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Pakistan trying to reach ‘debt for nature’ swap deal with creditors: PM

N.Siddiqui

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Pakistan trying to reach ‘debt for nature’ swap deal with creditors: PM
Anwar IqbalPublished June 7, 2021 - Updated a day ago
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Prime Minister Imran Khan addresses a ceremony in Islamabad on World Environment Day on June 5. — Photo courtesy Radio Pakistan

Prime Minister Imran Khan addresses a ceremony in Islamabad on World Environment Day on June 5. — Photo courtesy Radio Pakistan


WASHINGTON: Prime Minister Imran Khan said on Sunday that Pakistan was working with international creditors on a debt-for-nature swap deal, which links financial relief to improvement in a country’s environment.

In an opinion piece he wrote for CNN on the World Environment Day, Mr Khan emphasised the need for a partnership between governments and financial institutions to stop the rapid degradation of the global environment.
“Pakistan is presently working with international creditors on a debt-for-nature swap deal, in which relief will be linked to achievements in biodiversity conservation,” he wrote.
Pakistan also recently floated the country’s first green bond, amounting to $500 million, which was well received in the global market.

The prime minister said Pakistan fully endorsed the UN decade (2021-2030) on ecosystems and was already working on an ambitious plan to expand and restore its forests, having already planted one billion trees and mangroves as part of its 10 billion tree drive.
“Pakistan’s mangrove coverage has increased by 300 percent over the past decade, making it the world’s only country with an expanding mangrove cover,” he added.

Mr Khan noted that during the first phase of the Bonn Challenge, Pakistan pledged to restore 865,000 acres of degraded landscape in Khyber Pakhtunkhwa — a target already surpassed.

“Now we voluntarily pledge a much larger national target under the Bonn Challenge for restoring almost 2.5 million acres of degraded/deforested lands across the country by 2023,” he wrote.
The prime minister regretted that decades of negligence had put the country on the list of countries most threatened by climate change, but pointed out that “what is true for Pakistan is true for the world at large”.
“One-third of global farmlands are highly degraded today, partially … forests have been disappearing at alarming rates in Pakistan and across the planet,” he wrote.

Mr Khan warned that this degradation was threatening global development, food security, and peace as congested and polluted urban spaces posed serious health and economic risks.
“As cities lose their vegetation and encroach into forests that surround them, they become more vulnerable to floods, which Pakistan is all too familiar with,” he wrote.

The prime minister noted that when he was growing up, Lahore was called the “City of Gardens”,’ but since then “cars and concrete buildings” had replaced “the sprawling mango and guava trees across the city, while previously clean canals are tarnished with countless single-use plastic water sachets”.
Published in Dawn, June 7th, 2021


 

N.Siddiqui

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Nobody has thought about it except for the PM Imran Khan. This is quite plausible.

Pakistan has the lowest carbon emission in the world but high at risk of global warming and glaciers melting, Pakistan gets 80% of its water in Indus system from the glaciers.
 

Jungibaaz

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Nice deal, credit where it is due, this is a fantastic initiative and really shows some out of the box thinking. I saw some news stories on this in May. A big thank you to the creditors who are partaking, you’re simultaneously helping us secure debt relief while helping the climate and environment.

Great job!
Nobody has thought about it except for the PM Imran Khan. This is quite plausible.

Pakistan has the lowest carbon emission in the world but high at risk of global warming and glaciers melting, Pakistan gets 80% of its water in Indus system from the glaciers.
Brother I’ve been calling for initiatives for both PR and financial purposes to get EU countries to help us on the basis of climate. It’s fantastic that this government is going a few steps beyond what I thought would be achievable.
 

N.Siddiqui

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This is a remarkable feat...


Mr Khan noted that during the first phase of the Bonn Challenge, Pakistan pledged to restore 865,000 acres of degraded landscape in Khyber Pakhtunkhwa — a target already surpassed.

“Now we voluntarily pledge a much larger national target under the Bonn Challenge for restoring almost 2.5 million acres of degraded/deforested lands across the country by 2023,” he wrote.

“Pakistan’s mangrove coverage has increased by 300 percent over the past decade, making it the world’s only country with an expanding mangrove cover,” he added.
 
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Kingslayerr

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Initiative like these are only taken by the leaders who care about the country more then their own wealth. While others create ptojects like metro train which is more of a burden to this beautiful land.
 

Mk-313

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We’re already beholden to creditors, getting debt relief is like putting money (indirectly) in the pockets of citizens and beefing up the state.
be mind that they are still bonds i.e a debt. but if the creditors are US companies than it would most likely happen because they get tax credit on reducing carbon emissions and they will save more on taxes than the face value of the bonds.

if the strategy works then $500 million is chump change. pakistan oughta issue bonds worth billions of dollars
 

Jungibaaz

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be mind that they are still bonds i.e a debt. but if the creditors are US companies than it would most likely happen because they get tax credit on reducing carbon emissions and they will save more on taxes than the face value of the bonds.

if the strategy works then $500 million is chump change. pakistan oughta issue bonds worth billions of dollars
IMO issuing new bonds, especially dollar denominated, is something we have to be careful with, liabilities add up, and unlike soft loans from benefactors, international bond markets take no prisoners.
 

Mk-313

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IMO issuing new bonds, especially dollar denominated, is something we have to be careful with, liabilities add up, and unlike soft loans from benefactors, international bond markets take no prisoners.
but thats the point of the article. theyre swapping the bonds to hit the target that releives them of any liability. and on the flipside if the US bond creditors show that their company helped lower carbon emission. they get tax credit on that plus they also get to write off the face value fo the bond
 

Jungibaaz

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but thats the point of the article. theyre swapping the bonds to hit the target that releives them of any liability. and on the flipside if the US bond creditors show that their company helped lower carbon emission. they get tax credit on that plus they also get to write off the face value fo the bond
Yes, but that’s the swap, it’s not new debt issuance. It’s for outstanding debt. PAKWNP 7 1/2 31 (WAPDA) was a recent ESG Eurodollar debt issuance at USD 500m. We could be in the market for issuing more ESG paper, but it needs to be done cautiously.
 

Mk-313

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Yes, but that’s the swap, it’s not new debt issuance. It’s for outstanding debt. PAKWNP 7 1/2 31 (WAPDA) was a recent ESG Eurodollar debt issuance at USD 500m. We could be in the market for issuing more ESG paper, but it needs to be done cautiously.
yeah, just repeat the same process over and over again. right now green bond market in US is $1 trillion. means companies are willing to buy bonds as long as its for green purposes. Pakistan issues the bond with the option to exercise swap if certain green goals are met.

This is exactly how tesla makes profit right now. in US there is a credit you get for havign certain amount of electric cars. tesla has so many that it started selling thsoe credits to other companies and netted $600 million in the lastest quarter or year or whatever. and thier entire profit was made from selling those credits
 

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