Barbados is pursuing a ‘debt-for-nature’ swap worth around $300M to improve the island nation’s water infrastructure, according to Reuters.
As the name suggests, ‘debt-for-nature’ swaps have two aims: conservation and debt management. Here’s one example of how they might work:
- 💰 A lender agrees to forgive some debt, and in return…
- 🌺 The borrower country uses the money it saves to invest in conservation projects.
Why would lenders do this? Often it’s a way to bring a borrower’s debt back onto a more sustainable trajectory, rather than go through a costly restructure. It can also count towards a lender’s environmental commitments.
Intrigue’s take: Barbados pulled off a successful debt-for-nature swap last year to support marine conservation, but this new proposed swap is a bit different with its water infrastructure focus.
So if this new swap goes well, we can imagine it becoming a model for other countries looking to alleviate their own debt burdens and build more (and more sustainable) public infrastructure.
Also worth noting: