Debt4Climate (LINGO Incentives)

Debt-for-climate swaps offer a way to reduce debt while committing debtor countries to climate-focused spending and policies. These swaps address both climate and debt issues without the economic and reputational costs of traditional debt restructuring. The approach is inspired by the concept of debt-for-nature swaps. Since 1987, there have been 140 such agreements, involving both governments and private lenders, with billions of dollars allocated to support environmental conservation efforts.

In 2021 Belize restructured Belizean government debt held by TNC, USDFC, and commercial creditors holding a total of $553 million in sovereign bonds. Through a “blue bond” issued to the market, a TNC subsidiary provided a “blue loan” to finance a bond-for-cash exchange at 55 cents per dollar. In return, Belize agreed to use part of the debt relief to establish a $23.4 million endowment for marine conservation, spend $4.2 million annually on marine protection, and expand its protected ocean area from 16% to 30% by 2026.

Resources :

•  IIED (2024) Debt swaps could release $100 billion for climate action, Press Release, April 2024

• World Economic Forum (2024) Climate finance: What are debt-for-nature swaps and how can they help countries?, Article, August 2024

•  TNC (2022) Belize Debt Conversion for Marine Conservation, Case Study, May 2022

• Eurodad (2023), Miracle or mirage: are debt swaps really a silver bullet?, Report, December 2023
• CAN (2023), Climate Action Network Position on Debt Swaps, Press Release, May 2023