Press Release: DFC Provides $610 Million in Political Risk Insurance for Innovative Debt Conversion in Support of Marine Conservation in Belize
The nature conservancy, government of Belize, and credit suisse, and DFC create fiscal stability while safeguarding biodiversity and advancing climate solutions for a key U.S. Partner in the Caribbean.
In collaboration with The Nature Conservancy (TNC), the Government of Belize, and Credit Suisse, U.S. International Development Finance Corporation (DFC) today announced the financial close of a $364 million Blue Bond for Ocean Conservation in Belize. The innovative debt conversion, which DFC made possible through $610 million in political risk insurance (covering loan principal and interest), will provide sovereign debt relief and simultaneously fund projects in support of Belize’s commitment to protect 30 percent of its ocean. These projects advance ocean protection, fisheries management, and climate adaptation and mitigation. DFC and The Nature Conservancy announced the financial close of the project on the margins of COP26 in Glasgow.
“DFC’s collaboration with TNC, the Government of Belize, and Credit Suisse represents one of the most innovative examples of climate finance and a model for the future,” said David Marchick, DFC’s Chief Operating Officer. “This transaction is a win-win-win: it reduces Belize’s indebtedness, generates an estimated $180 million to invest in marine and biodiversity protection and promotes climate resilience in Belize’s blue economy. Belize’s marine ecosystem is one of the most unique in the world, and this transaction will help protect and preserve it for the future.”
“The twin crises of the climate emergency and biodiversity loss require rethinking and redesigning the ways we invest in our economies and natural assets,” said Jennifer Morris, Chief Executive Officer at The Nature Conservancy. “The Belize Blue Bond is a world-leading example of how a country can reduce its debt and create more fiscal space to dedicate substantial funds to its conservation ambitions. Belize is showing that when we work together, combining science, global finance and partnerships from the national to the community level, we can achieve enormous wins for people and nature.”
“Blue Bonds for Conservation is a singular opportunity for Belize to protect our unique marine resources and expand conservation programs while simultaneously reducing the public debt,” said Prime Minister of Belize John Briceño. “I thank our partners, in particular The Nature Conservancy and the U.S. International Development Finance Corporation, and share in their hope that this transaction will serve as a model to tackle the global emergencies of climate change and sovereign indebtedness.”
DFC’s insurance enables Belize to repurchase $553 million sovereign debt at a discount. Through a combination of debt cancellation and debt repayment by the Government of Belize over time, the project will generate approximately $180 million for marine protection and management, coral reef and mangrove restoration, economic diversification, sustainable tourism and fisheries, and will promote the growth of the country’s blue economy. As part of the agreement, Belize agreed to double the percentage of its ocean attributed to Biodiversity Protection Zones, up from 15.9 percent to 30 percent.
This innovative DFC transaction both mobilizes capital and partners with the government of Belize to protect one of the world’s most unique and treasured marine areas. In the context of the climate crisis, this transaction is even more powerful – marine conservation efforts go hand in hand with climate change mitigation, adaptation, and resilience. The project will fund activities such as mangrove rehabilitation, which will build carbon removal capacity, helping to reduce the concentration of dangerous climate pollution in the atmosphere. TNC will also provide technical assistance by facilitating a science based participatory marine spatial planning process that includes local stakeholders such as fishing associations and tourism boards in the design of new marine protected areas.
The United States Government is committed to continuing its global leadership on forging innovative solutions that help countries balance economic growth with conservation and climate-friendly approaches.
Photo courtesy of Ryk Porras.