The Ministry of Climate Change has come up with an innovative financing mechanism for Ten Billion Tree Tsunami (TBTT) project through debt-for-nature swaps. The idea was discussed on Wednesday at a strategy meeting chaired by the Adviser to the Prime Minister on Climate Change, Malik Amin Aslam, in order to devise a mechanism for debt-for-nature swaps with the potential countries.
The adviser on climate change was also briefed by the representatives of the United Nations Developed Programme (UNDP) on the proposed mechanism. The strategy will be presented to the federal cabinet for approval after its finalisation.
Aslam appreciated the idea and directed the relevant departments to start working on the strategy forthwith. He said the TBTT project will cost Rs 125 billion ($800 million), adding that the government of Pakistan allocated an amount of Rs 7.5 billion for the current financial year.
There was a financing gap of $754 million over the period of four years. "This is the golden opportunity to bridge the financing gap for this project of utmost importance," he added. "Pakistan has already done this practice for education and rehabilitation sectors in the past with Canada, Germany, Italy, Norway and Belgium."
The adviser was further informed that many countries in the world had availed the opportunity of debt-for-nature swaps with Paris Club and others. Most of these countries belong to Latin America and Africa.
It is pertinent to mention here that Pakistan's external debt stands at $85 billion while the largest component of annual budget goes for debt servicing. Swapping of even a billion dollars of debt against TBTT would not only help bridge the financing gap but would also prove a respite amid current fiscal struggle and balance of payment. Further details of the debt-for-nature swap mechanism will be available once the strategy is finalised.