Seychelles’ debt swap plan on track
Seychelles is on track to relieve a portion of its external bilateral debt through a debt-for-nature swap.
The debt-for-nature swap involves donors buying back part of the country’s debt at a discounted rate and using the surplus money to pay for conservation initiatives rather than continue to pay debt service and interest fees from the original loan.
A workshop was held recently to explore the concept of debt swaps as an innovative and environmentally-friendly way to approach our national external debt problem. The meeting was an initiative of the Ministry of Environment and Energy in collaboration with the Ministry of Finance, Trade and Investment.
Leading the talks were experts Robert Weary and Kirsten Patterson of US charitable organisation The Nature Conservancy, and Kasia Walawska from US legal firm Ropes and Grey.
The workshop was attended by senior government officials from the ministries of Finance, Trade and Investment, and Environment and Energy as well as the Seychelles Tourism Board, the University of Seychelles and local conservation non-governmental organisations.
Didier Dogley, special advisor to the Minister for Environment and Energy, said in his speech at the opening ceremony of the workshop: “The debt swap initiative provides us with a golden opportunity to assess and determine the value of our natural marine capital, introduce spatial planning to our EEZ (exclusive economic zone) and intercontinental shelf and transform patterns of economic investments.”
“We are targeting Seychelles for Paris Club debt, which is a vehicle created by creditor countries to allow debtor countries to come in and restructure their debt,” said Mr Weary.
“The total debt that we have targeted is roughly US $82 million, which we can buy back under Paris Club rules at about US $46.5 million.”
“Everything will flow in and out of the trust fund, which will essentially be a public-private partnership, but with government in the minority seat. It will manage the cash-flow from the debt swap and run an annual call for proposals, from which both government and civil society would be eligible to receive the funding.”
The move could prove to be an effective development tool for Seychelles as a small island developing state (Sids) and could relieve up to US $82 million worth of debt. The team aims to establish the Seychelles Conservation and Climate Adaptation Trust (SCCAT) that will focus on structuring and easing the debt swap and then using the funds generated from the repayment of the loan towards developing sustainable conservation programmes for the country.