is to realize its Millenium Development Goals vision of halving the number of the world’s poor in 10 years, it will need the concerted action of the richest nations. We offer this large-scale debt-equity investments program as a strategy that will bring rich and poor nations together to begin to defeat global poverty and achieve the goals of development," he said.
News editor-in-chief: Sol Jose Vanzi
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