It is a privilege to welcome you to this timely and vital dialogue on Debt-for-Development Swaps—a mechanism that speaks directly to the heart of today’s development challenges and opportunities.

In 2023, developing economies spent a record $1.4 trillion on external debt servicing. For the poorest countries, debt service costs have tripled, and interest payments have quadrupled over the past decade, reaching $36 billion. Many Least Developed Countries (LDCs) now spend almost 15% of total revenue on interest payments, compared to 9.5% for other developing economies.

In 56 developing countries, interest payments exceed 10% of government revenue, and in 17 of those, the figure surpasses 20%-a threshold closely linked to default risk. On average, low-income countries spend 2.3 times more on interest payments than on social assistance, undermining poverty reduction and human development goals. As UNDP has warned, we are witnessing a scenario where debt is crowding out the very investments needed to achieve the Sustainable Development Goals.

In addition, protracted debt restructuring negotiations and lack of a formalized restructuring framework have led to inadequate and unpredictable relief, often worsening fiscal uncertainty. 

But there is a way forward. Debt-for-development/nature swaps can offer a transformative solution—one that aligns fiscal relief with environmental stewardship. They allow countries to redirect debt payments toward protecting biodiversity, restoring ecosystems, and building climate resilience—while also strengthening national ownership and long-term sustainability. Let me mention only a couple of examples of debt-for-nature swaps that would be presented later today:  

• Belize’s 2021 deal, reduced its external debt by 10% of GDP and secured long-term financing for marine conservation, including protection of the second-largest coral reef system in the world.
• Ecuador’s 2023 swap, one of the largest of its kind, restructured over $1.6 billion in debt, generating $450 million for conservation of the Galápagos Islands over 20 years.  

UNDP has been proud to support pioneering efforts in discussing debt swap options in member states, through pre-feasibility, structuring and monitoring projects where these swaps have unlocked millions for marine conservation, sustainable livelihoods, and climate adaptation. 

Forests, wetlands, coral reefs, and mangroves are natural capital that underpins food security, water supply, disaster risk reduction, and livelihoods for billions. According to the UNDP studies, over half of global GDP—$44 trillion—is moderately or highly dependent on nature. Yet, we continue to underinvest in it. The current biodiversity finance gap is estimated at $700 billion per year. 

Investing in nature is a necessity. We must move from pilot to policy, from innovation to institution. That means building robust frameworks, ensuring transparency and equity, and forging partnerships across ministries, sectors, and borders. 

Nevertheless, it is also important to mention the caveats. While these instruments can unlock climate and biodiversity finance and allocate important public resources towards strategic development areas, they may be viewed as ‘credit negative’ by credit rating agencies particularly if it involves a distressed exchange. It is important to balance innovation and risk. 

For instance, focusing on how use-of-proceeds bonds are tied into debt-for-nature structures to ensure ringfencing of proceeds for nature and conversation. Or how to harmonize debt relief mechanisms with credit rating methodologies to avoid penalizing countries for pursuing sustainable finance solutions. 

Lastly, enhanced monitoring of debt-for-development swap proceeds is critical for transparency. Monitoring and reporting frameworks must be embedded in all debt-for-nature and debt-for-development swap agreements. Without clear governance and third-party verification, there is a risk that proceeds may be diverted or fail to deliver measurable outcomes. UNDP can also support and advocates for standardized metrics, independent audits, and participatory oversight to ensure that swap proceeds are aligned with national development priorities, SDG and NDCs, with its impact management and measurement work. 

Let me close these brief remarks by also congratulating the Government of Spain on the exciting launch of the Global Hub for Debt Swaps for Development. From UNDP, we standby to join efforts to make the initiative a success.