The noblest cause of all is out of the pit of poverty. And for us in the Second Committee, the most important problem is how to finance poverty alleviation programs.

But we cannot get out of poverty if the net transfers of international financial resources go instead to developed countries. While the net private flows to developing countries have improved over the past years, they are not substantial enough to make a dent in achieving the development agenda, particularly at this stage, where developing countries feel the crunch posed by increasing prices in oil and energy.

What we need is to think of innovative ways to address our debt problem and creative means to financing our development goals. The international community must be ready to organize deeper, wider and faster debt relief to help the LDCs, and low- and middle-income developing countries to relentlessly fight poverty.

The Philippines therefore proposes a "Debt-for-equity in MDG Projects" program as a major complement to the agreement by the G-8 countries to write off multilateral debt owed by the poorest countries. The Debt-for-equity in MDG Projects seeks to convert part of outstanding debt obligations and to utilize these resources to fund development programs. It provides an opportunity to transform debt into investments, which in turn, could propel sustainable economic growth and development.

Debt-for-equity in MDG projects does not call for debt forgiveness. It is neither debt cancellation, nor debt moratorium. It requires no new monies from the parliaments and governments of the rich countries. Neither does ‘debt-for-equity in MDG projects’ envisions any reduction or loss of facevalue in the creditor’s financial asset. Furthermore, participation by the creditors is voluntary. And creditors have the option to choose which MDG projects to support.

What we propose is for the rich countries, multilateral institutions, and large commercial banks to plough back into the economies of the debtor-countries 50 percent of an agreed-on portion of the debt-service payments due them. These payments would be plowed back in the form of equities, or other kinds of financial assets, and channeled toward MDG programs – such as reforestation, mass-housing, safe water systems, hospitals, infrastructure, or micro-financing.

The "Debt-for-equity in MDG Projects" program will be backed by tangible assets – most of which should be value-creating, job-generating, and tradable in themselves. Under this scheme, the debt service and/or principal amount is merely converted into equities in new or existing projects of at least equal value, and with their own earnings potential.

We propose that the World Bank, IMF, ADB, and G-8 countries, consider converting portions of debt into equity for MDG projects. This provides an opportunity for lenders to become shareholders.

Debtor-countries like the Philippines can readily offer specific economic and social projects as the object of debt-for-equity in MDG investments. These may include:

* Debt for Reforestation. These projects will regenerate forest resources; bring back green cover to the bald mountains in Asia, Africa and Latin America; and restore the ecological balance and create hundreds of thousands of jobs in upland rural communities throughout the poor countries.

* Debt for Energy. Current runaway oil prices have given impetus to develop projects on indigenous and renewable alternatives to hydrocarbons.

* Debt for Mass Housing – The lack of shelter is a common problem in many developing countries, a basic human necessity, and a priority for developing countries.

* Debt for Irrigation, Food Production, and Postharvest Facilities. In many developing countries, the interrelated problems of rural poverty, underemployment, hunger and malnutrition are best dealt with through strategic investments in basic food production, irrigation, and farmstorage facilities.

* Debt for Eco-Tourism. Many poor countries have natural tourist attractions located in untouched regions far from the usual tourist spots, which require infrastructure development.

* Debt for Wealth-Creating Projects. Many developing countries have natural resources they are unable to exploit for lack of investment capital.

* Debt for Education. Millions of young people in poor countries have little or no access to basic education. Debt payments can be ploughed back into school buildings, instructional materials, and better pay and training for public-school teachers.

* Debt for Hospitals and Health Care. Debt-relief funds can also be channeled to primary health-care facilities such as puericulture centers, general hospitals, and diagnostics laboratories. Even more useful are mass vaccination programs to prevent epidemics that now kill people in poor countries in great number.

* Debt for Microfinance. The United Nations regards microfinance as a key strategy in reducing poverty. The success of microlending in Bangladesh and elsewhere proves how much poor people, particularly rural women, can do – given a little capital.

So far, the Philippines has received positive feedback from the Italian Government through Prime Minister Silvio Berlusconi, who agreed to "give favorable consideration to the Philippine proposal – once [it] is submitted to the Paris Club."

For its part, the German Government, through Chancellor Gerhardt Schroeder, has promised that Germany "will work to ensure your proposals are discussed openly and constructively in the Paris Club." The President of the Paris Club, M. Jean-Pierre Jouyet, has decided to create immediately a "Technical Committee" of experts to evaluate the Philippine proposal for presentation to the Club’s 21 member-states. Senior Treasury officials on the International Poverty Reduction Team in London gave assurance also that they would consider the proposal in the Paris Club.

In addition to governments and institutions, the Asian Development Bank has also expressed readiness to collaborate with the Philippines to realize this proposal. No less than Secretary General Kofi Annan encouraged the Philippines to share this idea widely, mentioning that the "…proposal to broaden the scale and scope of debt swaps would help provide debt relief and release additional funds for financing sustainable development activities that are key to achieving the Millennium Development Goals."

As Professor Dani Rodrik told the Second Committee last Friday, "successful growth strategies require policy experimentation" and "willingness to try unconventional solutions." The Debt-for-equity in MDG Projects will help transform debt into investments and from investments to job creation, and into generation of full-scale economic activities that will help achieve our economic development goals. We need the political will of developed and developing countries to give this option a chance to help achieve the MDGs by 2015.