Gabon is seeking to replace $450 million in higher-priced debt with lower-priced borrowing and use the savings for conservation, reported Reuters. The country is the first in Africa to attempt a so-called “debt-for-nature swap.” Gabon is home to one-third of the endangered leatherback turtles on Earth.
The African country’s move follows Ecuador’s record-setting $1 billion-plus debt-for-nature swap in May. The South American country’s existing $1.6 billion bonds were bought up by Credit Suisse at a fraction of their face-value price. New bonds were then issued at approximately the price Credit Suisse paid, saving Ecuador over $1 billion in debt-service payments over 17 years. The country’s government, meanwhile, pledged to spend about $18 million annually on conservation in the Galapagos Islands.
The swaps by Gabon and Ecuador, however, demonstrate the continued power of capital markets over governments of the Global South. In contrast, some activists have called for outright debt cancellation.
by Saurav Sarkar from the Globetrotter News Service