The Government of the Bahamas launched a new debt conversion project that will save it an estimated $124 million over the next 15 years and enable it to improve ocean conservation and management of the Bahamas Protected Areas System.
The Bahamas debt conversion project will provide critical funding for initiatives supporting the effective management of The Bahamas’ ocean area, capacity building, and technical support. Commitments under this project include effective marine protected area (MPA) management with climate-smart plans and the completion of a national Mangrove Management Plan to protect vital habitats like coral reefs, seagrass meadows, and mangrove forests.
The project, supported by the Inter-American Development Bank (IDB), The Nature Conservancy (TNC)’s Nature Bonds Program, and other partners allowed the government to buy back US$300 million in external debt with proceeds from a new US$300 million loan arranged by Standard Chartered Bank. An endowment, expected to grow to US$20 million by 2039, will continue funding marine conservation in The Bahamas beyond the debt conversion project’s 15-year term. The Bahamas Protected Areas Fund (BPAF) will manage the conservation funding.
“Since 1958, The Bahamas has led in ocean conservation with the establishment of the Exuma Land and Sea Park. Now, our nation takes another ambitious step with an economic program that promotes ocean conservation and benefits local communities,” said Rochelle Newbold, Director of The Bahamas Climate Change and Environmental Advisory Unit. “By strengthening the protection and management programs of the Marine Protected Area system we will safeguard livelihoods, boost the economy, and contribute to global ocean protection goals.”
The new financing benefits from a comprehensive guaranteed package: US$200 million credit guarantee from the IDB, alongside a US$70 million co-guarantee from Builders Vision and US$30 million credit insurance from AXA XL.
In addition to providing a US$200 million guarantee, the IDB is supporting institutional strengthening policies for environmental and public debt management in The Bahamas. This operation will help the country to improve its macroeconomic stability, strengthen its environmental governance for sustainability and biodiversity protection, and enhance the country’s institutional debt management framework.
TNC’s Nature Bonds Program is a holistic approach to leveraging debt refinancing, in combination with science, planning and policy, for effective and durable conservation and climate action that supports communities. It involves working with governments to refinance debt, establish conservation commitments, provide technical expertise and generate new funding to invest in conservation, climate mitigation and adaptation measures.
“When it comes to addressing the dual crises of the climate emergency and biodiversity loss, there is a funding gap that stifles many countries’ ambitions to invest in nature for the benefit of their people,” said Jennifer Morris, CEO, The Nature Conservancy. “The Bahamas has a strong record in conservation and one of the largest systems of designated marine protected areas in the Caribbean. I am especially excited about this Nature Bonds project, as it will help The Bahamas reach its conservation goals and support sustainable livelihoods. This is further proof that debt conversions, with the right conservation commitments and technical assistance, are an effective market-based solution.”
