Amid Nigeria’s rising foreign debt profile, which stood at $43.2 billion in the second quarter of June 2023, the International Monetary Fund (IMF) has said it is considering setting up a debt-to-climate swap deal to help indebted countries cut their debt in return for protecting the ecosystem.
Kristalina Georgieva, Managing Director of IMF, who disclosed this during an interview with journalists at COP28, said the international institution is yet to have a clear mechanism on how the debt for climate swap deal will operate.
According to her, the decarbonization drive is difficult for countries with high levels of indebtedness.
“Decarbonization is very difficult for countries with high levels of debt. Climate is one problem, and debt is another problem for the same countries. We are very interested in debt for climate swaps,” Georgieva said on the sidelines of the ongoing COP28.
“What we want is to come up with key performance indicators, so countries can, if you wish, project their climate actions forward and get debt relief to fund these actions,” she explained.
“We are not there yet, but we are thinking about it.” She stated that the number of countries in debt stress is relatively small, noting that the number of countries close to debt distress is significant.
“And we see that levels are going up by one per cent over the next few years.”
African countries, including Nigeria, are pushing for debt relief and can tap from the proposed initiative to scale up additional climate funding by projecting their climate actions when the deal finally comes on board.
COP28: IMF mulls debt-for-climate swap deal for Nigeria, other countries
