Ecuador completed this Tuesday what has been classified as the largest conversion that has been made in the world of public debt for nature protection.
This thanks to an agreement backed by the Inter-American Development Bank (IDB) and the United States Development Finance Corporation (DFC) that will allow this country transfer a massive amount of resources to the protection of the Galapagos Islands.
According to the IDB, the operation consists of the granting of a guarantee given by the bank for 85 million dollars and a DFC political risk insurance for 656 million dollars to that Andean nation for the purchase of existing public debt on better terms. This purchase of debt with financing at a lower cost re-saved total savings to Ecuador of more than 1,126 million dollars.
«Ecuador and the IDB are leading the way with this debt-for-nature conversion. Not only is this the largest operation of its kind, but it is the first time that a multilateral institution combines guarantees with political risk insurance to mobilize resources from different actors towards conservation”, said Ilan Goldfajn, president of the IDB, through a statement.
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It is the first time that a multilateral institution combines guarantees with political risk insurance to mobilize resources from different actors towards conservation
According to Goldfajn, it is also an example «of how the region is not only tackling global challenges, but is also being part of the solution, becoming a pioneer in innovative approaches and instruments that can be replicated and scaled at a global level.» world».
According to the IDB, the operation will end specific savings for conservation of about 323 million dollars that will be used to create the Galapagos Life Fund (GLF), which will finance conservation activities for the next 18 and a half years, both in the Galapagos Marine Reserve and in the Hermandad Marine Reserve, a conservation area created in the area of the Galapagos in 2022.
According to the Minister of Foreign Affairs and Human Mobility of Ecuador, Gustavo Manrique Miranda, «this marine reserve is special due to the participatory process involved in its creation: the Government, the fishing sector, the academic sector and civil society in general joined efforts to increase and strengthen the mechanisms for the conservation of the extraordinary biodiversity of Galapagos. an example for the world of environmental protection and support for scientific research and production. This is true sustainable development.»
In its statement, the IDB states that this type of debt will allow countries to improve their debt management, while promoting investment in environmental sustainability and biodiversity. It also, they say, marks an important development in the IDB’s strategy to deploy innovative financing instruments in order to mobilize resources for sustainable development.
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«This transaction supports Ecuador’s efforts to achieve the Sustainable Development Goals linked to biodiversity and sustainability, and the goals under the Global Biodiversity Framework agreed at COP 15. It also promotes economic and social reactivation based on conservation and the sustainable use of its natural capital and care for the environment,» said Juan Carlos De la Hoz Vinas, IDB representative in Ecuador.
The Hermandad Marine Reserve encompasses 60,000 square kilometers of ocean between the Galapagos Marine Reserve and the Costa Rican maritime border northwest of the Galapagos Islands. The idea is to create a corridor of transnational protected areas in a vitally important habitat for threatened shark species.
The Galapagos Marine Reserve comprises 13 large islands in an area of 40 nautical miles. It has more than 3,500 species, 25 percent of which are endemic marine organisms, and 24 species of mammals, two of which are endemic. In addition to its invaluable intrinsic value, The natural capital of these two reserves is crucial for important economic sectors in Ecuador, such as tourism and artisanal fishing.
We achieved the world’s largest debt-for-conservation swap, saving $1.1 billion in debt and allocating $450 million for the protection of Galapagos and its biodiversity.
— Gustavo Manrique M. (@GustavoManriq_M) May 10, 2023
According to the IDB, Credit Suisse acted as the global lead arranger for this transaction, Oceans Finance Company served as the project manager, and Pew Bertarelli Ocean Legacy as the cooperating partner.
The model used for the Galapagos Islands is close to the proposals that President Gustavo Petro has been makingand others before him, to cancel or amortize the debt of developing countries in exchange for initiatives to protect the environment and counteract climate change.
SERGIO GOMEZ MASERI
EL TIEMPO correspondent