Maldives Pursues Innovative Debt-for-Nature Swap to Save Reefs

The Maldives is working on a debt-for-nature swap to preserve coral reefs, mangroves, and sea grass. This initiative involves valuing natural assets, collaborating with The Nature Conservancy, and addressing challenges related to its high external debt and foreign currency reserves.

The Maldives is embarking on a progressive debt-for-nature swap, aiming to allocate funds towards the conservation of ecological treasures like coral reefs, mangroves, and sea grass. This approach is gaining traction among financially burdened countries, offering a pathway to environmental financing by exchanging current debt for more affordable loans supported by multilateral lenders.

Environment Minister Thoriq Ibrahim expressed the importance of identifying the value of the Maldives' natural assets, a task the country has commenced by assessing its coral reefs and plans to extend to mangroves and sea grass. Ibrahim made these remarks at the COP29 U.N. climate talks held in Baku, Azerbaijan.

Recently, the Maldivian government signed an agreement with The Nature Conservancy, a U.S.-based group experienced in handling debt swaps across the globe. The initiative comes amid the Maldives' dwindling foreign currency reserves and its efforts to avoid defaulting on Islamic sovereign debt, currently at a critical juncture with repayment due in 2026.

(With inputs from agencies.)