The Ecuadorian government announced the largest debt-for-nature swap in the world and the most important in human history, which will save the country US$1.1 billion in debt and invest US$450 million to protect the Galapagos Islands.

The resources will promote climate resilience and support sustainable fisheries, taking a key step in the transition to an economy where diplomacy, conservation and finance go hand in hand to generate wellbeing.

By completing the debt-for-nature swap, Ecuador protects its irreplaceable natural assets, reduces public debt, increases fiscal stability and creates opportunities to meet other basic needs such as health care and education.

These efforts will strengthen the protected areas of Galapagos, namely its two Marine Reserves and the National Park, prioritising monitoring, control and patrolling, which will ensure the integrity of the archipelago’s key marine ecosystems, including critically endangered migratory species such as whale and hammerhead sharks, sea turtles, among others. The resources will also support Ecuador’s work to monitor ocean health, promote sustainable fisheries and strengthen climate resilience.

In this respect, conservation ceases to be an isolated issue for a single ministry and becomes a global, coordinated and cooperative action of all those who inhabit the blue planet, while strengthening the management of the marine reserve and other protected areas ensures that new generations can continue to enjoy the ecosystem of this heritage of Ecuadorians and humanity.

This operation was supported by the Inter-American Development Bank (IDB) and the U.S. Development Finance Corporation (DFC), which consists of an $85 million IDB guarantee and $656 million in political risk insurance from DFC to Ecuador for the purchase of existing public debt on better terms.

Ecuador and the IDB are breaking new ground with this debt-for-nature conversion. Not only is this the largest operation of its kind, but it is the first time a multilateral institution has combined guarantees with political risk insurance to mobilize resources from different stakeholders for conservation.

This type of operation enables countries to improve their debt management while boosting investment in environmental sustainability and biodiversity. It also marks an important milestone in the IDB’s strategy of deploying innovative financing instruments to mobilize resources for sustainable development.