Debt for Development Swaps: An Approach Framework

International Monetary Fund

No 2024/038, IMF Policy Papers from International Monetary Fund

Abstract: The aim of this note is to help stakeholders optimize their decision-making on when, where, and how to use debt-for-development swaps (“debt swaps”), ensuring they bring the intended benefits to all parties involved. It also proposes new approaches to structure these mechanisms, making them less transaction-heavy and more sustainable while maintaining accountability for fulfilling policy and spending commitments. Debt swaps are agreements between a government and one or more of its creditors to replace existing sovereign debt with one or more liabilities1 that include a spending commitment towards a specific development goal. These goals may include nature conservation, climate action, education, nutrition, support for refugees, among others. The spending commitment is often associated with the country's decision to pursue an important development policy.

Keywords: spending commitment; expenditure efficiency perspective; transparency policy; expenditure program commitment; expenditure commitment; debt sustainability prospect; debt amortization profile; Debt conversion; Debt service; Debt management; Debt sustainability; Global (search for similar items in EconPapers)
Pages: 20
Date: 2024-08-05
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