Palau Working On Plan For ‘Debt For Nature Swap’

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Pacific Islands Development Program, East-West Center With Support From Center for Pacific Islands Studies, University of Hawai‘i

Loan forgiveness in exchange for conservation investment sought

By L.N. Reklai

KOROR, Palau (Island Times, March 7, 2016) – Debt for Nature Swap, an innovative idea that is being worked on at the moment, is to have some of the Palau’s national debts paid off, and in exchange, Palau will direct its loan payments toward its conservation management programs.

"For example, we combine PNCC’s debt, our debt to Taiwan and other debts and present to a conservation group like TNC, which pays off that debt, and in exchange a local conservation trust or something like PAN Trust Fund is established to receive the payments that would otherwise go to pay RUS loan or to Taiwan. That money will be used to pay for the management of our resources and to build a trust fund to be used to continue sustainable financing for conservation in the future once the obligations are paid-off," explained Minister Umiich Sengebau of the MRNET.

Ministry of Finance is currently compiling the eligible loans to present for the SWAP. Countries holding the debts need to agree to the proposals as well. ADB loans are not eligible so PPUC loan will not be entertained as part of the package.

It was recommended during the MCES meeting when this idea was presented, that for loans such as RUS loans, it may be optimal to work with other Micronesian countries that have RUS loans and combining them into one package.

Debt for Nature Swap project has just recently been executed in the Seychelles and Palau can secure another source of sustainable financing using this idea.

"It is a win-win situation," said President Remengesau, during last week’s press conference.

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