Sharing Visions On How To Respond To The Debt Challenge

FORUM SERIES FOUNDATION FOR A SUSTAINABLE SOCIETY [FSSI] FREEDOM FROM DEBT COALITION [FDC]

Presentations

Sharing Visions for Ways to Respond to the Debt Challenge 25 August 2009, Sulo Hotel

Sharing Visions for Ways to Respond to the Debt Challenge August 24, 12:00 noon ‐ 4:OO PM  Ballroom A, Sulo Hotel, Quezon City    TIME 

PROPOSED PROGRAM    SOLIDARITY LUNCH AND REGISTRATION    A warm gathering of advocates in celebration of the Foundation for a  Sustainable Society’s [FSSI] 14th year of uplifting the lives of the poor. A brief  audio‐visual presentation of Freedom from Debt Coalition’s [FDC] Odious  Debts will also be shown to open the forum.  OPENING CEREMONY    Welcome Remarks  Mr. Milo Tanchuling  FSSI Chairperson and FDC  Secretary General  Introduction of the Forum  Moderator  Message from the Swiss Embassy  Mr. Juerg Casserini 

12 noon ‐1:00 PM 

1:00‐1:30 PM 

1:30‐2:00 PM  (30 minutes) 

2:00‐2:45 PM  (15 minutes each) 

PHOTO EXHiBIT 

Charge de Affairs 

Message from Advocate‐Legislator 

Presentation  1: Why Debt Reduction  Now?    The presentation seeks to provide a  historical context of the global campaign  for debt cancellation or reduction and to  share successful country experiences.  PRESENTATION 2:  (PANEL) Making Debt  Swap Work   1. Foundation for the Philippine  Environment         

The Embassy of Switzerland  Hon. Edcel Lagman   1st District of Albay, Bicol  House Representative  Ms Ma. Teresa Diokno‐Pascual   FDC Honorary Board Member   

    Ms Christine Reyes  Executive Director  Foundation for the Philippine  Environment      

2:45‐3:15 PM  (30 minutes) 

3:15‐4:00 PM  4:00‐4:10 PM 

 

    2. Foundation for a Sustainable Society   Ms Emma Lim‐Sandrino    Executive Director  Foundation for a Sustainable      Society      Atty. Jose Andres Canivel  3. Philippine Tropical Forest  Conservation Foundation   Executive Director   Philippine Tropical Forest    Conservation Foundation       The presentation seeks to narrate how  the debt reduction came to be, how it  was managed and factors contributing  to its success and its remaining  challenges.  PRESENTATION 3:  The Illegitimacy of    Debts        The presentation seeks to discuss the  Ms Lidy Nacpil  underlying principles and requirements  International Coordinator  for both indebted and debtor countries  Jubilee South  to achieve a just and sustainable debt  reduction strategy.  Open Forum    Closing Ceremonies  Ms Mercedes Castillo‐PHilDHRRA  Chairperson  FSSI Committee on Advocacy and  Education    

SPEECH OF JEURG CASSERINI COUNSELLOR AND DEPUTY HEAD OF MISSION 24 AUGUST 2009 FOUNDATION FOR A SUSTAINABLE SOCIETY INC. (FSSI) Honorable Congressman Walden Bello, AKBAYAN Representative and President of Freedom from Debt Coalition (FDC) Honorable Congressman Edcel Lagman, Representative of the 1st District of Albay, Bicol Mr. Milo Tanchuling, FSSI Chairperson and FDC Secretary General Mrs. Emma Lim-Sandrino, FSSI Executive Director Guests from the Philippine Government, Representatives of Non-Government Organizations Ladies and Gentlemen Good afternoon

Page 1 of 7

It is a great honour and privilege for me to address a few words to such an illustrious group. The best way I could contribute to today’s theme of “Sharing Visions for Ways to Respond to the Debt Challenge” is for me to recall a story. This year we celebrate the 718th Anniversary of the Swiss Confederation. In 1991 or 18 years ago, on the occasion of Switzerland’s celebration of its 700th Anniversary, the Swiss Debt Reduction Facility or SDRF was passed and enacted. I guess they had to do something big because 700 was a big number. Development requires debt relief. This was the conviction of the major Swiss development organizations which successfully lobbied for the passage of the SDRF in 1991. The massive campaign of these Swiss non-government organizations called on the Swiss parliament to create an endowment fund which aimed to reduce the debt to Switzerland of many developing nations either through an outright debt write-off, or through the more favored “creative debt relief scheme. By creative debt relief, it was meant that instead of just simple debt cancellation, the Page 2 of 7

debtor country must put up in local currency a portion of the original debt to be primarily managed by representatives of civil society, for the financing of domestic development programs for the poor. Twenty-eight countries benefited from the Swiss Debt Reduction Facility with eleven putting into practice the creative debt relief scheme. Among these eleven is the Philippines, where in 1995, the Swiss and Philippine Governments concluded an Agreement on the Reduction of External Debt. The Scheme called for the Philippine Government to set up a counterpart fund in the amount of P 454 million, then the equivalent of half of the total Philippine debt to Switzerland. This fund was turned-over to an independent body, a foundation, created to manage the fund for the benefit of marginalized communities. And as most of you know, this body is non other than the FSSI. What is very interesting to point out is that the creative debt relief scheme implemented in the Philippines is different from the creative debt relief schemes set-up in most other countries. Here, Page 3 of 7

the counterpart fund is managed by a foundation, whose highest decision-making body is made up of civil society representatives. In others, the highest decision-making bodies for the counterpart funds are bilateral committees whose representatives are those from the contracting governments. In other words, the Philippine fund is managed solely by NGOs with the Philippine Government merely as observer. In other countries, the funds are more or less under government control. I make mention of this difference because it attests to the strong, dynamic NGO movement in the Philippines and to the vital role it plays in the development process. I am told that the country has one of the highest number of registered non-government organizations in the world. The leading among these have either been or are currently members of FSSI. And so on 6 September 1995, the Philippine Government, through the Department of Finance, granted PHP 455 million consisting of 5% in cash and 95% in government securities to FSSI from the proceed of a debt cancellation under the Bilateral Agreement on the Reduction of External Debt entered into by the Philippines and Switzerland on 11 August 1995. Page 4 of 7

As you known, the endowment fund was and is structured as long-term capital fund, only the interests or profits from investments and inflows from loan re-payments are used to finance the projects and programs of the Foundation. The FSSI was established after a lengthy process that involved both Swiss Coalition of Development Organizations and the Philippine Caucus of Development Organizations and the Philippine Caucus of Development NGO networks. Incorporated in September 1995 by Philippine and Swiss NGOs, the FSSI serves as a resource institution for the economic empowerment of enterprising rural and urban communities in the Philippines. In the years after 1995 the FSSI and the Swiss Embassy, as a representative of the Swiss Government, had a wonderful and very fruitful collaboration. Eight years more or less. Then in 2003, the Swiss Government expressed its decision to exit from the Board of Trustees of the Foundation. The decision was a result of a vote of confidence in the Foundation’s management to continue Page 5 of 7

its operations of empowering various marginalized communities in the Philippines through eco-enterprises. The Foundation for a Sustainable Society was borne out of a creative debt relief measure between the Philippines and Swiss Governments and today, FSSI is the leading eco-enterprise resource institution for the empowerment of poor communities in the Philippines. FSSI is taking the lead in supporting communityoriented, ecologically-sound, and financially-viable business ventures knows as “eco-enterprises.” Sustainable economic development is one of the visions of FSSI. What a story, what a history. Indeed it is fantastic nd we all can be very proud of the unique and outstanding achievement of FSSI. It was a very good idea from the Swiss Government to agree to a reduction of external debt and it was a fantastic idea from the side of the Philippines to use the amount of PHP 455 million for the country’s development.

Page 6 of 7

Truly what has been achieved so far can be a benchmark for other similar debt relief schemes. My congratulations to the Philippine Government and the dynamic NGOs that make up the FSSI. I wish the Foundation and all its partner organizations good luck and much success with all its projects. Thank you and Mabuhay! Manila, 14 August 2009 CAJ ###

Page 7 of 7

DEBT-FOR-MDG SWAP: RESPONDING TO THE DEBT CHALLENGE (Speech delivered by REP. EDCEL C. LAGMAN during a forum sponsored by the Freedom from Debt Coalition and the Foundation for Sustainable Society, Inc. at the Sulo Hotel on 24 August 2009)

Since the revival of the Congress of the Philippines soon after the May 1987 elections, proposals and initiatives to address the foreign debt problem have come and gone, resurfaced and stagnated. Among these various debt reduction strategies, are the following: 1.

Selective debt repudiation, debt moratorium and debt renegotiation, not one of which ever took off the ground.

2.

Debt cap proposals with bills actually filed principally in the House of Representatives during the 8th and 9th Congresses wherein the country’s debt service for commercial bank loans would have been pegged from 10% to 15% of our export receipts. House Bill No. 53 was the first measure deliberated on by the House of Representatives in the Committee of the Whole. From a Page 1 of 6

total of about 129 coauthors, the bill was voted down in the Committee of the Whole with only 31 steadfast supporters remaining after Malacañang issued funding releases for Congressmen’s pet projects a day before the voting. 3.

Creation of a Legislative-Executive Foreign Debt Council under Republic Act No. 6724 which was moribund even before it started to operate as it was deluged by a chop suey menu of options and was principally adopted to kill the debt cap bill.

4.

Debt swap arrangements where the Philippines was a beneficiary like the debt-for-nature swap (World Wildlife Fund) in 1993 and debt for sustainable economic production efforts (Foundation for Sustainable Society Incorporated) in 1995, with a combined debt reduction of about $US 36 million.

5.

Debt-for-equity swap principally pioneered by former Speaker Jose de Venecia and diplomatically applauded by creditor countries and institutions. But the degree of applause is not the hallmark of success in debt reduction strategies. Moreover, it was objected to by the Freedom from Debt Coalition, among others, as it Page 2 of 6

proposed to transform debt payments to equity investments

by

creditor

countries

which

could

perpetuate foreign control or domination of important domestic undertakings and sensitive national industries. 6.

Proposals to create a Congressional Commission to review and assess the debt policies of the Philippines and conduct a public audit of loans acquired. This was first initiated under House Joint Resolution No. 02 and was

the

first

measure

of

national

significance

unanimously passed by the House of Representatives early in the 13th Congress but was never acted upon by the Senate. The Joint Resolution was re-filed in the current 14th Congress on 10 September 2007 as House Joint Resolution No. 4 and has been pending with the Committee on Rules since then. 7.

The General Appropriations Act has also been used to advance debt reduction strategies as what happened in the 2008 GAA when I was Chair of the Committee on Appropriations. A special provision prohibiting the disbursement

of

interest

payments

pending

loan

renegotiation and/or condonation of debts which are challenged as fraudulent, wasteful and/or useless had Page 3 of 6

been provided for in Republic Act No. 9498 or the GAA for Fiscal Year 2008. It enumerated an open-ended listing of such odious loans like, among others, the Austria Medical Waste Project, condemned as the “ghastly incinerators”. This was vetoed by the President and Congress did not have the independence and political will to override the veto. 8.

The current global financial crisis has activated interest in

debt-for-Millennium

Development

Goals

(MDGs)

swaps which are both a debt reduction strategy and a resource

generation

plan

for

sustainable

human

development. On 29 July 2009 I filed Joint Resolution No. 39 “Creating a Joint

Legislative-Executive

Council

for

Debt-for-Millennium

Development Goals (MDG) Swap” to pursue this latest initiative. Basically,

the

debt-for-MDGs-swap

converts

into

debt

repayment, with the conformity of the creditor country or institution, the amounts which a debtor country appropriates and utilizes for the achievement of the MDGs, particularly the reduction of child mortality (Goal No. 4), improvement of Page 4 of 6

maternal health (Goal No. 5), and combating HIV-AIDS, malaria, tuberculosis and other infectious diseases (Goal No. 6), among other Millennium Development Goals. Considering that the Philippines allocates a huge portion of its annual budget to debt service, that crowds out badly needed resources for health, other social services and sustainable development, the debt-for-MDGs-swap is pure benefit that the Philippines must pursue and avail itself of. According to the United Nations Development Programme (UNDP), the country’s resource gap in achieving the MDGs on health at the national level has a cumulative total of 45 billion pesos for the period 2007 to 2015. On improvement of maternal health alone, the current maternal mortality ratio (MMR) of the Philippines at 162 maternal deaths per 100,000 live births makes our MDG commitment of reducing MMR to 52 in 2015 beyond reach as the Philippines registers an appalling 11 maternal deaths daily.

Page 5 of 6

It is a truism that maternal death is not only a tragic circumstance but a scandalous social inequity. Perforce, we must relentlessly pursue this newest initiative on debt reduction which has been volunteered by creditor countries of Europe like Germany, Italy and the Netherlands to help

developing

debtor

countries

achieve

the

Millennium

Development Goals. Otherwise, if we do not act with alacrity, similarly situated developing countries will beat us to the draw like in the case of Pakistan which has reportedly forged a swap with Italy. I earnestly ask the FDC and FSSI to help enlist coauthors for House Joint Resolution No. 39. ###

Page 6 of 6

Why Debt Reduction Now by Maitet D. Pascual Presented at FSSI-FDC Forum on “Sharing Visions for Ways to Respond to the Debt Challenge,” Sulo Hotel, Quezon City, 24 August 2009

Three Compelling Reasons 





Justice demands that we be freed from fraudulent and odious debts. If there is anything the current global crisis is teaching us, it is that the banks – like the elites in our society – do not seem to learn from their mistakes. As government repays its creditors, it is accumulating an ever increasing social debt to the people, particularly the poor.

Fraudulent Debt 

Government must go after perpetrators of fraud or the banks continue profiting from lending to us even under onerous conditions  worse, the perpetrators/cronies become government officials 





Bataan Nuclear Power Plant a classic example; Austrian incinerator loan a more recent one House of Representatives recently recognized this by removing interest payments on loans identified by FDC from the budget 

BUT vetoed by Mrs Arroyo

Immoral Moral Hazard 



In Philippine debt crisis of 1980s, banks spared from lending to cronies for overpriced questionable projects the proceeds of which would end up back in the banks' vaults as the privatized deposits of corrupt officials and cronies Today banks all over the world, the same top creditors of the Philippines, are in a crisis all of their own making  Time

for banks to own up to their responsibility for the debt debacle we've been going through

Mounting Social Debt 

Debt crisis of 1980s didn't end there. Followed by economic crises in 1991 and 1994  Translated into power crisis of early 1990s  “Resolved” through overpriced and guaranteed risk-free contracts with IPPs and liberalization of capital accounts  Resulting in 1997 financial currency crisis and high electricity rates, second only to Japan  Resulting in a public sector heavy with debt & totally subservient to credit ratings and IFI prescriptions  Resulting in nearly total decimation of manufacturing sector, and an economy unable to provide jobs for its people. 

Mounting Social Debt 

Unexpected “dividend”: OFW remittances  Continuing

exodus of Filipinos who can afford it and who have access to job opportunities overseas  Hailed as new heroes primarily because their remittances reversed the balance in the current account, creating sustained surpluses never before experienced in the past  Remittances have allowed a weak economy to avert crisis, spending by OFW families fueling growth 

caveat: questionable growth data

Mounting Social Debt 

What debt crisis?  Certainly

going by sovereign solvency and liquidity ratios, Philippine debt appears to be “manageable”. Liquidity provided by OFW remittances the key factor explaining why there does not appear to be an imminent debt crisis, at least FINANCIALLY speaking.  But this is not because we no longer have a debt problem. On the contrary, the government has skillfully passed on the burden of the debt to our people, resulting in a SEVERE SOCIAL CRISIS.

Indicators of Heavy Indebtedness 

  



The minute the government incurs a budget deficit, the threat of a growing debt is raised (not only by FDC); balanced budget takes precedence over social and infra spending Low disbursement rates of ODA loans Inability to renegotiate IPP contracts Seeming lack of interest, despite indications of willingness on the part of the Austrian government, to work to cancel incinerator debt Severe deficit in social and infra spending

Education Spending Deficit 



If government followed “six will fix” recommended by UNESCO, education spending from 19962007 should have been PhP3T Actual education spending: PhP1.4T, leaving a gap of PhP1.6T

2500

2000

1500

1000

500

0 Ramos (96-97)

Estrada (98-00)

Arroyo (01-07)

TOTAL (96-07)

Interest Educ'n Spending Gap

Every cent paid out to creditors

... is a social obligation denied

... our youth

... our workers and producers

... our families

Hiding the debt problem   

By forcing Filipinos to go abroad to work Failing to address joblessness at home Maintaining scandalously low level of social and infrastructure spending

Results in deepening poverty   

Families torn apart Youth robbed of their dreams and their future Able bodied women and men rendered worthless, unable to develop their creative power and spirit

This is a huge UTANG  

That will take generations to repay And requires a radical change in economic paradigm to resolve

The Foundation For the Philippine Environment

The Philippines figures prominently in the biodiversity map... …it is 7th among the 17 “megadiversity” countries - biologically wealthiest nations: a home to an inordinately large share of the world’s biodiversity,

…and one of the world’s 19 ecological “hotspots” places which have the highest concentration of biodiversity and are under the greatest threat from human activities.

FPE is a private, non-stock and non-profit corporation organized solely in the public interest.

Founding History The socio-political situation in the Philippines after 1986 marked by the restoration of democratic institutions and the establishment of new policy reforms, provided the enabling environment that led to the eventual creation of FPE.

Birth of FPE

Registered with the Securities and Exchange Commission on January 15, 1992, FPE is considered the largest Philippine grant-making institution outside of government to support environment and sustainable development work among NGOs and POs in the Philippines

FPE as an Environmental Fund ENDOWMENT: The initial financial base of FPE is an endowment fund established through debt-for-nature swaps*. * A debt-for-nature swap is an arrangement by which an indebted developing country undertakes, in exchange for cancellation of a portion of its foreign debt, to establish local currency funds to be used to finance a conservation program

Creation of FPE through partnership: • Cooperative Agreement between USAID and WWF-US • Interim Board • Regional Consultations • Philippine Government • Philippine NGOs and POs • U.S. Government • U.S. NGOs

• Cooperative Agreement between WWF-US and PBSP

Start-up financing came from the United States Agency for International Development (USAID) which, through the Natural Resources Management Program (NRMP), provided the grants that established an endowment worth about US$22 million (or PhP 569M in 1994)

Total Endowment • $ 21,851,335.55 USAID Bank of Tokyo TOTAL

=> =>

$21,731,745.40 119,590.15 $21,851,335.55

• Php 569,809,065.24

FOCUSED ON THE ENVIRONMENT: FPE aims to reverse the rapid destruction of the Philippines’ natural resources by initiating programs and activities that strengthen the role of NGOs, POs and local communities in the responsible management of the ecosystem.

Strong CSO involvement FPE was created through a process of nationwide consultations with Philippine NGOs and POs.

They remain deeply involved in FPE’s programs through majority membership in the FPE Board of Trustees (BOT) and their participation in three Regional Advisory Committees (RACs): Luzon, Visayas, Mindanao

Why NGO? “The decision to go for NGOs and POs is a deliberate one. NGOs and POs in the Philippines have shown a commitment to work on critical concerns, amidst difficulties and conditions of risk. More importantly, NGOs and, more so, the POs, many of whom are proponents of grassroots empowerment, are the best bridge to reach the communities, which are, in the final analysis, the best stewards of the country’s natural resources.” (Inputs for FPE Strategies by Dr. Ganapin, Jr, 1994)

Our Roles Catalyst for Cooperation

FPE encourages international and local cooperation between and among communities, NGOs and POs, business groups and government agencies towards developing policies and effective programs for biodiversity conservation and sustainable development.

Grant-maker FPE initiates, assists and finances biological diversity conservation and sustainable development activities. It aims to strengthen the capabilities of NGOs and POs and local communities in enhancing biodiversity conservation and sustainable development.

Fund Facilitator FPE generates additional financial resources for funding qualified projects in biodiversity conservation and sustainable development. FPE also provides financial linkages between proponents and donors.

Area-Based Strategy In March 2000, the BOT adopted the Area-Based Strategy, “an operational approach to the localization of organizational structures, systems and processes to serve designated areas.” It highlights FPE’s role as a catalyst for cooperation and as an advocate for sustainable development.

FAST FACTS AND FIGURES

FPE Intervention in 21 Sites

Forest Cover Protected Area Marine Protected Area IP Area/CADC

Philippines 5.8 M has. 1.5 M has. 159 MPAs 1.2 has. (57 CADT/CADC)

FPE Sites under PA LUZON 1. Bolos 2. Malanas/Balbalasang 3. Biak na Bato 4. Banahaw 5. Bulusan 6. Palawan/Honda Bay 7. Zambales Sub-total

220,000 16,700 2,117 11,133 3,673

FPE Area of Influence 1.35 M has. 562,110 has. 39 MPAs 117,723 has. (9 CADCs) Sites under MPA 1

IP Areas/CADC * 42,000 (1)

13 253,623 has

14

41,161 (4) 83,161 has (5)

VISAYAS 1. North Negros

80,454

2. Northwest Panay

12,609

3. Mt. Talinis/Twin Lakes

65,000

4. Bohol Marine Triangle

14

5. Guiuan

11

Sub-total

157,463 has

25

None

MINDANAO 1. Pantaron

82,162

2. Matutum

15,600

3. Malindang

53,262

5,642.27 (1)

4. Pulangi

27,025 (1)

5. Arakan

1,895.47 (2)

Sub-total

Total

151,024 has

34,562.74 has (4)

562,110 has. in 11 FPE sites

117,723.74 has in 9 CADC areas

39 MPAs

Name of Project Sites

REGIONS Luzon Luzon Luzon Luzon Luzon Luzon Luzon Luzon Luzon Mindanao Mindanao Mindanao Mindanao Mindanao Mindanao Mindanao Mindanao Mindanao Visayas Visayas Visayas Visayas Visayas Visayas Visayas Visayas

Mt. Bulusan Sorsogon Banahaw and San Cristobal Biak na Bato Buasao and Poswey Baggao Palawan Zambales 2 PASS Bolos Point Banao-Malanas Watershed Pulangi Mt. Matutum Dinagat Island Mt. Malindang Ligawasan Tawi-Tawi Lake Mainit Arakan Pantaron Mt. Talinis (Ting Matiao Fdn) Twin Lakes (SU-CENTROP) Catubig Estuary/Palapag Paranas Guiuan Northwest Panay North Negros Natural Park Bohol Total

GRAND TOTAL (Totals 1,2,&3)

15,681,449.06 17,148,542.37 13,873,436.17 11,635,913.04 4,945,026.00 13,002,864.84 6,562,017.84 9,834,954.84 8,209,402.84 8,326,432.01 19,481,290.84 10,811,645.00 12,581,915.09 5,193,589.84 1,151,060.00 5,125,603.84 6,197,989.84 2,020,000.00 10,969,503.42 12,463,047.42 4,818,801.00 8,405,464.84 7,762,410.24 9,260,313.24 7,695,511.84 8,314,934.00 241,473,119.46

Figure 5. Approved Projects & Amount by Type of Grants 50 45 40 35 30 25 20 15 10 5 0 No. of proposals

Million PhP

FY2006-2007 Competitive

No. of proposals

Million PhP

FY2007-2008 Proactive

Site-Focused

No. of proposals

Million PhP

FY2008-2009 Total

Figure 6. Approved Projects & Amount by Funding Level 50 45 40 35 30 25

Small

20

Medium

15

Large

10

Total

5 0 No. of Million PhP No. of Million PhP No. of Million PhP proposals proposals proposals FY2006-2007

FY2007-2008

FY2008-2009

Figure 7. Approved Projects & Amount by Region 50 45 40 35 30 25

Luzon

20

Visayas Mindanao

15

National

10

Total

5 0 No. of Million PhP No. of Million PhP No. of Million PhP proposals proposals proposals FY2006-2007

FY2007-2008

FY2008-2009

Assets, Liabilities & Fund Balance 1997 to Jun-2009* Year

ASSETS

Grant Liab.

Oth. Liab.

Fund Bal.

1997

711,397,863

56,085,055

1,858,407

653,454,401

1998

737,971,818

61,006,267

15,332,705

661,632,846

1999

735,826,046

62,627,491

6,848,734

666,349,821

2000

786,905,977

64,699,079

9,517,549

712,689,349

2001

783,715,537

57,975,787

6,300,619

719,439,131

2002

772,426,984

44,351,521

7,052,382

721,023,081

2003

803,962,195

43,668,945

6,525,560

753,767,690

2004

834,967,361

48,322,699

8,559,075

778,085,587

2005

812,160,504

47,559,247

7,931,928

756,669,328

2006

857,687,938

57,784,956

7,320,354

792,582,628

2007

839,568,138

55,205,340

8,849,578

775,513,220

2008

765,817,400

37,942,835

15,062,831

712,811,735

2009**

780,736,574

34,403,082

13,040,094

733,293,398

FPE Financial Standing Initial Endowment As of 2009 • Fund balance (46%) • Disbursed (54%) • Endowment Value (100%)

P 569,809,065.24

P 733, 293,398.00 P 846,175,516.00 ================ P1,579,488,814.00

Disbursements (Expenses) • Grants Approved: • PDME • Administrative TOTAL

P 560,628,025.00 P 115,441,940.00 P 170,105,551.00 ================ P 846,175,516.00

The FSSI Debt-Swap Story Foundation for a Sustainable Society

Our Roots Just and  sustainable  society!

Product of a debt relief  program as a result of a  participative, cross‐sectoral,  multi‐level campaign 

50% Payment  Cancelled Philippine Debt  to the Swiss to the Swiss Government

50% Counterpart 50% C t t Fund

FSSI  Endowment  Endowment Facility

Three‐years completion

Product of successful negotiations  at different levels

Swiss NGOs and Swiss Government Swiss NGO and Phil NGOs Phil NGOs and Phil Government Phil NGOs and Phil Government Swiss Government and Philippine  Government

How it began.. •

Broad based national debt campaign led by Swiss  Broad based national debt campaign led by Swiss NGOs was launched in 1989   6 6 major organizations and 18 smaller organizations  major organizations and 18 smaller organizations formed an alliance

• Campaign Campaign Objectives Objectives  Obtain substantial reduction of bilateral debt  between Switzerland and poorer developing  countries  To raise public awareness on the consequences of  debt problem to people of poorer countries

Basic Proposition

“Development requires debt relief relief”

The Petition Establish a fund to write‐off both official debt  owed to government and to private banks by owed to government and to private banks by  low‐income countries That part of the funds be converted into local  currency to finance local development  p g programmes For the Swiss government to promote debt  relief in the international level relief in the international level To advocate fair economic relations with the  underdeveloped and developing countries

The Response • 250,000 250,000 (4% of Swiss population)  (4% of Swiss population) individuals signed the petition • Passage of debt relief bill in March 1991 • Establishment of the Swiss Debt  Reduction Facility (SRDF)

Eligibility of Potential Beneficiaries  for the Debt Swap p 1. 2 2. 3.

Highly indebted low‐income countries All l t d l All least developed country d t Country with major bilateral development cooperation  programmes 4. Debtor country must:  Practice good governance  Engaged in a medium‐term term economic reform  economic reform  Engaged in a medium programme  Have an effective debt management, including a  comprehensive program for obtaining debt reduction comprehensive program for obtaining debt reduction  & consolidation with different creditors 5. Volume of debt relief should be sufficiently large so as  to have significant impact on the country’s growth and to have significant impact on the country’s growth and  development prospects

Creative Debt Relief Concept • R Redemption of external debt in local currency into a  d ti f t l d bt i l l i t “Counterpart Fund (CPF)” for development  p g programmes  Macroeconomic benefits derived from debt reduction are  passed on to the micro‐level d t th i l l  Focuses on creating long‐term financial instruments  ( p (capital or trust funds) )  Substantial participation of & benefits to NGOs & citizen’s  group

Elements to a Creative Debt  Relief Scheme Relief Scheme 1. Bilateral debt relief agreement 2. Body responsible for the management of the  Counterpart Fund (CPF) 3. Projects and programs to be submitted for  Projects and programs to be submitted for funding 4 Development Partnership 4. Development Partnership

PHILIPPINES:  The Processes that Took Place....

Establishment of Development Partnership Establishment of Development Partnership • 1992 – initial contact of the Debt for Development Unit  (DDU) of the Swiss Coalition with Phil NGOs  • Swiss Coalition – CODE‐NGO partnership • Data gathering pertinent to Philippine bilateral debt to  Switzerland  • Study of existing Philippine NGO‐managed Fund  Mechanism –PCHRD PDAP UNDP‐GEF‐SGP and FPE Mechanism –PCHRD, PDAP, UNDP‐GEF‐SGP and FPE

PHILIPPINES:  The Processes that Took Place....

Program Preparation Series of consultations among Phil NGOs and POs  regarding the design of the CPF g g g 

As endowment fund –only interest will be used for  grants and loan



Criteria for projects to be supported –environment  friendly, gender sensitive, for disadvantaged sectors,  improve social, ecological and economic status



Support shall be open to all NGOs and POs with at  least 2 years track record least 2 years track record

PHILIPPINES:  The Processes that Took Place....

Fact Finding Mission  g ((May‐June’93) y )    

Amount: Sfr15‐20 million  CPF payment will be in the form of treasury bills by the  C t lB k Central Bank  FSSI submitted a letter on behalf of the Philippine NGOs  urging the Swiss government to sign the agreement Jan‐Feb ’95 – the two Governments finally met in Manila.  PHIL – Department of Finance and Central Bank of the  Philippines  SWISS‐ Swiss Federal Office of Foreign Economic

PHILIPPINES:  The Processes that Took Place....

Final Negotiation  Swiss government cancels all its bilateral rescheduled  non‐official debt against the payment by the  Philippines of an amount in local currency to FSSI  CPF will be 50% of the external debt to be used to  support sustainable production projects i bl d i j  New foundation shall be created to manage the  fund thus FSSI fund, thus FSSI  The two Governments will sit as ex‐officio members  of the FSSI Board of Trustees as observers during  of  the FSSI Board of Trustees as observers during the first six years of the foundation

FINALLY AFTER  THREE YEARS,  THE PHILIPPINE GOVERNMENT AND THE PHILIPPINE GOVERNMENT AND  THE SWISS GOVERNMENT  SIGNED THE DEBT SWAP AGREEMENT ON  AUGUST 11, 1995

Our Vision Sustainable  Economic  Economic Development of  Marginalized Poor  i li d Communities in the  Philippines

Our Mission

To be the leading eco‐enterprise resource  To be the leading eco enterprise resource institution for the empowerment of  marginalized communities in the Philippines i li d iti i th Phili i

Our People • • • • • • • • • •

AF APPEND CONVERGENCE FDC FPSDC GREEN FORUM HELVETAS HEKS MASS‐SPECC MINCODE

• • • • • • • • • •

NASSA NATCCO NCCP NCSD PBSP PHILDHRRA PHILNET‐RDI PHILSSA VCF WAND

FSSI is able to reach the poor… Coco‐coir Business Integration and Development Program Fund for Sustainable Civil Society Program Micro Finance for Eco‐Enterprises Program Sustainable Partnership for Eco‐Enterprise  Development Program Sustainable Waste Management  Eco‐Enterprise Program

Increased social investments

Over Php443  million in social  investments  provided to more  than 183 eco‐ than 183 eco‐ enterprises. 

Leaning towards  y g p community‐managed enterprises

47 percent or P174  47 percent or P174 million supports  democratized  ownerships via primary  cooperatives,  cooperative banks and cooperative banks and  federations. 

Reaching the entrepreneurial poor Some 10,700 Some 10 700 individuals have  derived income as  microenterprise  microenterprise owners, workers,  suppliers or sub‐ contractors More than 104,000 poor, mostly  women received  support through the  microfinance  program.

Our Partners Cabauatan Junk Shop k Sh “Hardwork and perseverance  are keys to entrepreneurial  success. I am not ashamed of  my work. There is decent  y income and I also help others  earn in a way that is also good  to the environment” Illumida Cabauatan, junk shop h owner

Our Partners “My income has  become better  compared with  commercial farming  techniques. My techniques. My  breathing problems  from using chemical‐ based inputs have based inputs have  disappeared. Our lives  have truly improved!” Agnes Sayucop Philip,  LaTOP organic  vegetable farmer vegetable farmer

LaTOP Cooperative LaTOP Cooperative

Our Partners 3KJ Chicharon “I used to work in a  factory that is  farther from farther from  here. Now, I am  happy to have  enough earnings  while I can do  my household my household  chores.” Marilou Estrada, , 3KJ worker

Our Partners Greenminds “We now produce,  man fact re and sell manufacture and sell  our peanuts without  the help of a  middleman” ‐Datu Datu Makadinding Greenminds Manager

Our Partners “We are now able to  sustain our daily sustain our daily  needs. I am able to  gradually improve my  h house. Our entire  O i family now sees  opportunity in every  trash that is  considered worthless  for others ” for others. Aling Dolores Dilay ,  BUBI Junkshop  Satellite Operator

BUBI Junkshop

Our Partners “Because of the loan for  banca improvement, we  p , now have a bigger catch  because our banca has  become sturdier And become sturdier. And  because of the project, I  am able to provide for my  students’ needs unlike  before when we were  f finding it difficult to fulfill  g ff f f their needs” ‐Aling Aling Susan Bandojo Susan Bandojo ‐ Carles MPC Beneficiary

Carles MPC

Our Partners Kapatagan MPC “Increasing organic  production to provide  steady supply in Isabela steady supply in Isabela and direct support to 238  farmer‐members”

‐Kapatagan MPC

Why Debt Swap? • Opportunity to finance needed development  services • BUT not a solution to the debt problem p • Debt swaps… – must not legitimize dubious debts must not legitimize dubious debts – not a substitute on international commitments  on debt cancellations on debt cancellations

• KEY: Long‐term debt management strategies 

Contact Us:

# 46 E., Samar Avenue corner Eugenio Lopez St, South T Triangle l Quezon City C 1103 Tel No: [632] 928-8671 [632] 9288422 [632] 4114702-03

www.fssi.com.ph www fssi com ph [email protected]

Illegitimate Debt

Lidy Nacpil, FDC For the FSSIFSSI-FDC Forum August 24

Saving the Forests and Ourselves

Philippine Tropical Forest Conservation Foundation

We envision lush and biologically diverse Philippine forests that are sustainably managed and equitably accessible to responsible stakeholders, as a collective responsibility for the greater good.

Creation of PTFCF • Established under two bilateral agreements signed on Sept. 19, 2002, between the governments of the United States and the Philippines under the US Tropical Forest Conservation Act. • Leveraged $5.5 million USG appropriation to treat $41.5 million in RP-US debt and divert $8.25 million in pesodenominated interest payments over 14 years, to the Tropical Forest Conservation Fund. • 9 Trustees (5 NGO representatives, 2 each for Philippine and US governments)

PTFCF Program Focus • Overall thematic focus on dipterocarp forests and coastal or mangrove forests. • No specific geographic areas but focused on key biodiversity areas. • Proposed activities should have a direct link to or have an impact on forest conservation.

Modes of Support • Area Projects (up to Ps.2M/year) • Small grants (up to Ps. 100T) • Partnerships (FPEEnDefense, nursery development)

• PTFCF initiatives

Knowledge generation and sharing

• Preparation of dipterocarp factsheets (26 species out of the 45 species documented in the Phils.) • Advocacy on the use of indigenous and endemic forest tree species including use of multi-species mangrove for reforestation • Mapping of forest cover

Catalyzing bureaucratic action and civil society action

• Enforcement in Southern Sierra Madre (50,000 bdft of lumber and flitches) and in NSMNP-Isabela (1.4M bdft confiscated logs and lumber) • EnForestment operations in Palawan confiscating 15 chainsaws, a vehicle and the tools for timber poaching • EnDefense program

Restoration and Sustainable Use Nursery Management -Non-mist Technology/Growth Chamber System

Soil and Water Conservation Foundation (Bilar, Bohol)

Restoration and Sustainable Use Mangrove conservation as protection from rising sea water level, as manifested by the need to increase the height of fishpond dikes.

Ipil, Zamboanga Sibugay

Ensuring Tenure Implementation of Co-Management Agreement & IPR agreements

FRENDS (Quezon, Nueva Vizcaya)

Ensuring Tenure Declaration of Protection Forest and Sacred Ground covering 28,447 hectares in Mt. Kampalili-Candalaga)

PBPF (Maragusan, Compostela Valley)

Ensuring Tenure Restoration of abandoned fishponds – LGU, NGO partnership

Ipil, Zamboanga Sibugay

Vincenzo Sagun, Zamboanga del Sur

Livelihood of Forest Dwellers Abaca intercropped with indigenous tree as abaca requires 60% shade for better growth and fiber yield) and tinagak processing

Landcare Foundation – Claveria, Mis. Oriental

Livelihood of Forest Dwellers Processing of forest fruits and honey and and Buri product development and marketing

Morong, Bataan; Bilar, Bohol and Bolinao, Pangasinan

Livelihood of Forest Dwellers Crab and grouper culture as incentive for mangrove conservation

COSEED (Vincenso Sagun, Zamboanga del Sur)

• Livelihood of Forest Dwellers Tuway (bi-valve) production and crab fattening as incentive to mangrove conservation

Bangsa Palawan - Rizal, Palawan

PTFCF Supported Projects (2008) Dr. Abraham – Sanchez Mira, Cagayan Tanggol Kalikasan – NSMNP, Isabela KEF – Kalahan, Nueva Viscaya

BICAS – Diffun, Quirino

CBMSF – Morong, Bataan (Year 2)

ISO & PIBCFI – Polilio, Quezon Illenberger & KPLN– Calapan, Mindoro (BRUTUS) & Roxas, Oriental Mindoro

LIFE – Maragondon, Cavite CONCERN –Pampanga

BIND – MKNP, Negros Occidental COSCA& ESSC-Lian & San Juan,Batangas DISOP – Leyte & Southern Leyte

Atty. Chan & PNNI - Palawan

SWCF – Bilar, Bohol (Year 2) BCMPC - Palawan

VISAYAS

UBCDFI – Bohol

KGMC – Kabasalan, Zamboanga Sibugay Kasilak & PBPF – Maragusan, Compostela Valley

XAES – Ipil, Zamboanga Sibugay (Year2)

COSEED – Vincenzo Sagun, Zamboanga del Sur (Year2)

MINDANAO

SDGF – Marilog District, Davao City TLDFI – Tboli, South Cotabato

NEDF-:Ilog-Hilabangan, Negros Oriental ALG-En Defense Program: Nationwide

PTFCF Supported Projects (2009) Cavapped – Ilagan, Isabela Task Force Sierra Madre Tanggol Kalikasan

Isla Biodiversity, Inc. – Calayan Island

UP Baguio Fdtn – Baguio City

Pusod Inc., Lipa City, Batangas

WWF-ATMST – Sibuyan Island, Romblon

Sasamaka (Y2) – Sablayan, Occidental Mdo.

Omagieca – Bantayan Island, Cebu PNNI – Puerto Princesa, Palawan

Landcare (Y2) – Claveria, Misamis Oriental

VISAYAS

Bangsa Palawan (Y2) – Rizal, Palawan

PBPF – Compostela Valley

KRDFI – La Paz, Zamboanga City MINDANAO

ISFI-ADDU – Bagumbayan, Sultan Kudarat

Kinaiyahan Foundation, Inc – Marilog, Davao City &Arakan, No. Cotabato PAMAAS, Inc. – Magpet, No. Cotabato

• Ps. 110,346,313 awarded from 2005 to 2009, with Ps. 88,889,431 as counterpart from grantees and partners • 109 projects supported, 38 are on-going • Covers 47,840 hectares of mangroves and 1,001,006 hectares of dipterocarp forests

Challenges • Outdated national forestry law • Continuing land conversion and illegal logging • Increasing rural populations without access to resources • Need for more resources

Opportunities • Increased awareness of forest ecosystem services (i.e. watersheds) • Public support for forest conservation • Increased support from local governments

The Future of Debt Reduction • Agreement on debt • Commitment to use funds for purposes agreed upon • Transparency and accountability • Forest recovery • Public benefits • Sustainability of resources

Thank you for listening

Philippine Tropical Forest Conservation Foundation (PTFCF) Unit 11-3A Manila Bank Building, 6772 Ayala Avenue Makati City 1223

ILLEGITIMATE DEBT  Now a major focus of many debt campaigns all over the world, North and South. 

Governments, intergovernmental organizations and international financial institutions have begun to recognize and deal with the issue. – The World Bank came out with a paper in 2007 exploring the merits and issues surrounding the question of Odious and Illegitimate Debt. In 2008 it organized a roundtable discussion on the this topic with experts, governments and civil society.

– The UNCTAD also came out with a study paper in 2007 and is now preparing to form an experts group on Responsible Finance which will cover among others the problem of Odious and Illegitimate Debt – The UNDP and the UNFfD organized a Consultation on Debt with governments, experts and civil society groups in May 2008. Two of the sessions addressed the issue of illegitimate debt.

– The “Paris Club” of bilateral lenders announced in 2008 that it plans to start a study of the issue – The call to study and address the problem of illegitimate debt was included in the penultimate draft of the Outcome Document of the UN Financing For Development Conference in Doha in Nov--Dec 2008. The document that was Nov finally approved did not contain the provisions because of strong opposition from US and Japan.

– The following universities have organized recent academic conferences on Odious and Illegitimate Debt –  Harvard University  Duke University Harvard, in conjunction with a Washington think tank, are now in the process of organizing an Experts Panel and word is that US President Obama is interested in looking at Ex Ante approaches to the problem

– The NORWEGIAN DEBT CANCELLATION  In 2007 the Government of Norway cancelled its loans to 5 countries  Though they did not use the term “illegitimate debt” – the arguments they used fall within the scope of issues covered by the concept.  An important statement they made was the acknowledgement of “creditor co--responsibility” co

THE CONCEPT OF ILLEGITIMATE DEBT 

Based on experiences of the peoples of the South and is a systematic articulation, analysis and address of these experiences.



Issues and implications of the debt are beyond simply the huge amount of debt and the burden on debt servicing.



The framework of debt sustainability does not cover these dimensions, no matter how progressively defined.



The concept is not new.



Issues of illegitimacy have been raised since the 1980’s, or even earlier.



Many terms used – fraudulent, onerous, odious, criminal, imm oral, unjust….

There is a range of perspectives: 



From the more radical – looks at debts not only in their specific and immediate circumstances, nature and consequences – but from a broader, historical and systemic analysis; To a narrower and more easily empirically verifiable definition



Illegitimate Debts are those which cannot be rightfully claimed as debts of the peoples of the South. Involve the gross violation of basic assumptions of debt contracts, as well as widely accepted ethical, social, political, economic, environmental values, standards and principles. Cause harm to the well being of the people and communities in whose name the debts were incurred and who are the ones paying for these debts.

 These violations can be found in any one or combination of the following • circumstances surrounding the contraction of the debt (can be immediate, can also include broader, historical context) • the nature of the contracting parties themselves • the relationship between the contracting parties (and the imbalance of power which shapes the financial transactions and relationship) • the terms and obligations of the contracts

•

the implications and impact of attendant conditionalities

•

how the funds were used

•

the impacts of servicing these debts

•

how debts and access to credit are used as leverage

•

the impact and implications of “indebtedness” and the “dependence” on borrowing

EXAMPLES 

Loans were contracted by dictatorial governments with dubious legitimacy



Debts were incurred with the use of fraud bribery and coercion.



Many loans had terms of payment which were unfair and unjust.



Many loans were supplysupply-driven, benefiting mainly or even solely the lenders (Norwegian case)



Many loans were spent on projects and policies harmful to people, communities and the environment



Many loans were contracted without complying with domestic laws

Basic assumptions of debt contracts 1.

The contracting parties are clearly authorized and clearly have the mandate to act in behalf of the constituency in whose name they are contracting the agreement.

2.

The contracting parties have the common obligation of being transparent and accountable to the constituencies in whose name they are contracting the agreement, and that the agreements must respect this obligation.

Basic assumptions of debt contracts 3.

The agreement being contracted is for the benefit of the constituencies in whose names they are contracting the agreement.

4.

The agreement, and the attendant terms and obligations, should be fair and mutually beneficial. It should not be grossly disadvantageous, or outrightly harmful to one party.

“Widely accepted” ethical, social, political, economic, environm ental values & principles 

We assume and invoke a collective or community sense of justice and fairness, a sense of what is right, what is the common good. These common values and principles include: o Basic Human Rights o Sovereignty and Self Self--Determination of Peoples and State and the Obligation of States and public officials to act in the interest of their constituency

o Democratic Process, Democratic Governance, which includes transparency and accountability o Sustainable use of ecological and environmental resources o Relations based on Parity, Mutual Respect, Mutual Benefit, Fairness, Transparency, Mutual Accountability and Responsibility; NonNoninterference and nonnon-aggression



Many of these are not just assumed – there are established laws, customs and codes, treaties and in fact United Nations covenants and agreements as evidences of wide acceptance, and as declaration of commitment and obligation to uphold these values and principles.



Illegitimacy is more than just legality. – Support and resonance to be found in present laws (national and international), but – Laws do not YET adequately cover and address all the issues being raised in the work on illegitimate debt.



Definitions not rooted solely in law, but,



Full appreciate of the value of using legal instruments to explain the concept, gain recognition of the problem, and compel action.

The Question of Illegitimate Debt 

Lays further, firmer grounds for demanding debt cancellation and repudiation as a matter of justice



Points to what has to be transformed and the alternatives to be established in the policies, practices, processes, power relations and structures of the international financial architecture.