Philippines Seeks Debt Relief for Developing Nations

Strategic Insights -

Philippine House Speaker Jose de Venecia has received backing from the Inter-Parliamentary Union (IPU) for his proposal to ease the debt burden on some 100 middle-income developing nations. The IPU plans to discuss De Venecia's debt-for-equity idea at its next executive council meeting in Geneva, Switzerland, this October. This proposal aims to convert part of billions of dollars in loans to poor nations into equity for infrastructure and social projects, allowing them to allocate more funds for development.

Key Takeaways:

  • The IPU plans to discuss De Venecia's debt-for-equity proposal at its next executive council meeting in Geneva, Switzerland, this October.
  • De Venecia has asked lenders to consider converting 30% of their loans into equity for projects such as reforestation, mass housing, irrigation, and post-harvest facilities.
  • If lenders convert 30% of their loans into equity, national parliaments can begin to allocate funds for social services and projects.
  • The proposal is not for lenders to forgive or cancel part of the debt owed by poor nations, but rather to enable them to obtain economic growth and progress by minimizing the debilitation debt payment burden.
  • De Venecia has also proposed the establishment of a standby global anti-disaster fund under the UN system, which would be made ready well before the need arises.
  • The House of Representatives, upon De Venecia's initiative, has passed a resolution proposing the creation of such a fund.
  • De Venecia has asked the parliaments represented at the IPU assembly to co-author the Philippine resolution, which will be formally commented to the United Nations through its secretary general, Kofi Annan.

Statistics:

  • The Philippines yearly foreign debt service is roughly US$2.7 billion.
  • If lenders convert 30% of their loans into equity, the Philippines can re-channel around US$810 million towards social services and projects.
  • The Indian Ocean tsunami in December left widespread destruction and deaths of almost 300,000.

Sources:

  • Asia Pulse, "Philippine Speaker Gets IPU Backing on Debt Proposal" (September 13)
  • Philippine News Agency (PNA), "Speaker De Venecia Seeks Backing for Debt Relief Proposal" (September 13)