|
||
|
TWN
Info Service on Biodiversity and Traditional Knowledge (Dec23/02) Dear friends and colleagues Debt-for-nature swaps: Miracle or mirage? As the end of 2023 approaches, 136 countries are considered to be in a critical debt situation. At the same time, more and more international agencies (including the UN) point to debt swaps as an “innovative” solution for tackling sovereign debt problems, while also generating resources for biodiversity and/or climate action. Swaps, therefore, are gaining increasing attention, particularly due to the proliferation of so-called debt-for-nature swaps. However, a recent report by the European Network on Debt and Development (Eurodad) suggests that such swaps will not provide substantial debt reduction, nor will they create sufficient fiscal space for developing countries to tackle development and climate challenges. The report identifies several concerns with debt-for-nature swaps. Among these are that, firstly, debt swaps are not effective instruments for significantly reducing debt levels and that their overall impact on debt levels has been rather limited. Over three decades of debt swaps have led to roughly US$8.4 billion of debt treated, 0.11% of total debt payments by low and middle-income countries during the same period. Debt swaps are thus not a means to restore debt sustainability, and cannot be a way to avoid comprehensive debt restructuring, including debt cancellation. Further, debt swaps inherently bear conditionality. The swap will not happen if the debtor country does not agree to invest the freed-up resources in the area or project to be approved by the creditor. This risks creditors imposing their own interests and priorities on the borrowing country, a particular concern when international conservation foundations or foreign corporations play a prominent role in setting up the deal. Debt swaps also tend to be slow, complex and costly instruments. They tend to have high transaction costs, particularly in relation to the amounts involved. In the history of debt-for-nature swaps, a lack of transparency and accountability has further been a constant. Additionally, there is insufficient community and civil society participation and a lack of systematic monitoring, accountability and evaluation of the impacts of debt swaps. The swaps have occasionally led to communities experiencing exclusion, denial of access to traditional lands and resources, displacement, knowledge extraction and biopiracy, and human rights violations. Finally, debt-for-nature swaps can open the door to greenwashing, as there is a risk that creditors and the international community (including international conservation NGOs) appear to be delivering on their climate finance and environmental conservation commitments, while actual results remain out of reach. The report concludes that the increasing focus on debt swaps should not be an excuse to detract from the urgent need for debt cancellation and delivery of debt-free climate (and biodiversity) finance, nor to avoid the necessary reforms in the international debt architecture. With best
wishes,
|
||
