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 
 
12 noon ‐1:00 PM  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. 
1:00‐1:30 PM  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 
Charge de Affairs 
The Embassy of Switzerland 
PHOTO EXHiBIT 

Message from Advocate‐Legislator  Hon. Edcel Lagman  
1st District of Albay, Bicol 
House Representative 
1:30‐2:00 PM  Presentation  1: Why Debt Reduction  Ms Ma. Teresa Diokno‐Pascual  
(30 minutes)  Now?  FDC Honorary Board Member 
   
The presentation seeks to provide a 
historical context of the global campaign 
for debt cancellation or reduction and to 
share successful country experiences. 
2:00‐2:45 PM  PRESENTATION 2:  (PANEL) Making Debt   
(15 minutes each)  Swap Work    
1. Foundation for the Philippine  Ms Christine Reyes 
Environment  Executive Director 
  Foundation for the Philippine 
  Environment  
   
   
    
2. Foundation for a Sustainable Society   Ms Emma Lim‐Sandrino 
  Executive Director 
  Foundation for a Sustainable 
  Society 
   
3. Philippine Tropical Forest  Atty. Jose Andres Canivel 
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. 
2:45‐3:15 PM  PRESENTATION 3:  The Illegitimacy of   
(30 minutes)  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. 
3:15‐4:00 PM  Open Forum   
4:00‐4:10 PM  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 community-
oriented, 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
2500

“six will fix” 2000

recommended by
UNESCO, education 1500

spending from 1996-

2007 should have been
1000

PhP3T 500

 Actual education
spending: 0
Ramos (96-97) Estrada (98-00) Arroyo (01-07) TOTAL (96-07)

PhP1.4T, leaving a gap Interest

Educ'n
Spending
of PhP1.6T 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.
 Registered with the Securities
Birth of FPE 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
• Cooperative
• Philippine Government Agreement between
• Philippine NGOs and POs WWF-US and PBSP

• U.S. Government
• U.S. NGOs
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 => $21,731,745.40
Bank of Tokyo => 119,590.15
TOTAL $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 FPE encourages

Cooperation 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
FPE Area of
Philippines Influence
Forest Cover 5.8 M has. 1.35 M has.
Protected Area 1.5 M has. 562,110 has.
Marine Protected Area 159 MPAs 39 MPAs
IP Area/CADC 1.2 has. 117,723 has.
(57 CADT/CADC) (9 CADCs)

Sites under
FPE Sites under PA MPA IP Areas/CADC
LUZON
1. Bolos 220,000 1 *
2. Malanas/Balbalasang 16,700 42,000 (1)
3. Biak na Bato 2,117
4. Banahaw 11,133
5. Bulusan 3,673
6. Palawan/Honda Bay 13
7. Zambales 41,161 (4)
Sub-total 253,623 has 14 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 151,024 has 34,562.74 has (4)

562,110 has. in 11 117,723.74 has in 9

Total FPE sites 39 MPAs CADC areas
 GRAND TOTAL (Totals 1,2,&3)
Name of Project Sites REGIONS

Mt. Bulusan Sorsogon Luzon 15,681,449.06

Banahaw and San Cristobal Luzon 17,148,542.37
Biak na Bato Luzon 13,873,436.17
Buasao and Poswey Luzon 11,635,913.04
Baggao Luzon 4,945,026.00
Palawan Luzon 13,002,864.84
Zambales 2 PASS Luzon 6,562,017.84
Bolos Point Luzon 9,834,954.84
Banao-Malanas Watershed Luzon 8,209,402.84
Pulangi Mindanao 8,326,432.01
Mt. Matutum Mindanao 19,481,290.84
Dinagat Island Mindanao 10,811,645.00
Mt. Malindang Mindanao 12,581,915.09
Ligawasan Mindanao 5,193,589.84
Tawi-Tawi Mindanao 1,151,060.00
Lake Mainit Mindanao 5,125,603.84
Arakan Mindanao 6,197,989.84
Pantaron Mindanao 2,020,000.00
Mt. Talinis (Ting Matiao Fdn) Visayas 10,969,503.42
Twin Lakes (SU-CENTROP) Visayas 12,463,047.42
Catubig Estuary/Palapag Visayas 4,818,801.00
Paranas Visayas 8,405,464.84
Guiuan Visayas 7,762,410.24
Northwest Panay Visayas 9,260,313.24
North Negros Natural Park Visayas 7,695,511.84
Bohol Visayas 8,314,934.00

Total 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 Million PhP No. of Million PhP No. of Million PhP
proposals proposals proposals

FY2006-2007 FY2007-2008 FY2008-2009

Competitive Proactive Site-Focused 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 P 569,809,065.24

As of 2009
• Fund balance (46%) P 733, 293,398.00
• Disbursed (54%) P 846,175,516.00
================
• Endowment Value P1,579,488,814.00
(100%)
 Disbursements (Expenses)
• Grants Approved: P 560,628,025.00
• PDME P 115,441,940.00
• Administrative P 170,105,551.00
================
TOTAL P 846,175,516.00
The FSSI Debt-Swap Story

Foundation for a Sustainable Society

 Our Roots
Just and  Product of a debt relief 
sustainable  program as a result of a 
society! participative, cross‐sectoral, 
multi‐level campaign 

50% Payment 
Cancelled
Philippine Debt  FSSI 
to the Swiss
to the Swiss 50% Counterpart
50% C t t Endowment 
Endowment
Government Fund 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. Highly indebted low‐income countries
2
2. All l t d l
All least developed country
d t
3. Country with major bilateral development cooperation 
programmes
4. Debtor country must:
 Practice good governance 
 Engaged in a medium
Engaged in a medium‐term
term economic reform 
economic reform
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 • NASSA
• APPEND • NATCCO
• CONVERGENCE • NCCP
• FDC • NCSD
• FPSDC • PBSP
• GREEN FORUM • PHILDHRRA
• HELVETAS • PHILNET‐RDI
• HEKS • PHILSSA
• MASS‐SPECC • VCF
• MINCODE • 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  LaTOP Cooperative
LaTOP Cooperative
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
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  BUBI Junkshop
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
 Our Partners
“Because of the loan for  Carles MPC
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
 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
fssi@fssi.com.ph
Illegitimate Debt

Lidy Nacpil, FDC

For the FSSI-
FSSI-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 peso-
denominated 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 (FPE-
EnDefense, 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

LIFE – Maragondon, Cavite
(BRUTUS) & Roxas, Oriental Mindoro

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,
XAES – Ipil, Zamboanga Sibugay (Year2)
Compostela Valley

SDGF – Marilog District, Davao

COSEED – Vincenzo Sagun, Zamboanga
City
del Sur (Year2) MINDANAO

TLDFI – Tboli, South Cotabato

NEDF-:Ilog-Hilabangan, Negros Oriental

ALG-En Defense Program: Nationwide

 PTFCF Supported Projects (2009)

Cavapped – Ilagan, Isabela

Isla Biodiversity, Inc. – Task Force Sierra Madre
Calayan Island Tanggol Kalikasan

UP Baguio Fdtn – Baguio City

Pusod Inc., Lipa City,
Batangas
WWF-ATMST – Sibuyan Island,
Sasamaka (Y2) – Sablayan, Romblon
Occidental Mdo.
Omagieca – Bantayan
Island, Cebu
PNNI – Puerto Princesa,
Palawan Landcare (Y2) – Claveria,
VISAYAS Misamis Oriental
Bangsa Palawan (Y2) –
Rizal, Palawan PBPF – Compostela Valley

Kinaiyahan Foundation, Inc

KRDFI – La Paz, Zamboanga City – Marilog, Davao City
MINDANAO &Arakan, No. Cotabato

ISFI-ADDU – Bagumbayan, Sultan PAMAAS, Inc. – Magpet,

Kudarat 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 supply-
supply-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; Non-
Non-
interference and non-
non-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.