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July 2, 09

NEWS / Indonesia Partners with United States to Protect Tropical Forests Debt-for-nature swap will funnel

By Bridget Hunter
Staff Writer

Washington — Indonesia is the newest participant in an innovative U.S. program to promote conservation of the world’s tropical forests.

On June 30, the U.S. departments of State and Treasury announced that the governments of the United States and Indonesia, along with nongovernmental organizations Conservation International and Yayasan Keanekaragaman Hayati Indonesia (KEHATI), have concluded the largest debt-for-nature agreement in the history of a U.S. law that authorizes such pacts.

Nations that partner with the United States under the 1998 Tropical Forest Conservation Act (TFCA) commit to conserving and protecting their own precious natural resources and are encouraged to do so by having some of their official debt owed to the United States forgiven.

The agreement will reduce Indonesia’s debt payments to the United States by nearly $30 million over the next eight years. In return, the Indonesia government has committed to use these funds to support grants to protect and restore the country’s tropical forests.

The pact is particularly significant because Indonesia is one of the most biologically diverse countries on Earth. Funds generated by this program will help Indonesia protect several forest areas on Sumatra, Indonesia’s second largest island, which are home to species like the endangered Sumatran tiger, elephants, rhinoceroses and orangutans. In addition, these forests play an essential role in ensuring fresh water and carbon sequestration in the ecosystem.

The swap was made possible through contributions of $20 million by the U.S. government under the TFCA and a combined donation of $2 million from Conservation International and KEHATI.

Such debt-for-nature swaps also strengthen civil society by providing small grants to nongovernmental organizations (NGOs) and local communities.

The TFCA program is run largely by three U.S. government agencies: the State and Treasury departments and the U.S. Agency for International Development (USAID). Participating NGOs include the Nature Conservancy, Conservation International and the World Wildlife Fund.

The TFCA benefits both the United States and other countries, according to the State Department. For the United States, the program offers a way to advance its goal of protecting forests worldwide. Partner countries benefit because they can redirect their debt payments from the U.S. government into local funds to provide a “steady stream of financing to support forest conservation projects,” the department said in a statement.

The Indonesia agreement is the 15th such arrangement. Previous agreements were reached with Bangladesh, Belize, Botswana, Colombia, Costa Rica, El Salvador, Guatemala, Jamaica, Panama (two agreements), Paraguay, Peru (two agreements) and the Philippines. The State Department predicts these debt-for-nature programs together will generate more than $218 million to protect tropical forests.

For more information about the U.S. debt-for-nature program, see “U.S. Program Helps Save Tropical Forests, Cut Foreign Debt.”

Additional details about the agreement with Indonesia are available in a State Department media note.




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