Seychelles discusses debt swap with bilateral creditors |10 April 2014
Seychelles’ debt swap initiative has been discussed with high level representatives of the ministries of finance and environment of the governments of the United Kingdom, France and Belgium – the main bilateral creditors of Seychelles.
The Seychelles delegation for the meeting in the three European countries comprised Finance, Investment and Trade Minister Pierre Laporte, Environment and Energy Minister, Professor Rolph Payet, Didier Dogley, special advisor in the Ministry of Environment and Energy and Brian Charlette from Ministry of Finance, Investment and Trade. They were helped by Robert Weary from The Nature Conservancy, Sebastian Espinosa and David Nagoski from Whiteoak, a financial advisory company.
The Seychelles delegation was accompanied and supported by the Seychelles ambassadors based in London, Paris and Brussels and their staff.
They also met the vice-chairman and senior staff of the secretariat of the Paris Club and senior representatives from the European Investment Bank.
The objective of this mission was to present the debt swap initiative in more details and offer the representatives of the bilateral creditors the opportunity to obtain more information from the Seychelles delegation.
Following the country’s successful macroeconomic programme which has led to remarkable economic stability and growth, the Seychelles government has now embarked on a longer-term strategy to reduce its debt to a much more sustainable level by 2018.
To achieve this, among others, the government of Seychelles has launched an innovative initiative called debt swap for which it is seeking support from its main bilateral creditors, most of which are members of the Paris Club.
The debt swap involves the partial buying back of existing debt at a discounted rate through a combination of grant money and very low interest loans payable in Seychelles rupees.
With more than 30 years experience in marine conservation and restoration efforts, the Nature Conservancy is helping Seychelles raise these funds. The initiative will also include the creation of a trust fund which will be used to finance coastal and marine-related projects which will strengthen Seychelles’ resilience to climate change and the long-term sustainable development of the country.
The Nature Conservancy is acting to mobilise US $80 million (R960) in debt-swap for the government of Seychelles in exchange for their commitment to enhance marine conservation and climate adaptation commitments.
The effort will also establish a permanent endowment that generates sustainable financing for Seychelles’ marine conservation efforts.
Furthermore it is foreseen that through the process Seychelles will produce its first marine spatial plan, which will result in part of our exclusive economic zone being put aside as replenishment zones.
Once complete, this project will result in the Indian Ocean’s second largest marine reserve, improving protection for the marine resources that fuel the island nation’s thriving tuna and tourism sectors. Some 200,000 square kilometers of Seychelles’ territorial waters are slated to be classified as “replenishment zones” to protect important tuna feeding grounds, and therefore the tuna industry.
During the three-day mission, the Seychelles delegation met officials from the HM Treasury, Foreign and Commonwealth Office and senior officers of His Royal Highness The Prince of Wales, charity organisation, the International Sustainability Unit (ISU).
In Paris meetings were held with the advisor of the president for climate change issues, senior French government officers from the French Treasury and the Paris Club.
The last leg of the mission was in Brussels, where the delegation had similar discussions with senior officers from the Belgium Ministry of Finance and the European Investment Bank.
Debt Swap is an innovative financing mechanism being championed by the Global Island Partnership (Glispa) launched by President James Michel in 2005 to efficiently apply adaptation to climate change funding to achieve high leverage for adaptation projects while simultaneously reducing financial barriers to Small Islands Developing States’ (Sids) implementation of climate adaptation strategies. Debt-for-adaptation is a variation of the debt-for-nature and debt-for-development swaps, and it responds to high debt burden which many Sids experience.
The debt swap provides predictable funding over a period of years to address ongoing needs in the face of climate change such as capacity building at different levels, monitoring and evaluation.
The Nature Conservancy is a major environmental non-government organisation based in the United States of America. Its main role is to act as broker and to provide credibility to the initiative.