“They need to see some action from the government, this commitment to structural reforms,” he said. “There is that willingness, they have this on their radar.”
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Debt swaps, such as those for climate and nature, are innovative financial mechanisms where a portion of a developing country’s external liabilities are forgiven in exchange for commitments to invest in climate or marine-conservation projects. Barbados, Belize, Gabon and Ecuador have rolled out similar instruments, Fernandez said in an earlier presentation.
The long-term nature of debt-for-climate swaps provides nations with room to borrow and service obligations, Fernandez said in an interview Tuesday. “The basic idea stems from Zimbabwe’s inability to access concessional loans,” he said. In the southern African nation’s case, creditors will have to consider “writing off some debt” for this to work, he added.
A debt-for-climate swap would be “more suitable for bilateral creditors” and the option is a part of a policy presentation for a conference to be convened by the environment ministry in the capital next month, according to Fernandez.
While the so-called Climate Investment Plan is a strategy for resource mobilization, it must not be seen as replacing the ongoing debt talks, he said. “It will be complementary,” he said.
Zimbabwe has been locked out of international capital markets since 1999 after it defaulted on its debts. Unable to meet its obligations, interest payments have ballooned. In 2022, it solicited the help of African Development Bank President Akinwumi Adesina and former Mozambican President Joaquim Chissano to lead restructuring talks with creditors, who include the Paris Club, the World Bank, European Investment Bank and the AfDB.
Finance Minister Mthuli Ncube didn’t respond to questions sent to his mobile phone seeking comment.