Italy converts loans to assistance to Philippines

Finance Secretary Cesar Purisima. INQUIRER FILE PHOTO

The Philippines and Italy have forged a debt-for-development swap agreement, converting nearly 3 million euros (about P157.10 million) in Italian loans to funding sources for antipoverty and environmental protection projects of the Aquino administration.

This was announced Monday by the Department of Foreign Affairs (DFA) which described the deal as the “first debt conversion arrangement” between Manila and Rome.

The DFA said the agreement was signed on May 29 in the Philippines by Finance Secretary Cesar Purisima and Italian Ambassador Luca Fornari.

In a statement, the foreign office said the agreement was “expected to relieve the Philippines’ debt burden with the conversion of 2.91 million euros in outstanding loans from Italy into financial resources which would be used to  implement social development projects, particularly in provinces with the highest poverty rates in the country.”

“Development projects which are eligible for funding under  the agreement must be focused on poverty reduction, sustainable development and environmental protection,” the DFA said.

The foreign office noted that in 2010, the Italian government named the Philippines as one of the beneficiaries of its debt conversion program called Programming Guidelines and Directions of the Italian Development Cooperative.

The approach authorizes the payment of Philippine debts to the Italian government through the financing of development projects in the Philippines, it added.