Belgium offers Mozambique 2.4m euro 'debt-for-climate swap'

Belgian Development minister Caroline Gennez has proposed cancelling part of Mozambique's outstanding debt to Belgium in exchange for investments in the fight against the climate crisis. The "debt-for-climate swap" proposal covers 2.4 million euros of the 5.6 million euros outstanding debt.

Gennez proposed the swap in a letter she handed to the Mozambican government in the country's capital, Maputo. The proposal could strengthen the "loss and damage" part of a new cooperation agreement between the two countries.

Gennez and the Mozambican minister of Foreign Affairs and Cooperation, Verónica Macamo, signed the agreement on Tuesday. The programme has a total budget of 25 million euros for 2023-2028 and aims to support Mozambique in making its economy more climate-friendly.

It is the first Belgian bilateral programme to focus exclusively on climate change, Gennez said. Under the agreement, Belgium will support the country's commitment to green energy and its national programme for sustainable waste management. 2.5 million euros of the budget will compensate for losses and damage caused by human-caused climate change.

Mozambique currently repays 500,000 euros yearly of the 5.6 million euros it owes to the Belgian state. Under the proposed swap, this money would no longer go to the Belgian state but to the Belgian development agency Enabel. Enabel would then use the funds for Belgian climate change projects in Mozambique.

"This way, we kill two birds with one stone. The outstanding debt is reduced, and we mobilise additional resources to fight the climate crisis," Gennez said on Friday. "We cannot talk about solidarity and development if we do not support African countries in their transition to a more climate-friendly economy. And to do this, we must dare to look beyond traditional financial support."

The proposal is the first of its kind Belgium has made to a partner country. If the Mozambican government agrees, the Belgian federal government must still approve it.

^{Children run around the severe erosion caused over the years by mass flooding along the banks of the Zambezi river in Mozambique © PHOTO JOHN WESSELS / AFP}