The transaction is expected to generate approximately USD 124M in funding for marine conservation efforts over the next 15 years.
Nassau, The Bahamas — Under Prime Minister Philip Davis’s leadership, The Government of The Bahamas has launched the groundbreaking The Bahamas Debt Conversion Project for Marine Conservation, demonstrating the nation’s dedication to both ocean conservation and sound fiscal management.
The project is part of the Bahamian authorities’ fiscal consolidation efforts and prudent debt management strategy.
“Since 1958, The Bahamas has led in ocean conservation specifically with the establishment of the Exuma Cays Land and Sea Park. Now our nation takes another ambitious step with an economic program that promotes ocean conservation and benefits local communities,” says Rochelle Newbold, the Director of the Climate Change and Environmental Advisory Unit of the Government of The Bahamas. “By strengthening the protection and management programs of the marine protected area system, we will safeguard livelihoods, boost the economy, and contribute to global ocean protection goals.”
Developed in collaboration with the Inter-American Development Bank (IDB), The Nature Conservancy (TNC), Builders Vision, AXA XL, and Standard Chartered, this innovative program will generate an estimated USD 124 million in funding for marine conservation efforts over the span of 15 years, helping to safeguard The Bahamas’ vital marine ecosystems, and combat climate change, while also securing the future of vital marine resources that underpin the nation’s economy, livelihoods, and cultural heritage.
This endeavour builds upon the Davis administration’s commitment to fiscal responsibility and strategic debt management, which was mapped out due to the economic strain experienced during the COVID-19 pandemic and reinforced by the aftermath of Hurricane Dorian. By repurchasing USD 300 million of external commercial debt using proceeds from a new USD 300 million loan provided by Standard Chartered—secured with favourable terms thanks to credit enhancements from the IDB, Builders Vision, and AXA XL—The Bahamas has refinanced its scheduled debt service, while simultaneously unlocking essential funding for marine and climate priorities, demonstrating the government’s adeptness at leveraging innovative financial mechanisms to achieve concurrent economic and environmental goals. A notable component of the Standard Chartered Facility is the inclusion of an option to temporarily suspend principal repayments in the event of a future pandemic or range of natural disasters, further enhancing the country’s financial resilience.
In a statement issued by the IDB’s President Ilan Goldfajn, he remarked, “The IDB is proud to deploy innovative approaches to support our countries to effectively achieve their sustainable development goals, including their biodiversity conservation efforts. We’re happy to join The Bahamas in this initiative to strengthen the mechanisms for the conservation of marine and coastal ecosystems and their sustainable management. This will also help advance the country’s Blue Economy agenda and enhance its climate change resilience.”
By investing these necessary resources, the government is ensuring the long-term prosperity of industries including fishing and tourism, while also safeguarding the islands from the increasing impacts of climate change. The project represents a commitment to a healthier environment, a stronger economy, and a more resilient future for all Bahamians.
The project will further advance the development of climate-resilient management strategies including:
Conservation Commitments
As the largest marine conservation funding program in the country’s history, The Bahamas Debt Conversion Project for Marine Conservation, managed by The Bahamas Protected Areas Fund (BPAF) and led by the Government, will bolster the management of The Bahamas’ extensive Marine Protected Areas (MPAs), which already encompasses over 17% of its nearshore environment—a clear indication of the nation’s longstanding commitment to marine conservation.
- A framework and procedures for enhanced effective management of its recently expanded network of MPAs.
- The development and implementation of a Marine Spatial Plan aimed at addressing increasing demands for the use of The Bahamas’ ocean, using a transparent, participatory and science-based process with local communities and other stakeholders.
- A national mangrove management plan designed to enhance protection, management and restoration of this essential habitat type that helps minimize the risk of climate impacts.
“Investments in conservation and climate resilience across The Bahamas yield considerable benefits across our islands and for our neighbours. Growing threats to our natural environment, including over-exploitation and climate change and increasingly limited funding, are impacting the sustainable management of our resources and have placed critical ecosystems and ecosystem services at risk,” said BPAF Board Chair Glenn Bannister. “BPAF applauds the Government of The Bahamas, Inter-American Development Bank, and The Nature Conservancy for structuring The Bahamas’ first debt swap designed to generate sustainable revenues to protect our most important marine ecosystems and support Bahamian livelihoods. We are pleased to be a part of this very innovative solution.”
A Collaborative Effort Among Innovators
This collaborative undertaking between public and private sectors underscores the impact of partnerships to achieve ambitious conservation outcomes. Standard Chartered Bank spearheaded the structuring and financing, while the IDB, Builders Vision, and AXA XL provided key credit enhancements. The Nature Conservancy’s Nature Bonds Program supplied technical expertise to help ensure the project’s conservation commitments are ambitious, achievable and measurable and to mobilize the providers of the credit enhancement. Rothschild & Co. served as financial advisor to The Bahamas’ Ministry of Finance on this transaction.
“Sovereign debt solutions such as these create vital fiscal space and offer a significant opportunity to shift financial flows toward halting and reversing nature loss, which is a priority for us as a Bank,” said Sunil Kaushal, Co-Head, Corporate and Investment Banking, Standard Chartered. “We are proud to have applied our expertise and innovative mindset to deliver this landmark transaction, which will play an important role in supporting The Bahamas to reach its conservation goals and help its communities adapt to climate change.”
“When it comes to addressing the dual crises of the climate emergency and biodiversity loss, there is a funding gap that stifles many countries’ ambitions to invest in nature for the benefit of their people,” said Jen Morris, chief executive officer of The Nature Conservancy. “The Bahamas has a strong record in conservation and one of the largest systems of designated marine protected areas in the Caribbean. I am especially excited that our Nature Bonds Program is supporting this ambitious project, as it will help The Bahamas reach its conservation goals and support sustainable livelihoods. This is further proof that debt conversions, with the right conservation commitments and technical assistance, are an effective market-based solution.”
For media inquiries:
Keishla Adderley-Smith, Press Secretary
Office of the Prime Minister
Government of The Bahamas
keishlaadderley@bahamas.gov.bs
+1 (242) 825 4333