Zimbabwe's creditors may be willing to consider a debt-for-climate swap as part of a restructuring of the country's $21 billion debt.

Engagement with the country's various development partners suggests it is “an option they are willing to consider,” Raul Fernandez, head of the UN Development Programme's climate change project, told delegates Monday at an economic summit hosted by the country's finance ministry in the resort town of Victoria Falls.

“They also need to see some action from the government, this commitment to structural reforms,” he said. “There is this willingness, they have this in their sights, this option.”

Debt swaps, such as climate and nature swaps, are innovative financial mechanisms in which part of a developing country’s external debt is forgiven in exchange for commitments to invest in climate or marine conservation projects. Similar instruments have been rolled out in Barbados, Belize, Gabon and Ecuador, Fernandez said in an earlier presentation.

“This could lead to a significant reduction in debt,” Fernandes said. “In some cases, it could lead to better payment terms.” The southern African country has a “window of opportunity” it can take advantage of as industrialized countries are required to provide climate finance.

Zimbabwe has been locked out of international capital markets since 1999 after it defaulted on its debt. Unable to meet its obligations, interest payments have skyrocketed. In 2022, it sought help from Akinwumi Adesina, president of the African Development Bank, and Joaquim Chissano, the former leader of Mozambique, to negotiate a restructuring with creditors. The country's creditors include the Paris Club, the World Bank, the European Investment Bank and the AfDB.

Finance Minister Mthuli Ncube did not immediately respond to questions sent to his mobile phone outside working hours.

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