Swiss Coalition

of Development
Organizations
Swissaid.CatholicLentenFund .
Breadfar all Helvetas Caritas
Monbiiaustrasse31,POBox
CH-3001Berne,Switze and
Phone+41 31381177113-15
F a x + 4 13 13 8 1 1 7 1 8
E-mail: scoalition@igc.apc. org

00a4'7,t I9: lvlatihiasNleyei,FOFEA

Serge.Chappaiie, SDC
F-r5,ift. CoovtoiHanspeter l\raag,Susanne Biiki,
SDC,Section Asiall
lVichel
lvlordasini,
lvlartin
Rohner, FOFEA,FSll
Ambassadof KurtHoechner, Manila
EugeneGoozales. ExecDir. FSSI
Helvetas,Zurich,Swisscontact, Zurich;
SwissLentenFund,Luzern;HEKS,Zurjch;
Bfeadfor all, Berne;GruppeSchweiz-
Philippinen,
Zurich

SOCIEry,INC.
FORA SUSTAINABLE
THEFOUNDATION
(FSSI):

FIRSTEXPERIENCES

KtrTUK I

on the missionto the Philippines

February15to March1, 1997

Debtfoi-Development
Unii
AliiedGugler
Iuarch1997
 tsoae: rre r:rr: irsr EYpefl€nces

TABLEOF CONTENTS

1 INTRODUCTION

2 THE FSSIAFTERIO MONTHSOF OPERATIONS

2.1 Sod€basicinformationotrthe FSSI 3

of thetroundation
2.2FinancialsituatioD t

of projectsapproved
2.3Overview {

2.{ Institutional
functiodiog
2. 1.1Relationship
be$€enFSSIManagement andBoardof Trustees 6
2.4.2Relationship
b€t$eenManagementandMeftbership 6
2.4.3Projectappmsal process
anddecision-making 6

2.5FundingPolicy 7
2.5.1General
Features 1
2.5.2Toolsapplied 8
2.5.33 examples
of implementation
of nerri nstruments 9
2.5.4Partne$hip
andcollaboration
ivithotherorganisations IO

2.6Investm€nt
Policy

2.7Moniloridglnd Evalultion(M&E) System

2.7.1Backgrcund II
2.7,2Designof lheM&E System 12
2.7.3Methodolog]andimplementation T2

ANDRECOMMENDATIONS
3 CONCLUSIONS
\t
3.1 R€gffdil|g institutionalfonctioningof FSSI

3.2 RegnrdingtbeModtonng rtrd EvaluationSJ-st€m

Attachftent 1: Scheduieof the mission 15

Attachment2: Shortreporton tlrc First Asia-Pacrfic Fonm on EnvircnmentelFunds 1,"
Attachment3: FSSI:Analysisof Incone & Principal t9
Attachmentil: SummdJ-of ProjectsApproved 20
5; FSSISnallGnntsFacilin-
Attachment 11.
6: Project
Attachment Concep{
PaperFormal 21
Attachment7: Intefiention Manix 23
Attacbment8: Perfonunce of Fund Managen 21
 fhe FSSI:Ftsl Experiences prge 3

1 lntroduction

.The Foundation for a SustainableSociety,lnc. (FSSI)is probablythe counterpart

fund in whichthe SwissCoalition's Debt-for-DevelopmentUniihasput mosttimeand
energyof all the fundsestablishedLrpto now underthe SwissDebt Reduction
Faciiity.Moreover,it is the only instancewhere the Unit was able to directly
participatein the negoijationsbetweenthe two governments. Thiswas in Januaryof
1995, and the bilateralagreementas well as the documentsestablishing the
Foundation wereeventually signedln August 1995.

Sincethenthe Unithas beenfollowingFSSI'Sdevelopment fromSwitzerland, based

on reports,minutes,projects and the like.
descriptions, The invitation
by the UNDP to
forumon environmental
an international funds,scheduled to takeplacein Cebu,the
by mid-February,
Philippines, providedthe Unita goodopportunityto visitthe Manila-
basedFoundation andto reviewthe experbnceit hasmadeuntilnow.The aimof this
was to updatethe information
missionto the Philippines on the FSSI,to assessits
functioningas well as its funding activities,and to discussits monitoringand
system.
evaluation

2 TheFSSIafter10 monthsof operations

2,1 Somebasicinformation on the FSSI

In August1995,the Governments of the Philippines and Switzerland signedan

agreementon the reductionof Philippineexternaldebt. Underthis accord,fifty
percentof Philippine Government's outstanding commercial debt(exportcreditdebt)
to Switzerland amounting to 42 millionSwissFrancswas cancelled. The remaining
fifty percentwas convertedinto Philippine pesos. These PhP 455mn were then
providedby the PhilippineTreasuryas an endowment to the Foundationfor a
Sustainable Society,Inc. (FSSI),a Philippine NGo-managed foundation formedto
managethecounterpart funds.FSSIsuppodsproductjve of NGOs,people's
activiiies
organizations, cooperatives, and similar private organizations in the field of
agicultureand fishery,and in the urban and rural small industries sector.The
Foundation is in thefirsiplacea loan-making but provides
instituiion, alsograntsfor
liketechnical
activities assistance, studies,marketresearch,
feasibility etc.

The FSSIhasa numberof interesting and uniquefeatures:

. The processthat led to the forging of the agreementwas markedfrom the very
start by a elose and intensivecollaborationamong Philippineand between
PhiliooineandSwissNGOsi
. The FSSIis exelusively managedby NGOS,the two'governments beingonly a
non-voting member of the Board(Philippines)
and an observer(Swi2erland);
. The paymeniof the debt conversionproceedsto the Foundationwas not in the
form of cashbut in TreasuryBillswith differentmaturities;
. FSSI'Sresources are exclusivelybeing allocaiedto civil societyorganisaiions
(NGOs,POs,cooperatives, and similarorganizations),
 Plge 4 ]nJ FSSJ:Firsi Experiences

. li is structuredas a long-iermcapital fund, i.e. only the inteiestor the .eturn on

investmentand partof the loanreflowsare usedto fundprojectsand programs;
. lts interveniions production",
are limitedto,,sustainable i.e.productive activitiesin
-
the sphereof sustainable agriculture
and fishery,and in the urbanand ruralsmall
industriessector,includingfoMard and backwardlinkages.

The Foundation wasofiicially

incorporated
in September 1995.Aftera build-upphase
it started operationsin April 1996. lts Board of Trusteesis composedof seven
members, all of themrepresentingmajorNGO networks(e.g.PH|LSSA, pHILDRRA,
NGO-CCD)or individual NcOs. One member(HELVETAS) represents the Swiss
NGOcommunity. ThePhilippine Departmentof Financeis member ex-officio.
but has
no votingright,andthe SwissGovernment has an observerstatus.The Foundation,s
staff comprises7 persons,includingan ExecutiveDirector,an AssociateExecutive
Director,and 2 ProgramOfficers.

Financial situationot the Foundation

As of Sepiember 1996,all T-Billsinitiallytransferredby ihe philippine

Department
of Finance(DoF)to the LandBank of the Philippines, whichactedas the initial
custodianfor the Foundation's endowment,have matured. The proceedshave
been reinvested by FSSI'sfour Fund Managers(investment banks)in djtferent
rnstruments,principally in fixed incomesecurities(see section2.6, Investment
Policy).
As of 31 December 1996,FSSI'stotal assetsramountto php5O2million(CHF29
mn at the currentexchange rate),as comparedto PhP475millionby the end of
1995,and PhP455millionon 6 September'1995,the dayon whichthe conversion
proceeds weretransferred to the Foundation.
As of 31 December '1996, the revenuesof the Foundatjon (inierestearningsand
investmentincome) for theyear1996werePhP57 million.
The operatingexpenses of the Foundationamountedto PhP4.4millionin 1996;
thisrepresents7.7percentof totaiincome.The budget1997for operating costsis
PhP7.1 million.
Duringthesameperiod, the FSSIprovidedgrantsin theamountof php 3.3 million.
(The loansgrantedin 1996amountto 14.9 million;sincethey haveto be paid
back,theyarecountedas asselbuildingdisbursements). Thus,the FSSI'sincome
was morethanenoughto covergrants,operating expenses, reserves,and inflation
(8.4%in 1996).(cf.alsoAttachmeni 3: Analysjsof lncome& Principal).

2.3 Overviewof projectsapproved

(seeAttachment
4 for deiails)

Accordingto FSSIGuidelines, proponenishave to submiia shortprojectconcept

p€per before30 Juneof each year. lf the conceptpapershowsihat the projectand

' Thiscomprisescash,accoLrnts
receivabie(projects),accruedinierest,guarantee
funds,long-term
inveslmentportfolio,property,
andequipment
 The FSS: F st Experienccs page 5

the organisationapplyingfor fundingare eligible,the applicantwilibe askedby FSSI

staffto submita detailedprojeciproposal.
. During 1996a total oi approximately 70 projectproposalshavebeensubmittedto
'
the FSSI;
. Out of these,'15projectsand programshavebeenapprovedby the Boardup to the
end of 1996,coveringa totalamount(FSSIcontribution) of PhP'18.2million(CHF
1.05mn).PhP14.9nn (82o/o) have been providedin the formof loans,wheleas
PhP3.3mn (18%)aregrants;
. 6 additionalprojectsof the totalamountof PhP194,000 (CHF11,000) havebeen
approvedby the Executive Directorunderthe Foundation's SmallGrantsFacility;
. Moreover,3 additionalprogramsand one projectcomponentwereapproved:
- a creditIineof PhP2Smn (CHF1,4mn) for ricetradingby Mindanao Cooperatives;
- a guaranteefund of PhPlmn with the New Rural Bankof San Leonardofor small
loansto micro-enterorises:
- a large guaranteefund (PhP25mn)with the BankersAssociationof the
Philippines CreditGuarantee Corporation (BAPCGC)for creditsto smallcottage
enterpfises;
- an equityinvestmentof PhP890,000for a waste management programin Sjlang
(Cavite).

2.4 Institutional functioning

TheBoardof Trustees (BoT)of the Foundation meetsat leasteverytwomonthsfor a

five to six hoursmeeting. In orderto preparefor the meetings, Boardmembers
receivea comprehensive amongothers,quitedetailed
kit containing, information
abouttheproject proposalsto bediscussed. Theagendaitemsinclude discussion on
basicFSSIdocuments (e.9.Operations Manual,Management Plan),investmeni
decisions, budgetdiscussions, reportson the implementationof approvedprojects,
decisionson projectproposals, administrative
matters.TheBoTbeingrelatively small
(7 members), thereare,forthetimebeing,no specialsub-commiitees, except for an
investment committee.Projectproposalsare usuallypresented by oneof the Project
Officersor theExecutive Directorandthendiscussed in detail.Thedecisionsof the
Boardaremadeby majority vote.
The Membership of the Foundation (ihereare presently19 members) meetoncea
year for the GeneralAssembly.At this occasionthe Membersare informedby
Management aboutthe FSSI'S activitiesand can put questions
to theStaffand to
Boardmembers. Boardmembersare alsopartof theMembership.
By definition, The
powersof the Membersconsistessentiallyjn electingthe members of the BoT,
amending the Foundation'sArticlesof Incorporation
andBy-Laws, anddissolvingthe
Foundation.

\
 2.4.1 Relationship
betweerFSSIMsnagement
a'ld BoardofTrustees
-.
In general,thereseemsto be a greatamountof trustin the relaiionbetweenthe
Boardand Management. Boardmembersconsiderthe staff as bejngreliable,
competentand experienced.One indicationof this trust is the fact that the Board
approveda SmallGrantsFacilityunderwhichthe ExecutiveDjrectorhas powerto
approvesmalllgrantsup to a totalamouniof PhP1,000,000 a year(cf.Aitachmeni
. In termsof makingdecisionsregard,ngrequestsfrom loaneesin difficultsituations
(e.9.for extendingmaturitiesor loweringinterestrates),it seemsthatthe Board
usuallytakesa toughstance,whilethe Stafftendsto havea rather,soft,,positjon,
havjngto dealdifectlywiththe client.However,
this,,toughattitude',
by the Boardis
accepted by Managernent as beingthe Boards role.

2,4.2 R€lationship
between
Managem€nt
andMembeNhip

. This is describedas goodand open.However, policydoesnot yet

the informaiion
seemto be very clear.Membersdo not knowwhat kjnd oi (written)information thev
are entitledto get. lt is supposedthat thiswill be the annualandfinancialreport;.
andthatadditional information wiilbe provideduponrequest.
. Somelvlembers seemto havea rathercriticalattitudetowafdsManagement (and
alsotowardsthe Board)arguingthat the FSSIis too,,business-minded',, that it is
not alwaysopento differentopinionsand that its fundjngpolicydoesnot really
benefitthe poorest.

2.1,3 Projectappraisalanddecision-making
process

Accordingto the ExecutiveDirector,the projectscreeningand appraisajprocessis

structuredas follows:

' Seethe formaifor projectconceptpepers

as Attachment6. Togetherwiththeaanceptpaper,
proponents are requiredto submilthe follolvingdocuments: Articlesof Incolporation
andBy-Laws;
auditedfinancialstalernentsforthe latesitwo fiscalyeais;lisl of donors/crediioE
andfundsrcceived
forlhe latesihvoyearsland,r,vhereapplicable, descriptionandstalusot memberc'savings schemes.
 The FSSI:Fist Experie.ces p.ge 7

2.5 Funding Policy

2.5.1 GelrelalFeatures

The fundingpolicyand strategies of the Foundation is laid downin the Guidelines

and - in a moreelaborated -
and detailedmanner in the Operations Manual.The
funding policy is based on FSSI'S mission,which is fo serye as a resource
institution tor the economic empowerment of oryanized maryinal rural and
urban communitiesin the Philippines.
In the pursuitof this mission,the Foundatjonhas defineda stfaiegyincludinga
responsiveand a pro-activecomponent:
. the responsive component involvesreceivingprojectproposalsfrom interested
NGOs,POs,Cooperatives, etc.in the sectorsspecified in theGuidelines,
. lhe pro-active pad includesthe conductof studiesand consultations with NGOS
and networksto determinestrategicgaps in thoseindustriesand geographicareas
where there is high concenirationsof NGO and PO efforts and to identify
competent(nehvorksof) NGOSand POswhichmightwish to enierinto partnership
with FSSI;this componenialso involvesthe searchfor new instruments (like
venture capital, recoverablegranis, etc.) and new folms of cooperationwith
financialinsiitutions
in orderto leverage fundsfor sustainable production
projects.

For its fundjngactivities,

the FSSIhas designedan interveniion
matrixthai defines
four ecosystems(forests,coastsand marine,crop lands,urban)and four economic
activities(credit,production,
services, (seeAttachment
marketing) 7).

r Thisincllrdes:background checkofthe pfoponent;assessment andpfoject

of beneficiaries;
development.
4 lf a proposalis deferred,
the staffcommunicaies
wiih ihe applicantiorthe lattefsresponsero tne
issuesiaisedby ihe 906d. Oncea iesponseis ieceived,the proposalis ag6inreviewedbythe Board
t
a*." The FSSI:Fnll E:rei,encPs

Toolsapplied
-
is an overview
Following usedby theFoundaiion:
of financialinstruments

, l-. i ',,,'

Wth loancomponent . majodty of large.gEnts

Grant Withoutloancomponent . allgrantsunderthe smallGaants
Facility
. Dkecl:FSSI-borower
Loan . F55t - trusteeBanK-
tnorrecl: . arangemenlwithAsianBank
(throlghlrustaccount)
. Direct:FSSI-borowe| Institutefofthe Development of
CreditLine Educational andEcological
Alternalives, Inc.(IDEAS)
. lndirectiFSSI- TrusteeBank- Consortium of l\4indanao
borrowers {Cooperatives) Cooperalives in RiceTrading
. Direct:
FSSIdeposit withcfedit- . Guarantee Fund(Deposit)
withNew
Guarantee makinginstitution RuralBankof SanLeonardo fNRBSL)
. Indirect:
noFSSIdeposil . Guaruntee Fund(l\4aster
Guarentee
Agreement) withtheEanke|s
Association
ofthePhiliDoines
Credit
Guarantee (BAPcGc)
Corooration
. Direct: in enterprise. lnstitule
equilyinvestment fortheDeveiopment of
Equity EducationalandEcological
Inc.(IDEAS)
Aliernatives,
. lndirectr
equityinvestment
in venture
capilalfund

. Grantmadebygrant-making . Agrcemenl betweenFssl andthe

,,Re- institution
t0 FSSIwhichrelends it f0r forthePhilippine
Foundation
coverable livelyhoodcomponentof (FPE)
Environment
Grant" environmenlalproject(interest
free (notyetopefatjonal)
toan)
 Ihe FSsr:First Fxpe,icnces paee 9

2.5.3 3 exaopies
of iruplenreDtaiion
of newinstrunents
-i'i
CreoitL,neforivl,noanao
RtceTraoinoCoooeiatives
This programoriginatesdirectlyfrom the rice trading consultationssponsoredby
FSSI and held in Davaodel Sur, Mindanao,in November1996.A Rice Tradin;
AssessmentStudyidentified,amongothers,the lack of workingcapitalfor purchasing
palayouiputof Cooperatives'membersas one of the mainproblems.
The programwhichaims to scale up rice tradingby Cooperatives and NGOSin
Mindanaoconsists of a creditlineof php 25 million(CHF1,4mni.Theseare its main
features:
. EachCoophasto applyfor jts indjvidualcreditline (shareof the overallline)by
submitting
auditedfinancialstatements for the lastthreeyears,reporton its rice
tradingexperience andthe proposed (70%of line);
coJlateral
. FSSIstaffappfaises thecoop'sfinancesand trackrecordin ricetrading;
. Forapproved lines,thecoopassignsthe applicable 70%collateralto FSSI;
. OneoftheFSSlbanksmakesthe creditlineavailable to thecoop;
. The FSSIbankreleases theiundsas agreeduponbetween FSSIandthe coop;
. Marketratesare appliedto the used portionof the credjtline (91-dayT-Billrate
plus3%);
. The cooprepaysthroughthe FSStbank.
Thecreditlineis nolyetoperational.

(ii) Guarantee (NRBS

Fundwiththe NewRuralBankof SanLeonardo

This is the first guarantee fund esiabtishedby FSSI.ti amountsto phpl million
(CHF57,000). TheNRBSLrunsa LandRedemption anda Loansto SmallEnterprises
program.Undertheseprograms the bankextendsloansfor landacquisition, farming
and oiher productive activiiies(dressmaking, broom-making, sari-saristores,etc.).
Loans range from PhP 3,000 to 100'000 (for the land redemptionprogram).
Repayment ratejs 100%for bothprograms.
The Guarantee Fundhasthefollowingiermsand conditions:
. The one millionpesosare depositedby FSSIwithNRBSL;
. The guaranteeing portjonof the depositearnsa guarantee fee of 15%per annum;
the unusedportjonof the guaranteeearns a time deposiijnterestof presenfly
12.Oo/oDetannum.
. NRBSLtakesfull responsibility in the credlt evaluationprocess;FSSI js noi
involvedin creditevaluation:
. NRBSLsubmits quarierlyreportsto FSSIaccording to a mutuallyagreedformat;
. The guarantee fund is only garnishedafter NRBSLhas exhausted all standard
collectionefforts(collectionletters,personalvisits,dialogue& litigation).
By the end of November1996, close to 50 small loans of a totai amountof
PhP74A,A00F4% af theguarantee)
hat alreadybeencoveredby theguaranieefund.
 ,,",

'This
secondguaranteeschemewas approved
Involves by the Boardin December1996. rt
a muchtargerjnitialouari

;',jtr#,"f[d.
;H,+.,11tt!"*"iifli{#i{ir'.:":L';:
ff:i:l m#i:"Jl?cover
Rsffii i[
in accordance
with'terms speciiied
in i
"nJ"onoit["n,
;"j*ruffifl#iiilff,f,tt"Tgl cuarantee
corporation jsarso
(which acredii-
ilfli".i#i::f
;$"::,,""f
,3,lJlJ::?l;l;["J"ff ;li:'"i:"ffi
lmf,::*lXl;
5:::tilJ: ;:?:i:t?":{*ff industries
:.T:'e ensased
. iii,'.T,:Tlffi "T,ili:
:::,^,Tlrft
: Iguarantee
jl#l,i: ii,,I:311il"ili,aHl$::m*u:"1"""i.T
{ili1ff
cover iiFtl=."i
wjthin120davs:
ffH:??::i,il,,","j,
;" ;; ",ca,
on,he
. Proceedsfromthe sale of mon

:g3gqr
nn:1;;tri*.itdil,f:",fi
Ttrf
flff ;i,:il:::
. The Agreementwrllbe in effectfc
gu;iffi;t,;,-*i;ff j,fiffi"?:'*?ff
::l"JfJ"""t?:il#i,{Exf]::!
2.5,1 Paduership
andcollaborationwith otherorganirations

In the frameworkof its pro_active-.strategy,

partnerships the Foundatjonjs seeking innovatjve
andnewformsof co aboratiJn
witn org"""iii;;inicn canonty
Dementionedhereverybrieflyj "tn"i
. An arrangementwith the Foundation
for the phjlippine Envtronmeni(FpE),

i!"8.i'ufi
sustainable
l; g::1":,*i:;;;:i*:rrni:g
ffl,.'ffln,gT,ilt::"'
agriculture:
j:
. A guarantee
fundarrangement
w
"rianrlnosaerxl;r"#;t;,il;::Rr"1ia:""T..?llH;"J,:,1
rornoseANirs
ri;lrii.,#
;#J,91,,"J"-ij.i#,r#,;t:i
l:^. ro,.
f,.os,", tn"
 The FSSI:Fnsi Experiences page 11

2.6 lnvestmentPolicy
'As
of Sepiember1996,ali TreasuryBills initiallytransfeiredby the Departmeni of
Financeto the Foundation as its endowment In
havematured. orderto spreadrisk
and ensureoptimumyields,the FSSI has selectedfour professional financial
institutions (FundManagers) to handlethe placement of its resources
in commercial
investments and managethe lendingoperationsof the Foundation. The selection
criteriafor the FundManagers as in
specified the OperationsManualare: (i) income
(iii)
yieldsoftered;(ii) credibilityandtrack record; size of totalinvestment portfolio
managed; (iv)reputation
of topmanagement; and(v) overallinvestment
policy.

Basedon these criteria,the followingfour institutionswere appointedas Fund

Managers by theBoardandapproved in December
by the lvlembership 1995:
. AsianBankCapital Corporation
. Bankof thePhilippine
lslandsCapitalCorporation
. CityTrustBankingCorporation
. MetropolitanBankandTrustCompany
The total fundsto be investedwere allocatedat equalpartsto eachof the four
theBoarddecided
ln Ociober1996
institutions. to terminate
theagreement withBPI
CapitalCorporationbecauseof bad performanceof the latter and to appoint
SOLIDBANK CORPORATION asnewfundmanager.

An Investmeni Committeesupervises the fund managers and makes

recommendations to the entireBoardon investmentmatters.Fundmanagers are
amenabie to a negative andtypesof investments
list,i.e.a list of corPorations the
fundsof the Foundation may not be placed in. Investmentin real estateis not
permittedby the investment guidelines,exceptfor low-costhousing.The ratio of
investment in fixedincomevis-a-visotherinstruments has beenset by the Boardat
80:20to a maximum of 70:30.

The performance of the four Fund Managersas of 31 December1996differed

Thereturnon investment
significantly. forAB Capitalto 9.10%for
variedfrom12.23o/o
CityTrust,the weightedaveragebeingapproximately 10.5%(seeAttachment 8 for
Theannualinflation
details). ratestoodat 8.4%.

2.7 Monitoring and Evaluation (M&E) System

2.1.1 Background

The chapteron projectmonitoring and evaluationin the Foundation's Operations

Manualcontainssomeinformationon the implementaiion of a M&E system and the
tools to be applied (progressreports,staff monitoringvisits, eic.), but no specific
designfor monitoringand evaluationof FSSI activities.SinceFSSI is neithera
classicalNGOnor a typicalbankor investment a unique,tailormade
institution, M&E
system has to be devised for the Foundation.Therefore, the Board decided to
commissiontwo consultantsto design such a sysiem.A first proposal outlinewas
P.go 12 Thc FSSI:Fnsi Exper'€nces

submittedby the consultants

in September'1996 and discussed
by the Boardat its
Octobermeeting.hr December providedan addendum
the consultants to the initial
ofo00sal.

2.7.2 Designof theM&E SysteDr

The mainelementsof the proposedsystemare as follows:

. Levelsof M&E:
The M&Eactivitieswill be conductedat two levels:
The first is the projecuptogrcmlevel. This relatesto all the instrumentsutilizedby
the Foundation (grants,loans,credit lines,guarantee funds, equityinvestment).
Individualloansand grantswould be consjderedas projects,whereascreditlines
and guaranteefundswouldratherbe regardedas progfams.Specificindicatorswill
haveto be developedfor eachinstrument.

The secondlevel is the institutional level (FSSIas a fundingagency).Herethe

systemwill lookat the institutionalperformanceof the Foundaiion.

. Elements to be monitored/evaluated:
Regardingspecificgranuloan-funded projects,the consultantsproposeto monitor
financjal/economic, and genderand environmental
socio-political, effects.lt is also
suggestedto selectevery year certaintypes of projects(e.9.marketing projects)to
be scruiinjzedby doing householdsurveysso as to quantitivelymeasureproject
etfect(andimpact)on beneficiaries.
With respectto guarantee fundsand cred'tlinesthe Foundation will monitorthe
performance of the 'wholesaler"(bank or other lendinginstitulion)in termsof rates
of return,repaymentraie, risk management,etc. lt is also proposedio conduct
selectedcasestudieson the effect(and impact)on borrowersand beneficiaries.

. On the insiitutionallevel(FSSI)efficiencyand cost effectiveness of the institution

will be measured. Specifically,
ihe and
administrative overhead costswill be
examinedvis-a-visconducted operations. Additionally,it is suggested to monitor
and
,,profitability" sustainability
of FSSI. This would be done by looking at the
returns of the djfferent income generating tools (loans, equity investments,
guarantee funds)and at how thesecontribuieto the (financial) sustainability of
FSSI,

.lndicators:
The proposedschemedoes not yet contain any indicatorsfor monitoringand
evaluation.Specificsets of indicaiorswill have to be designedfor the different
levels (project, program, institution)and also for different types of projecis
(production,marketing,eic.).

2.1.3 Nlethodologyandimplementation

In theirproposal, suggestto reviewexisiingmonitoring

the consultants andevaluation
practices havingsimilaractivjties.
of otherinstitutions consultations
Addjtionally, with
 The FSSI|Ftsl Expefiences p.go t3

FSSi managemeniwill be held and interviewswiih key informanisconducted.Aiter

this,M&Eindicators
willbe designed.
The designand settingup of ihe M&E systemshouldbe finishedby the end of April
' 1997so thatimplementation
of the schemecouldbe startedin Mai.

Conclusions
andrecommendations
Wthin a relaiivelyshortperiodof time,the FSSIhas beenableto establish itselfas a
recognized, well functioningand innovativefundinginstitution.lt has an efficieni
governingstructure(Boardof Trustees)with experiencedpeopleon ii, which have
beendemocratically electedby the Membersof the Foundation.The decision-making
processssare clear and transparent. Tbe Foundation's Management consistsof
knowledgeable and experienced stafi.Withina surprisingly
shortlapseof time,the
FSSI'Sstatfhasbeenableto designand set up innovative financialinstruments and
implement newformsof partnership with otherfundingmechanisms. I believethatthe
gap servinga clienteleof smallto mediumsizeenterprises
FSSIcan fill a strategic
which do neither have access to the formal banking system nor to microfinance
institutions.

On the followinglinesI have listeda numberof issuesand recommendationsthat

relateto certainweaknessesand deficiencies
FSSIshouldaddress.These pointsare
basedon statements madeby contactpersonsmel duringthe missionas wellas on
personalobservation.

3.1 Regarding institutional functioning of FSSI

FSSIstaffshouldtakea moreactiverolein jnforming the Membership,whichforms

its consiituency
and iis conscience, and in involvingit moreintopolicy-makingand
in itsfundingactivities.
The projectappraisalprocessofien looks like the exclusivework of one specific
ProjectOfficer.The wholeProjectTeamshouldbe systematically involvedin the
process,criticallydiscussingthe ProjectOfiicels appraisalreportbeforeit is sent
to the Boardmembers.
The expertiseat staff level with respeci to appraisaland presentaiionof loan
applicaiionscouldbe improved. lt seemsthatstaffin its presentcornpositiondoes
not have too much experiencewith credifmakingand promotionof small
industries.

3-2 Regading theMonitoring and EvaluationSystem

. The proposedsystemis very ambitious,especially with respectto the numberof

areas to be assessedat the projectlevel (economic,socio-political, gender,
environmenteffects)
andthe numberof fieldvisiisplanned(semi-annual).
 t" rhoFssr:FnstExpsienc€s
/G*"

It shouldtherefore be madeclearthat the implementation of thissystem(evenif

scaleddown)willreouireadditional staff.
It is not clearfromthe proposalwho will be responsible for monitoring at the
beneficiary levelor in somecasesalsoat the lowerintermediary level(if thereare
twointermediate organisations,e.g.a coopandan NGOwhjchassiststhe coop).lt
will not be feasiblefor the Foundation to do the datacollectionat the benefieiary
level.Therefore, the requirement to assuremonitoring at the beneficiarylevel
shouldbe contained in the Memorandum of Agreementsignedwiththe proponent
(including a budget itemfor M&E).
Thereshouldbe a clearerdistinclionin the systembetweenmonitoringand
evaluation activities.Forinstance,household surveyscanmostlikelynotbe partof
(regular)monitoringactivitiesbut will be done as part of an (end-of-project)
evaluation contracted outto consultants,

Thanks

In conclusion andfor preparing

I wouldliketo thankthe FSSIstafffor theirhospitality
this interesting
itinerary. go
My spgcialthanks to EugeneGonzales, the Executive
Directorof FSSI,forthetimehe hasdedicated to meduringthismission.

v
 The FsSr:F st Experien.es . p.go ]s

Attachmeut l: Scheduleof the missiorr

Unitto the Philippines

Missionby the Debt-for-Development
February15 to March1, 1997

Schedule

Date Time Activitv

'15
Sat Febr 7 : 1 0p m International
Arrivallvlanila Airport
Transferto HotelDanarra
Sun16Febr 1 0 r 1a0m n a h . r i , ' . a f ^ r a a h ' r
11:24am Arrivalat Cebu
Transferto HotelKalingaw
6:30om OfficiaidinnerandoDeninq
of the Forum
Mon17 Febr
titl Forumon Environmental
Asia-Pacific Funds,
Plantation
Wed '19Febr Bav.Mactanlsland
Thur20 Febr Visitto FSSIfundedprojectin GeneralClimaco,Toledo
Citv( P96-006-07.
KAKASAKA-SUGBU)
Fri21 Febr ic Forum:
Asia-Pacif Conclusions
Sat22 Febr Davoff in Cebu
Sun23 Febr ' 1 0 : 1 0
a m Departure for Manila
1 1. 2 4a m Arrival
at Manila
Transferto HotelDanarra
Afiernoon Studying at HotelDanarra
documents
withRev.Francis
Dinner B.Lucas,
Chairperson
of the
for thePhiiiopine
Foundation (FPE)
Environment
Mon24 Febr 1 0 : 0 0a m BrieiingSwissEmbassy (AmbassadorHoechner,Mr.J.
Eisele,Ms. MaeOlalia
Lunchwith FSSIstaff
Briefingwith EugeneGonzales, DirectorFSSI
Executive
Briefingwjth RemoGes(,DireciorHelvetas, Board
N4ember FSSI
Tue 25 Febr 9:00am Nreeting with BarbaraSalazar, HEKSPhilippines
'10:30 am Discussion on M&ESystemwithFernando T. Aldabaand
lvlichael
M. Alba,Consultants
LunchmeetingwithMa.AuroraTolent'no, PBSP,
Chalrperson FSSI
3 : 0 0p m Studyingdocumenis at FSSIoffice
5:00 p m Meetingwiih Prof. Leonor Vice-President
Briones,
Universitvof the Philippines
P.ge 1e Tl€ FSSI.Fnsr Experienc€s

Wed 26 Febr 9:00am Meetingwiih DaniloSongco,National Coordinator,

Caucusof Development NGONetworks (CODE-NGO)
: 3
11 am 0 Discussion on financial with
instruments E. Gonzales
Meetingwith SalvacionBulatao, EDAP,BoardMember
FSSI
4:00pm Meetingwiih Ma.TeresaDiokno-Pascual, President,
Lidy
Nacpil,Ex. Secretary,and Arnelde Guzman,Treasurerof
the Freedomfrom DebtCoalition (FDC)
6:00om Dinnerwith Gabvand RemoGesu
Thu( 27 Febf 9:00am Meeting with PaulWeijers,ResRep Swisscontact,Member
of FSSI
11 : 0 0a m Departure ior Silang,Cavite
Visitto FSSIfundedproject (IDEAS, SilangWaste
Manaqement Proiect)
Fri28 Febr 9:00am Debriefing Swis_sEmbassy withMaeOlalia
12:AO LunchwithKarinaConstantino-Davis. Ex.Director,
and
Rebecca Demetjllo-Abraham, Chairperson, HASIK,and
Eugene Gonzales
1 : 3 0p m Visitto Eco-shelter prototypeat Quezon Circle(HASlK,
Project,,Enterprise Development for Low-Cost Eco-
Sheltel')
4:00pm Discussion on financialinstrum€ntsandotherissues with
Eugene Gonzales at FSSIoffice
7 : 3 0p m 0innerwithThomasEggenberger, AlternateExecutive
Director,ADB,at lllustrado Restaurant, Intramuros
Sat1 N4arch 9130am Meeting withMartinTanchuling, Phil.Network forRural
Development Member
Insiitute, of FSSIBoard, and
Th^h.c tr^^anha.^ar
12:oo LunchwithMenSantaAna,formerExecutive
Secretary
FDC,andThomasEggenberger
8:30pm DeDa|lure
ManilaInternational
Airport
 The FSSI:Firsi Expcrtences pagc l7

Aitachment 2: Short reporton tlre First Asia-PacificForum on Environnrental

Futds

Organisationand participation

The FirstAsia-Pacific
Forumon Environmental Funds(NEFS)was heldon Mactan
lsland,Cebu,the Philippines,
from 16 to 21Feb(uary'1997.This was the second
regionalconsultation
on NEFs,thefirsthavingtakenplacein Cartagena,
Colombia,in
June1996.

The Forum in Cebu was sponsoredand organjzedby the Foundation for the
PhilippineEnvironment planningGroupon
(FPE)with supportfrom the Interagency
EnvironmentalFunds(lPG).The IPG is an informalbodychairedby a representative
of the cEF unit at UNDP.Membersof the IPG workinggrouphelpingto plan the
PhilippineMeetingincludedthe GEF Secretariat,UNDP,USA|D,the World Bank,
The NatureConservancy, IUCN-US,Conservation International,
WWF, and large
U.S.foundations.

The Forumwas attendedby more than 100 persons.Partjcipants from the Asia and
Pacificregionrepresented operatingNEFs,NEFs in the processof establjshment,
governments, and localand internatjonal
NGOs.Participants fromoutsidethe region
includedrepresentetivesfrom multilateral
agencies (above all UNDP),USAID,and
mainlyU.S.environmental and philanthropic
organisations foundatjons.
The Forumwas able to draw in the first place on the experiences of the FpE
(Phjlippines),
the BhutanTrustFundfor Environmental Conservation,the lndonesja
Biodiversity
Foundation,the FondoMexicanoparala Conservaci6n de la Naturaleza
andthe Jamaic€Conservation and DeveloomentTrust.

Maintooics

The maintopicsdiscussed at the Forumincluded

. Policy,legislative,
legal,tax and governanceissuesinvolvedin establishing and
structurjnga NEF;
I Definitionof investmentand fundingstrategies; implementation
of Fundprogram;
monitoring andevaluaiion;
. Mobilizationof resources(externaland in-countrysources).
Eachissuewas presented in a plenarysessionand thendiscussed in g or 4 parallel
worl(ng groups.

Conclusions/ follow-up

Given the experienceand the experiise of the persons presentat the Forum,
especiallythe severalfund executivedireciors,the level of discussions
was rather
high.Aboveall in the workjnggroupsthe differentissueswerebeingdiscussedin
considerabledepth.For the Debt-for-Development Unit,the mostinterestingdebates
were the ones on investment strategies,monitoringand evaluation, and resource
mobilization.
One of the upshotshere was that ihere is, on principle,
a quitegreai
Pase le Th€ FSSI:F;rs: ExDeriences

potentialfor in-country
resourcemobjlization, e.g.throughtaxesandlevies(tourism
tax,userfees,pollutiontaxesor fines,etc.), butthaithesesources areonlytappedto
.a very small extent.
Themainconclusions of theForum- especjally regarding - wereasfollows:
follow-up
. lt is not alwaysnecessary to set up completelynew structures; in somecases
existingfunding mechanisms shouldbe usedto avoiddupljcationl
. Thereis a needfor transferof knowledge, exchange of information
endexperience
amongexistingfunds,but aboveall fromexistingfundsto fundsin the processof
establishment:
. Regionalcooperation(networkingof funds in the same region)should be
intensified;
. Thereis a needto setup a Technical Assistance Unitwhichwouldruna NEFdata
base,a listof experts/practitioners,
etc. Herethe roleof the lpc wouldhaveto be
clarified;
. lt wouldbe useiulto designa handbooldmanual of howto setupa NEF.

All in all it wasusefulfor theDebt-for-Development

Unitto particlpate
in theForum.ln
addition,the Unitwas able to makesomecontributions with respectto resource
mobilization through
debtconversions,
A reporton the Forumis expected
to be publishedin Aprjlor May.For information
pleasecontacttheDebt-for-Development
Unit.

21 March1997IFG
 Thc FsSl: Fnsi Expericrces page 19

Attachment3: FSSI:Analysisof Income& princifral

t; Income&Prfui
rs Grantsand
ExDenses
PhP 7,037,150 FromIncome

rl
- Grants
- Operating

rs Expenses
Reserves
_ LOAns
PhP41.559,465 FromIncome

rl
- Equrty
- CreditLine

r_s - Guarantees
- Tnflation
Asset-Building PhP 15.843.670 To Principal

rI Disbursements+ CreditLine Use

- Loans

rg - Equity
- CreditLi]]e
s
Use

tE Guarantees
andSpecial
Deposits
PhP 26.000.000 To Principal

tg AnnualIncome: PhP52,618'896
r3 LE Grants. = PhP48'597'215
& Reserves
Expenses.
: 4.021.681
 Plgc 20 The FSSI:F sl exprr on.os

Attachment4: Summaryof ProjectsApproved

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 The FSSI:First Expefienc€s- page ?1

Attachment5: FSSISmallGrants Facilitv

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 orge 22 Th€ Fsstr Frsr Eipe'Enlor
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Attaehment6: ProjectConeeptPaperFormat

AttachmentI
PROlECT
CONCEPT PAPERFORMAT

Noteto U5eriro facilitateappraisal,praponentsareencouagedto submitcleat,

concise,srai ght-to-the'pointconceptpapeft that ptesentquantitativeinformation

1.0 Generallnformation
a ProjectTitle
a ProjectSite
a ProponefltOrganizalion
a Proponent's Address
a ContaclPetson andPosilion
a Beneilciaries
a projeclType
a TolalProjeclEudget
a AmountRequested a5Loanand/orCrant
a Co.Financiert{if any)
a ProjectOuGtion
.} Pro,ectStatus(newor ongoint)

2.0 of theProject
Objectives of Success
andlndicators

3.0 of theBeneficiaries
Descfiption (witha separate
andtheirEnvironment
on the Statusof Women)
description
I l) Numberot Me'Vwomen
a Occupation

I ,f
,f
lnconreLevel
Socio-Economicstatus

I 4.0 of Problem/Situation
Description by theProject
Addressed

5.0 Description Components,

of Proiect to be Supported
AndActivities
Timetable
I 6.0 andProcedures
Structure
Management

I 7.0 of the Proponent

HistoryandDescription
I D.te Organizedand Regi5tered
I a
a
.}
Type of Reginralion
NetworkAfiilialion
ObjectivevMajorPrograms

I a
.
.
PreviousProjects/Dono6(last lwo yea6)
F i n a n c i aPl o r i t i o n( , { t i e l sa n d L i a b i l i t i e s
N!nber ol Siaff(Fulltime,Pantime, Volunteers)

I Alt chmo.l2: Con.rpiPsp.rFo.mrt

 : , r s tE \ p e r i e n c c sp a g c 2 3
T h c F S S |F

Attachnrent7: InterventionMatrix

I|

s INTERVENTIONMATRIX
I
Q, E;N-:--{fsYsrEM
---'-'--
FOREST5 COASTS a:td CROP URBAN
LANDS

t
l.crrvrrY MARINE
CREDiT

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SERVICES
rh

gI tt
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WU,C&G
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lvtARKE-I'GNTFP,
Fltrl, |..Ito I , WU,LCH,
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LIEI 'qQ

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/-aeT C&G,CSS C&G,CSS WU,LCH, F]
CSS HBI.C&G Irl
.{ttachment8: PedornranceofFuud if{araeers

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ti-
 DEBTREDUCTION
THESyy7SS FACILITY
. ASTATEOFTHEART-

'| The SDRF:Whatlt ls All About

PointA NationalCampaign
1.1 TheStarting
1.2 AimsOfTheSDRF
And KeyConditions
Criteria
1.3 Selection
1.4 TheMeasures Planneo
DebtRelief:TheBasi; ldea
1.5 Creative

a 2 of the SDRF:Tho StateOf ThoArt

lmplementation

2.1 ODerationsConcluded
2.2 DebtReliefNegotiations
Bilateral
2.3 A GlancoAt ThaCounterpartFundsSo FarEstablished
2.4 Programmes AndProjeqtsFinanc€dByTheFunds

3 ThatnstitutionsInvolvedln CreativeDebtReliefOperations

3.1 of TasksAmongTheOfficialAgencies
TheAlloc€tion
3.2 TheRoleOfSwissNGOsAndOf NGOSIn TheSouth
a
4 Fund
OpenQusstionsRegardingThe PolicyOf ThoCounterpart

4.1 TheLifeSpanOfTheFund:Short-Term or Long-Term?

4.2 TheFundlngPolicy:ProactiveOr Reactive?
4.3 DirectFunding Agencies?
Or FundingVia Intsrmediary

5 Prospect

5.1 AndEvaluation
Monitoring
5.2 WithTheSDRF?
Howto Proceed

ANNEX
 tHE S"IS\ DI:RT REDL'CTIONF.ICILIN' I

FACILITY
THESWISSDEBTREDUCTION

1.1 TheStartingPoint;A National

CamPaign

,,Development requiresdebtrelief':this was the sloganof a broadbasednational

debt reliefcampaigncarriedout by six major'Swissdevelopment organisations
in
1989/90. The campaign was supported by about 20 otherinstitutions.
The central
aim of the campaign wasto obtainthe cancellationof all bilateraldebtthe highly
indebtedpoorercountriesowedto Switzerland.ln addition,variousinformation
activitiesand specificeducational measuresshouldbe takenup to raisepublic
awareness of thedebtproblem anditsimplications for theSouth

The centralelementof thecampaign was a PJtitioncallingon the Swissparliament

andgovernment a specialfundfor debtreliefoperations
to establish to the
additional
(t official aid budget.On the occasionof the 700th anniversary of the Swiss
confederation a fund endoMnent of Sfr 700 mn was asked for. The debtsto be
boughtup withthis money,however, werenot to be simply cancelled. Instead,the
ideaof a "creativedebtrelief was introduced. lt was plannedthatin returnfor the
write-offof thedebt,the govemments of the debtornationsshouldbeobligedto pay
the equivalent of a smallportionof the originaldebt in localmoneyintoa national
fund". This fund is then used to finance domesticdevelopment
"counterpart
'pertpective,for the ben€fitof the poor. In a more generaland longerterm
programmes
thepetitionalsoaskedfor fair economicandfinancial between
relations
Switzerland andtheSouth,particularly Wth respectto pricesof primarycommodities
andto capitalflight.
Thanks to massivesocial mobilization,the petition was signedby 250'000
(about
individuals 4 percentoftheSwisspopulation) in lessthaneightmonths.Due
to this substantjalpoliticalpressure and the forthcominganniversarythe
O workedoutandtableda government
administration bill basedonthepetition
withina
veryshortperiodof time.In March1991,the bill to set up theSwissDebtReduction
Faiilitywaspassedwitha volumeof Sfr 400 mn.TogetherwithSfr100mnout of a
the SDRFhas a totalvolumeof Sfr 500
formeicrediilinefor debtreliefoperations
mn. ln the samebill anotherSfr 300 mn were set asideto financeenvironmental
programmes in theSouth.

Althoughthe SwissNGOS didnotagreeon a numberof aspectsof thebill,theyhad

to acknowledge thattheconceptproposedand the set of measures foreseenwere
sensibleand quitecomprehensive. In particular,the debt reliefschemeprovides
speciflcinstruments to dealwith differentcategoriesof debt (see 14) and thus
assuresa certainburdensharing. In principle,it alsoreducestheriskof free-riding'
at
at least the nationallevel.

'1.2 Aimsof the SwissDebtReductionFacility

The primaryobjectiveof ihe SDRFis to suPportthe beneficiary to reduce

countries
foreigngovernments
theirexternald;bt burdentowards guaranteed
(officially expoft
 ] THE SWISSDEBT REDL'CTIONFAC]LITY

debt), privatecommercialbanks (commercial debt), and towardsinternational

financialinstitutionssuchas the WorldBank,the International MonetaryFund,and
regionaldevelopment banks(multilateral debt).TheSDRF, however, willnottackle
externaldebtsresultingfrommilitaryexpenditure. The debt reliefobtainedshould
lead to reduceddebt serviceobligations(interestsand amortisation), and should
thushelpto decreasethe pressureon boththe nationalbudgetandthebalanceof
payments.In the longrun,it is expectedthat the outlookfor economjc and social
development will improve, wtrichin turnwill enablethe debtorcountries
to stabilize
theirrelationship withfoleigncreditors. The counterpart fundsthemselveswill have
theirsharein promoting of socialandeconomic'development.

1.3 SetectionCriteriaAnd Ksy Conditions

As explainedabove,themainpurposeof the SDRFis to alleviatethedabtburdenof
highlyindebtedlowincomecountries andnotto createcounterpart funds.Therefore,
neitherthe questionwhethercountry-specific conditionsallow the seation of a
counterpartfund nor the local demandfor thes€ funds were investigated and
! consideredas decisivefactorswhendeflningthe selection
criteriafor thebeneficiary
ln general,potential
countries. beneficiaries
of theSDRFare
. low-incomecountrieslvtrichhave successfully
rescheduled
and reducedtheir
officialbilateraldebtwiththeParisClub,

. progfamme countriesof swissoDA vvfrichhavealsosucceeded

in rescheduling
theirdebtwiththeParisClub,and

. ail otherleasldeveloped thatdo notformpartof eitherof thetwogroups

countries
aoove.
In total,about45 developing countriesare eligiblefor debt reliefoperations under
the SDRF. However,the Swiss governmentwill only undertakedebt relief
a negotiationsif the countryin questionmeetssomefurtherconditions: flrstit mustbe
engagedin a medium-term economicreformprogramme,vvhichusuallyis a
structuraladjustment programme withthe WorldBankand the lMF.Secondly, the
countryshouldhavean adequatedebt management systemvvhichalso includes
comprehensive andspecificstepsto reducethe externaldebtburdentou/ards other
creditors.Finally,the government in the debtorcountryshouldbe stableand
respectfulof democraticprinciples,rule of law and human rights (,,good
governance").

It is also demanded combinedwith assistance

that operations fromotherdonors,
e.g.internationally
coordinateddebtreduclionoperations,
shouldresultin debtrelief
of growthand
impacton thecountry'sprospecls
largeenoughto inducea significant
develo0ment.
In lhe case of debt buybackoperations,debt conversions or similarmeasures,
privatecreditors
(banksandsuppliers) arerequiredto beara proportion
of thecosts
lhat conesponds a largediscounton thefacevalueof the
to theirriskby conceding
orioinal
debt.
 FACIL]T|
- '''1SS DEBTREDUCTION 3

1.4 The MeasuresPlanned

TheSDRFallowsto financebothbilateralandmultilateral debtreliefoperations.
lt is
exDected thatwiththeSfr500mn a nominal of
debtvalueof a total Sfr2 bnto 2.5bn
m;i be writtenoff. To includeall types of externaldebts(offlciallyguaranteed
bilateraldebt,commercialdebt and multilateral
debt)as well as to respondto the
requirementsforfreshmoney,fourdifferenlmeasures havebeendeveloped:

Buybackof,,tail ends"of officiallyguaranteedexportcredits

To cancelbilateraldebtresultingfromexportcr€ditsthe Swissgovemment canbuy
parts
backthe non-guaranteed of officially guaranteed Swissexportcreditdebts.
These,tail ends"are in the handof exportersand usuallyamountto up to 30 per
centof the exportcredit.Theguaranteed partof the exportcredit(i.e.theremaining
70olo)belongto the SwissExportRisk Guarantee Agency(ERG),oncethe debts
havebeen rescheduled in the ParisClub.Afterthe buyback of thetailendsthe ERG
passesthe conesponding guaranteed partsoverto the government whois thenthe
only remainingcreditor.To compensats the ERG the government in tum writesoff
someof the debtthe ERGowesit. Thus,onlythe buybackof thetail endswtrichis
,t doneat a pricewellbelowfacevalue,resultsin effective costsfor theSDRF.

Intemationalbuybacksof commercialdebt
As far as the externaldebt of developingcountriesdue to commercial
banksis
concernedSwitzerland may contributeto international
debt buybackscoordinated
and managedby the WorldBankaffiliate,the International Agency
Development
(lDADebtReduction Facility).

Contributions to the clearing of arrears due to intemational financial

institutions
of developing
To restorethe creditworihiness countries thatcouldnot keepup with
debt serviceobligationstowardsthe World Bank, the IMF or the reglonal
development banks,Switzerland may contributeto financingtheir arrears.Where
appropriateand needed, the financialaid may also be extendedto currentdebt
servicepayments.
\,
Complementary measures
Finally,freshmoneymaybe providedfor thosecountries thathaveavoidedthedebt
trapthanksto a cautiousdebtmanagement. As theyare not eligiblefor any of the
measuresmentioned above, it has been decidedto rewardthe prudentbehaviour
Themoneyis usuallyprovided
throughfinancialassistance. as balanceof payments
assistance aid
or budgetary and shouldbe clearlyearmarked to specificpurposes,
suchas importprogrammes for examPle.

'1.5 CreativeDebtRelief:The Basicldea

For mostLDCSthe debtowedto Switzerland is verysmallin relationto the overall

externaldebtburden.When preparing the campaign SwissNGOSwerefullyawEre
of the factthata debtreliefotfeledby Switzerlandalonewill thereforeleadto only
limitedbenefitsfor the South.To obtainbroaderand moresignificant resultsin the
longrun,twoadditional aspectswereemphasized. First,the debtreliefprog.amme
shouldhavea demonstration Oncethe positiveeffectsof
efiec;ton othercreditors.
 THESWISS FACIUTY
DEBTREDI;CTION

othercreditorcountriesmightbe encouraged
the Swissinitativeareacknowledged,
to implementsimilarprogrammes.

Second,the conceptof "creativedebt relief was introduced as a key elementin

bilaieraldebtreliefoperations. The underlyingideais that debtor ratherdebtrelief
couldbe usedas a tool for fosteringdevelopment in a broadsenseThe simple
write-offof bilateralexternal debt has a direct on the nationalbudgetandon
effect
the balanceof payments only.Thebasicideaof the creativedebtreliefconceptis to
passthesemacroeconomic benefitson to the poorpeopleon the microlevel in
exchangetor the debtcancellation, the government of the debtorcountrycommits
itselfto redeema smallpartof the extemaldebtin questionin localcurrencyintoa
so-calledcounterpartfund. This fund should be primarilyadministeredby
representatives of the civil society(localNGOS,privateorganizations and public
institutions).Thec€pitalshallbe usedto financedomestic development activities,
to
strenghtenthe flnancialautonomyof local organizations, and to increase their
absorption capacity by improving organizationaj and management skills ln addition,
the partof thelocalcurrency proceeds that is notimmediately usedforfunding,may
seryeas a capitalbasefor smallfinancialinstitutions. Thus,the promotion of self-
financialinstruments, suchas loan guarantee funds or revolving funds,
v sustainable
maybe supported.
A bilateraldebtreliefagreement formsthe underlyinglegalframework for sucha
creativedebtreliefoperation and has to be negotiatedbetweenthe debtor country
and the SwissGovsrnment. Apartfromsomegeneral provisions
anda specification
of the debtto be converted the agreement states the redemptionrate,the payment
modalities,the secto(s) in lvflich the resourcesshould be invested'the
organizationalstructureof the counterpart fund and the composition of the body
(bodies)responsibleforthemanagement of thefund,

Somebasicprinciples
for thecreativedebtreliefhavebeendefined:

. Monetary andbudgetary haveto ba considered

constraints vvhennegotiating the
redemptionrate (i.e. the percentageof the externaldebt that has to be
I transformed andthe paymentmodalitieslt shouldbe ensured
intolocalcurrency)
thattheproceeds arefinancedthoroughly outof thebudgetAnyfinancing viathe
centralbank,i.e an increasein moneysupply, would not only contradictthe
country'sreformand stabilizationprogrammebut would also hamperthe
demonstration effectthe SDRFattemptsto haveon othercreditorsOn the other
hand,thedebtorgovernment understandably triesto minimizethecostsas ',!ellas
the implicitsubsidiesfor domesticNGOS.Boththe effectivecashflow reliefthe
debtwrite-offhasc€usesin the nationalbudgetandthe pricepaidfor the tailend
of theexportcredit(themarketvalueof the deboc€nbe usefulindicators for the
appropriate rangeof the redemption rate.In caseswherebudgetary constraints
proveto be very severe,Switzerlandmay also agreeto acceptpaymentsIn
severalinstallments.
processthe Swissdelegationdemands
. ln the negotiation thatthe moneywttich
shouldformthe counterpart fund must be transferredto an interestbearlng
accountwith a privatecommercialbank. The debtor govenment, however,
usuallyprefersto openup a non interestbearing account withthe bank.
central
is usuallynot willingto givein, sincethecentralbank
On thisissue,Switzerland
 o+tin EqJld give the governmentfull control over the counterpartfund, wirich
Frpardizes the principleof NGOparticipationin the fund management

. ldeally, the counterpartfund should be managed by an independentbody

representing the wholerangeof NGOSand POs (people'sorganizations)thatare
aclive in the priority sectors specified in the agreement.Generally,these
membersof the boardor committeecomefrom nationalumbrellaorganizations or
Nco-networks. The contractingparties, i.e. the two governments,
usuallyalso
havea seat in the committee(s).

Withina certainperiodof timeafterits constitution, the body(ies)of thefundwill

haveto workout rulesandregulations for itsfunctioningandfor theallocation
of
thefundresources. Theseinclude,among others,general investment andfunding
policyguidelines, criteria,andprojectselectioncriteria.
eligibility

of thecounterpart
Theresources to flnanceprojects
fundshouldbe usedprimarily
andprogrammes of NGOsandotherprivateorganizations
.O
Withinthe prioritysectorsdefinedin the agreement, the scopeof projectsand
eligible
activities for fundingshouldbe definedbroadlyenoughas to allowall
interested NGOsandPOsto fileapplications. The promotion andstrenghtening of
the organizations themselves, for instance by enhancing their autonomy
financial
through endowments or by improving theirskillsthroughthefinancingof training
activities,is an interestingand innovative field and shouldnot be excluded from
funding.

A creaiive debtreliefprogramme shouldbe embedded in a long{erm relationship

betweenNGOSin the Souihand (privateor public)development cooperation
agenciesin the North.Only then a knowledge
sufficient of thelocalconditionsand
stiengths and weaknesses of the organizaiionsinvolved is ensured A close
coooeration between the partners in the Southand in the Northis especially
helpfulin the preparatoryphase,v'henthe organizational of thefundis
struciure
desioned.
 . THESWISS FACIUTT
DEBTREDUCT|ON

2 OFTHESDRF:THESTATEOFTHEART
IMPLEMENTATION

2.1 , OperationsConcluded
UntilMay1995,almosthalfof the overallvolumeof the SDRF(Sfr243mnoutof Sfr
500 mn) havebeencommitted for debt reliefoperations.
This chapterinformson
howthemoneyhasbeenspenton thedifferentmeasures introducedabove.

Buybackof tail endsof ofticiallyguaranteedSwissexportcreditdebt

Up to now the SwissGovernment has undertaken variousoperations to buy the
unguaranteed -
partsof exportcredits,which togetherwiththecorresponding claims
of the ExportGuarantee Company (ERG)- maksuPa debtreliefvolumeof almost
Sfr 1.4bn. In otherwords,Switzerland is nowin positionto negotiate
bilateraldebt
reliefwith 28 countries.Morethan 95% of the exportingcompanies in question
participated in theseoperations.The price paidto the exporters
was, on average,
22o/oof lhe nominalvalue.Thus,totaleffectivecostsof thismeasureamountto Sfr
78 mnsofar.lt shouldbetakenintoaccount,how€ver, thatto compensate theERG,
tt the government debtsof aboutSfr900mn.
haswritten-off

Intemationaldebt buybacks
As explainedabove, Switzerlandparticipatesin internationaldebt buyback
operations,coordinated by the lDA.To dateSfr50 mn havebeencommitted to this
debtreduction facilityof whichso far Sfr 16 mn havebeenusedfor debtbuybacks
for Niger,Mogambique, Bolivia,Ugandaand Zambia.Alongwith contributions by
other donorcountriesas well as with Part of the net Profltof the IBRDthese
countriesw€reableto buybackcommercial bankdebtswitha nominalvalueof Sfr
9oo mn. In otherwords,for almosteverycountrynearlyall outstanding bankdebt
wasbought.The price paid varied between for
100/o Mogambique and 18% for Niger.
For the comingmonths,debt buybacksbenefittingSierraLeone,Nicaragua and
Tanzaniaarescheduled. Once again, Switzerlandwill be oneof the donors.

Clearingof anearstowardsinternationalfinancialinstitutions
v Since1991Sfr60 mnhavebeenspentto cofinance the clearingof arrearsbuiltuP
debt.The
from multilateral seven benefitting werePeru,Vietnam,Niger,
countries
Haiti,Rwanda, andGuineaBissau.Wth the helpof otherdonorsarrearsof US$2.7
financed.Thefar biggestsharewas clearedby Peru(US$2.3 bn) Apart
bn \ryere
from Nigerand GuineaBissau,lvho had bothbuiltup arrearstowardsthe African
Development Bank,the arrearsclearedweremostlydueto theWoddBankandthe
IMF.
Complementarymeasures
So far, freshmoneyhas beenprovidedto four countries,namelyGhana,Capverde'
El Salvador,and Zimbabwe.In total, they receivedSfr 45 mn. In each case the
moneywas earmarkedto the financingof certainbudgetor-balanceof payments
operations,mainlyimportprogrammes.
In addition, with Sfr 2 mn Swtzerland cofinancedthe computer-aideddebt
management systemDMFAS,developedby UNCTAD.This systemshall enablethe
debtoi governmentsto manage their extemal flnancial flows more efficiently.
Furthermore, a broaduseof this systemwill improvethe collectionand processingof
internationaldebtdatafor institutionslike the lMF.
 z2 Bilateral Debt ReliefNegotiations

The buybacks of exportcreditdebtallowSwitzerland bilateral

to cancelthe external
debtof28 developing Sofar,the SwissGovernment
countries. hassigneddebtrelief
agreements with 17 countries.The total debt reliefagreed upon mountsuP to Sfr
922 mn.In 11 outof these17countriesthe concaptof creativedebtreliefhasbeen
put into practice,\,lhereas
the othersix countriesbenefitted froma debtwlite-off
withoutthecreationof a counterpartfund.

It is almostimpossible yet
to givea realistictimetablefor the debtreliefoPerations
to come. In principle,negotiationsshall be held with Madagascar, Congo,
Cameroon, Guinea,Togo,Yemen,Liberia,Sudan,zaire, and CAR. However,most
of these counlriespresentlydo not meet the "good govemance"-condition as
prerequisite for debtrelieiTherefore,negotiationplans haveto be postponed.

Bilateraldebt reliefwithoutcounterpartfunds

v A simplewrite-offof thebilateraldebtis proPosed if eitherthedebtvolumeitselfis

verysmallor if thecountry's resources to set up a counterPart fundareverylimited
du6 to budgetaryconstraints. ln these c€ses,the requirement to pay in local
cunencywouldproduceunintended sideeffects.lf the debtin questionis so small
thata conversion cannotcreatea significant develoPmental impact, a complexsetup
and administration of a fund lvould not be justified. lf, on the otherhand, ths
government facesseverebudgetary constraints, the demandfor a counterPart fund
iould pushup '/vhich
inflation - as pointed out above - contradicts thebasicideasof
creativedebt relief.Therefore,the bilateraldebts of Nic€ragua (Sfr 26 mn),
Mozambique (Sfr1.7mn),Mali(Sfr4.3mn),Guayana (Sfr0.07mn),andMauritania
(Sfr O.O1mn) werec€ncelled withoutinsistingon debt conversionA different
a
agreemsnt,how€ver,was reachedwith Guinea Bissau (Sfr 17.5 mn) The
government committed itselfto establishthe legalbasisfor the creaiionof a nature
ieserve.Thus,for thefirsttimean ,,immaterial counterpart" of the debtw€sagreed
upon.
\t

Bilateraldebt reliefwithcounterpartfunds
The tableon page8 summarizes the outcomesof debtreliefnegotiations with 1'1
countries.Thetoialdebtreliefamounts to Sfr 1.05bn,withPeru (Sfr 1962 mn) and
lvory Coast (Sfr 362.0mn) as the biggestdebtors.The redemption rate (the
perientageoi the face value that has to be convertedinto localmoney) varied
beween8% in Zambiaand600/0 in Egypt.The nominaldebtvolumeas well as the
redemptionrate determine the volumeof the counterpart fund Henceit is not
surprisingthat the size of the counterpartfunds variessignificantly amongthe
countries.The smallestfundhas beenset up in Zambia(equivalent of Sfr2.2 mn),
just
thefar largestonehas beencreatedin Egypt (equivaleni
of Sfr90 mn).

Althougheachcounterpart fundhas its o',vnorganizational therearealsoa

structure
few commonelements. The highestdecisionmakingbodyof the fund is, with the
exception alwayscomposedof oneor morerepresentatives
of the Philippines, of the
t\rc contractingparties(i.e. the governmentof both countries)ln addition'
representatives of the privatesector (civil companies,NGOs'companies, etc.)
 THE ,

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 for projectselectionThe
usuallyform part of the committeethat is responsible
dutiesaswellas the dayto daybusinessarein mostcasesdelegated
I admin;$rative
secretafiat.
to an executive
and the structureof the fund the bilateraldebt relief
Apah.fromthe composiiion
aoreementalso specifiesthe target sectorsand the organizations eligiblefor
fu-ndino.As the table shows the promotionof micro- and small enterprises,
enviroimentalprogrammes, and activitiesin the social sector are the most
orominent prioritysectors.The issueof eligibilityhas provedto be a difflcultmatter
io negotiaie. Out off 11 countries only thre€,namely. Bolivia,Zambiaand the
Philip;ines,agreedthatthe fundsshouldbe solelyusedfor programmes/ Projects
impl6mented by private In
organizations. all other governmental
counlries agencies
mayalsoapplyforfunding
Oncetherulesandregulations of thefundas wellas the criteriafor plojectselection
aredefined,theinitialbhase, fund,is comPleted-and
i.e the setuPof tbe counterpart
thefundbecomes Meanvtlile
opelational. five fundshave started to selectandfund
projects(see2.4 below).Theyare alsoelaborating an adequ€t€ monitoring system
g theongoingprojects.
to supervise

2.g A GlanceAt TheCounterpartFundsSo FarEstablished

It has been alreadysaid that the counterparl funds differgre€tlyas far as the
organizationat struiture,the legal form' the composition of.the bodiesand the
of thefundsareconcerned.
utiiization Theeconomic the legalbackground,
situation,
potiticalissuesand of coursethe willingnessto negotiateYaryflgm countryto
iounirvanOnaveto be takenintoaccountwhendesigning thefund Therearefunds
manarieOsofefvbv NGOs,others are more or less under the controlof the
oou"iit"nt. S6mafundshave been establishedas legal entities(trustfund or
ioundation) witha fairlycomPlex and rigidorganizational others
structure,-whereas
h"u" t"'tt light managiment.This chapterprovidesa bJieflutline of the
" "t oflach of th; fundsestablished
cniracteristics so far underthe SDRF(seealsothe
\t country-specific Presentations in the annex).

Bolivia
TheBolivian counterpartfundwasthefirstoneestablished undertheSDRF11%of
the nominalexternaldebt were convertedinto local currency The Bolivian
Gouernment transferred this money(the equivalentof Sfr 5 8 mn) to an interest
blaring accountwith a domesticcommercial bank.The fund is administered and
r"n"ola Uua sinqleCommittee, vvhichis composedof one representative eachof
ifre fi'inistrvof p-tanning and Coordinationof Bolivia,the SwissDevelopment
e;d;;;ti; in l" patl the Bolivian Federationof small and Medium-size
fnouliriei,a nationalNco-network, andthe NationalEnvironment Fund(FONAMA)'
Uo to F"orrutv 1995, the fund has committed about90%-of the totalresources
,J"if"Of" io nn!n"" 1i proiectspromoting smallenterprisesahdthe conservaiion of
natura|resources.Allprojectsareimp|ementedbyNGosandprivateinstituti
Sub-committees appointedfor each projectallow direct asslstanceand close
monitoring for uPto threeYears.
 lMuras
The Hondurian counterpartfundwasestablished in 1993anditsresources mounted
of Sfr12.7mn.Thegovernment
up to theequivalent paidthemoneyin twotranches
with-oneyearin-between. Theprioritysectorsarewaterandsanitation, envtronmenr
andnaturalresources andpromotion of smallindustries.
The government maydraw
up to 50%of thefund'smoney. Theorganizational structure
comprises threelevels.
The highestdecisionmakingbodyis the Comit6Bilateralwitha representative of
each of the contractingparties. The Comite Tecnjco consistsagain of
representativesof the two contractingparties (technicalstaff) but also of a
multilateral
organization(UNICEF)and a local NGO. lt examines the proposats
submittedto the fund and presentsa selectionto the ComiteBilateralfor final
decision.A secretariat(Unidadtecnicade apoyo)appointedto the Ministryof
Planningof Hondurasis in chargeof the day to day business.Untiltoday,13
projectshavebeenapproved, absorbing 80%of thetotalresources.
Jordan
Jordanagreedon a debtreliefof Sfr 35 mn and converted 27%of it into loc€l
currency.The targetsectorsof the Jordanian-Swiss counterpart fund are export
promotion,economicand socialdevelopment, and the preservationof national
at monuments, The bilateralcommittee is the only bodyof the fundand is formedof
one representative of the Jordaniangovernment (the Ministryof Finance)and one
representative of the Swissgovernment (theembassyin Amman). Thereasonsfor
this rather light organizational structureare twofold.First, neitherthe Swiss
Development Cooperation noranySwissNGOis represented in Jordan.
Second, the
loc€l Nco-sceneis still relativelyweak comparedto othercountriesand under
government control.As of February 1995,30%of thefundshavebeencommitted to
financetwofaidylargeprojects implemented by parastatalorganizations.
Tanzania
With Sfr 5 mn in localcurrency the Tanzania-Swiss counterpart fundis oneof the
smallerones.The debtreliefagreement statesthat 600/0 of the resources shallbe
usedto financesocialbudgettransactions, the remaining40o/omay be usedto
financeprojectsof loc€lNGOSand govemmental entities.Pfioritysectorsenclose
!t aclivities in health, poverty alleviation, promotion of micro-enterprises and
environmental issues.Thelegalformchosenfor the funddiffersfromall otherfunds
so far established.lt is a PublicTrustFundbasedon international iaw.This legal
entityenablesthe fundto drawadditionalfundsfrom othersources. Thus,it may
continueits aclivitiesevenafterthe resourcesoriginatedfromthe debtreliefare
spent.The Boardof Trustees is composed of two representatives of the Tanzanian
government andonerePresentative of the SwissDevelopment Cooperation. Forthe
technical\rcrk localexpertsmaybe appointedon a consultancy basis.So far, only
about8% of the originalresources havebeencommitted to financesix rathersmall
Projects.
Peru
Whenestablished in late1993,the Peruvian-Swiss counterpartfundwasby far the
biggestone with an originalendownentof Sfr 49 mn. In 1994interestearnings
addedanotherSfr4.5mn.According to the agreementthe resources shallbe used
for projectstargettingsocialinfrastructure,
the environmentandnaturalresources,
and micro-enterprise promotion.The organizationalstructureis a three-stageone
(bilateralcommittee,technical committee and an executive very
secretariat), similar
to the structure
of th6 Hondurian fund.ln Summer1994,thefirsttenderresultedin
 233 proieclproposals.
By now19 havebeenapproved,comprising
a totalvolumeof
22o/oot the initial capital.The acceptedprojectscover all prioritysectors.Although
the agreementindicatesthatthe Peruviangovemmentcan demandup to 50%of the
projects,onlyone request0f this kind
funq capitalto financeits owndevelopment
hasbeenmadeso far.
Zambia
The face valueof the debtnegotiated with Zambiawas Sfr 27 mn.Giventhe low
paymentcapacityandseverebudgetary constraints,the redemption ratewasset at
a low 8% so that the counterpart fundvolumeamountsonlyto Sfr2.2 mn in local
money.Contrary to the otheragreements negotiatedto date,the Zambianone
specifiessomeof theorganizations eligiblefor fundingandalreadyidentifl€d p or to
the negotiations.Oneof them,the Women'sFinanceTrustof Zambia(WFTZ),is a
financialinstitutionaffiliatedto the New York based Women'sWorldBanking
(VWVB). lts objectiveis to supportpoorfemaleentrepreneurs in Zambiaby granting
smallloansor facilitating accesslo commercial bank loansthrough loanguarantee
arTangements. Dueto thefairlysmallvolumeof the fund,the management structure
is very light. There is only one Coordinating Committee formed by two
representatives of eachcontracting party.For monitoringand evaluation activities
v the committee may comission independent consultants.The fund has just set up a
smallexecutive secretariat andis expectsdto startselecting projecls in the coming
weeks.
lvory Coast
With a nominaldebtvolumeof Sfr 362mn, lvoryCoastbenefitted fromthebiggest
bilateraldebt reliefotferedby Switzerland so la(. 14okof that debt havebeen
converted intolocalmoneyandcreateda counterpart fundvolumeof approximately
Sfr 50.7 mn, payablein four tranches.Consideringthe size of the fund, the
organizational structureis rathercomplexand broad,The highestdecisionmaking
body is a board (Conseil)with four membersrePresenting the two contracting
parties.A trilateralcommittee (Comit6tripartite)with threerepresentatives eachof
ihe lvorian government,the Swiss govemment,and loc€l Nco'umbrella
organizations is responsible for projectscreening.lt presents
theresultsto theboard
v foi {inal decision.An ExecutiveSecretaryis emPloyed,paid by the Swiss
shouldbe
Development Cooperation. Thebilateralagreementstatesthatresources
investedin the agricultural sector,includingforwardand backwardlinkagesof
production
agricultural activities. Morethantwothirdsof thefundcapital(70%)shall
be usedto financeprojects implemented by NGOS.The Comit6tripartite is presently
definingthe rules and regulationsand elaboratingthe guidelinesfor project
selection.Oncetheseareapproved by the boardthe fundwill startits operational
ohase.

Senegal
TheSlnegalese-Swiss counterpart fundhasan endowrnent of Sfr'
of the equivalent
Thegovernment
4.6 mn in localcurrency. has paidonly50%,sofar,thesecondhalf
will be dueby the endof November 1995.The agreement specifiesthatthemoney
shall be allocatedat equal parts to governmentprogrammes and proJects or
programmes implemented by NGOs.The fund's structureis a typi€l three-stage
onewitha bilateralcommittee. a technicalcommitteeand an executive secretariat.
In contrastto the agreements signedto date, the compositionof the technical
committeehas not been part of the negotiationprocess lnstead,the contract
designatedfour organizations allo\eedto proposecandidatesto the bilateral
 monthsaflerthe agreement beingsignedthetechnical committee
€s s€ltup. lt is composedof five of
representatives the privatesector(including
NGOS)and one representative of the Senegalese Government. The rules and
andtheguidelines
regujations for projectselectionhavebeenelaborated butnotyet
approved bythebilateralcommiltee.

Ecuador
The debt relief agreement with Ecuadorwas alreadynegotiatedin Fall 1993.
However, due to obstacles
various it tookaboutoneyearfor bothpartiesto signthe
'15'mn)havebeentransferred,
contract.50%of the totalfundvolume(Sfr the rest
willbe paid in two in
tranches July95 (40%)and July96 (10%). a
Again, fund witha
three-stage structure hasbeencreated.Thetechnical committee is composed of two
representatives government,
of theEcuadorian the SwissDevelopment Cooperation
and local NGOS.The moneyshall be distributed equally among govemmental
entitiesand privateorganizations. Prioritywill be givento socialdevelopment and
infrastructure, environment, small industry promotion and vocationaltraining
Thefundjuststartedwiththeexamination
aclivities. of projectproposals

tl Philippines
After severalpostponements, debt relief negotiationswith the PhiliPpines were
finallyheld in February1995.However,the agreement was signedonlyin August
1995. Taking into account the particular and
institutional Politicalsituationof the
country,a ditferentscheme for the setupof the counterpartfund wasProposed, with
the idea resultingfroma cooperation of Philippineand SwissNGOS.\ /hereasin
mostothercountries thefundis designedto lastfol a shorperiodonly,the model
agreedupon in the caseof the Philippines,is that of a privatefoundation. The
foundation will be managed by nationalNGO umbrellaorganizations for the benefit
of nationalNGOsandpeople'sorganizations. The representative of the Philippine
governmentis a memberof the Board of Trusteesbut has no right to voie
Switzerland is representedin the boardby Helvetas, whereasthe Swissembassy in
Manilahas an observerstatusonly. The endolvment of the foundatlonwill be
disbursed mainlyin theformof creditsfor sustainable productive investments in the
sectorof agriculture,fisheries,andsmallinduskies.
v
Esvpt
The agreementsignedwith Egypthas been the latestbilateraldebt reliefoperation
of the Swissgovernment. For the first time, only part of the externaldebt a country
ou€d to Switzerlandhas beencancelled(Sfr 150 mn out of aboutSfr 800 mn).Due
to the fairly high prices of Egyptian debt traded on the secondarymarket,the
redemptionrate agreedupon is by far the highestone of all agreementsso far
negotiated.With Sfr 90 mn in Egyptianpoundsthe fund is alsothe largestone.The
technical committeewill be composed of seven members.In addition to the
contractingpartiesthe nationalSocial Fund for Development, Unicef,the Egyptian
EnvironmentalNGO Steering Committee, the National Council for Childhoodand
Motherhood,and the AlexandriaBusiness Associationwjll ,be represented.The
counterpartfund will finance activities targettinghealth and educationservrces,
employmentgeneration,and environmenial issues.lt is expectedthat the fund will
in early '1996.
commencedisbursements
 Programmes
And Pro.iectsFinancedBy TheCounterpart
Funds
8y now,fiveof the established counterpartfundshavebecomeoperational: Bolivia,
Honduras, Jordan,Tanzania, and Peru.As pointedout above,othersare expected
to followsoon.Bec€use the implementation of the firstprojects(Bolivia)datesback
only 18 months,it is far too earlyto presentany evaluation oi the developmental
impactof thoseprojects.Nevertheless, as the table on page 14 shows,some
quantitative
datais available:
. Outof around530projectssubmittedto'the fivefunds,only66 (lessthan 15%)
havebeenaoorovedsofar.

. Forthese66 projects a totalfinancialvolumeof approximately

US$31 mn (about
56.7%of thetotalinitialfundcapital)has beencommitted. Hou€ver,as shownin
the table,the relationof committedfundsto overallfund capitaldiffersgreatly
amongthefunds.

rangingfromsmallerprojects(up to US$
Projectsize alsovariessignificantly,
t 100,000)to verylargeones(more thanUS$500,000).Themajorityof theprojects
layssomewhere in between.

The60 projectb amongthe prioritysectorsasfollows:

aredistributed
- promotionof emallindustries: 17projects
- socialservices
andinfrastructure: 23 projects
- environmentendnaturalresources: 20 projects
Only6 projectsare beingimplemented in othersectors,for of themfocuson
educationandtrainino
activities.

PrivateOrganizations
are by far the mostimportant
implementing
agencies,only
11projects
outof66arebeingcarriedoutby publicor semipublic
entities.

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 ONSINVOLVEDIN CREATIVEDEBTRELIEF
EERANONS

3.1 The Allocation Of Tasks Among The Official Agencies

The implementation o{ the SDRF and, in particular,the implementation of the

creative debt relief programmeinvolves various agents and institutions
both in
Switzerlandand in the targetcountries.The reasonfor this is that the setupof a
counterpartfund requiresmorethan a classic€ldonor-recipientrelation.Thecreative
debt relief involvesgovernmentaland private institutionsat variouslevels,vvhich
increasesthe complexityof the processeven more. Therefore,the tasks of the
agents have to be specifiedand clearly defined. This chapter providesa brief
overviewof the rolesplayedby the officialagenciesinvolvedon the Swissside.

fhe Fedenl Ofiice tor Forcign EconomicA*airs (FOFEA)is in chargeof the first
Dhaseof the creativedebt relief operation.lt buys back the tail ends of the export
credits,deals with the Export Risk GuaranteeAgency, and analyzesthe overall
v macroeconomicsituation of the debtor country. lf the country in question is
consideredto be eligible for debt reliel FOFEA defines the Swiss negotiating
position(redemption rate,paymentmodalitjes, preparation of the documents) and
negotiateswith the governmentof the debtorcountry.

The Swlss Development Cooperation (SDC) is the leading authorityfor the

secondphaseof the implementation process,so to say for the oPerational aspects
of the creativedebt relief.The SDC designs the structuraland organizationalsetup
of the counterpartfund, definesthe prioritysectors,and, in manycases,replesents
Switzerlandin the (technical)committeeof the fund.lf and whennecessary, the SDC
may also assistthe FOFEAin the negotiaiion process. ln addition,the SDC is
responsible for the monitoringand evaluationof the funds'activities.

fhe Debt-for-Development Unit of the Swiss CoarTlo/' of Developnent

v Organizations (SCDO)acts as a consultantfor both federal offices.The Unit has
been actively involvedin the formulationof the conceptof the variouscounterpart
fundsestablished so far. In somecases,especiallyin thosecountries vvherethe
SDC does not have a coordinatingoffice,it also helps to constitutethe (technical)
committeeand providesassistancein the elaborationof the rules and regulaiions
and the criteriafor projectselection.Furthermore,it regularlyinformsthe Swiss
NGOSaboutthe stateof the art of the SDRF.Finally,the DebLforDevelopment Unit
has the task to monitorand evaluatethe overall impaciof the creativedebt relief
concept.

The Swr:ssEmbass/es in the debtor countries also play a crucial role in the
process,althoughtheirtasksare not explicitlydefinedbut ratherdecideduponon an
ad hoc-basis.ln most cases,they providelogisticaland administrative assistance
process.Oncethe agreement
duringthe negotiation is signed,the often
ambassador
repreients the Swiss party in the highest decision-makingbody (bilateral
committee).
 on betweenFOFEA,SDC and the Debtfor Development
Unit
$ccessfullyinstitutionalized.
Priorto the negotiations
a trilateralworking
groupis set upfor eachcountryto discussandjojntlydecideon themajorelements
of lhe debt conversion(redemptionrate, structureand composition of the
counterpartfund, priority potential
sectors, Theconcept
beneficiaries). for the setup
and the utilizationof the fundsis workedout eitherby the SDC(in the caseof
prioritycountriesof the SDC)or by the Debt for Development Unit (in those
countrieswhereSwissNGOSor partnerorganizations are engaged). In all other
countriesthe impetusmaycomefrom any of the two or it may be a joint effort,
depending on thecountry-specific know-howin bothinstitutions.
The cooperation
withthe SwissEmbassies has turnedout to be ratherdifficultin
somecases.Because theirpartin the processhad not beenspecifled in advance,
misperceptions
of theresponsibilities
of otheractorsinvolved
arose.
To conclude,oneof thefuturetasksshouldbe to defineevenmorepreciselythe
participatingin the programme.
differentrolesof the institutions The experience
gainedwill helpto do sowithoutjeopardizing the flexibility
of the agents,necessary
0 to ensurean efficientandcase-by-case
programme.
implementation of the creativsdebtrelief

3.2 The Role Of SwissNGO8And Of NGOSln The South

Apartfromthe,official"agentsof the creativedebt.reliefprogrammethereareother

institutionsandorganizationsinvolved.NGOs,umbr€llaorganizations or any other
privateinstitutionin the developingcountryand in Switrerland oftendisposeof
experience andknow-how highlyvaluablefor the planningandimplementation
of the
concept.Experience showsthata contribution of SouthernNGOScanbe especially
helpfulin thefollowingareas:
the design of the conceptfor the setup and utilhation of the counterpatt fund:
The SDC and the Debtfor DevelopmentUnit often contactdomesticNGOS,
v or any otherexpertsand ask them for advicein certainissuesof the
net\,\r'orks
concept. Theymayalsobecommissioned to workouta concept of iheirown.

the administnlion of the countetpaft fund.' NGOS,representative netllork

organizations
whenever possible,may becomemembersof the committee that is
for projectselection
responsible (technical boardoftrustees...).
committee,
the utilization of the fund capital: Local NGOSand grassrootorganizations
engagedin lhe prioritysectorsmay applyfor fundingif theirorganization
and the
projectplannedbothfulfilthespecificseleclioncriteriaof thefund.

monitoringand evaluation:fhe fundmaycommission experiencedserviceNGOs

or independentlocalconsultants ahdiorevaluation
to carryout the monitoring of the
funded projects.
political lobbyin$ As the negotiationphase approaches NGOSspecializedin
lobbyingactivitiesmayhelpto increasethe pressureon the relevantgovernmental
lnstitutions.Lobbingmayalsobe useful,if politicalobstacles
ariselateron, in the
imolementation Dhase.
 with SwissNGOSengagedin developingcountriesalso provedto
in:
Yafuable
thq identificationof local NGOS:SwissNGOSmay proposepotential candidates
for the discussionor evendesign of the conceptof the counterpartfund.Theymay
alsogivecompetent adviceasfar as the representationof NGOSin thebodiesof the
fund and the of
outsourcing monitoringand evaluationactivities
areconcerned.

lhe assistarceol |ocatpaftnerorganizations:SwissNGOSinformtheirpartner

organizationsin the Southaboutthe policyof the counterpart
fundandtheeligibility
formsandthusimprove
criteria.Theycanalsohelpto fill in application thedialogue
betweenthefundandthsapPlying organization.

the monitodng and evaluationof Prqec6 financed by the tund: SwissNGOS

which are activelyengagedin the country in questionmay carry out certain
andevaluation
monitoring tasks.

the monitodng of the fund itself; Local NGOS that cooPeratewith Swiss
Y organizationsmayr€porton theirexperiencewith the fund.Thereby,SwissNGOS
on the performance
m,y be a goodsourceof additionalinformation of the fundas
perceived group5.
by local
the rcpresentationof Switze and in the fund: In someratherrare cases,Swiss
NGOSmay evenbe appointed partyin the relevant
to representthe contracting
committee.

v
 qJESTIONSREGARDING
THEPOLICY
OFTHE
qilRITERPARTFUND

O., tn" a,r" SO"nOf TheFund:Short-TermOr Long-Term?

Whetherthe counterpart fund shouldbe designedas a short-term institution
or
ratheras a long-termorientedcapitalfund is mainlya matterof the underlying
development policy.Basically,
twotypesof fundshaveto bedistinguished:

a shotl-term oriented fund (seeillustrationon page 19)

Thelifespanof a short-term orientedfundgenerallyrunsfromoneupto aboutthree
years.Thissortof fundis mainlyset up to alleviatethe povertysituation in theshort
run. Specialemphasisis laid on financing programmes and projectsalreadywell
plannedand ready Jor implementation. However,the promotionof financial
instrumentstargettinggrass roots, such €s credit-systems, revolvingfunds,
guarantee fundsetc.,mayalsobe partof the policy.Theendowrnent of a short-term
orienteddevelopment fundis considered All
as a transitoryitemonly. capitaland
interestearningswill be usedfor funding,mainlyin the formof grants.Therefore,
thereis no needto designa long-terminvestment policyfor the fund.Examples for
short-termorientedfundsarethoseestablished in LatinAmerica.

a capitaffund (seeillustration onpage 19)

A capitalfund is a long-term orientedfinancialinstrument. lts timehorizoncovers
aroundeight to ten years,sometimes evenmore.The purpose of the fundis not
limitedto thefinancingof development projects.lt comprises alsothe promotion of
thatleadto institution-
activities andcapacity-building in development organizations,
e.g,strenghtening of the financialautonomy or improvement of the c€pjtalbaseof
privatefinancialinstitutions.Whereasa short-term orientedfundfocuseson projects
yieldingdirectand immediate benefits,a capitalfund alsoconsiders the degreeof
sustainabilityof theexpected projectimpact as a decisive factor. As a rule,onlythe
returnon thefundcapitalis usedfor projectfunding.In orderto preserve thecapital
basethefundmanagement hasto design and implement an appropriate investment
policy(stocks,treasurybonds,realestateetc.).Thefoundation to be set up in the
Philippines is designed as a long-termorientedcapitalfund.

Thedecentralization of the capitalis anotherway1opreservethefund'sfinancial

resources in the longrun.Decentralization meansthatthe funddecidesto allocate
its capitalon the level of intermediary financjalagencies.The realizationoi
synergetic effectsmaybe one reasonfor thefundto channelits resources through
existingcreditschemes or guarantee funds locatedat and managed by banksand
development The capitalis thenadministered
organizations. by theseintermediary
anddoesusuallynothaveto be returned
institutions to thefund.

Sucha decentralization of fundcapitalalsoproduces a positivesideeffect.Because

fundssofar established
ail counterpart are located in thecapitalof thecountrythere
is a greatgeographicalaswellas psychological distancebetween thefunditselfand
mosiof the targetgroups. The alloc€iionof the fund capitalin regional
officesof
banksor otherfinancialintermediaries may help to narrowthe gap, to remove
obstacles, andthusto increase the potential
numberof beneflciaries.
\,

v
 of the fund capitalis verydifficultif the country
decentralization
doesnot disposeof adequateintermediary throughout
struclures the
curfry- In thosecasesthefundcapitalshouldbe usedto buildup newstructures
and-to strengthenthosealreadyexisting.This is especlallyrec€mmended in
- to poor intermediary
countries,in vvhich additional -
structures the counterpart
fund has plenty
of available(such
resources as in the lvoryCoastandEgypt).
In the contextof long-term orientedcounterpartfunds the questionalso arises
lvhetherthefunditselfmayactas a creditagency.Althoughnoneoftheestablished
fundshas beendesigned to set up creditschemesof its own,the conceptmaybe
considered appropriateforthosecountriesin wtrichthe financialandcapitalmarkets
are notyet broadlydeveloped or in lvtlichgrassroot-oriented
financialinstitutions
do
not yet the
exist. Finally, alternative could be discussed to fully integratethe
counterpartfundin anexistingor newlyestablished creditagency.

4.2 The FundingPolicy:Proactiveor Reactive?

Counterpartfundsshouldrespondon fundingapPlications only,theyshouldnotbe

activelyengagedin elaborating projectideas.ldeally,thisratherpassiveroleof the
fund motivatesorganizations to take the initiativeand helps to ensurethe
participation
of grass-rootsin poect development. lt alsoallowsa iairlywiderange
of organizations for
to apply funding.However, the existenceof a broadandfairly
powerfulNco-sector(grassroot organizations and serviceNGOS)is one of the
preconditionsto guarantee an efficient
use of the resources. Otherwise, the money
may easilydry up in scattered projects,each too smallto createany significant
developmental impact.

The issueof the developmental impactof the counterpartis a centralone when

formulating the principles of thefundingpolicy.Very often,the fundcannotrestrict
itselfto reactto incoming fundingapplications only.Instead,someactiveassistance
in the projectdesignmaybe necessary to reachthe expectedlong{ermresults.
\t Suchan activefundingpolicyimpliesfor instancethe precisedeJinition of target
sectors,of guidelines for project selection, and of eligibility lt
criteria. alsoinvolves
the assistance of smallerorganizations in filling in the aPplication forms.An active
funding policymayevenresult in the formulation of fund Programmes and in the
searchfor adequate organizations to implement them.Of course,onehasto bearin
mindthat going in this direction,the realization of otherdevelopmental princiPles
suchas ,ownership" and,,participation" becomesmoreandmoredifficult.
Basedon the experience gainedso far, the fundingpolicyof counterpart
"optimal"
fundsshoutdcontainbothproactiveand reactiveelements.The realization of a
developmental
substantial impactremains the mosi importanttarget.
At the same
time,however,the policyshouldensurethat low'volumepro"jects of smallgrouPs
andorganizationsarenottotallyexcluded fromfunding.Onewayoutof ihe dilemma
could be the creationof a special"windoyy''forsmall-scale projects,allowjnga
certainpercentageof ihe overallresourcesto be usedto flnancemicro-proJects.
Thiswindowmaybe established at thefunditselfor at anyintermediaryagency. To
encourage smallNGosto cooperate andto designa jointprogramme of appropriate
sizewouldbe another wayto solvetheproblem.
 (} Fundingvia lntermediaryAgencies?

lh dv d|er instiMion dealing with.funding programmesand projects,a

oo|"Qh'pa.ttundhasto definethe channelsusedto pas! the resources of ihe fund
m to tt|e.recipientagencies.
In principle,two distjnctwaysof fundinghaveto be
distinguished.
Directfundingalwaysimpliesa direclrelationbetweenthecounterpart Jundandthe
agency implementingthe project.The organizationapproaci.,es the fund,s
secretariat
€nd lnlroduces
itsprojectproposal.lf the funddecidesthattheprojectis
v/orth.funding the moneywill be transferreddirec{y to the accountof the
organization.
Thefundwi| arsobe in chargeof the monitloring
andevaruation of the
implemented project.

Thealreadymentioned decentralization
of the capitalvia intermediaryagencies is
s|e altemativeway of funding.The fund cafltai transferredto banksand credit
agencies,networkand umbrellaorganizations, cooperatives and associations is
then distributedto the projectimplementing agencies.lt is now tha intermediary
b agencywtrichis responsible for projectseleation.of course,to be ableto fulfilltha
funclionof an intermediary,the organizationin questionmusthavetire necessary
capacityandknow-how.
The cooperation
with intermediariss
has provedto be a sensibleand sometimes
evennecessarythingto do, especiallyin thosecountrieswith a fairlylargefund
volume.The majoradvantages of such a decentralizationof the capital;re the
following:
. The costsinvolvedin projectselection(technicalworkand administratjon)are
limitedon the fund level.Hence,the complexityand size of the organizaiional
structureof the fund,especially
withregardto the executive
secretariat.
mavbe
reduced.

. Thedecentralization
of thecapitalimproves
the accessof thebeneficiaries
to the
fundingagencies.Therefore,
the numberof poten al beneficiaries
andalsothe
developmental
impactmaybe increased.
. Thewidelyspreadintermediary agenciesthemselves are morecloselyrelatedto
their clientsand thus are in a befterpositionto judge the incomingproject
orooosal.
. The cooperationwith intermedjariesallows the strenghteningof these
whichjn turnmay improvethe processof democratization
organizations, in the
domestic
society.

ln principle,
the tasksdelegared
to the intermediary
agencymayinclude:
. Financialtasks, such as screeningof incoming loan applicarrons,
credit
management or administration
of subsidyprogrammes.
 of projectideas,project
tasks,such as the operationallzation
' Project-oriented
of implementingagencies,monitoringand evaluation
selection,consultancy
/
activities.
financialcontrol and auditing
tasks, such as book-keeping,
. Administrative
activities.
of
In mostcases,limitedcapacityand a lack of know-howprohibitthe delegation
Thus,cooperation
thesetasksto a singleorganization. is usually moreefficient
if
various specializedagenciesare involved'(cfedit agencies,NGO umbrella
anddomesticNGOs,consultants,
international
organizations, etc.).

It becomesobviousthatthereis no idealsolutionapplicable to all cases.lnstead,

the decisionson thedesigilof the timehorizon,the allocation of the resources and
the principlefundingpoliayof the counterPart fund haveto take into accountthe
country-specificcircumstances. Differencesin the politicalsystemandin the overall
\, economlisituation, issues,the degreeof development
institutional in the financial
sector,the capacityandexperience of the Privateseclor as !rcll as the extentof
networkingactivitiesamong grassrootorganizationsrequire.a cas€-by-case
approach.-The sizeof the counterpart fund, the domesticabsorption capacityand
tdd priorityof needsin the targetsectorsalso play a majorrole the decision
in
pfocess.
 PROSPECT
/

5.1 MonitoringAnd Evaluation

The experiencesgainedfrom the implementation of the creativedebt relief

programme havealready been pointed out in the variouschaptersaboveHowever,
ihoJeexperiences concentrate on the institutionalaspects'the setup'the policies
andthe collaborating partnersof counterpart funds.Now,abouthalfof thefundsso
far established havestartedto fund projects'(and othersare to followsoon)'and
time has cometo thinkoverhowthe imPactsof the creativedebtreliefshouldbe
measured and evaluated. The Debt-for-Development Unitwill playa majorrole in
this discussion as it is the only institutionaccompanying fundsin
the counterpart
their varioussteps,from the planningof the conceptthroughthe setupinto the
oDerational phase.Themonitoring andevaluation taskhastherefore beenincluded
in thetermsof reference of thatUnit.

Up to nowthe Debffor-Development Unit has concentrated in its workmainlyon

b, ooerational tasks,suchas the preparation of the debt conversion negotiations and
the setupof the organizationalstruclureof the funds.Dueto the facl that with the
maioritv'ot countriesnegotiations
the benEficiary havebe€nheld,the focusdf the
*oit Wlt rnit overto otherthingsin the nearfuture.Majoremphasis will be laidon
the designand implementation of a comprehensive monitoringand evaluation
system (M&E). Thisinstrumentwillcomprise threelevels:

r The M&Eof the programmesand projectsfinancedby the fundswiththe fund

management for itsdesignandimplementation.
beingresponsible

o TheM&Eof the counterpart fundsthemselves of thefund

undertheresponsibility
management, CooPeration
the localSwjssDevelopment Officeor thecooldinating
officeof a SwissNGO.

r The M&E of the overallcreativedebt relief programmewith the Debt'for-

Unitin chargeof it.
Development

Obviously,allthreelevelsneedto be closelylinkedtogether..The qualityof theM&E-

oi th" pagr"rt"" and Projects the resultsof
for examplewill of courseinfluence
As the DebtJor DeveloPment
the overalievaluation. Unitcan neithermonitornor
evaluatesingleprojectsby itself,it stronglydependson thecooperationof thefunds'
ioi tneoesiln6i tne uai system,a closecooperation withthe M&Edepartment of
the SwissDevelopment Cooperation is envisaged

5.2 HowTo ProceedWithTheSDRF?

MorethanthreeyearshavePassedsincethe SDRFwas createdAs pointedoui

abovein chapter2.1,abouthalfof theoverallvolumeof Sfr500mnhavebeenspent
so far.Timeias cometo discusshowthe remaining shouldbe
halfof the resources
used.MajorissuesarisinginthisdiscussionrefertothequestionV+]etherthe
measureiare still adequateor whethernew instruments shouldbe introduced
to
optimize thePolicy-mix.
 Boththe FOFEAandtheDebffor-Development Unitarecurrently
investigating
these
issues.As internaldiscussions havestartedonlya shortwhileago, answers to the
questionsare still veryvague.However,as far as the futurepotentialof the four
alreadyexistingmeasures thefollowingfactshaveto beconsidered:
is concerned,

. The variousoperationsundertakento buy back the tail ends of offlcially

guaranteedexportcreditsalreadycover most of the exportcredii debt the
countriespresently eligiblefor the SDRFowe to SwitzerlandTherefore, a new
for this measurewill be createdonly if othercountries,i.e. middle
"potential"
incomecountries, areto be included.

. The resourcestransfened facilitymanaged

to the debtreduction by the IDAhave
not beenfullyspentyet.However, furtheroPerationsplann€d,especiallythe one
for Nicaragua,will absolbquitea lot of money.But as theseoperations usually
need sometime for preparation and impleinentation,a very high increasein
demandis notexpected forthe nearfuture. '

. The overallpotential for complementary measures is fairlylow,as onlyveryfew

\, countriesfullfllthecriteriato become In
eligible. addition,one-shotoperations in
balanceof payments assistance and budgetaryaid are an contentious issue in
development policy.Especially, the lackof anysustainable lt
impactis criticized.
hasalsobeenfoundoutthattheactualuseof the moneyis verydifficult to control
in practice.

. Thereis no doubtthatthelargestpotentialfor futureoperations of the SDRFlies

debt.Notonlyaretheremanycountries
in thefieldof multilateral witharrearsand
severe difficultiosin debt service payments towards international financial
institutions.Butthe operationsare also very expensive compared to ths other
threemeasures of the SDRF. The reason is that arrearstowards international
flnancialinstitutionshaveto be clearedon a nominalbasis ln other words'
contraryto the exporters and commercialbankswho beara proportion of the
costsby conceding largediscountson the face valueo{ the originaldebt, the
v multilat;ralagencies arenotyet willingto wliteoff anydebtor partof anydebt lf
futureoperatonsof the SDRFare also to includethe financingof currentdebt
servicepayments, thedemand of resources will increaseconsiderably.

In conclusion,thesefewremarks alreadyshowthatinternaiionalbuyback operations

as well as assistance debtissuesareverylikelyto
in multilateral playa greater
role
in the futureyearsof the SDRF.However,the extent,the conditionsand the
instruments in furtherdetail
to beusedstillneedto be discussed
 ANNEX
/

FUND B O L I V I A
COUNTERPART

Debt volumel Sfr 53,1 mn

'11 Yo
rate:
Redemption
a CPF Volume Sfr 5,8 mn
cPF committee: - Ministry ol Planningof Bolivia
- swiss bevelopmentcooperation(coTESU)
- FederacidnBolivianade la Pequeia y
Mediana Industria (FEBOPI)
- Fondo Nacional del Medio Ambiente
(FONAMA)
- Coo.dinadorade Ftedesde Instituciones
Privadas de DesarolloSocial
Beneficiarie6: NGOs / Private organisations
/

FUND H O N D U R A S
COUNTERPART

Debt volume: Sfr 63,3 mn

rate;
Redemption 20 y"

e CPF Volume: S fr 1 2 , 7 m n
Bilat. Committee: - Ministfy of Financeot Honduras/SEcPLAN
- Swiss Embassyin GuatemalaCiIy/COSUDE
Techn.Cornmittee: - Secretariade Planiflcacidn(SECPLAN)
- swisg Development cooperation(oOSUDE)
- Fede.acidnde Organizaciones Privadas
de Desarollode Honduras(FOPRIDEH)
- UNICEF
- (2 NGO rep.esentatives providedfor
in the agreementhave not been
appointed.)
Beneficia.ies: 50 % Nco/p.ivate organisations
50 % Governmental orgaDisations
 FUND J ORDAN
COUNTERPART

Bll.brrl D.bt Rrlt.t Aontmmt

Debt volumel Sfr 35.2 mn

rate:
Fledemption 27
v CPF Volumel Sfr 9.5 mn
Bllat.Committe€: - Ministryol Flnanceot Jordan
- Swiss Embassyin Amman
Beneficiaries: - JordanExport Development and
Commercial Ce.ntresCorPoration
(JEDCO)
- Petra NationalTrust/UNESCO
- any other NGOS/privateorganizalions
agencies
multilateral
governrnentalorganizations
 FUND T A N Z A N I A
COUNTERPART

Debt volume: Sfr 33.3 mn

Redemption
rste: 15 %
v CPF Volume: 5lr o mn
Boardof Trustees: - Swiss DevelopmentCooperation
in Daressalam
- 2 Representativesot Tanzania
, MinisFy ol Finance
, PlanningCommission
Techn. Committees: on a consultancybasis
 THE SWISSDEBT REDL'CTIONFACILITI 29

PERU
COUNTERPARTFUND

Debt vglume: S l r ' 1 9 6 . 2m n

Redemptionrate: 2s 10
CPF Volurne: Sfr 49 mn
Bilat. Committee: - Ministry of Financeof Pefu
- Swiss Embassyin Lima

Techn.Committee: - SecretariaEjecutivade Cooperacidn

TecnicaInternacidnaldel Ministerio
de la Presidencia(SECTI)
- Swiss DevelopmentCooperation(COTESU)
- Fondo Nacionalde Compensacidn Y
DesarolloSocial (FONCODES)
- Fondo Nacionalpara Areas naturales
protegidaspor el Estado (PROFONANPE)
- centro de Estudiosy Promocidnde
Desarollo(DESCO)
Beneticiariesr 50 % governmentalorganizations
50 % non-governmentallorganizations
and pravatesector
 //. 30 THE SWISS
DEBTREDUCT]ON
FACIUTY

FUND Z A M B I A
COUNTERPART

Bilalor.l Dobt Rollef Agreotnqnt

Debt volume: Sfr 27.0 mn

rate:
Redemption 8%
CPF Volumel Sfr 2.2 mn
Coord.Committee: NationalCommissionfor Development
Planningof ZarnbialMinistry ot Finance
Swisg Embassyin Harare/zimbabwe
'1 independentSwiss representative

Beneficiaries: Wornen'sFinanceT.ust of Zambia(WFTZ)

United Churchot Zambia(uCZ)
Any other registerednon_governmental,
private organizationand multilatera
aqency
.' FACILnT
THEswtssDEBTREDUCTIoN 3l

C O T E D' I V O IR E
FONDSDE CONTREPARTIE

Volumede la detie: FS 362 millions

Taux de conversionr 14 %
Volumedu FCP: FS 50,7 millions
ConGeil: - 2 represenlantsdu Min, de l'Eco-
nomie et des Financesde la RCI
- Ambassadede Suisse a Abidjan
- BUCO/DDAa Ouagadougou / Burkina

Comit6: - 3 repr6sentantsdu Gvt.ivoirienl

Min. Economie/Agriculture/Commefce
- 3 representantsSuisses
- 3 representantsd'organisations
privees de d6veloppement(oPDl):
CONGACI,COOPAGCI, Chambre de
Commerce
B6n6ficiaires: OPDI min.70 %
Gvt. max. 30 %
 // 32 FACIUTY
DEBTREDUCTION
THE SIWSS

SENEGAL
FONDSDE CONTREPARTIE

-ffi
o

Volumede la dettel FS 22,9 millions

Taux de conversion: 20%
Volurnedu FCP: FS 4,6 millions
Comit6 bilat€ral: - Min. de l'Economie,des Financeset
du Plan du Senegal (MEFP)
- Ambassadede Suisse a Dakar

Comit6 technique: - Chambrede Commerce

- Agence d'ex6cutiondes travaux
d'int6ret publique(AGETIP)
- Comil6 nationalde concertationdes
ruraux (CNCR)
- Union nationaledes commerqantset
industrielsdu Sen6gal (UNAcolS)
- Conseil des ONGS d'aPPUiau d6ve-
loppement(CONGAD)
- croupementeconomiquedu S6n. (GES)
- MEFP

B6n6ficiaires: 50 % ONcs/Organisationspriv6es
50 % Organisationsgouvernementales
 -... THE ST]SSDEBTREDLCTIO,'.F]CIUN JJ

FUND E C U A D O R
COUNTERPART

{-

Debt volume: Sfr 60.3 mn

Redemptionrate: 25 1o
uPl- votume: Sfr 15.1 MN
Bilat. Cornmittee: - M i n i s t r y o f F l n a n c ea n d P u b l i cC r e d i t
of Ecuador
- Swiss Embassyin Quito

Techn.Committeel - Consejo Nacionalde Desarollo(CONADE)

- Swiss DevelopmentCooperation(COTESU)
- M i n i s t r yo f F i n a n c ea n d P u b l i cC r e d i t
- Ministry of ForeignAffairs {only as
observer)
- consorcio de agenciasde servicios
pop!lares (COASER)
- Comite ecuatorianopara la defensade
la naturalezay el medio ambiente
iCEDENMA)
Beneficiaries: Governmenta e ln t i t i e s , 5 0 9 0
Private organizations(includingNGOs)
 COUNTERPART
FUND P H I L I P P I N E

Debt volume; Sfr 42.4 mn

Redemptionrate:
CPF Volume: S fr 2 1 . 1 m n
Ownerof CPF : Foundationfor a sustainable
society, Inc. (FSS)
Board of Trustees: - Rep.esentativesof major philippine
N G O n e t w o r k s :p S B p , E D C S ,N G O - C C D ,
P H I L D H R R AP, H I L S S A
- Helvetas ProgrammeOffice Man a
- D e p a r t m e n to f F i n a n c eo l t h e
Philippines
- Swiss Ernbassyin Manila (as observer)
Beneficiaries: Programnres/Projects of philippine
N G O S/ P O s
 UNTERPARTFUND
EGYPT

D€bt volum€: Slr 160,3 mn

Redemptionrate: 60%
CPF Volum€r Str 92 mn
Bilat.Committee: - Min.ot Internat.Cooperation
ot Egypt
- Swi€s Embassy in Caifo
Techn.Committee: - Min.ot Inlernat.Cooperation
ot Egypt
- Swiss Embassy in Cairo
- Natlonal Centre for Childhoodand
Motherhood(NCCM)
- Egyptian EvironmentNGO Steering
Comnittee
Alexandria Business Asaociation ,]
Social Fund tor DeveloDment .)
UNICEF
Beneficiaries: non-governmental/private organizations
and private enterDriaes
local gove.nmentalentities
multilateraldevelopmentagencies
public/privatedevelopmentagencieS