The Department of Finance (DoF) and the US Department of the Treasury are exploring additional funding for environmental protection through debt-for-nature and debt-for-climate arrangements.
In a statement released Saturday, the DoF said talks about these fiscal measures emerged during the meeting between Finance Secretary Ralph Recto and US Treasury Undersecretary Jay Shambaugh on 24 October in Washington, D.C.
Redirecting debt payments
Through a debt-for-nature arrangement or swap, the Philippine government can redirect its debt payments to implement environmental projects.
The DoF said the Philippine and US governments have completed two debt-for-nature swaps amounting to $40 million since 2022.
“Those have allowed the redirection of Philippine debt payments owed to the US towards forest protection, biodiversity conservation, and climate action,” DoF said.
“Both parties are exploring more potential partnerships to improve the country’s fiscal management. This includes the possible collaboration for new debt-for-nature and debt-for-climate arrangements,” the government agency added.
BSP Sustainability Report
According to the 2023 Sustainability Report of the Bangko Sentral ng Pilipinas, domestic industries could lose P645 billion each year by 2030 due to climate change, which scientists say causes extreme weather like super typhoons.
Combined with its geographical location, the Philippines ranks among the “very high risk” group for natural disasters in the 2023 World Risk Index.
Out of 100, the Philippines hit 46.86 which was the highest risk level among 193 countries.
The central bank also reported that storms last year damaged agricultural goods and infrastructure amounting to P24.4 billion amid growing concerns about climate change.
Rising climate funds
The DoF’s statements on the possible new debt-for-nature arrangements came after it officially launched the Green Climate Fund (GCF) Philippines’ website to ensure transparency on the country’s projects involving the mitigation of climate change.
The government agency said the website allows the public to view details of climate projects from their conception to implementation and evaluation.
The GCF is the world’s largest fund for developing countries that helps create solutions to the effects of climate change.
In March last year, the Philippine Climate Change Commission said the country received $26.3 million from the GCF. This was followed by another $10 million grant the DoF announced in May.
The government also raised $2 billion in May through its 25-year global bond issuance with 5.6 percent interest rate. Proceeds of the bonds will be used for projects aligned with the country’s Sustainable Finance Framework.
The government aims to reduce carbon emissions by 75 percent by 2030 to prevent the worst effects of climate change.