RP gov’t urges UN to change debt concept

The Philippine government is calling on the United Nations to spearhead an international campaign to change the concept of debt into investments and financing the Millennium Development Goals (MDGs).

The National Commission on the Role of Filipino Women (NCRFW), the government’s machinery for the advancement of women, recently participated in the 52nd Session of the United Nations Commission on the Status of Women (UN-CSW) and reiterated the Philippine government’s stand on the debt concept aimed to help poor countries attain the MDGs.

“In finding innovative means of financing, we support the recommendation of the Secretary-General regarding debt financing measures. We reiterate the call to consider the ‘Debt-for-Equity in MDG Projects’ proposal. We call on the UN to spearhead an international campaign to change the concept of debt sustainability from ‘capacity to pay’ to “level of debt that allow developing countries to achieve the MDGs” where debt payments do not hinder the attainment of the MDGs, especially the cross-cutting goal number three (State Goal 3),” NCRFW Chairperson Myrna T. Yao said during the UN-CSW annual conference in New York, USA.

The Debt-for-Equity in MDG Projects seeks to convert part of outstanding debt obligations and to use these resources to fund development programs. It also provides an opportunity to transform debt into investments, which in turn, could propel sustainable economic growth and development.

“We believe that there can be no aid effectiveness without development effectiveness and no development effectiveness without women’s development and gender equality,” Chair Yao noted during the UN-CSW meeting.

The Philippine delegation headed by Ambassador Lauro L. Baja, Jr., the Philippine government’s former permanent representative to the UN, originally, made the proposal in October 2005.

The Philippines proposed that rich countries, multilateral institutions, and large commercial banks plough back into the economies of the debtor-countries, 50 percent of an agreed-on portion of the debt-service payments due them. These payments would be plowed back in the form of equities, or other kinds of financial assets, and channeled toward MDG programs -such as reforestation.

The “Debt-for-Equity in MDG Projects” program will be backed by tangible assets -most of which should be value-creating, job-generating, and tradable in themselves. Under this scheme, the debt service and/or principal amount is merely converted into equities in new or existing projects of at least equal value, and with their own earnings potential.

The Philippine government is proposing that the World Bank, International Monetary Fund, Asian Development Bank, G-8 countries consider converting portions of debt into equity for MDG projects. This provides an opportunity for lenders to become shareholders.

During the UN-CSW annual conference, Chairperson Yao likewise stressed the Philippine government’s concern over the negative impact of emerging issues such as climate change, armed conflict and terrorism, particularly on women.

She added that climate change further increases women’s vulnerability to natural disasters, food shortage and diseases and that armed conflict and terrorism continue to put women and children in precarious situations.

“The post-Beijing scenario with its emerging issues requires a stronger and more effective United Nations to deliver on its programmatic and financial commitments to gender equality and women’s empowerment. The Philippines welcomes the UN reform process and strongly supports the creation of a highly-placed and ambitiously funded women-specific entity with normative as well as operational functions,” she explained.

Chair Yao emphasized that the strong gender architecture should be responsive to the needs of Member States and accountable to women’s movements.

“It will not only provide the necessary leadership in shepherding the resources for gender concerns but also ensure that the goals for which these funds are set are effectively achieved at all levels,” Chairperson Yao added.