This story
was taken from Bulatlat, the Philippines's alternative weekly
newsmagazine (www.bulatlat.com, www.bulatlat.net, www.bulatlat.org).
Vol. V, No. 32, September 18-24, 2005
Debt-for-Equity
Scheme Will Legitimize Fraudulent Loans
House Speaker Jose de
Venecia’s debt-for-equity scheme, if implemented, recognizes that all debts are
legitimate, including those deemed as onerous.
By IBON Foundation Despite all the hype speak,
House er Jose de Venecia’s debt-for-equity scheme is not a solution to the
country’s debt crisis but may in fact even worsen it, according to independent
think-tank IBON Foundation. The plan does not call for
debt forgiveness or cancellation, but will instead convert half of the
debt-service receipts of multilateral lending institutions and multinational
commercial banks such as the International Monetary Fund (IMF) and the World
Bank to “equity development and anti-poverty projects that poor countries are
undertaking to meet their national Millennium Development Goals (MDG) goals over
2005-15.” Accepting this proposal
recognizes that all debts are legitimate, including those deemed as onerous,
says IBON. An example of onerous debts is those contracted by former President
Ferdinand Marcos-- such as debts for the mothballed Bataan Nuclear Power Plant (BNPP),
which Filipino taxpayers will have to pay almost $76,000 daily until 2007. According to IBON, debt
cancellation of fraudulent loans incurred under Marcos, the Bataan Nuclear Power
Plant (BNPP) debt in particular, is an option that government should seriously
consider if it is looking for a doable solution to ease its debt problems. The
debt of the national government stood at almost
P4.1 trillion as of February 2005, while debt servicing in 2004 reached P601.7
billion, more than half of national government expenditures. IBON adds that using the
MDGs as an end-goal makes the debt-for-equity scheme a shrewd strategy to
promote neoliberal globalization The MDGs, through the World Bank’s Poverty
Reduction Strategy Papers (PRSPs), promote a package of neoliberal reform
policies that developing countries must implement if they want to avail of
concessional lending or poverty reduction assistance from the World Bank. These Papers may require
developing countries to privatize state-run utilities or reduce spending on
social services to pave the way for private sector participation, resulting in
increased user fees and less access by the poor to vital services such as water
provision and health. It would also open the door for further foreign corporate
control over the ailing domestic economy. According to IBON, instead
of pursuing the debt-for-equity-scheme, implementing a sound debt management
plan that would include cancellation of odious and illegitimate debts and
stopping automatic appropriations for debt service is a more logical step in
solving the debt crisis. IBON / Posted by Bulatlat Sept. 14, 2005 © 2005 Bulatlat
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Posted by Bulatlat