Seychelles closes landmark buyback of paris club debt and activates marine conservation and climate change adaptation initiative
March 04, 2016
The Government of Seychelles announced today that it has completed a buyback of US$21.4 million of its Paris Club debt and launched a partnership to protect the country’s marine resources and build resilience against the effects of climate change.
Seychelles bought back 100% of the maturities falling due to participating Paris Club creditors through to mid 2022 at a discount to face value, as per the agreement reached with the Paris Club in February 2015. This buyback was financed by generous grants from a group of international marine conservation foundations and a loan from The Nature Conservancy (TNC). The Nature Conservancy provided a low interest loan and helped the Government of Seychelles secure USD 5 million in private grants to set up the buy-back vehicle from the Leonardo DiCaprio Foundation, the Wait Foundation, Oak Foundation, China Global Conservation Fund, Jeremy and Hannelore Grantham and the Turnbull Burnstein family Charitable Fund among others.
Going forward, the Government will repay the same amount of debt bought back from the Paris Club on concessional terms to a local specially created organization under national legislation, the Seychelles Conservation and Climate Adaptation Trust (SEYCCAT). SEYCCAT will use this cash flow to fund critical marine conservation and climate change adaptation work in Seychelles and to service the loan.
As well as forming the building block of a self-sustaining financing mechanism for much-needed environmental work, the buyback of Paris Club debt will also smooth out the repayment profile of Seychelles’s official bilateral debt, whilst increasing the proportion of debt that can be serviced in local currency.
Now the payments that Seychelles owed to Paris Club debtors will instead remain in the country and will be directed to the newly created SEYCCAT.
At a time when threats to the marine and coastal environment and its natural resources are on the increase, this new financing mechanism is critical in providing reliable and additional financing to build resilience and sustain livelihoods. Instead of simply waiting for financing under the global climate change financing mechanism, which has been very slow in happening, Seychelles has once again taken the initiative.
“I have seen erosion, storms and floods increase, affecting the health of our communities and their ability to sustain livelihoods,” said President James Michel. “Together, we are making a difference.A difference that brings the best outcomes for Seychelles… and a difference that places nature at the center of solutions for climate change and sustainable development.”
The Nature Conservancy is now working with a wide array of partners to create a marine spatial plan for the 1.3 million square kilometers of the Seychelles Exclusive Economic Zone. Science, spatial data, stakeholder input and local knowledge are being used to propose zones for high and medium biodiversity protection and multiple uses. The Marine Spatial Plan will allow Seychelles to maximize the potential of its ‘Blue Economy’ being a country which is 99% ocean with its economy being built on sustainable tourism and fisheries.
The new protected areas and zones under enhanced marine management in Seychelles’ Exclusive Economic Zone will protect important species like the hawksbill sea turtle, safeguard the country’s most important natural resource, and become the largest network of marine protected areas in the Indian Ocean, while also providing the framework for long term locally owned sustainable fishing effort and eco-tourism opportunities that contribute positively both to economic growth and sustainability.
Commenting on the debt buyback, Jean-Paul Adam, Minister of Finance, Trade & the Blue Economy, said “We are delighted to have been able to bring this innovative transaction in support of our Blue Economy to a successful closing. As a small, open economy, Seychelles is determined to break new ground in its efforts to reduce its vulnerability whilst proactively managing its debt stock. The partial buyback of our Paris Club debt and extension of the average life of our debt shows that our leadership in environmental conservation can create tangible benefits at a time when financing for many emerging market economies has come to a standstill. We extend our appreciation to all those partners that made this operation possible, including the Paris Club, those foundations that extended grants to SEYCCAT, and to the TNC.”