The Philippine Debt Divide -- and what to do about it

It's a common image we've all come to know: squatters reduced to picking over the rubbish (and sometimes fighting over it) at the garbage dumps of major cities. But this BBC report contains some other info that's a strong indictment of aid through World Bank and IMF loans.

"The debt repayments and the government payroll take up 90% of the budget," the powerful Speaker of the Philippines House of Representatives, Jose de Venecia, told the news agency. "That leaves just 10% for schools and hospitals, water and electrification projects."

But, the article continues, the politician actually has an idea of how to move forward--a debt for equity swap:

His proposal would convert half of the debts into equities, which would be used by creditor nations to invest in projects aimed at achieving UN anti-poverty goals. Thus, for example, if the Philippines owed France $100m a year in debt repayments, Paris would, on a voluntary basis, forego half the repayments in exchange for a $50m-share in development projects. The money for those projects would be found by the Philippines government.

It's an interesting idea. It's high time for the lending nations to get a global kick in the pants.