NASSAU, BAHAMAS – The Opposition is calling for the “full details” of the government’s $300 million “debt for nature swap” while also raising concerns over transparency and the unexplained use of $200 million from the sinking fund, which it argues breaches public debt management laws.
The Opposition, commenting on the recently announced “debt for nature swap,” stated:
“They say the plan is to use taxpayer dollars to fund environmental conservation. But, true to form, the Prime Minister has chosen flashy PR and spin over transparency instead of giving Bahamians the full details of the deal. This is the perfect moment for the government to address a concern the opposition raised back in September. Why was $200 million from the government’s sinking fund—money meant to pay off this debt and avoid refinancing—used without any prior announcement or explanation? We made the point at the time that the Prime Minister was in breach of the law, as Section 51(2) of the Public Debt Management Act requires that the Minister disclose any planned use of the sinking fund in parliament during the budget exercise.”
The Opposition further argued: “Indeed, the Prime Minister must explain why $200 million was used from the sinking fund last fiscal year instead of being left to pay off—and not just refinance—a substantial portion of bonds when nothing in your last year’s annual borrowing plan referenced a drawdown on the sinking fund.”
The Opposition contends that this was contrary to the government’s annual borrowing plan, which made no mention of utilizing more than half—53.6 percent—of the sinking fund’s assets to meet current debt repayments.
According to the government’s fourth-quarter and full-year fiscal report: “During the fiscal year 2023-2024, drawings on the Sinking Fund for the servicing of debt obligations totaled $203m. The four sinking fund arrangements earmarked for scheduled retirement of external bonds amounted to $175.6m in June 2024, of which $96.6m is subject to a repurchase agreement.”
The government’s debt conversion project will reportedly save an estimated $124 million over the next 15 years while bolstering ocean conservation and the management of the Bahamas Protected Areas System.
The initiative, supported by the Inter-American Development Bank (IDB), The Nature Conservancy (TNC)’s Nature Bonds Program, and other partners, enabled the government to repurchase $300 million in external debt using proceeds from a new $300 million loan arranged by Standard Chartered Bank. An endowment fund, projected to grow to $20 million by 2039, will provide ongoing marine conservation funding beyond the project’s 15-year term.
The financing arrangement includes a $200 million credit guarantee from the IDB, a $70 million co-guarantee from Builders Vision, and $30 million in credit insurance from AXA XL. Conservation funding generated by the deal will be managed by the Bahamas Protected Areas Fund (BPAF).
Rothschild & Co advised the government on the transaction, which reportedly will support effective marine protected area (MPA) management, climate-smart plans, and the creation of a national Mangrove Management Plan to protect critical habitats such as coral reefs, seagrass meadows, and mangrove forests.
The Opposition stated: “After the Prime Minister explains why we have had to refinance a portion of bond holdings for which money was set aside in the sinking fund to pay off, he then must release the full details of this transaction, inclusive of copies of the related agreements. We remind the government that it is the Bahamian people’s money, and therefore we do not beg a favor when we demand that the government release the full deal.”
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