Portugal plans to swap the entire 140 million euro ($152.91 million) debt it is owed by Cape Verde for investments in the archipelago's environmental and climate fund, Prime Minister Antonio Costa said on Tuesday.
Such "debt-for-nature" swap deals are a way to resolve the dilemma of how and who will foot the bill for actions to "counteract the impact of climate change and to accelerate the transition energy of developing countries," Costa said in a joint address in Lisbon with Cape Verde's Prime Minister Ulisses Correia e Silva to announce the plan.
Cape Verde, an archipelago off Western Africa which was a Portuguese colony, already suffers from rising sea levels and biodiversity loss due to increasing ocean acidity caused by global warming.
The two countries had already agreed in January to swap 12 million euros of debt repayments scheduled until 2025 and then assess the effectiveness of this mechanism in concrete projects.
"We are sure the assessment we will make in 2025 will be positive and that we will be able to extend this mechanism to all 140 million euros of debt throughout its maturity," Costa said.
Cape Verde's Silva said the investments will increase the country's resilience and achieve sustainable development goals.
He said his country plans to invest 520 million euros by 2030 in energy transition projects - such as wind, solar and green hydrogen - "of which 65% will be financed through these debt-to-nature swaps and by public-private partnerships".
Cape Verde is 80% dependent on imported fossil fuel energy, which has risen sharply in price following Russia's invasion of Ukraine in 2022.
($1 = 0.9156 euros)
