The Philippine government will present a debt-for-equity (gæd for kapital) proposal to the UN next month to address the mounting debt problems of developing countries, the Philippine Daily Inquirer reported Monday.
Philippine President Gloria Arroyo and Foreign Secretary Alberto Romulo will present the proposal to the UN Global Summit in New York on September 12-14.
House of Representatives Speaker Jose de Venecia, who drew up the proposal, emphasized that it “does not call for debt forgiveness or for debt cancellation.” The proposal seeks to persuade multilateral lenders like the International Monetary Fund and the World Bank to convert 50 percent of their debt service receipts into equity in development and anti-poverty projects that poor countries are undertaking.
De Venecia said the proposal has been endorsed by UN Secretary General Kofi Annan. He cited Annan as saying in a letter that the 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 millennium development goals.”
De Venecia said that the proposal will also be presented to the boards of the International Monetary Fund, World Bank, Latin American Bank, African Regional Bank, the Paris Club and the OPEC Fund. – 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.
– Swapping some of that debt for equity in development projects would ease the burden on many of the worlds poor and indebted nations. IIf we are to defeat global poverty and achieve the goals of development it will need the concerted actions of the world’s richest nations as the poor can not do it alone, he added.
De Venecia said that his proposal, which was officially unveiled in June, has won endorsement from Italian and German governments, and aroused the interest of the international institutions including the Asian Development Bank, Paris Club, the British Treasury, the Organization of Petroleum Exporting Countries and Latin American Bank.
According to the speaker, the worlds most heavily indebted nations must service over 2,3 trillion US dollar in debt stock yearly. The Philippines with foreign debt of roughly 55 billion dollar, alone, will be paying about 4,5 billion or a third of the national budget in debt amortization in 2005.
Kilde: www.worldbank.org
