Debt Swaps

A debt swap is a financial arrangement where a country or organization reduces or restructures its debt in exchange for specific actions or investments. For example, a debtor might agree to allocate funds toward environmental projects or social programs instead of repaying part of their debt in cash. This strategy helps improve the debtor’s financial stability and achieves mutual goals, such as sustainable development or conservation, while easing their debt burden. Debt swaps can be used by governments, organizations, or international agencies to promote economic or social objectives alongside managing debt repayment.