NGO proposes debt swap for agrarian reform
By Gina Mission

posted 11/14/06

As a constructive alternative to servicing foreign debt apart from outright nonpayment, a Philippine peasant NGO proposes swapping debt for the creation of an NGO-managed endowment fund for agrarian reform implementation.

___"Foreign debts are granted for the same reason that lands are distributed," explains Soc Banzuela of the Philippine Agrarian Reform Foundation for National Development (PARFUND). "Fundamentally, both initiatives seek to provide assistance to the very poorest in society," he adds. Thus, if debt relief is granted and the money allocated for its payment used instead to help pro-poor programs, Banzuela believes that it wouldn't be that much of a loss for the part of the creditor nation.

___As Agenda 21, a program of action adopted by the United Nations Conference on Environment and Development (UNCED) in Rio de Janiero in June 1992, provides: "Various forms of debt relief and greater use of debt swaps are required to finance implementation of sustainable development."

___"Agrarian reform is a concrete expression of sustainable, long-term economic empowerment of not only society's poorest, but of society as a whole, because of improvement in agricultural productivity, reduced inflows from rural to the urban centers, the toppling of feudal culture, etc.," writes Banzuela in the paper Philippine Debt for Agrarian Reform Swap. The paper was presented during a recent press briefing on the foreign debt issue of the Philippines.

___For this reason, the Philippine government, says PARFUND, should negotiate with the respective foreign governments on the terms of debt relief, including provision for the Counterpart Fund (CPF), which is essentially a conversion of part of Philippine external, foreign currency-denominated debt into local currency.

___PARFUND proposes that a new NGO-managed foundation with representatives from the Philippine government and the multilateral organizations, or foreign governments, would be set up to manage the CPF.

___"Financing priorities would be geared towards projects of NGOs and POs that build capacities of agrarian reform beneficiaries to be effective resource claimants and managers," Banzuela says.

___The projects will include support to community organizing, education and mobilization to help government expedite distribution especially of large private agricultural and ancestral lands. Other projects proposed by PARFUND also include the securing of municipal waters for priority use of small fishers; provision of leverage funds to access other available resources from government agencies; and building both technical and managerial capacities of farmers/fishers cooperatives, as well as support to start up sustainable agricultural projects.

___The problem with agrarian reform in the Philippines, Banzuela says, is that ten years after the implementation of the Comprehensive Agrarian Reform Law (CARL), only 60 per cent of the total 8.4 million hectares have been distributed. Most of these lands were government-owned, public, and marginal lands. Only 9 per cent of the total 1.5 million hectares of private agricultural lands subject for compulsory acquisition have been distributed.

___Moreover, support services in the form of credit extension, post-harvest, and farm to market roads are not available, according to PARFUND, to more than two-thirds of farmer beneficiaries. This undermines any gains from land transfer, adds Banzuela, as a good percentage of them have started to mortgage or sell their newly-acquired lands.

___In addition, strong and violent landlord resistance – both in and out of government – is one of the key obstacles contributing to the slow implementation of agrarian reform laws. Per the experience of PARFUND, it is only in areas where farmers are organized are reforms of private lands possible. Unorganized farmers, farm workers and government officials alike fear the possible reprisal of the landowner once they start to cover and subject private land to CARL.

___Among the celebrated cases of harassment is the Sumilao case where the tribal farmers of Sumilao, Bukidnon staged a 28-day hunger strike after the landlord and his armed goons drove them away by gunfire from the 144 hectares of land already awarded to them by the government.

___There are two Philippine debt-swap precedents in the country: the Foundation for Philippine Environment (FPE) and the Foundation for Sustenance Societies (FSSI).

___FPE is the result of intense lobbying by Philippine NGOs in the US Congress for the conversion of a percentage of Philippine debt to the US into a perpetual fund to support biodiversity conservation in the country. FPE was set up in 1992 to manage the $21.2 million endowment fund granted by the US government through USAID.

___FSSI is a Swiss-Philippine initiative aimed at supporting poverty-alleviation projects of NGOs and people's organizations (POs). It was set up in 1995 to manage the $17.1- million endowment fund, as well as to disburse in the form of loans and small grants its interest earnings to support "sustainable production" projects of NGOs, POs, cooperatives and similar private organizations.