De Venecia seeks debt-to-equity conversion for RP

Speaker Jose de Venecia Jr. urged lenders yesterday — whether nations or banks — to convert part of billions of dollars in loans to poor nations into equity for infrastructure and other social projects.

This is the only way poor and underdeveloped nations like the Philippines can begin to allocate more funds for development instead of paying the money to lenders as amortization for loan principal and interest, he told a group of parliamentarians attending the ongoing 112th Inter-Parliamentary Union assembly.

"We call on the world’s lenders to consider a portion of bilateral and multilateral debt into large-scale debt-for-equity conversions for such projects as reforestation, mass housing, irrigation and post-harvest facilities, hospitals and health care, education and eco-tourism," he said to the lawmakers who he treated to lunch at the Manila Hotel.

He said if the lenders convert 30 percent of their loans into equity, national parliaments could begin to allocate funds for social services and projects.

"For example, of the Philippines’ yearly foreign debt service of roughly $2.7 billion, 30 percent or around $810 million, can be re-channeled into the above projects. The lenders then acquire equity in these projects, while helping implement programs geared towards attaining the United Nations Millennium Development Goals, including the reduction of world poverty by 50 percent in 2015," he said.

He pointed out that his proposal is not for lenders to forgive or cancel part of the debt owed by poor nations.

"Technically, under this formula, there should be no loss to lenders. Our goal is to enable these poor nations to obtain economic growth and progress by minimizing the debilitating debt payment burden," he stressed.

De Venecia also proposed the establishment of a standby global anti-disaster fund under the UN system.

He said the Indian Ocean tsunami in December, which left a swath of widespread destruction and deaths of almost 300,000, should teach nations that there should be an organized response to "this kind of destructive power."

"Our experience informs us that ad hoc efforts at assistance — no matter how well meaning and how generous — will always prove inadequate, wasteful and unevenly applied in such calamities. Only a standby global anti-disaster fund within the UN system, which is made ready well before the need arises, can cope with a natural disaster of the magnitude of the Indian Ocean catastrophe," he said.

He informed his listeners that the House of Representatives, upon his initiative, has passed a resolution proposing to the UN the creation of such a fund.

"Excellencies, I ask that the parliaments represented here and their leaders attending the IPU assembly co-author this Philippine resolution, which we will formally commit to the United Nations through its secretary general, Kofi Annan," he said.

He said the fund might be established from contributions from donor countries like the United States and Japan and from participating nations.