In May 2023, the world’s first and largest debt swap to conserve oceans was signed by Ecuador. The country had exchanged $1.6 billion denominated bonds for a new $656 million loan.

• Gabon recently announced a $500 million debt-for-nature swap and agreed to a deal with the Bank of America, the US International Development Finance Corporation (USDFC) and The Nature Conservancy (TNC), to refinance the amount in national debt toward marine conservation efforts in the country.
• In Africa, it is the largest such deal signed by any country to refinance its debt
• Gabon’s debt has been restructured under a Blue Bond in the world’s second-largest debt-for-nature swap.
• This is the fourth project under TNC’s “Blue Bonds for Ocean Conservation”
  • Gabon is the fourth country to partner with TNC on a Blue Bonds project after Seychelles, Belize and Barbados.
• This transaction will enable the country to make annual contributions to an independent conservation fund and an endowment that will continue to fund conservation after the bonds are repaid.

ABOUT DEBT-FOR-NATURE SWAPS

• Debt-for-nature swaps allow heavily indebted developing countries to seek help from financial institutions in the developed world with paying off their debt if they agree to spend on conservation of natural resources.
• Usually banks in developed countries buy the debts of such countries and replace them with new loans which mature later.
• These have lower interest rates.