CNH Tours - Cultural and Natural Heritage Tours Galapagos
Tuesday August 24, 2021
Ecuador considers debt swap for expanded Galapagos marine reserve
(this is an edited version of the Google Translated article that appeared in the "La Republica" newspaper on 20 August)
Editor's preamble: "Debt for nature" swaps are not uncommon. International holders of a national government's debt may agree to more lenient terms in exchange for social / environmental investments in that country. Under the terms of such agreements, some or all of the cash-flow thus liberated can be committed to achieving social/environmental objectives.
Ecuador is analyzing an environmental debt swap to create a new reserve around the Galapagos archipelago that will expand the limits to fishing through a negotiation between all the parties involved, the Minister of the Environment, Water and Ecological Transition, Gustavo Manrique.
"Without a doubt, we are considering evaluating a debt swap for the creation of a new reserve," said the head of the environmental portfolio, recognizing that, "indeed, there is a proposal for a very important amount."
The current Galapagos Marine Reserve is the center of an initiative that puts at odds the Ecuadorian fishing sector and conservationists, who have proposed a sovereign debt swap of one billion dollars in exchange for expanding the current protected area around the archipelago by 312,000 square kilometers .
The proposal, which was presented to the previous government of Lenín Moreno and is currently being negotiated by that of Guillermo Lasso, had the initial intention of expanding the protected area from the current 133,000 to 445,000 square kilometers.
"When the current Government assumed the Administration a few months ago, there were two positions: one was 450,000 square kilometers of marine reserve of the conservationists, and that of fisheries and industrialists was zero," said Manrique, an agronomist and former president of the Latin America Green Awards at the Foundation of the same name.
But as the new administration approaches its 90 days in office, Manrique explains that the new president has managed to bring positions closer together.
«We are in a situation where the conservationists are proposing a hundred thousand kilometers and the fishing industry that doesn’t oppose an agreement to protect the Galapagos marine corridor – which extends from Galapagos to Coiba Island (Panama) Cocos Island (Costa Rica) and Malpelo Island (Colombia) », Manrique specified.
The Eastern Tropical Pacific (CMAR) Marine Corridor which forms a migratory route for species that are not targeted by fishing, such as sharks, sea lions, turtles and whales. [ed. Note: I was involved in the early stages of establishing this corridor when I worked at UNESCO’s World Heritage Centre],
Ecuador closed 2020 with a public debt of 63,163 million dollars, which then represented 65.3% of GDP, according to data from the Ministry of Finance.
The environmental project promotes a “debt for nature” swap and is based on the purchase of 2030 debt bonds from Ecuador with an approximate 40% discount on amortization, which would guarantee the supervision of the expanded maritime area, according to the proposal put forward by a coalition of NGOs, including the local Más Galapagos.
This includes resources for the Ecuadorian Navy to patrol and control an eventual expanded protected area.
Manrique appreciated that more than being a swap, it would be a “swap” or financial exchange agreement on the international debt acquired by Ecuador, and that conversations are being developed in that line so that, for example, “the amortization term is doubled and thus releases more cash flow to the state ».
On the other hand, the bondholders of this type of green investments have assured the Government that a proportion equivalent to around 30% of the debt will be exempt from interest within the framework of a financial solution that starts with the creation of a trust in exchange for the protection of the reserve.
The Environment minister stated that the creation of the new marine reserve has an impact on conservation, but also on the social and economic side and implies a millionaire investment for the Ecuadorian State: «It is a new child and you have to have the resources to carry it forward ».
But at the same time he expressed his optimism regarding conversations "in which we already agree that we have to expand" and in which it is analyzed "how much, how and what fishing gear" will be banned.