The IMF wants poor countries’ debt erased in exchange for climate action

In 2011, the Seychelles, an archipelago nation of 100,000 people in the Indian Ocean, decided it should do more to protect the marine ecosystems that comprise 99% of its territory. There was just one problem: The country was broke, staggering under more than $900 million in debt (nearly equal to its GDP) to France and other European sovereign lenders.

So the government approached The Nature Conservancy, the US environmental nonprofit, with an idea to chip away at that debt—or at least make it work in the country’s favor. TNC could buy a small portion of that debt, erase some of it, and channel the rest into conservation programs.

TNC roped in a few funders and agreed, eventually assuming $21.6 million in Seychelles debt (TNC originally sought $80 million, but couldn’t convince creditors to agree to that amount). $1.4 million was canceled, and as the government repaid TNC for the rest, TNC redirected most of that money into a fund managed by a board whose members included Seychellian government ministers and civil society groups. They tapped the fund for coral reef restoration, setting aside an area the size of Germany as a protected zone, and other green initiatives.

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