(also debt-for-nature swap)
A transaction in which a foreign exchange debt owed by a developing country is transferred to another organization on the condition that the country use local currency for a designated purpose, usually environmental protection.
- Indeed, local banks and pension funds may be wagering that an orderly restructuring - which is what the debt swap really is - is preferable to a messy default that would leave investors much worse off.
- It was the first bilateral debt swap agreement to be signed by the Indonesian and German governments, the embassy said.
- But many observers feel that well-negotiated debt swaps give developing countries access to international goodwill and additional financial resources, he added.
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