 My name is Monique Oswell. I am the type of patient finance advisor at the climate change adaptation unit at UNEP, the United Nations Environment Programme. This event has been organized by UNEP in partnership with the government of the SWATEMI, the Commonwealth Secretariat and the International Institute for Environment and Development. Unfortunately, our speaker today from the government of the SWATEMI has been turned up, but we shall continue with an initiative to join our community. However, we have an excellent lineup of speakers today, including from the Commonwealth Secretariat and online. The site event is looking at debt for finance swaps and it's used as an innovative financial instrument for public debt management. We heard at the opening ceremony of the Africa Climate Week the importance of managing the debt crisis in Africa and that debt for climate swaps can be used as a potential mechanism to contribute financing for climate action while also providing debt relief. At this site event, we will get different perspectives and expert opinions on how we can use debt for climate swaps to ease the debt crisis in Africa and redirect financing towards climate action for the continent. We have an excellent lineup of speakers today. We will hear from government ministries of finance and environment on the interests and the use of debt swaps to raise capital in their countries for climate and sustainable development activities. We also have the final Green Climate Fund, the International Monetary Fund and the African Development Fund, who will provide guidance and advise us on ways that debt for climate swaps can be used. But first, it is my pleasure to introduce Dr Pichenjin, the Commonwealth Regional Climate Finance Advisor to Africa to provide us with some opening remarks. Dr Pichenjin has vast experience in different development contexts and has little in leadership position, including at the UN. Over to you. Thank you so much. Distinguish ladies and gentlemen. We recognize the presence of the Minister of Environment for Kenyans. Welcome, horrible minister. Welcome to this afternoon's site event on debt for climate swaps. As introduced, my name is Henry Pichenjin from the Commonwealth Secretariat and I'm the Regional Climate Finance Advisor for Africa. On behalf of the United Nations Environment Programme in collaboration with the Kingdom of Esquiteen, as well as the International Institute for Environment Development and the Commonwealth Secretariat, I welcome and thank the distinguished panelists as well as all of you for coming together this afternoon for this discussion on debt for climate swaps. A warm welcome to those of you joining us online. We are here to examine whether debt for climate swaps may help in simultaneously tackling the worrying debt levels as well as the climate concerns in African countries. This event arises from the work of these partners, that is UNEP, IIIT, the Commonwealth Secretariat, in supporting the Kingdom of Esquiteen, in assessing the suitability of incorporating debt for climate swaps in an ongoing UNEP-led Green Climate Fund proposal. The GCF proposal focuses on increasing the resilience of vulnerable communities in mountain ecosystems. The Commonwealth Climate Change Programme aims to strengthen the resilience of communities to the negative impacts of climate change. Through our flagship initiative of the Commonwealth Climate Finance Advisor, we provide technical assistance to a balanced approach of project pipeline development, technical and policy support, and capacity building. This includes engagement for enhanced delivery of climate finance, not only from the public sector, but also from the private sector with the use of innovative instruments such as debt swaps. The debt and climate crisis are escalating in Africa. Can we tackle both simultaneously? Can we kill two birds with one stone? On the debt crisis, more than two years into the COVID pandemic, the debt situation has deteriorated significantly in many African countries. In 2019, before the pandemic, the average debt to GDP ratio for South Saharan Africa was 55.4%. In 2021, after the pandemic, the average debt to GDP ratio for South Saharan Africa increased to 60.3%. The effects of the war in Ukraine are likely to significantly worsen the debt crisis, further undermining debt sustainment. High levels of public debt service and insufficient fiscal and monetary space have impeded much needed investments in climate resilience, causing risks for vulnerable households and communities on the climate crisis. A number of studies have shown that climate vulnerability is driving up the cost of capital of climate vulnerable developing countries. Nine out of ten of the world's vulnerable countries globally are in Africa. Further, the Africa adaptation report by a global center on adaptation shows that in Africa, climate change is both in the next next year as a risk amplifier. Thus, there is danger that the vulnerable developing countries will enter a vicious cycle in which greater climate vulnerability raises the cost of debt and diminishes the fiscal space for investment in climate. Ladies and gentlemen, we are here to get a deeper understanding on how the debt for climate swaps work. We will hear more on this instrument during the panel discussion, but in simple terms, the debt for climate swaps is an instrument whereby debtor countries are relieved from their contractual debt obligations in return for local climate-related spending commitments. Some questions to have in mind as we listened to our distinguished panelists are, what has been the experience? How have debt for climate swaps been designed? In what situations is the instrument most suitable? What are the challenges? How can we realize the full potential of debt for climate swaps? Ladies and gentlemen, can we kill two birds with one stone? I will now welcome somebody to introduce our distinguished panelists and moderate the discussions going forward. Thank you. Thank you, Dr. Benje. May I ask Ms. Santos if she's connected? Yes, I can hear you. Our next speaker is Ms. Santos from the Ministry of Finance in Cape Verde. She's the Director General of the Treasury Department. Ms. Santos leads the administration of the state treasury as well as the banking services provided to the administrative public sector institutions and the management of public debt and state financing. The government of Cape Verde has already taken the first few steps to understand how debt for climate swaps can be leveraged to support government budgets. We will start to hear more about that process from Ms. Santos. Over to you Ms. Santos. Thank you and good afternoon to everyone. So as it was mentioned already we know that we are facing a lot of crisis that is affecting our countries and in the case of Cape Verde it's not different. Cape Verde is a small island developing state and we are facing we can say that we are facing a triple crisis because we have the COVID-19, the war and in the particular case of Cape Verde we have also the shocks associated with the climate issues that we are facing now almost four years of doubt. So this is one of the crises that also affect our financial in Cape Verde. We have the same shocks we derived from the COVID-19 also, the crisis that the COVID-19 brings to all the countries around the world that also affected Cape Verde with impacts in our economy growth and our government avenues in 2020 combined with the increase in the government spending for support the needs in health protection, support the families and the business that lead to an increase in our financing needs and to a recession of around 14.8 percent and all these factors combined with the reduction of the GDP led our public debt to reach 155.6 percent of GDP in 2020, eliminating our downward trajectory of this ratio that started in 2017. As mentioned already also we were in a good ratios about our public debt comparing with the GDP the last two years in 2018 and 2019 we were about 125, 24 percent of our debt was about 124 percent of GDP. So we faced a big increase in 2020 with the crisis of COVID-19 and then this year we have another crisis caused by the war a war in Ukraine that had a very strong impact on food price that did the government our government to adopt measures containing price by placing a cap on retail saving prices and through compensations to concessioners. So all of these crises affect our debt our ratios about the public debt and it lead to a decrease in our fiscal space since 2020. So we can say that this crisis indeed affects our country fiscal space and this debt swap climate we think that it could be a good a good instrument to support to help to support our to give us some free up in our budget for investments for new investments because we have all these crises but we need to continue to invest in our country. So we faced this debt for climate swap as an instrument that can help us with emphasis on renewable energy, energy's blue and green economy. We approach this process by linking the debt swap with climate related key performance indicators in which the these key performance indicators are based on national commitments on climate issues such our indices that are in line with the objectives of the Paris agreement. So in the case of Cape Verde we think that a good way that we can explore this instrument and this initiative it's making a mechanism that would allow Cape Verde to use up to 100% of the amount due as a budget support for renewable energies blue and green economy related sectors. In addition we guess that we can set key performance indicators that could be defined that will be monitored and verified by a third part to track specific progress towards a great sustainable performance target. So we guess that a practical way that we can if we can say like this to use this instrument to give us some free fiscal space to invest would be making this arrangement that can we can use the amount that we have from another debt that we already have to pay we can use this space as a budget support and then use this amount as a space to invest in this areas renewable energies blue and green economy that it's new sectors that it's important to develop our country and we guess that this instrument can help make these investments and we can make it by changing our debt service using this space for make these these investments. We know also that we have another approach about these instruments that is like creating a fund but we guess that using converting this amount to a free fiscal space for investing the renewable energies it could be a good approach for us and for our reality by now. Just to give a brief overview about the public debt of Cambridge as I said our debt we have external debt and internal debt our external external debt is composed by bilateral multilateral and commercial debt okay and our multilateral debt it represents almost 50.6 percent of our portfolio so we guess that the external debt converting our or some space in our external debt would be a good way to help us with some free fiscal space for new investments that's why you think we think that this instrument would be the swap with the climate would be a good instrument to help us facing this crisis that we have now and to continue to invest and make some new things in our public service so thank you. Thank you very much Ms Santos for those excellent insights. We now have Ms. Martina Massina, Ms. Dudu Massina from Eswatini. She is the Director of Literology in Eswatini at the Ministry of Tourism and Environmental Affairs. Ms. Massina also serves as the country's NPC partnership technical focal point and needs the team responsible for making climate action in the country including the international climate negotiations. Ms. Massina will be providing us with some perspectives on the country's interest in the use of innovative financial institutions with Ansari instruments to attract public finance for climate, nature and development. Welcome to the side event I'm glad you could make it. Thank you very much. It's such an appreciation you get to say and talking on the subject of the swap for which I'm the most specialist and I am equal in a space where I am once to then and the government of Eswatini is also curious. We are a government where we are living with a population here close to 16 percent is living below the poverty line that is of 25 million statistics and if you know that what has been happening recently with the COVID-19 pandemic where a lot of businesses were lost there were a lot of job losses and a lot of new homes as well children were affected there's poverty line increasing in recent years and also 27 percent of the land is degraded. There's also as an impact on the life of the people and the impact on the future change issue. And the whole country is interested with alien invasive species and also affecting my people. I'm not sure if you can add into the livestock and finding and if you are having such an invasion by other invasive species which are also some of them probably also have a climate change and potentially the impact on the country's economy. Resolving Africa region is also having an energy crisis particularly in the electricity and ESYT is importing most of its electricity around 70 percent from South Africa which is co-fired and we have an agreement against one and the first crisis we all know they were going and this is also affecting our future and outlook and new regards to capacity to for the economy to continue to increase and also challenging our efforts to achieve a digital global effort. We have also been affected by other things like for him he said something about the quality of the land that we have seen several years ago which means as you know before we had covered fully from the 2015-2016 drought and we are still definitely covered from that and probably now we are getting by more of the same year on events which result in digital effecting infrastructure. This past year we had a volume drain and there was a lot of infrastructure of the region for one. Now we can accept all of us we find ourselves also having to have the commitments under the climate agreement. We have an increase in we are still developing the implementation plan and we should go to the assistance side there is of course that that's an initial indication show that we need about 900 billion to one to the last big one we got a big number of dollars and just to get to 14 percent and below our business as usual we would like to um better increase our immigration going forward and we would like to be able to get some information that will be from us later to do that but hopefully we do this um when we um when we are um a country that is developing the challenges that developing countries are having and recently our our our debt to GDP ratio goes from about from before 20 percent to about 40 percent and part of this was the result of the challenges that were created with the COVID pandemic and so it's been challenging how we can um right now um local um funding we can rise um the external funding like we do today so for us the question is why is it an expo in innovative um um um financing that is the contributing to this one is one of those and um I have stated that the debt for the thing is increased by about 40 percent but I was just thinking some African countries are even about 100 percent I saw one of them I've mentioned names that are even about 400 percent so the question is why can't we explore this and make it work for us particularly because um as I am here during this week there's been a lot of talk also about those countries that are more vulnerable also here in lower capacity to um to access the mainstream employment finance there are cases where just accessing even a readiness program under the AGC and it will take you even up to three percent of that can three years of that can four I'm trying to get a financing so while we are accessing we are doing our best to build capacity and access that can be innovative how can those do for us and saying that we still need a lot of information we have central ministries that are also um we are telling them that there's this instruments we are asking us a lot of questions we are trying to answer some as people from the environment some states have changed we are not fully capacitated to talk to the finance issues so we do need more information out there to help us we do need more and information sharing and we've already started on that we've had some sessions where we're sharing information and and we're inviting the central ministries but there is more just next to it we actually should be very fascinating with them to be able to address more but more information more clarity more distance lens and it's a new instrument but we are willing to explore it we need innovative financing we need to meet our own comments less but um that is not reaching very good for us but if we can use that it's um we help us and I think it will be useful for most African countries if it's possible it also um cuts down on the need to have um finances um to pay um in important currency we get here could be used in local currency but again it depends on what the understanding is and how it's utilized we are willing to again and we want to know more thank you thank you so much Miss Miss Messina uh there's some excellent insights um from East Blackening in fact the insights that we received from both Cape Verde and East Blackening very much are vast majority of African countries that are at the very early stage of looking at our debt for climate swap mechanisms and be used for debt relief and kind of action in the countries we will now hear a little bit of a different opinion from a country that was already signed and is in the process of implementation of the debt for nature swap it's my pleasure to introduce our next speaker Miss Jeremy she's the CEO of the satiate's conservation and climate adaptation trust previously Miss Jeremy was the director general of the biodiversity conservation and management division ministry of environment energy and climate change from the government of satials the satials are actually signed a very unique nature for swap deal back in 2015 um and in that deal almost 22 million years dollars of its national debt was was written off and that was an exchange for the country implementing a set of options to protect its oceans so we will now hear from Miss Jeremy on some experiences from that deal over to you Miss Jeremy I think I did see you online earlier it's a fantastic table over to you welcome thank you so much and uh and thank you for um welcoming me welcoming me into the into the event today I think it's such a it's always such an honor for us to actually get to share a little bit of our experiences and and also try out a bit to help other countries that are thinking about you know how to do the do's and don'ts and the best and the lessons learned I I suppose relating to depth for nature swap so of course thank you for the for the very helpful introduction takes away from some of the things that I would have had to mention so as you rightly said so the satials we started our depth for for nature swap back in 2000 actually it was quite a lengthy process so we started back in 2009 um and this had been mostly due to the economic crises that we that the world encountered back in 2008 and this is the time that the government started to you know to ponder about the possibility of restoring some of its debt which at the time stood at over 150 percent of our GDP with an external public debt that represented about 95 percent of our GDP so as you know satials we are very very small country we've got 150 tiny islands and we are 99 percent ocean and tourism and fishing are major parts of our economy so as a result our people and economy we are quite vulnerable to the threats of climate change and already even at that time back then we had already started to encounter more severe storms and rising sea levels and we had started to see more motion temperatures and diminishing fish stocks and all of that which linked a lot with our vulnerabilities to the climate change phenomenon and so therefore there was a lot of thinking about you know how to improve our our situation and for us we were fortunate enough to to start a partnership at the time the government of satials started this discussion with the nature conservancy based in in the states and through their nature-based arm this is where we started to to work on our on our debt so the the social step conversion itself it's sorry so the the TMC was allowed was able to raise a mixture of grants and repayable loans for a new non-profit trust so in essence the conservation trust the conservation finance trust that I currently had is a direct product of our debt for nature swap it was created for us to channel the proceeds of the debt swap and also to fulfill some of the terms and conditions that were agreed to at the time so the SECAT the trust that I work for it uses the debt payments from the government to one repay the initial capital that was raised and two to fund ongoing conservation program so in exchange for restructuring our debt obligation on more federal terms the government committed to improve policy and increase investment in conservation so creating marine protected areas so one of the key commitments that the government of satials made and that was tightly linked with our debt for nature swap was our 30 percent marine protection marine protection areas which the president announced back in 2012 and our commitment was that we would go from a 0.1 percent coverage of our total EZ which is a total of 1.34 million square kilometers up to 30 percent protection by the year 2020 so that was one of the caveats and also at the same time when we were looking at the debt for nature swap that's when we also was able to start working on our marine special plan and to use that as a tool that would work very closely with our debt for nature swap so now I'm just going to focus a little bit more on the so the structure of the of the debt itself so after lengthy negotiations like I mentioned we were able to discount 22.2 million dollars at the rate of 93.5 cents on the dollar of some of the debt so we had a total of 80 million that we had originally wanted to restructure but through the negotiations we had some pull out from some of the partners and eventually we were only able to to restructure a proportion of that so but the transaction was still quite notable for several reasons one because it was the first time that the Paris Club creditors which was the biggest group that we we could buy back our debt for and it was the first time that this had been designed to benefit the environment and the credit participation in the agreement was the highest ever achieved in a buyback that was reached to the Paris Club's market-based window so the final step in the restructuring process was for us to raise the 20.2 million to purchase the sovereign debt and this is where the nature conservancy was quite instrumental so the nature vest was able to raise funds from two main sources so first they were able to raise five million dollars in grants and that was raised primarily from philanthropic foundations that included the Leonardo DiCaprio Foundation, Wates Foundation, Oakes Foundation amongst others and then the second whereby TNC was able to provide a 15.2 million dollar loan repayable at a 3% rate over 20 years so this was mostly what the what the structure of the of the debt was so the structuring process itself so we had to identify and work with the debtors the debtor country to purchase the sovereign debt and we were able to secure the commitments from the debtors to improve policy and increase investment in the specific area and secondly we were able to identify and reach proper agreement that would allow us to sell the debt owned by the debtor countries we were able to fundraise for repayable loan and non-repayable grants capital for debt buyback and we were also able to establish a local trust fund the sessions conservation and climate adaptation trust to lend debtor country funds to purchase the sovereign debt receive the debt payments and fund the programming so in essence we were able to now get the full five million grants the full five million dollars that we were going to disperse over a number of years through conservation and climate adaptation programs so this is one of the key milestones of the of the debt for nature swap in that it has been able to to put available in the country over 200 000 dollars every year from the from the debt for nature swap proceeds enters the secat and it goes towards the funding of small to medium-sized projects within the country of up to two million rupees to local NGOs to local actors for them to undertake projects that speaks to marine conservation marine protection the development of the bleak enemy and as well as sustainable fishing so since 2015 the the debt for nature swap was finalized and in 2016 secat became fully operational and as of 2017 we have started and we have run six full cycles of what we call the blue grants fund here in Seychelles we have funded over 56 projects which is equivalent to over 2.5 million dollars and we are continuing we are now in our sixth cycle and this has been one of the biggest biggest achievement that we have seen however it has not all been rosy there has been quite a steep curve in terms of the funding and how to channel it how to administer such grants and to make the funds more available to the everyday person who actually wants to undertake the effective programs on the ground whilst at the same time remaining accountable and to the donors as well as to the parties we also have an endowment fund which we're building it which will mature in 20 years from the time of the start and this is something that is ongoing and then obviously there is the loan component that secat as part of its role has to ensure that the government of Seychelles honors and the fact that we were able to actually fulfill our commitments to protect the 30 percent of how he said by 2020 we have also been able to get additional support and at this moment Seychelles is putting or is considering maybe having a second debt for nature swap I think I'll leave it here and I will be very very welcome to your questions in the panel discussions that will follow I thank you fantastic thank you so much for for the atmosphere and space that we will have a few questions for you once we've had all the speakers it's the Andre Turin who is the head of innovation technology transfer and co-funding platforms of the private secativity of the GCN fund who now provide us with some comment what I do want to say is that I'm very grateful to you Andre to to be here today it's well past midnight in Seoul so thank you very much for that Mr Turin joined the GCN in 2017 prior to that year work for around 18 years as an investment and finance professional with regional authorities private companies and international organizations and this was across Eastern Europe, Asia and Africa today Mr Turin acquired some guidance on how a debt for climate swap instrument can be used to be structured debt with support from the GCN and this is going to be very interesting for several of us to be over to you Andre you know you want to sit on mute apologies thank you very much Somali for your kind introduction and thank you very much for offering me this opportunity and present debt for climate as well approach as we see it in the context of activities of the green climate fund now I'm sharing my screen with a small slide and schematic representation or potential implementation strategy that we have as a mechanism to implement debt for climate swap with participation of the green climate fund the cornerstone of this implementation strategy is a coordinated effort among three key stakeholders developing country debtor creditor country or several countries primarily from developed countries constituency and of course green climate fund the largest financial institution dedicated to financing and support mitigation and adaptation climate projects in developing countries so the key underlying mechanism of this debt for climate swap deal is the three-party assignment arrangement that on one hand captures appropriate terms and conditions of this mechanism and on the other hand outlines rights and obligations of each party involved in the process to successfully address issues that are supposed to be implemented or utilizing climate debt for climate swap as a solution definitely first a step and initial effort we expecting to receive from developing country which is the most interested in that mechanism and the first effort on that way is to design robust climate related mitigation or adaptation project or program that would be supported by financial resources received from that debt for climate swap for that gcf around several redness programs we are supporting country programming and of course looking forward to potential opportunities in cooperation with interested parties to facilitate preparation of these projects in order to find debt for climate swap implementation second step is engaging creditor countries or countries with a proposal to take part in this debt for climate swap deal as we indicate here the crater countries who are agreeing to support this mechanism will contribute their creditor rights and here we're talking about bilateral craters so far this is the easiest way to implement debt for climate swap mechanism in our context so they will contribute crater rights to the green climate fund mechanism reciprocally we will receive funding proposal from the developing country which will be linked in its implementation as a condition precedent to this contribution and effectuation of next steps in that process after receiving this debt creditor rights debt green climate fund will in coordination with developing country will either convert this into the local currency of developing country debtor and ultimately contribute this local currency to the projects or in some cases may also contribute this funding in the in the hard currency of initial indebtedness so as a result we will receive financial support for the ongoing projects in developing country we will receive a total decrease or diminishment of the debt burden and ultimately support much needed climate mitigation and adaptation project with this mechanism so this is schematic representation and definitely as many speakers told before we see some challenging ways and some challenges on our way to implement this particularly definitely first step for us to see is a robust climate related mitigation and adaptation projects that will be supported this is a coordinated effort between different stakeholders and constituencies within the government of course maybe spearheaded by the national designated authority another key challenging moment is engaging a greater country cooperation and as we heard from says shells experience it is not straightforward however is a good deal and clear view of where the money monetary contribution will go what will be implementation mechanism to ensure that results achieved that we get the funding to the purpose where it is intended this is where GCF can bring the most value in that scenario by providing its robust measurement reporting verification system dedicated divisions that are monitoring and evaluating performance from different angles including independent divisions that are not constrained by the organizational structure of the green climate fund and some other safeguards that we have in place in order to ensure that the process of the debt for climate swap is effective transparent and ultimately reaching its goals in all dimensions we are talking about not only climate related action support but also in terms of debt relief which is achieved by this implementation so final remarks is that this implementation scenario is straightforward and plain manila option that we can definitely adjust depending on the conditions existing in a particular situation of a specific developing country and of course its negotiation discreeters and other conditions that might be relevant for structuring or adjusting this scenario to to become operational and ultimately effective i'll stop here and definitely will be happy to take your questions and answer them thank you very much thank you very much i'm going to move on to our next speaker now Mr. Demandakur a senior economist from the Ironman sitting within the strategy policy and review department Mr. Thakur groups do work in the fiscal affairs department covering expenditure policy issues and with the Southampton, Kisla Tini and Antelope Teens he's the incoming resident advisor on micro-phenomics and climate at Ironman's Africa training institution today Mr. Thakur would be highlighting a few points on the analysis design and implementation for on debt for climate swaps over to you remote review thank you Simone and pleasure to be here so as you already mentioned i'm going to talk about recently issued paper on how we see debt for climate swaps and its usefulness as an addition to the climate finance toolkit first of all what is the novelty of the debt for climate swaps in a sense we are trying to address a debt problem and a climate problem if you're looking only at a climate problem then we can think of providing climate conditional grants or we can think of conditional lending of the type of ESG instruments to finance those if you're thinking of a debt problem we usually think of fiscal consolidation or debt restructuring what a debt for climate swap does in a sense is combines both and provides us with partial forgiveness and conditionality the issue is that might not be enough to restore that sustainability or provide the level of climate finance that is needed for countries to meet their NDCs as we have seen all the debt for climate swaps debt for nature swaps have been around for the best part of three decades now the total amount of debt that has been treated remains quite small four billion or less and that includes 200 transactions so if we are thinking about enhancing the impact of debt for climate swaps we need to think about how to scale it up but before we get there the question that we ask is how do we do that in a sense is debt for climate swaps the best instrument and the way to think about it is it depends on the country's situation if a country does not face a debt problem then climate conditional grants are better they're better because they're conditioned on the country implementing specific policies and there's no risk that these policies will not be implemented because of the conditionality associated with the disbursement under the hand with debt for climate swaps we can find ourselves in a situation whereby the country reneges on the promise and then the monitoring costs kick in but if a country is facing a debt problem then we need to think about debt restructuring and debt for climate swaps under the circumstances may not be adequate to restore debt sustainability that's it when our approach is more pragmatic in that in today's world even elevated debt vulnerabilities reduce fiscal space the easiest place for debt for climate swaps in the broader climate finance toolkit and this has to do with the fact that in many countries grants are not forthcoming necessarily and debt relief is not necessarily on the table either and if you have the opportunity to get a debt for climate swaps under those circumstances then of course if it is the only instrument available please go for it but if a country is in debt distress and debt for climate swap is seen as debt restructuring light it might still provide some space but it might not be adequate to restore debt sustainability so our bottom line is it very much depends on what is the objective the country wants to address and the design of the debt for climate swaps will be crucial in determining whether we restore debt sustainability that's it even the overall financing needs and elevated debt vulnerabilities debt for climate swaps can be a useful addition to the climate finance toolkit I would use the remaining few minutes that I have to just touch on how do we maximize the impact of debt for climate swaps basically try to get as much debt under treatment as possible bringing the private creditors bringing the official creditors and if the pool is too restricted think about engaging third party buybacks to increase the pool of debt that is treated also try to get the debt buyback at a high discount maximizing the discount reduces of course the debt burden and buying back the debt on a secondary market is when it is already being discounted can be the best way to do that as our colleague from Seychelles mentioned having a collective action close might be useful to ensure that there are no holdouts now when you're buying back the debt of course you're raising money then to think about how you can use the ESG instruments and maximize the premium that is associated with those financing to reduce the cost at which you are taking the new loan and of course IFI involvement for guarantees and the likes can be helpful to reduce the cost of the transaction action. So with that I will stop here now and happy to touch on some of the other aspects related to scaling up debt for climate swaps during the discussions thank you. Thank you very much and I know I do have one question for you after this. Our last speaker is Dr Innocent Onam he's the Chief Natural Resources Officer at the African Natural Resource Management and Investment Centre at the African Development Bank. He leads work that falls across the public policy, governance of natural resources, climate change and regional areas of the banks. Dr Onam will be explaining the role that the AFPB can play in supporting countries, development of debt for climate and nature swap. Over to you. Thank you very much and good evening. So today's conversation has been very interesting particularly from the development bank who has operations across Africa. So it's very important for us to have this kind of conversations one because the topic on that discussion even though it's very old it has only very little applications across board. What we've noticed if you want to consider the burden of debt of debt stress on so many African countries, visa fees, the volume and amount of transactions or the volume and amount of debt swaps that have occurred within the last 20 years you will see that Africa has a long way to go in terms of first of all understanding the mechanisms and methodology and also applying them. So what the bank on the what the African Development Bank is doing first of all is to take a deep dive you know try to understand how this thing has worked. I mean we've had listen to speakers from Seychelles this morning from it's Virginia and Cape Verde, particularly Seychelles. I mean where they already recorded more than up to 56 projects is this kind of success stories that we decided to take a deep dive to really understand how African countries with huge debt stress can benefit from it. So for example we are currently finalizing a study on the feasibility of the feasibility and policies significance of debt for climate and nature swaps as a sustainable financing tool. The study provides detailed policy recommendations regarding sustainable financing options with a particular focus on debt for climate and nature swaps. How transactions can be designed learning from countries like Seychelles for example how can the bank develop its own debt action plan to be able to specifically speak and design interventions that could help to relieve some of the debt stress that African countries are currently going through. The study will potentially place the bank in a situation where we can provide debt management advisory by assessing the viability of debts and the range of economic and environmental factors that could inform the design of this debt. Expected outcome from this study for example is to develop a debt restructuring framework of course using IMF guidelines you know to perhaps reclassify some of you know the countries within Africa that are really really in debt and then see how you know we can categorize them either as extreme high risk or high risk of debt stress maybe some color coded red or yellow lights countries and to some extent fragile countries I mean those that do not have a headroom for non-concernational debt across key economic variables. So while carrying out this evidence-based policy advisory we are also delving into how we can learn from this kind of studies and events like this to develop technical assistance and capacity buildings for original member countries and most importantly a key role that the bank can play is to play a facilitating role where we can identify opportunities for countries either as a lead arranger or credit enhancer how we can connect debt support participants such as original creditors new creditors debt the debtor governments and conservation organizations and local conservation projects so we are uniquely placed to be able to connect all of these key stakeholders together we have a lot of operations across the 55 African countries so by understanding and studying how debt for climate and nature swaps have occurred over the years in countries like also Madagascar we will be able to at some point perhaps also serve as a donor institution where we could consider bilateral debt forgiveness or be a part of multi-party debt swaps donor or also consider sustainability link bonds where we can actually see what aspect of our ADF financing can go into it but before all of this can happen we need to first of all make sure that it is based on evidence we need to ensure that the economic indicators are favorable for those African countries that we would push forward and we need to also ensure that the environmental factors are right how would this help to protect key biodiversity areas for example using IUCN classification how would it lead to improving the ecosystem situation of these countries do they have the natural assets that can also become like financial capital when discussing debt for nature swaps so some of these key questions are yet the bank is still understanding it so we are really happy to be here and we hope that by the end of this panel discussion and during the Q&A we can share more lights on how collaboration can start from this kind of discussion and we thank the Africa Climate Week and the organizers for this event thank you and over thank you very much innocent with that we've had our views from from the last people and we have about 10 minutes now for a Q&A session I would like to invite both you know those participants online and those in the room today to raise your hand and ask us people's any questions if you like that please we're going to follow the organizers for this absolutely we have a place to be also just to identify also my my employees are able to go and they can't be a sedentary environment and forestry in the Indian Republic and a couple of issues really that's a very interesting discussion I'm just wondering besides seashells that has one sucks I don't know that we can really call it a success story potentially any other in the world so we will still have a very experimental uh as the statements and then two due to we have um internationally established several guidelines and standards and then this now comes over the legal aspect is the in the event of non-compliance on the conditions and the commitments what happens in that situation that the the test can then be what happens in that situation if the country the beneficiary country fails is unable really to perform the arrangements I think thank you three excellent questions there might be the speakers to raise their hands um if they would like to provide a response who would like to go first and Paul please do and I welcome you to also um I'll join us at the panel uh Paul Steele from the IED the International Institute for Environment and Development will be providing us with some closing comments afterwards but here's me working on the course over the last couple of years but I thought it may be before we go to the beginning about giving answers I would just like to add one more question that is been I'm trying to remember one of the speakers of the house that's about making one month depending on national circumstances so my question is is they are not done particularly I talked about um that that that they get to a degree or is they are not done uh they're not about to say what is that the features that we're trying or the privileges that I know that I know that I know that we take it and have the opportunity for working for a certain country thank you very much so I think that that last question is directed primarily at you human in terms of um and perhaps innocent as well um in terms of how do you qualify a country for a different kind of sports for the conditions maybe the top two or three conditions that a country needs to look at and then we had um three questions earlier one that looked at um the guidelines are there any guidelines available for countries to follow in the development and the design of that that nature that for time and swap um we also um had a question on accountability um you know is there any defaults on the reasons of the deal what are the accountability guidelines as well and the very first question um was regarding the decisions and um I think quite an open question about perhaps some news on hasn't been a success um what are the lessons learned so far I think uh Miss Jeremy you you mentioned some of those uh what are the pitfalls um how is the debt deal um considered and looked at globally is it uh something that we should be duplicating replicating with a few other considerations based on the fact that you know you're one of the first countries to do this so panelists please do raise your hand and contribute we have a few other questions but I think let's let's first answer these four before we take any others Miss Jeremy please go ahead okay um thank you you're very encouraging to to hear the questions I guess um and all the interests that we have around um our process so I guess I'll start with the last the last question first so focusing a little bit on the um so the the local perception around the debt for nature swap um as you know this is quite a technical um it's quite a technical venture a dealing and for for people locally it actually did take quite a bit of time for people to understand and appreciate um what the government was doing and why government actually would engage in such a restructuring deal but I think um as in when the SEICAT actually became operational and they started understanding how the proceeds were working and where the resources were being made more available to to the public I think this is um when people started to appreciate it because I remember back in the first call I believe we got very little like 13 projects and we were able to only approve seven projects in that in that particular call but in this call that we had this year we had over 56 applications total applications and then of course based on the number of resources that we have then we um we identify a number of projects that we can support but I think it actually takes time and your accountability measures that you actually put in place to support the activities that you intend to do at the outset and how you report on that is actually what builds the confidence around the process and again in terms of lessons learned a lot of the things that we actually put in the in the agreement with TNC between government and TNC they had to be updated and changed over time because the learning curve was quite steep it was the first time that the country had done such a venture and so therefore there needs to be some flexibility around how the deal is done and also to have proper review mechanisms within the agreement over the lifespan of the contract so that you are able to to fix it as you know as and when things change and this is something that we have had to do and just this year we have had to review the establishment act of the trust because there were some limitations on the ground and in the implementation that we couldn't have foreseen at the time when we set up the trust so that is something that you have to to be mindful of and in terms of having guidelines to support depth for nature swap you know Seychelles has documented its own process quite extensively and we are still working on our depth swap and MSP story which we hope to to be publishing quite soon before we start full implementation of our MSP and a lot of it will be around lessons learned and potential for upscaling which I think would become quite important for other small island developing states that might be considering such a venture but even to other African countries African coastal states that might have similar models to Seychelles looking at exploring blue economy concept you know innovative blended finance which is the heart and soul of what we do at Seychat so I believe there is scope for that and just to think of another place where they've actually done another massive deal is Belize and there's a lot a lot a lot bigger than ours and I think there's space there to also learn because it's also TNC that has broken this deal and it's also TNC that worked with us here in the Seychelles so TNC would have likely a wealth of knowledge that could be shared quite extensively to other African countries if there is appetite I think I'll stop there and I think I've touched on quite a few of the questions through for these answers thank you. Thank you very much miss Jeremy, would you like to go next please? Thanks Imani and just a couple of comments from my side so when is a debt for climates feasible in a sense it depends when there is an alignment between a data country and a creditor country absent this alignment between the two countries you can think of a tri-lateral debt swap whereby you bring in a third party who buys back the debt and then allows for the debt swap to go through so that is like one of the first conditions when you can think about proceeding with the debt for climate swaps. Now the other point is the objective of those the debt for climate swap what is the objective with which it is being done and the context within which it is being done particularly the context matters if debt for climate swap is being undertaken as a way to circumvent an unsustainable debt situation the risk is we might not be able to restore that sustainability and we are just pushing the problem further down the road so that is something that is important now if the objective is to provide climate finance of course debt for climate swap is a useful addition to the toolkit it should definitely be scaled up and at the same time other instruments including ESG instruments grants financing from philanthropic organizations and everything else should be leveraged because debt for climate swaps on their own will not provide the amount of financing that countries need to meet their NDCs. There was another question linked to the accountability very important question in fact this is one of the reasons why debt for climate swaps have remained small in nature because they are project specific by and large and because of the specific nature of the projects the transaction costs are huge the monitoring costs are huge and a creditor country might not go ahead with the debt for climate swap if it is unsure as to whether the debtor country will implement what it promises to so it is a bit of a chicken and egg story and there is a fantastic work that has been done by Paul and Sejal Patel on how a programmatic approach to debt for climate swaps can circumvent some of these problems including having good public financial management and everything else so the other way to think about it is to finance projects that are less reverse less prone to reversal. If you do a policy reform there is a risk of reversal if you do a project the risk of reversal is smaller or zero in most cases so this is something that can be brought in to address the commitment and accountability problem and finally the other thing is in the design of debt for climate swaps we can think of penalties although people don't necessarily like penalties so we can think of sweeteners for instance if the country meets its obligations then there can be a subsidy that is given on the cost of the debt which reduces the overall cost of the debt so we have to be creative in terms of how we think about the accountability mechanisms and enhance this. Thank you. Thank you very much Vimal. Andrei would you like to go next? Thank you. I just can second what was just said by Mrs. Takovar on the key elements of interest alignment accountability mechanisms and overall approaches that would answer some of the questions that were raised. We're all answering maybe broader context question why we do not have this in the international finance some of the tools which is widely approached and applied with guidelines with standardized forms is definitely driven by the circumstances 20 years ago Green Climate Fund did not exist. Climate related problems were sort of a not mainstream issue that is now shared by everybody and definitely community world community was much more fragmented whereas now we are sharing this discussion sitting on different parts of the world almost seamlessly and we're also recognizing how close we are in terms of our shared destiny facing all these challenges that changing climate brings to the humanity therefore combining all these circumstances may be opening up new opportunities for the approaches like that for climate swap like effective corporations between debtors and creditors not just for sake of money but for sake of future generations of humankind. It's a new chapter in our shared life here on this planet and this is where we try to find this solution not definitely a bullet silver bullet that would solve all the problems in one shot but definitely something that can effectively supplement all the efforts that are done by great people from different countries different continents to achieve our shared goal again we do not have earth number two and this is clearly understood by everybody who is now sitting in the whole of Africa who is now flooded in Pakistan or facing air pollution in densely populated areas in Southeast Asia so all these things are now in place maybe critical masses created and we're converting this into actions step by step moving towards our goals opening up these opportunities running test pilots combining important statistics and establishing learning curves to achieve maximum efficiency for future projects when we can have guidelines we can have standardized forms when we can expedite the process to the maximum possible speed so these are the key thoughts maybe capturing all this contextual but important matters that I would like to put into the discussion thank you very much thank you very much Andrew we have time for perhaps two more questions we're running a little a little over I would like to invite Kevin Benville and Chloe Farron if I got your name correct to please unmute yourself and ask the question of what I did in the chat box sure thanks sorry sorry and perhaps some I think some some type is the question at the chat I think you received an answer from Kevin do go ahead sure thank you so I'm I work at the nature conservancy and I was actually the transaction lead on the Belize transaction but was not around during the Seychelles and I just wanted to you know there's we could have a five more hours of discussion here but you know I just want to highlight that the the bilateral one of the problems that we had as was mentioned on the Seychelles deal is that the bilateral discount we got from the Paris Club was small right it wasn't a large discount and that's why we shifted to or didn't shift but that's why we started exploring the commercial sector right so when when there was a you know six and a half percent discount on the bilateral debt to the Paris Club when we started talking to Belize because they were in a debt problem and they had negotiators sitting around the table and the capital markets were already talking to them their bonds were trading at 38 cents on the dollar right and we ended up getting pretty close to 50 cents on the dollar so that was half of you know the money that we we we we structured out 190 million dollars which is really about 250 million dollars of their debt and Belize was small so that really moved the debt to GDP ratio pretty pretty significantly we don't have that opportunity but so what what I would like to see is a focus on both of those solutions right so and when I see I don't really see it's the IMF's role to encourage these but I know it helps with the debt sustainability and I think one way to do it like is the IMF considering you know including and highlighting these climate risks in their debt sustainability analysis right and even their article fours and showing that all right this is a big thing there is a real play here with solving climate reducing climate risk and increasing you know debt sustainability and therefore even even improving their rating credit rating and borrowing lower in the capital markets that would be a great thing for us to get you know go to more bilaterals and argue that a deeper discount on on these bilateral negotiations and then on the commercial side it's really GCF and African Development Bank you know we need to scale these things we we got the credit enhancement from the development finance corporation in the United States but you know we could do guarantees we could do all kinds of credit enhancement but we we are limited by our credit enhancement right if we're going to pull money out of out of we're going to pull that out of the capital markets on the private side we need the credit enhancement we need to redo we need to offer them a better solution to what they're paying now and that requires credit enhancement so like is there a specific tool that you guys can offer that could help us do more of these because quite frankly I think with with this that sustainability problems that we're seeing in Africa everybody's trading at a discount which means people in countries aren't even going to the capital markets because new debt is so expensive that we need cheaper solutions and therefore we need credit enhancement to come in and what we did in the real big win I think in the Belize transaction was that we went from CAA3 rated Belize borrowers and then financed them with AA2 rated you know borrowers right lenders sorry not borrowers lenders and that is a gigantic market and that's you know much larger and it was a real success shifting from one to the other and now those were both Moody's ratings so it was a 16 step step up sorry I've taken a lot of time but I'm just worried I'm just trying to think about how to scale these things and scale them quickly because the debt sustainability problem is high and the climate risk is not going away thank you Kevin I think that that question was directed more to them but before you answer I'd like to ask a way to please go ahead and ask a question and Sam I think you actually do have a question so I will let you have a go as well so please go ahead we can't hear you would you like to go first was yes please I can go I can go ahead yes thank you so much my question goes to the Andrew GCF are you considering other multilateral institution as part of the creditors that you will be dealing with because from your presentation you have only creditors countries so what about multilateral institution because some of the African countries are also indebted to multilateral institution development banks and financial institution so are you considering that in your portfolio that besides bilateral which are crediting countries you also absorb others from you know other financial institution that these countries are indebted to thank you over thank you Sam thank you very much Sam this is this is a very relevant question on one hand we cannot exclude that instead of crater country there can be multilateral financial institution to participate in this deal at this point in time we have clear straightforward indication that our contributors countries sovereign countries therefore that particular implementation that was presented in my slide might not be straightforwardly realized in the current state of GCF capital base formation approaches that we have in place however it does not include exclude a situation where we can provide funding or co-funding and again as it was mentioned credit enhancement very valid approach where GCF leverages maximum its constitutionality because as financial institution we are not interested in the financial results of operation per se we are more focused on the climate results mitigation and adaptation outcomes of our projects so considering something that would be implemented as a death swap on the project level where GCF plays a side role but nevertheless actively participate including providing credit enhancement including providing co-financing and ensuring that other creators and stakeholders interest aligned we cannot exclude that situation and definitely would be flexible enough to find appropriate structure to accommodate participation of multilateral financial organizations in that deal thank you very much and the last question is for you as well it's from Chloe Faraghan or report that climate for you so I'll just read it out to everyone our question is will the IMF board and management endorse your working paper do you think there is appetite for this in the organization the IMF was expected to present a death swap mechanism at the COP26 which did not happen and can we expect an announcement by the IMF on death swaps COP 27 over to you. Yep thanks first of all this is a working paper which reflects staff's views and has not been endorsed by our board so when it comes to death for climate swaps as I mentioned before it is a decision that is between the data and the creditor and to the extent that such transactions happen and the help improve the death sustainability position of the country then of course it is a step in the right direction on COP 27 I will have to revert back we are currently finalizing our work program on that and I will revert back on that while now there wasn't the question from Kevin on the IMF and the DSAs indeed we are working on integrating climate change modules into our death sustainability framework for market access countries this will have a long time longer term horizon up to 20 years and look at adaptation mitigation in expenditures associated with those and also look at the impact on growth and within that of course to the extent there are scenarios to be run with death discounts or death swaps these can be integrated within the DSAs thank you very much. Thank you and I'd like to thank all the speakers for your time and insights today to close the session I would like to now hand over to thank you very much I just want to make three quick comments because we've had a fascinating discussion and as someone said we could have gone on for five hours but the first point is I think we're reaching a positive tipping point we're seeing growing demand from debtor countries both in Africa and in other countries in Latin America and the Caribbean and Asia as the debt crisis grows and we're also seeing growing support from predators and financiers we have here on the panel as you see the IMF the African Development Bank and the GCF and many others are also showing interest secondly the challenge is upscaling as we know debt for climate and nature swaps have been around for about 30 years but they've been relatively small scale as Vimal said they've only managed to write off about four billion dollars so far however our calculations done in the recent report by my colleague Seja Patel estimated that about a hundred billion dollars worth of climate and nature spending could be financed through these kind of swaps even if only 10 percent of the funds are spent on climate and nature and the rest is spent on fiscal space so the challenge is how do we upscale and I think there are three ways of doing that as we've heard both from the Cape Verde presentation from Suelli and also from Vimal from the IMF the first one is a comprehensive approach to creditors that's involving as Kevin was saying both the private sector but also all the bilateral creditors including China which is an important creditor in many African countries secondly channeling the funds through government budgets with appropriate fiduciary safeguards while the approach of an independent trust fund as in Seychelles is an important first step it does have quite high transaction cost to set up so we have been proposing using the government budget however to make sure that there is the kind of accountability that many of the speakers have referred to we need to link it to key performance indicators for climate and nature which are drawn from NDCs and national biodiversity strategies and action plans as Suelli and others were explaining so it's not just about projects but it's about indicators and outcomes and finally I hope we can all pick up Chloe's point about having some kind of initiative at COP 27 the African COP so it would be great if the African countries represented in Gabon push for this along with the Egyptian presidency having some kind of international initiative on climate and nature debt swaps taking forward all this important work thank you very much fantastic thanks very much for and I'd like to say a big thank you for the time and attention of the audience today both those attending in person and those online thank you again to the speakers and thank you then for being a welcome remarks goodbye from Gabon