Debt-for-nature swaps have regained prominence globally, with more and more indebted countries using them to raise money for climate-related projects. Under such arrangements, a debtor country redirects payments in local currency toward agreed-upon climate mitigation and adaptation projects, instead of making payments on outstanding loans. While they are often presented as a win-win, their fiscal and conservation gains often depend heavily on transaction design and safeguards.
The Republic of Congo recently announced discussions on a debt-for-nature swap to convert part of its US$5 billion external debt into financing for environmental protection projects. This follows its US$670 million Eurobond issuance. For the Republic…