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New research released today by Debt Justice finds that debt-for-nature swaps have on average reduced debt levels by seven times less than recent debt restructurings.
Debt swaps reduced countries’ debt levels by just 3%, but the actual financial burden was only reduced by 1% because most of the resources freed up must be allocated to conservation goals.
In comparison, the five most recent debt restructurings since the pandemic have reduced external debt levels by an average of 21%. [1]
Naresa McRwray-Williams, Project Officer at the Caribbean Policy Development Centre, said:
“Debt swaps are perpetuating fundamental issues of lack of transparency and lengthy and complex negotiation processes. Should a nation have to undertake three or four debt swaps to attain manageable debt levels? Currently, research is indicating that debt restructuring is the better alternative.”
Tess Woolfenden, Policy Adviser at Debt Justice said:
“Debt swaps are being presented as innovative solutions for nature and debt, but they deliver minimal debt reduction and bring serious concerns. Transactions are opaque, involve high costs for governments and risk imposing conservation models that overlook local needs. Rather than relying on complex mechanisms that do not deliver, rich countries must provide a fair and effective debt restructuring process. They have a pivotal opportunity to act by establishing a UN Framework Convention on Debt at the Fourth Financing for Development Conference in July 2025.”
The Gabon debt-for-nature swap actually increased the country’s debt levels by over $66 million. The small savings for other countries come primarily from guarantees from largely public financial institutions which have lowered the interest rate on new debt. The savings are ultimately dependent on the provision of public finance, rather than being a result of debt swaps.
Debt swaps are being promoted as a solution to debt problems in lower-income countries, for example by the United Nations Development Programme [2] and by The Nature Conservancy. [3]
The research confirms IMF and World Bank analysis which finds that “Debt swaps are generally not the right tool to address unsustainable debt situations.” [4]
The analysis covers the four debt-for-nature swaps for which there was sufficient available information: Barbados (2022), Belize (2021), Ecuador (2023) and Gabon (2023). Eight debt-for-nature swaps involving a buyback of a country’s external commercial debt have been completed in the last five years: Belize (2021), Barbados (2022), Gabon and Ecuador (2023), the Bahamas, Barbados, Ecuador and El Salvador (2024). However, just four of the eight swaps could be analysed because the full details of the other four have not been made public. The lack of transparency related to these agreements continues to be raised by impacted communities and civil society. [5]
Notes:
[1] The full statistics are in Debt Justice’s briefing here https://debtjustice.org.uk/wp-content/uploads/2025/05/Analysing-the-debt-related-outcomes-of-debt-for-nature-swaps.pdf.
A spreadsheet with all the data is here.
[2] https://www.undp.org/future-development/signals-spotlight-2023/new-wave-debt-swaps-climate-or-naturehttps://www.undp.org/future-development/signals-spotlight-2023/new-wave-debt-swaps-climate-or-nature
[4] https://www.imf.org/en/Publications/WP/Issues/2022/08/11/Debt-for-Climate-Swaps-Analysis-Design-and-Implementation-522184https://www.imf.org/en/Publications/WP/Issues/2022/08/11/Debt-for-Climate-Swaps-Analysis-Design-and-Implementation-522184
[5] See https://www.reuters.com/business/environment/record-galapagos-debt-for-nature-swap-scrutinized-over-transparency-2024-09-27/ and https://earthjournalism.net/stories/rushed-conservation-is-belizes-blue-bonds-deal-sacrificing-fishermen-for-global-praise
Civil society groups have been calling for improved transparency in loan contracts, including the establishment of a global debt registry to promote transparency currently being promoted as a part of the Financing for Development Conference. See https://assets.nationbuilder.com/eurodad/pages/4688/attachments/original/1729260399/01_debt-architecture-briefing-EN-oct18.pdf?1729260399
The IMF and World Bank have said: “Swaps are intrinsically complex, and all parties involved need to be committed to providing the highest levels of transparency to adequately assess the benefits of swaps, and to provide for scrutiny by relevant stakeholders, including civil society.” https://www.imf.org/en/Publications/Policy-Papers/Issues/2024/08/05/Debt-for-Development-Swaps-An-Approach-Framework-553146
Debt Justice (formerly Jubilee Debt Campaign) is a UK charity working to end poverty caused by unjust debt through education, research and campaigning: https://debtjustice.org.uk/
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