Raul Fernandez, a United Nations Development Program project manager for climate development frameworks, revealed on Monday that debt-for-climate swap for Zimbabwe’s development partners has become “an option that they are willing to consider.”
As reported by Bloomberg, the UN project manager made the revelation at a summit hosted by Zimbabwe’s ’s Treasury in the resort city of Victoria Falls.
The basic concept of debt-for-climate is to provide debt relief in return for fresh pledges to fund environmentally friendly projects, frequently associated with conservation and climate action.
“They need to see some action from the government, this commitment to structural reforms. There is that willingness, they have this on their radar,” Raul Fernandez stated.
According to Fernandez, in an interview on Tuesday, the long-term nature of debt-for-climate swaps gives countries flexibility to borrow funds to fulfill their obligations under the agreement. “The basic idea stems from Zimbabwe’s inability to access concessional loans,” he said
For this to be feasible in the case of Zimbabwe, creditors will need to think about “writing off some debt,” he added.
The UN official further relayed that s debt-for-climate swap would be “more suitable for bilateral creditors” adding that the proposal is a part of a policy presentation for a conference that the environment ministry will host in the nation’s capital the following month.
According to the Bloomberg report, Zimbabwe’s default on debt led to its removal from the international capital markets in 1999. Interest rates have skyrocketed since the country is unable to settle its debts.
As a result, the Southern African country solicited the intervention of former Mozambican President Joaquim Chissano and President of the AfDB Akinwumi Adesina in 2022 to aid in restructuring negotiations with creditors, which included the Paris Club, the World Bank, the European Investment Bank, and the AfDB.
