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Business Recorder
2 days ago
- Business
- Business Recorder
World Bank, Spain launch Global Hub for debt swaps
LONDON: Spain has partnered with the World Bank to help countries free up money to spend on sustainable development projects via debt swaps, the country's Ministry of Economy said on Tuesday. With rich governments cutting official development aid and many countries spending more on servicing debt than on development, nations are turning to creative ways to find cash to support projects ranging from protecting coral reefs to paying for water sanitation projects and schools. The Global Hub for Debt Swaps for Development, launched at the Finance for Development summit in Seville, southern Spain, will provide countries with technical and financial assistance as they look to reallocate finance to projects like food security and climate adaptation, the Spanish government said. Countries from Barbados to the Ivory Coast have used debt-swap mechanisms over the last year to buy back more expensive loans or bonds and refinance them at cheaper rates, while pledging to use the savings for social and environmental projects. But critics say such deals can be time-consuming, costly and hard to replicate, which has prevented more widespread adoption of a tool advocates say is critical to helping countries reduce debt burdens and address development issues.
Straits Times
2 days ago
- Business
- Straits Times
Spain and World Bank in push for wider use of 'debt swaps'
Sign up now: Get ST's newsletters delivered to your inbox FILE PHOTO: Vehicles pass in front of the World Bank building, which houses the International Centre for Settlement of Investment Disputes, in Washington, D.C. on May 20, 2022. Picture taken with a long exposure. Picture taken May 20, 2022. REUTERS/Raphael Satter/File Photo SEVILLE/LONDON - Spain has partnered with the World Bank to help poorer countries free up money to spend on development and conservation via debt "swaps," the country's Ministry of Economy said on Tuesday. With rich governments cutting official development aid and many countries struggling with their debts, nations are trying to find creative ways to fund projects ranging from protecting coral reefs to paying for schools. The Global Hub for Debt Swaps for Development, launched at the UN's Finance for Development summit in Seville, will provide technical and financial assistance to countries eyeing debt swaps for food security and climate change adaptation, the Spanish government said. Nations from Barbados and Belize to Ecuador and Ivory Coast have all used debt swaps in recent years, buying back more expensive loans or bonds and securing refinancing deals with cheaper rates. There have been roughly $6 billion worth of debt-for-nature swaps - transactions in which a country's debt is reduced in exchange for a commitment to invest in environmental conservation - in recent years. Development banks often play a crucial role by providing guarantees or risk insurance that brings down the cost of swapped debt and generates the savings. Critics say such deals can be time-consuming and complex, which has prevented more widespread adoption of a tool advocates say is critical to helping countries reduce debt burdens and address development issues. "We have heard loud and clear the message from many countries: we need practical tools that make debt swaps simpler, faster and more accessible," Spain's minister of Economy, Trade, and Business, Carlos Cuerpo, said. Top stories Swipe. Select. Stay informed. Singapore Seniors can claim $800 SG60 vouchers from July 1; adults to get $600 in vouchers from July 22 Singapore NSman, 30, dies in hospital after collapsing outside Maju Camp Asia Thai PM's suspension could spell end of Shinawatra clan's era of political dominance Singapore Judge rejects woman's claim that she owns 99% of Bukit Timah condo mostly paid for by ex-boyfriend Singapore 'He fought till the end': Man who survived acid attack as a baby dies of cancer at 26 Singapore Trial opens for 3 women who allegedly organised procession outside Istana Business Do not overcommit to a single solution in a multi-polar world, says ex-foreign minister George Yeo Singapore 1MDB saga: Standard Chartered Bank disputes $3.4 billion claim by liquidators in Singapore Spain will contribute 3 million euros ($3.54 million) to support the Hub, while World Bank President Ajay Banga said it would host a "multi-partner trust fund to finance technical assistance". TIMELY The push comes at a timely moment for the debt swap market amid concerns that crucial U.S. backing for such deals - particularly those with a climate or nature focus - could largely dry up under President Donald Trump. Still, demand for broader development swaps remains strong, Inter–American Development Bank President Ilan Goldfajn said at a news conference in Seville on Tuesday. The IDB has backed five of the last nine major debt-for-nature swaps, many of which were done alongside the United States' International Development Finance Corporation. "We are getting demand for debt for education, debt for health," Goldfajn said. "Those are things that have been under construction. Let's see how they evolve." In an effort to spur wider adoption of debt swaps, a set of conservation groups, investors, development bankers and lawyers who have spearheaded the growth of the nature-swap market also published a best-practice guide for such deals. It included guidance on who should use debt swaps, and how. Melissa Garvey, a director at the Nature Conservancy, which was one of the lead contributors to the how-to-guide, said debt swaps were now a "proven model to finance conservation at scale." REUTERS
Straits Times
2 days ago
- Business
- Straits Times
Spain, World Bank launch debt-swap hub to free up development funds
FILE PHOTO: Vehicles pass in front of the World Bank building, which houses the International Centre for Settlement of Investment Disputes, in Washington, D.C. on May 20, 2022. Picture taken with a long exposure. Picture taken May 20, 2022. REUTERS/Raphael Satter/File Photo LONDON - Spain has partnered with the World Bank to help countries free up money to spend on sustainable development projects via debt swaps, the country's Ministry of Economy said on Tuesday. With rich governments cutting official development aid and many countries spending more on servicing debt than on development, nations are turning to creative ways to find cash to support projects ranging from protecting coral reefs to paying for water sanitation projects and schools. The Global Hub for Debt Swaps for Development, launched at the Finance for Development summit in the Spanish city of Seville, will provide technical and financial assistance as countries look to reallocate finance to projects like food security and climate adaptation, the Spanish government said. Nations from Barbados to the Ivory Coast have used debt-swap mechanisms in the last year to buy back more expensive loans or bonds and refinance them at cheaper rates, while pledging to use the savings for social and environmental projects. But critics say such deals can be time-consuming, costly and hard to replicate, which has prevented more widespread adoption of a tool advocates say is critical to helping countries reduce debt burdens and address development issues. "We have heard loud and clear the message from many countries: we need practical tools that make debt swaps simpler, faster, and more accessible," Spain's Minister of Economy, Trade, and Business Carlos Cuerpo said. Spain will contribute 3 million euros ($3.54 million) to support the Hub, while the World Bank said it will host a "multi-partner trust fund to finance technical assistance". "By turning successful pilot projects into repeatable solutions, we can ease debt burdens and unlock investments in education, health, and opportunity," World Bank Group President Ajay Banga said. Efforts by multilateral lenders and governments to support the market have materialized amid concerns that crucial U.S. backing for such deals - particularly those with a climate or nature focus - is drying up under President Donald Trump. As of July 1, no market-based deals had been completed. Still, demand for broader development swaps remains strong, Inter–American Development Bank (IDB) President Ilan Goldfajn said at a news conference in Seville on Tuesday. The IDB has been involved in five of the last nine debt-for-nature swaps. "We are getting demand for debt for education, debt for health," he said. "Those are things that have been under construction. Let's see how they evolve." In an effort to spur wider adoption of debt swaps, a group of investors and development bank professionals, lawyers and non-governmental organizations convened by the Nature Conservancy, which has spearheaded the nature-swap market, on Tuesday published a best practices guide for such deals. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
2 days ago
- Business
- Straits Times
Spain, World Bank launch debt-swap hub to free development funds
FILE PHOTO: Vehicles pass in front of the World Bank building, which houses the International Centre for Settlement of Investment Disputes, in Washington, D.C. on May 20, 2022. Picture taken with a long exposure. Picture taken May 20, 2022. REUTERS/Raphael Satter/File Photo LONDON - Spain has partnered with the World Bank to help countries free up money to spend on sustainable development projects via debt swaps, the country's Ministry of Economy said on Tuesday. With rich governments cutting official development aid and many countries spending more on servicing debt than on development, nations are turning to creative ways to find cash to support projects ranging from protecting coral reefs to paying for water sanitation projects and schools. The Global Hub for Debt Swaps for Development, launched at the Finance for Development summit in Seville, southern Spain, will provide countries with technical and financial assistance as they look to reallocate finance to projects like food security and climate adaptation, the Spanish government said. Countries from Barbados to the Ivory Coast have used debt-swap mechanisms over the last year to buy back more expensive loans or bonds and refinance them at cheaper rates, while pledging to use the savings for social and environmental projects. But critics say such deals can be time-consuming, costly and hard to replicate, which has prevented more widespread adoption of a tool advocates say is critical to helping countries reduce debt burdens and address development issues. "We have heard loud and clear the message from many countries: we need practical tools that make debt swaps simpler, faster, and more accessible," Spain's Minister of Economy, Trade, and Business Carlos Cuerpo said. Spain will contribute 3 million euros ($3.54 million) to support the Hub, while the World Bank said it will host a "multi-partner trust fund to finance technical assistance". "By turning successful pilot projects into repeatable solutions, we can ease debt burdens and unlock investments in education, health, and opportunity," World Bank Group President Ajay Banga said. In the last two decades, Spain has signed 47 agreements with 28 countries, resulting in the forgiveness of 1.64 billion euros of debt. The government has put in place a new national framework to sign bilateral debt swap agreements totaling up to 300 million euros over the next five years, the Economy Ministry said. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
The Star
2 days ago
- Business
- The Star
Spain, World Bank launch debt-swap hub to free development funds
FILE PHOTO: Spanish Minister of Economy, Trade, and Enterprise Carlos Cuerpo participates in a media interview at the International Monetary Fund (IMF) and the World Bank Group 2024 Fall Meeting in Washington, U.S., October 23, 2024. REUTERS/Kaylee Greenlee Beal/File Photo LONDON (Reuters) -Spain has partnered with the World Bank to help countries free up money to spend on sustainable development projects via debt swaps, the country's Ministry of Economy said on Tuesday. With rich governments cutting official development aid and many countries spending more on servicing debt than on development, nations are turning to creative ways to find cash to support projects ranging from protecting coral reefs to paying for water sanitation projects and schools. The Global Hub for Debt Swaps for Development, launched at the Finance for Development summit in Seville, southern Spain, will provide countries with technical and financial assistance as they look to reallocate finance to projects like food security and climate adaptation, the Spanish government said. Countries from Barbados to the Ivory Coast have used debt-swap mechanisms over the last year to buy back more expensive loans or bonds and refinance them at cheaper rates, while pledging to use the savings for social and environmental projects. But critics say such deals can be time-consuming, costly and hard to replicate, which has prevented more widespread adoption of a tool advocates say is critical to helping countries reduce debt burdens and address development issues. "We have heard loud and clear the message from many countries: we need practical tools that make debt swaps simpler, faster, and more accessible," Spain's Minister of Economy, Trade, and Business Carlos Cuerpo said. Spain will contribute 3 million euros ($3.54 million) to support the Hub, while the World Bank said it will host a "multi-partner trust fund to finance technical assistance". "By turning successful pilot projects into repeatable solutions, we can ease debt burdens and unlock investments in education, health, and opportunity," World Bank Group President Ajay Banga said. In the last two decades, Spain has signed 47 agreements with 28 countries, resulting in the forgiveness of 1.64 billion euros of debt. The government has put in place a new national framework to sign bilateral debt swap agreements totaling up to 300 million euros over the next five years, the Economy Ministry said. ($1 = 0.8470 euros) (Reporting by David Latona, writing by Virginia Furness; Editing by Sharon Singleton)
