Page content
Debt for Development Swaps: An Approach Framework
Debt for development swaps (“debt swaps”) are agreements between a government and one or more of its creditors to replace sovereign debt with one or more liabilities that entail a spending commitment over time towards a development goal, for example, nature, conservation, climate action, education, nutrition, support to refugees, among others. The spending commitment funds are usually required to be ringfenced, typically through the establishment of a new government trust fund or entity to manage projects funded by the earmarked commitment spending. Debt stocks are reduced and, if the new expenditure commitments are lower than the original debt service, claims on budgetary resources (and thus liquidity pressure) are reduced […]