HAMBURG — Colombia is in talks with Germany for a debt-for-nature swap as the country seeks to fund its $40 billion plan to transition away from fossil fuels and protect the environment, Foreign Minister Luis Gilberto Murillo told Reuters on Monday.
Colombia last month launched a new investment portfolio for its climate adaptation plans, which it hopes will attract some $40 billion.
Murillo said that Colombian President Gustavo Petro and German Chancellor Olaf Scholz had been in conversations for “some kind of climate natural debt swap with Germany…for a long time.”
Organizations
“They are really going in the right direction, and are moving fast,” he said in an interview on the sidelines of the Hamburg Sustainability Conference, declining to give a timeline on the potential agreement, but adding there was “tremendous political will.”
Debt-for-nature deals are an increasingly popular way for emerging economies to fund conservation under a process in which bonds or loans are bought and replaced with cheaper debt, with savings used for environmental protection.
The precise structure of the potential swap was not clear, but Murillo said Colombia would identify an energy or social-ecological transition project and present it to Germany.
“We fund the project with the resources that were supposed to pay the debt to them…and they take off the debt,” he said.
Murillo declined to put a dollar figure on the potential swap with Germany.
Colombia’s Environment Minister Susana Muhamad told Reuters last week that the country was seeking the $40 billion from a mix of sources, including private-sector investments, credit lines from public banks and other instruments.
Murillo also called on the international community to do more to support developing countries’ responses to the climate crisis, adding that high debt, and Colombia’s high cost of debt, made it difficult to finance climate initiatives.
He said the International Monetary Fund should step up environmental funding, calling for action similar to the COVID-19 pandemic response, when it made $650 billion in IMF currency available to boost global liquidity.
“But it would be even better if we create a special financial architecture to do this,” he said.
Venezuela dialogue
Colombia and Brazil have led a regional push to guarantee that the Venezuelan presidential elections that took place in July reflect the will of the voters. Bogota has asked Venezuela to release voting tallies – rather than aggregates, which Caracas says show President Nicolas Maduro won re-election.
Murillo said Colombia is focused on facilitating dialogue – and had diplomatic relations with the Maduro government and a “channel of communication” with the opposition, led by Maria Corina Machado, a widely popular politician who was banned from running for office.
“We have been very discreet in terms of Venezuela, applying a very quiet diplomacy,” Murillo said, adding: “We are not soft on Venezuela, but we are realistic.”
(Additional reporting by Jake Spring in Sao Paulo; Editing by Michael Perry)
