Debt for Equity in MDG Projects; A Philippine Proposal for Converting 50 Percent of the Debt Owed by the 100 Highly Indebted Countries to Equity Investments in the Millennium Development Goals of the United Nations
Byline: JOSE DE VENECIA Speaker, House of Representatives Congress of the Republic of the Philippines
Presented to the Boards and Senior Officials of the United Nations, the International Monetary Fund, the World Bank, the G-8 Nations, the Paris Club, all the Heads of State and of Government, and all the Speakers of Parliaments of the World
ON this eve of the 2005 World Summit, I am honored to be given this opportunity to elaborate before this distinguished body on the Philippine proposal for a large-scale "Debt-for-Equity in MDG Projects" program to help attain the UN's Millennium Development Goals - the foremost of which is to cut world poverty in half by 2015.
Since the late 18th century - a time of the overturning of monarchies and the emergence of ordinary people on the stage of history - visionaries inspired by scientific progress and the promise of the new international economy have dreamt of an end to poverty.
Yet, a World Bank study says that until now 1.2 billion people still have a daily spending power equal to about the price of a hamburger, or a can of soft drink and a chocolate bar, in the West.
And, according to the Food and Agriculture Organization, about 815 million people go to bed hungry (among them 200 million children under the age of five).
Of course, the Good Book says "the poor always ye have with you."
But - in our age of the information revolution - it has become more and more difficult to segregate poverty and wealth: To prevent the poor from realizing what is possible.
So that - in the long run - the peace and prosperity of the rich depend on the well-being of all the others.
The world debt burden
Since the 1980s, the weakest economies have been weighed down by their burden of external debt.
Nowadays, the 100 most heavily indebted poor and middle-income countries must service over 2.3 trillion American dollars in combined debt-stock yearly.
Debt-servicing in effect deprives these countries of scarce resources and hardearned savings that they could have otherwise invested in economic growth, job-creation, and povertyreduction.
To pay off interests and principals, our governments are forced to slash social spending and investment in infrastructure. They are also forced to impose more - and higher - taxes.
Typically, debt-ridden states must sacrifice budget allocations for education, health care, housing, and development projects in the name of financial responsibility and continued access to international capital markets.
And, all too often, even such sacrifices come to naught, because the higher a poor country's debt-stock, the lower the level of foreign-investor confidence - and the higher the premium that lenders charge on its debt-paper.
In sum, the debt-burden of the developing world - a burden that's still growing - has been blocking economic progress for billions of the world's poorest peoples.
Now the creditor-countries must realize that the poor economies need a respite from the burden of their debts.
This is the only way they can achieve the higher - and better-quality - economic growth which is the key to reducing global poverty by 50 percent toward 2015 that the Millennium Development Goals seek.
The HIPC initiative of the G-8 countries
Let me say - up front - that we welcome the decision of the G-8 countries to condone tens of billions of dollars in loans of the Highly Indebted Poor Countries, or HIPCs, which are states mostly from the African continent.
This is a compassionate - and praiseworthy - step the G-8 has taken - to reduce to "sustainable" levels the debt-stock of this most vulnerable group of countries.
We must all realize, however, that the HIPC make up a tiny group - compared with the absolute number of poor peoples in the so-called middle-income countries. …