Osinbajo seeks climate swap deal for debtor African countries

Osinbajo seeks climate swap deal for debtor African countries

Vice President Yemi Osinbajo has proposed a Debt-For-Climate (DFC) Swap deal that could significantly advance global net-zero emission targets, facilitate energy access and develop African countries.

Explaining DFC during a lecture on a just and equitable energy transition for Africa, at the Center for Global Development in Washington D.C, Osinbajo stated that the concept is where bilateral or multilateral debt is forgiven by creditors in exchange for a commitment by the debtor to use the outstanding debt service payments for national climate action programmes

He noted that the creditor country or institution here agrees to forgive part of a debt, if the debtor country would pay the avoided debt service in a local currency into an escrow or any other transparent fund, and the funds must then be used for agreed climate projects in the debtor country.

Justifying the rationale for such a debt swap deal, the Vice President submitted that the commitment to it would increase the fiscal space for climate-related investments and reduce the debt burden for participating developing countries.

According to him, there is a need to take a comprehensive approach in working jointly towards common goals, including the market and environmental opportunities presented by the financing of clean energy assets in growing energy markets.

Culled from the Guardian

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