UN partly writing off RP debt

The Food and Agriculture Organization of the United Nations will soon write off half the Philippines’ debt in the maintenance of the FAO Representative Office in Manila.

This was announced by Philippine Ambassador and Permanent Representative to the FAO Philippe J. Lhuillier after the Department of Foreign Affairs (DFA) approved the FAO proposal.

"While the numbers might seem to be small, it is significant because it signifies that international institutions remain supportive of Her Excellency President Gloria Macapagal Arroyo," Ambassador Lhuillier said.

The amount to be written off comes to around P30,500,000 ($544,459.50) at $1 to P56.14.

The agreement for the establishment of an FAO Representative Office in the Philippines is governed by the Exchange of Letters between Ambassador Carlos J. Valdes to FAO Director General Edouard Saouma dated Nov. 2, 1977 and Letter of Director General Edouard Saouma to Ambassador Carlos J. Valdes dated Nov. 14, 1977.

Under these Letters, the Philippines is obliged to provide the following:

• Suitable office accommodation for the FAO Representative and his staff, as well as the necessary furniture;

• The services, as and when required, of two stenographers, two clerks, one driver and one messenger;

• Cleaning services and all necessary maintenance and repairs for the above-mentioned premises;

• Internal and external telephone services as well as communication links with the international telex systems.

However, when the agreement was signed, the exchange rate was constant. Over time, shifts in the foreign exchange rate ballooned the Philippines’ obligations.

Moreover, no adjustments had been made for inflationary factors.

Due to these considerations, the Philippines’ obligation to the FAO for the maintenance of its office in Manila ballooned to about P61,000,000 ($1,088,919) at $1 to P56.14.

Ambassador Lhuillier remarked: "If we are not going to do something about this, the numbers will keep on increasing and considering our fiscal problems, we will be compounding our problems further."

The Philippines has the biggest debt among member countries of the FAO as far as maintenance of FAO representative offices is concerned.

For its contribution to the maintenance of the FAO representative Office in Manila, the Philippines will now provide a constant contribution of P1.2 million per year.

Ambassador Lhuillier said this is a small amount compared with the projects and grants extended by the FAO to the Philippines annually.