Indonesian Government Set to Sign $22m ‘Debt-for-Nature’ Swap Agreement With United States

Arti Ekawati, Jakarta Globe 29 Jun 09;

The country’s debt burden will become $22 million lighter after Jakarta and Washington sign a green-themed agreement on the conversion of debt, or a so called “debt-for-nature swap.”

“The fund will be used to develop conservation forests on Sumatra Island,” Masyhud, head of information at the Ministry of Forestry, said on Monday.

Rahmat Waluyanto, director general of debt management at the Finance Ministry, is set to sign the agreement today with the US ambassador at the Ministry of Forestry in Jakarta.

The debt-for-nature swap is a program under which developed countries write off developing-country debt, by directing money into conservation-related programs.

Instead of paying off debt, developing countries invest an approved amount of money in programs designed to protect the natural environment. The concept was first developed in 1984 by Thomas Lovejoy of the World Wildlife Fund.

Under the program, Masyhud said, the government would earmark about $19.6 million for the country’s forest-conservation program.

The Indonesian Biodiversity Foundation (Kehati) and Conservation International will then also set aside $1 million each for the program. A total of $21.6 million in debt will then be forgiven, Masyhud said.

The program will focus in supporting forest conservation in three parts of Sumatra: the northern end of Sumatra, near Batang Gadis National Park; Bukit Tigapuluh National Park in the central part of the island; and at Way Kambas National Park.

“The program will be supervised by a committee of seven people,” Masyhud said.

Taufiq Alimi, director of communications and resource development at Kehati, refused to provide further details about the program until an agreement had been signed.

In early 2007, the country signed a similar agreement with Germany, under which Rp 16 billion ($ 1.6 million) in debt was written off to fund environmental education.

US, Indonesia sign debt for nature agreement
Yahoo News 30 Jun 09;

WASHINGTON (AFP) – The United States and Indonesia signed an agreement in which the largest Southeast Asian nation will commit to protect tropical forests in return for reduced debt payments to Washington, officials said Tuesday.

It is the largest debt-for-nature swap under the US Tropical Forest Conservation Act passed in 1998 and aimed at providing debt relief to developing countries that protected forests, the US Treasury said.

The swap with Indonesia was made possible through contributions of 20 million dollars by the US government and a combined donation of two million dollars from two environmental groups -- US based Conservation International and Indonesia's KEHATI, a Treasury statement said.

"The agreements will reduce Indonesia's debt payments to the United States government by nearly 30 million dollars over the next eight years," it said.

"In return, the government of Indonesia has committed these funds to support grants to protect and restore the country's tropical forests."

Indonesia is one of the most biologically diverse nations and, according to the statement, funds generated by this program will help protect several forest areas on the large island of Sumatra.

These forests are home to species found only in Indonesia, including the endangered Sumatran tiger, elephant, rhino and orang utan, and will provide important ecosystem services such as maintaining freshwater supplies, the statement said.