Portugal has signed an agreement to swap Cape Verde’s debt for investments in an environmental and climate fund that is being established by the archipelago nation off West Africa’s coast, Portuguese Prime Minister Antonio Costa said on Monday.
Such “debt-for-nature” swap deals are emerging in other countries and are part of attempts to resolve a dilemma faced by world leaders on how and who will foot the bill for actions taken to reduce the impact of climate change.
The former Portuguese colony, which is already suffering from rising sea levels and significant biodiversity loss due to increasing ocean acidity, owes around 140 million euros ($152m) to the Portuguese state and over €400m ($434m) to its banks and other entities.
Costa said that initially, €12m ($12m) of debt repayments to the state scheduled until 2025 will be put in the fund, and ultimately “the entire amount of debt repayments” will end up there, allowing Cape Verde to invest in energy transition and the fight against climate change.