Government says debt-for-nature swap necessary
The Barbados government assured taxpayers on Tuesday that they will not be footing the bill of the debt-for-nature swap to help fund marine conservation efforts.
Minister in the Ministry of Finance & Econ0mic Affairs, Ryan Straughn told Parliament that the debt swap arrangement, which is being entered into with CIBC First Caribbean and Credit Suisse International at $150 million each, was to allow the government to re-purchase a portion of its existing debt at a lower interest rate – both Eurobonds and Series E bonds.
The minister said that it is the interest payment saved that will be diverted to the Barbados Environmental and Sustainability Fund over the next 15 years for the marine conservation plans, and this was being made possible with a guarantee by the Inter-American Development Bank (IDB) for up to $200 million and The Nature Conservancy for up to $100 million.
“This will not impact the budget of the Ministry of Environment,” Straughn told legislators during his contribution to the debate on the resolutions to supplement the Debt Conversion (Counter-Guarantee) Act and the Special Loans Act Cap 105 (Marine Conservation).
“Since we were already committed to paying a portion in interest, in exchange for buying back the debt at a lower interest rate, the commitment is that we will divert a portion of the existing interest payment to do some marine conservation work that is critical to be able to help sustain and build out the blue economy in Barbados.”
Straughn said that the savings from the existing debt payments were estimated between U.S. $30 million and U.S. $40 million, depending on the rate on the close of day on September 20 this year.
“Therefore, over the next 15 years, once we close this transaction, the Barbados Environmental and Sustainability Fund will receive those debt service payments as they come due,” he said, insisting that it was not a government fund.