Belize shows the growing potential of debt-for-nature swaps

IF ECONOMIES WEREGDPTNCNGO measured by their natural capital, as well as the physical and human sort, Belize would be a richer country than it is. What the tiny Caribbean state lacks in cold, hard cash, it makes up for in warm, tropical biodiversity. The Belize Barrier Reef, the second largest expanse of coral in the world, is packed with turtles, manatees and other threatened species. Holidaymakers flock to its coast to dive, snorkel or simply gaze at its waters from the comfort of a hammock. Or at least they did before the pandemic. Last year tourism dried up, growth contracted sharply and public debt jumped from just under 100% of in 2019 to over 125%.That forced Belize, not for the first time, into a debt restructuring—one in which it is seeking to exchange one sort of riches for another. As part of the deal, concluded on November 5th, Belize bought back its only international bond, a $553m liability misnamed the “superbond”, at 55 cents on the dollar. It funded that with $364m of fresh money, arranged by The Nature Conservancy (), an , which is insured by the International Development Finance Corp, an American agency. The transaction is backed by the proceeds of a “blue bond” arranged by Credit Suisse, a bank. The payback is due over 19 years with a coupon that begins below that of the superbond but rises above it over time.