Water and energy are privileged areas in Cape Verde's debt swap with Portugal

The fund that will speed up the exchange of Cape Verde's debt to Portugal will focus on water, sanitation and energy, and could grow to 140 million euros, said Gilson Pina, National Planning Director of the Cape Verde Ministry of Finance, on 2nd July, on the sidelines of the 1st Energy and Climate Seminar, which took place at the headquarters of the Community of Portuguese Speaking Countries (CPLP) in Lisbon.

"The Environmental Climate Fund will finance the investments in the green projects and, if we do well with the 12 million euros, we will evaluate the implementation so that we can use this model to execute the remaining amount of the debt, which totals around 140 million euros," said Gilson Pina.

Cape Verde and São Tomé and Príncipe have signed an agreement with Portugal for part of their debt to be channeled into a climate investment fund, in a model in which payments to Portugal are returned to these countries as long as they are applied to green investments and climate change adaptation and mitigation.

"It's not debt forgiveness, because we're still paying the debt service; instead of sending the money to the Portuguese Treasury, the amount is made available as a donation for Cape Verde to make investments in projects selected and carried out by Portuguese and Cape Verdean companies, which execute the amount," explained Gilson Pina.

"If we do well with the 12 million euros [included in the initial agreement between the two countries], we will evaluate the implementation of the remaining part of the debt, which in total is 139 or 140 million euros, in addition to the commercial debt to CGD and BPI, which is also guaranteed by the Portuguese government," added the government official.

The government project to create the Environmental Climate Fund has already been sent to the Cape Verdean Parliament and should be approved "in the next few weeks", he said, pointing out that the aim is for this amount to be invested by the Fund by the end of next year.

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