Philippines, Italy enter into P158-M debt-for-development swap

MANILA, Philippines – Some P158 million worth of loans secured by the Philippines from Italy will be stricken off in a debt-for-development swap agreement entered into by the two countries in May.

The principle of such agreement is this: Italy grants the debt relief; in exchange, the Philippines implements development projects for the equivalent amount.

Finance Secretary Cesar Purisima and Italian Ambasador to the Philippines Luca Fornari signed the deal, which will run for about 5 years.

The projects to be funded will be agreed on and selected by both governments through a management committee composed of their representatives. 

The projects will target poverty reduction, socio-economic sustainability and environmental protection in the Philippines. They will be implemented mostly in areas with the highest poverty rates in the country.

Eligible to receive funding are Philippine government agencies, local government units as well as community-based organizations in the field of development and environment protection.

The debt-for-development pact is part of the Philippines efforts to manage its debts. The Philippines has also been swapping local debt to lengthen their maturities, and issuing peso bonds to convert debts into local currency. – Rappler.com