Controversial, unusual but legal, beneficial

It has been 10 years since the PEACe bonds (Poverty Eradication and Alleviation Certificates) were auctioned by the government.

These 10-year bonds proved to be beneficial for the government as the 12.75-percent annual interest was almost one-percentage point lower than the market rates at that time. Thus, the government saved more than P1 billion.



The bonds also benefited more than 1.5 million poor Filipinos. More will benefit in the future. This has been made possible through the Peace and Equity Foundation (PEF), which was established by CODE-NGO to manage the bulk of the PEACe bond earnings. An endowment fund of P1.3 billion was donated to the foundation.


Using the fund income, PEF has, since 2001, provided P1.1 billion to 1,200 antipoverty projects in many poor provinces. These projects have provided water, solar lighting, microfinance and livelihood assistance to poor households.

Endowment intact

Through diligent management, the endowment fund remains intact since only the earning is being used.

The PEACe bonds marked the first time that funds for anti-poverty work of civil society organizations (CSOs) were raised through the private-capital market. The bonds were welcomed and hailed as an innovative measure by many CSOs and by prominent leaders of the business community.

However, as a groundbreaking effort, it was also unusual, causing some eyebrows to be raised.

Congressional probes

The PEACe bonds thus became controversial. Thorough (and often antagonistic) investigations were conducted by the Senate and the House of Representatives in 2002. Some groups attacked CODE-NGO and the PEACe bonds in the media and other venues.


In 2010, the House again initiated an investigation. In these investigations and forums, CODE-NGO explained repeatedly the PEACe bonds and why we believed the bonds were legal, above-board and beneficial.

The use of the proceeds of the funds is reported through annual audited reports of PEF and CODE-NGO, which are also submitted to the Securities and Exchange Commission and posted on our websites. We have already explained the PEACe bonds enough for people who are truly interested and willing to look into it.

However, we will summarize the main criticisms against it and our responses:

The bidding was rigged.—The bidding followed all applicable laws and rules; 15 government securities-eligible dealers, including 5 foreign banks, participated. None of them complained.

The PEACe bonds increased the debt of the government.—The bonds were part of the government’s borrowing program to finance its deficit. Even without the bonds, the government would have borrowed the same amount.

The government must now pay P35 billion for the P10.16 billion that it got.—The government has not paid a single centavo on these bonds since 2001; now it will make a “one-time lump-sum payment”; P35 billion may appear big, but it is actually just the accumulated and compounded payments at 12.75-percent interest.

Then Secretary Lito Camacho and then CODE-NGO chair Marissa Camacho are siblings, so there was undue influence.— Most of the major decisions on the bonds had already been made before Lito Camacho became finance secretary.

After his appointment, he and Marissa inhibited themselves from all PEACe bond transactions.

So, if the PEACe bonds were legal and beneficial to the government, CSOs and poor Filipinos, why are these bonds being criticized up to now by some quarters?

Probably because the bonds and CODE-NGO’s tapping of the private capital market were so unusual that others cannot imagine how it can be done legally. But is this not the strength of CSOs—that we can imagine unusual solutions and that we can dare to be unconventional?

(Macasaet is the executive director of Caucus of Development NGO Networks [CODE-NGO].)

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