“Rich countries are responsible for the climate crisis and have a moral responsibility to help the poorest countries”

Tribune. What if there was a silver bullet to deal with the climate crisis, the pandemic-induced debt crisis, and the need to kick-start development finance at the same time? It is certainly interesting to try to solve these problems jointly, as we already need to mobilize climate finance from rich countries (the main polluters) to help low-income countries (which will bear a disproportionate burden of climate change).

The President of the European Commission, Ursula von der leyen, at declared than “Large economies have a special duty towards the least developed and most vulnerable countries”, and the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, said “That it is logical” to seek to face the tensions on the debt and on the climate crisis jointly. The idea is to organize “Green debt swaps”.

The idea is not new. Over the past decade, so-called “Brady” bonds [créées en 1989] have been the mainstay of an international “menu” of debt restructuring instruments. Debtors used official IMF and World Bank loans to acquire US Treasury bonds as collateral, allowing them to swap existing bank loans at a price well below face value for marketable Brady bonds. and guarantees.

Attractive exchanges

Debt-for-nature swaps have also been implemented. The first such instruments were structured as agreements between a conservation organization, creditors and a debtor government. In 1987 [l’ONG américaine] Conservation International used donor funds to acquire $ 650,000 in Bolivian external debt at the greatly reduced price of $ 100,000.

In return, Bolivia pledged to protect the Beni Biosphere Reserve, by providing $ 250,000 (in local currency) for its management. Similar approaches have been used to establish a marine sanctuary in the Philippines and to protect mountain gorillas in Uganda.

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Debt-for-nature swaps were attractive to nature conservation organizations, as they could buy debts from struggling countries at greatly reduced prices and leverage funding from their donors. But doubts remained about the effectiveness and sustainability of these strategies, and the sums involved have therefore remained low.

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