Women’s body pushes debt-for-equity arrangements

The National Commission on the Role of Filipino Women (NCRFW) has expressed support to calls for debt-for-equity arrangements to give developing countries opportunities to fund their development programs and meet the Millennium Development Goals (MDGs) without increasing their debts.

The Philippine government is proposing that the United Nations spearhead these calls. “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.

NCRFW, a government machinery for the advancement of women, participated in the 52nd Session of the United Nations Commission on the Status of Women (UN-CSW).

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 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,” Yao added.

The Philippine delegation headed by former Philippine Ambassador to the UN Lauro Baja Jr., originally made the proposal in October 2005.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.