Ecuador completed a debt-for-nature conversion operation with the Inter-American Development Bank (IDB) and the United States Development Finance Corporation (DFC) for a total of US$ 1,630 million.
*100003 *This is a mechanism by which the country reduces its liabilities and, at the same time, generates savings that are used for the conservation of the Galapagos Islands, an archipelago located almost 1,000 kilometers from the Ecuadorian coast but which is part of the country .
The Galapagos have a territory of just 10 square kilometers between the 13 islands that compose it. Part of them are in the southern hemisphere and part in the north. They constitute the second largest marine reserve on the planet after Hawaii, which has an area of almost 28 thousand square kilometers.
The Galapagos archipelago was declared a World Heritage Site in 1978 by Unesco. Its main source of income is tourism, with around 200,000 travelers a year.
But that number of people is also a great disturbance to the environment of native species. The increase in temperatures, plastics in the sea and, of course, the diesel oil spill, are undoubtedly factors that led the IDB to carry out an operation that must contemplate strict conservationist measures by the Ecuadorian authorities.
* 100011*This is the largest debt-for-nature conversion that has been completed in the world to date. The operation consists of granting a guarantee from the IDB and political risk insurance from the DFC for the purchase on better terms of the existing public debt.
This purchase of debt, with financing at a lower cost, will generate total savings of more than US$ 1,126 million. In addition to providing the guarantee, the IDB will support institutional strengthening policies for environmental and public debt management in the country.
Ecuador converted debt for an approximate value of US$1.630 million into a new debt of US $656 million, said the Minister of Economy, Pablo Arosemena, according to the press in Quito, the Ecuadorian capital, and confirms a statement from the IDB.
The year 2022 had a strong climate agenda in international forums due to because the records of global warming and environmental alterations are on the five continents.
In Ecuador, on Saturday, April 23, 2022, there was an event that catalyzed this operation. The Albatros tourist boat, which was without passengers and was carrying some 8,000 liters of diesel, sank off Puerto Ayora, capital of Santa Cruz Island, the heart of the archipelago.
The spill left a “superficial stain of fuel at various points in Academia Bay”, as reported at the time by the authorities of the province of the Galapagos.
Immediately, the Ecuadorian Ministry of the Environment had barriers and absorbent cloths installed to contain the spill. However, a fuel stain remained in the transparent coral waters of the archipelago.
The authorities of the Galapagos National Park monitored the results and reportedly found no traces of damage to the fauna. But this change of debt for environmental care was activated.
The Credit Suisse bank, which articulated the operation, reported that, in addition, a group of 11 private insurers provides more than 50% reinsurance to facilitate the project .
IDB President Ilan Goldfajn, quoted in the agency’s statement, said: “The operation is an example of how the region is not only addressing global challenges, but is also being part of the solution, becoming a pioneer in innovative approaches and instruments that can be replicated and scaled globally.
(With information from agencies)