Decline
The decline in the number of debt-for-nature swaps in recent years likely results in part from the higher prices of commercial debt in secondary markets. In the late 1980s and early 1990s, conservation organizations could purchase relatively large debt obligations on the secondary market at highly discounted rates. During this period, conservation organizations and national governments negotiated swaps at a rate of approximately five agreements per year. Since 2000, the number of swap agreements has dropped to about two per year. Additionally, other agreements for debt restructuring and cancellation, such as the Heavily Indebted Poor Countries (HIPC) initiative, lower a developing country’s debt obligation by much more than the relatively small contribution debt-for-nature swaps make. Also, debt-for-nature swaps have undergone thorough critique by skeptics; these criticisms may have contributed to the decline of the debt-for-nature financing mechanism.
Read more about this topic: Debt-for-nature Swap
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