New initiative to cut national debt


Minister Lionnet addressing the audience

Land Use and Habitat Minister Christian Lionnet said this yesterday when he launched a one-day workshop held to review the country’s debt reduction strategy options.

“It is in our interest to explore all viable and tangible options and innovative ways in reducing our debt burden which weighs heavily on our economy and stifles development.”

Present at the discussions were a financial and a legal expert – Robert Weary of Nature Conservancy and Kasia Walawska from Ropes and Grey – who led the talks, senior government officials from the ministries of Finance and Trade, Foreign Affairs and Environment and Energy.

Also there were representatives of the Programme Coordination Unit and several non-governmental organisations involved in conservation, island development and biodiversity.

The workshop – which looked at Debt for Adaptation Swap as a new way to cut debts – was an initiative of the Ministry of Environment and Energy in collaboration with the Ministry of Finance.

It explored debt swaps as a good way to approach our national debt problem and an effective development tool for Seychelles as a Small Island Developing State (Sids).

This had already been brought to the table by Vice-President Danny Faure last month at the 67th Session of the United Nations General Assembly in New York.

The workshop aims to bring forward ideas to conclude a debt adaptation swap for Seychelles as well as develop next steps to conclude the Seychelles Conservation and Climate Adaptation Trust (SCCAT).

The initiative will also build Seychelles’ capacity to recover following an environmental shock and create an opportunity to deal with the country’s debts and its resulting negative effects on the environment.

The Debt for Adaptation Swap is an agreement between the funder, the government of the country in debt and conservation organisations using the funds.  Through this agreement, the latter transfers the debt title to the country in debt and in exchange, the country agrees to either pass certain environmental policies or donate a government bond in the name of a conservation organisation, with the aim of funding conservation programmes.

Mr Weary explained that through the debt swap, Seychelles will be able to reduce some of its external debt as well as pay for conservation initiatives rather than debt service.

Environmental benefits for the country through the debt swap will include preserving biodiversity, maintaining the ecosystem and promoting responsible use of resources as well as providing long-term funding for conservation initiatives.

Mr Lionnet said the way forward to reducing national debt is to “embrace new ideas and concepts that can open new windows and avenues...” out of the “economic quicksand”.

Small island developing states like Antigua and Barbuda have recently renegotiated their debts with Brazil using the same approach.