Ecuador’s debt-for-nature swap created to benefit the Amazon Biocorridor has refinanced US$1,527 million of Ecuador’s international bonds, to generate US$800 million in net fiscal savings by 2035.
It is expected to secure approximately US$460 million in the next 17 years to support the conservation of ecosystems in the Ecuadorian Amazon.
Key Messages
- The transaction has three pillars: (1) a financial transaction, where a special purpose vehicle (SPV) is capitalized for the repurchase and retirement of Ecuador Global Bonds at a discount rate; (2) an impact loan, whereby Ecuador agrees to conservation milestones by signing the Conservation Commitment Agreement (CCA) in exchange for a new impact loan with a favorable interest rate; (3) long-term conservation financing through national conservation commitments and the establishment and financing of the Fondo del Biocorredor Amazonico Inc. (FBCA).
- The FBCA was created as an international financial mechanism with a local presence in Ecuador to channel conservation finance generated through the transaction, as well as additional finance raised from other donors to support environmental efforts in the Ecuadorian Amazon Basin.
- The FBCA will be managed by a nine-member board, with seven Ecuadorian seats (four private, three public) and two seats for representatives of international organizations. The Fund President will be the Ministry of Environment to ensure alignment with Ecuador’s policies and interests.
- Conservation commitments include achieving 10 milestones by 2035 and sustaining them at least until maturity of the impact loan. The commitments focus on holistic natural capital maintenance of at least 6.4 million ha and 18,000km of rivers within Ecuador’s Amazon Basin by declaring 1.8 million ha of new conservation areas and enhancing the protection of 4.6 million ha of current protected areas.
Keywords
climate financeconservationdebt-for-nature swapfinancial instruments