Definition of debt swap in English:

debt swap

(also debt-for-nature swap)

noun

  • A transaction in which a foreign exchange debt owed by a developing country is transferred to another organization on the condition that the country use local currency for a designated purpose, usually environmental protection.

    • ‘The economic justification for debt-for-nature swaps is that they represent one way of acknowledging that preserving rainforests provides a global public good.’
    • ‘Indeed, local banks and pension funds may be wagering that an orderly restructuring - which is what the debt swap really is - is preferable to a messy default that would leave investors much worse off.’
    • ‘It was the first bilateral debt swap agreement to be signed by the Indonesian and German governments, the embassy said.’
    • ‘The key outcome of the talks, however, was a package of soft loans and debt swaps amounting to 390 million euros, which Spain has granted to Morocco.’
    • ‘But many observers feel that well-negotiated debt swaps give developing countries access to international goodwill and additional financial resources, he added.’