When COVID-19 hit Belize, its economy nosedived: Closed borders meant fisheries and farmers had no export markets, and tourism centered on the tiny Central American nation’s warm waters and wonders of biodiversity came to a halt.
“We lost approximately 14 percent of GDP,” Belizean Prime Minister John Antonio Briceno said in an interview. Nearly one-third of the workforce of the nation’s 400,000 people were unemployed and there was not enough money “to keep the lights on,” let alone maintain onerous debt repayments.
Then came a lifeline: Environmental nonprofit The Nature Conservancy (TNC) offered to lend Belize money to pay off creditors if it promised to put part of the savings into marine protection.
Photo: AFP
So-called “debt-for-nature-swaps” are being hailed as an innovative financial tool for preserving ecosystems from climate change and overexploitation, even as critics warn their generosity is overstated and they are far from a cure-all.
Finalized in November 2021, a year after Briceno took office, the deal involved TNC buying back a US$553 million “superbond,” which held the government’s entire commercial debt, negotiating a discount of 45 percent.
This was converted into a US$364 million loan “blue bonds” in a sale arranged by Credit Suisse, unlocking US$180 million for marine conservation over 20 years.
“For us, it was a win-win, it gave us a breather,” Briceno said.
Notably, the buyback reduced the country’s debt-to-GDP ratio by more than 10 percent.
OLD IDEA, BIGGER SCALE
Belize’s coastline is home to the largest barrier reef in the northern hemisphere, providing significant habitat for threatened species, including manatees, turtles and crocodiles. However, warming oceans from climate change, excessive fishing and coastal development all pose major challenges.
Under the terms of the deal, Belize agreed to expand protection to 30 percent of its territorial waters and spend US$4.2 million annually on marine conservation.
Since then, TNC has signed similar agreements with Barbados and Gabon. Ecuador negotiated the biggest swap of all in May, reducing its debt obligations by about US$1.1 billion to benefit the Galapagos Islands under an arrangement overseen by Pew Bertarelli Ocean Legacy Project.
Slav Gatchev, managing director of sustainable debt at TNC, said that although the first debt-for-nature swaps happened in the 1980s, now they operate at a far larger scale.
“A third of the outstanding commercial debt to lower and middle income countries is in some form of distress,” he said, meaning environmental ministry budgets are stretched and it is hard for governments to invest in nature. He sees an opportunity to refinance up to US$1 trillion of the commercial and bilateral debt, in turn generating US$250 billion for climate and nature.
PAPER PARKS?
Andre Standing, a researcher for groups including the Coalition for Fair Fisheries Arrangements, said that the Belize deal was only possible because the country was about to default and it was therefore better for creditors to accept a lump sum — rather than the altruistic act it was portrayed as by some.
Moreover, such deals do nothing to address the debt crisis plaguing developing countries, he added.
“That’s true, but it’s not intended to,” said Esteban Brenes, who leads conservation finance for the World Wide Fund for Nature (WWF), which is also looking to organize new debt swaps.
“We’re going to take a piece of the debt and use some proceeds for something better, but by no means are we going to solve the big problem,” he said.
Another concern has been that countries might agree to lofty commitments to secure concessions, but then fall to “paper park syndrome” where protections exist only in theory.
However, Gatchev said the commitments are legally binding and governments could incur fees for breaking them.
“Our reputation as the world’s largest conservation organization is on the line here, and we have no incentive to sugarcoat lack of compliance,” he said.
Briceno, for his part, said the high-profile deal had increased environmental consciousness among his people, who were now quick to report illegal mangrove dredging, for instance.
The debt restructure was “a very good start,” he said, but his country needed far more assistance from the Global North.
“Developed countries destroyed their environment to be able to have development: high-rises, big vehicles, nice fancy homes,” Briceno said.
“Now we want the same and you’re telling us: ‘We can’t afford you to destroy what we have destroyed’ — then pay us,” he said.
The Philippines yesterday said its coast guard would acquire 40 fast patrol craft from France, with plans to deploy some of them in disputed areas of the South China Sea. The deal is the “largest so far single purchase” in Manila’s ongoing effort to modernize its coast guard, with deliveries set to start in four years, Philippine Coast Guard Commandant Admiral Ronnie Gil Gavan told a news conference. He declined to provide specifications for the vessels, which Manila said would cost 25.8 billion pesos (US$440 million), to be funded by development aid from the French government. He said some of the vessels would
BEYOND WASHINGTON: Although historically the US has been the partner of choice for military exercises, Jakarta has been trying to diversify its partners, an analyst said Indonesia’s first joint military drills with Russia this week signal that new Indonesian President Prabowo Subianto would seek a bigger role for Jakarta on the world stage as part of a significant foreign policy shift, analysts said. Indonesia has long maintained a neutral foreign policy and refuses to take sides in the Russia-Ukraine conflict or US-China rivalry, but Prabowo has called for stronger ties with Moscow despite Western pressure on Jakarta. “It is part of a broader agenda to elevate ties with whomever it may be, regardless of their geopolitical bloc, as long as there is a benefit for Indonesia,” said Pieter
US ELECTION: Polls show that the result is likely to be historically tight. However, a recent Iowa poll showed Harris winning the state that Trump won in 2016 and 2020 US Vice President and Democratic presidential candidate Kamala Harris courted voters angered by the Gaza war while former US President and Republican candidate Donald Trump doubled down on violent rhetoric with a comment about journalists being shot as the tense US election campaign entered its final hours. The Democratic vice president and the Republican former president frantically blitzed several swing states as they tried to win over the last holdouts with less than 36 hours left until polls open on election day today. Trump predicted a “landslide,” while Harris told a raucous rally in must-win Michigan that “we have momentum — it’s
CARGO PLANE VECTOR: Officials said they believe that attacks involving incendiary devices on planes was the work of Russia’s military intelligence agency the GRU Western security officials suspect Russian intelligence was behind a plot to put incendiary devices in packages on cargo planes headed to North America, including one that caught fire at a courier hub in Germany and another that ignited in a warehouse in England. Poland last month said that it had arrested four people suspected to be linked to a foreign intelligence operation that carried out sabotage and was searching for two others. Lithuania’s prosecutor general Nida Grunskiene on Tuesday said that there were an unspecified number of people detained in several countries, offering no elaboration. The events come as Western officials say
RSS