The US has approved the utilization of $23 million in debt owed by the Philippines for an environmental project.
Treasury Secretary Timothy Geithner confirmed in a meeting last week with Finance Secretary Cesar Purisima and Ambassador Jose Cuisia that the Philippines was eligible for a second round of debt conversion under the US Tropical Forest Conservation Act of 1988, the embassy said in a statement.
A letter from Undersecretary Lael Brainard stated that “a provisional allocation of up to $23 million will be set aside by the Treasury in US appropriated funds for the treatment of certain eligible debt owed by the Philippines to the US government.”
Debt conversion involves the exchange of debt for equity or counterpart domestic currency funds to be used to finance a particular project or policy.
In this case, the US has approved the utilization of debt for an environmental project.
Purisima was part of the delegation of President Aquino who was on an official visit to Washington last week.
The Philippine government’s proposal for a second debt-reduction agreement was developed in collaboration with the Philippine Tropical Forest Conservation Foundation (PTFCF).
The first debt reduction agreement in September 2002 was in partnership with USAID Philippines.
Under the new proposal, the government will step up implementation of the Philippine National Reduce Emissions from Deforestation and Degradation Plus Strategy (PNRPS), 2010-2020.
Key investment areas across the Philippines covered by the PNRPS have been identified as critical forests where biodiversity and ecological services matter most - Luzon Montane Forests, the island province of Palawan, Samar Island, and Eastern Mindanao Biodiversity Corridor.
