Manila Bulletin, Philippines : Philippines & US to implement forest project debt relief

06/12/2003

Philippines & US to implement forest project debt relief

By Fil C. Sionil

The governments of the Philippines and the United States will finally put into effect its debt reduction/restructuring agreement covering the $123.359 million worth of the country’s principal loan through the Philippine Tropical Forest Conservation Board (PTFC).

Finance Officer-in-Charge Juanita D. Amatong announced Friday that under the debt reduction program, some P74.5 million has already been approved for transfer to the Philippine National Bank (PNB), tapped as the fiscal agent of the debt reduction program.

The money has already been deposited to the Tropical Forest Conservation Agreement account.

Availments for forest conservation projects availing will have to be approved by the PTFC. Once the go-signal has been given, PNB will be disbursing the money.

Under the Debt Reduction and Tropical Forest Agreements inked in September last year, eligible activities for financing include the establishment, restoration, protection and maintenance of parks, protected areas and reserves.

Also eligible are:

—Development and implementation of scientifically sound systems of natural resource management including land and ecosystem management practices;

—Training programs to increase scientific, technical and managerial capacities of individuals and organizations involved in forest conservation efforts;

—Restoration, protection or substainable use of diverse animal and plant species;

—Research and identification of medicinal uses of tropical forest plant life to treat human diseases, illness and health related concerns; and

—Development and support of the livelihoods of individuals living in or near a tropical forest in a manner consistent with protecting such a tropical forest.

On the other hand, entities eligible to receive grants from the fund are non-governmental environmental, forestry, conservation and indigenous people organizations of, or active in, the Philippines, including those involved in development, education, science research or forest management as well as other appropriate local or regional entities active in the Philippines.

The debt reduction swap transaction between the governments of the Philippines and the US was made available under the US Tropical Forest Conservation Act of 1998.

Under the program, the Philippines and other eligible countries can negotiate with the US government to treat a portion of their debt by engaging in debt buyback; debt swap with an eligible third party and debt reduction/restructuring.

For the Philippines, the debt reduction/restructuring was the most advantageous option, wherein the government will continue to repay the loans based on their original amortization schedules with some discounts; pay the principal amount of the loans to the US government in dollars and pay the interest of the loans in a local account in pesos.

Under this scheme, about eight loans of the Philippines with the United States Agency for International Development will be treated/converted under the program.

These loans were signed from 1971 to 1974, amounting to $85.7 million, the original amount of the loan, have repayment period of 40 years inclusive of nine and half year grace period and interest rates of two percent annually during the grace period and three percent during the repayment period.

Payments of the fund will amount to about $8.247 million or roughly about R430 million and will be done in 28 semi-annual payments over a period of 14 years starting this year.