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World Bank ventures into debt swaps with Ivory Coast education deal

The World Bank stated on Thursday it had helped Ivory Coast release a debtforeducation swap in a landmark initially transaction for the Washingtonbased loan provider.

The Ivory Coast federal government will redeem 400 million euros ($ 423 million) of its most costly commercial financial obligation due in the next five years with the help of a business loan raised at a. lower interest rate, a longer maturity and a grace duration thanks. to a partial World Bank warranty, it stated in a declaration.

The debt swap will maximize around 330 million euros over the. next five years and create savings of at least 60 million. euros, which Ivory Coast will invest in education, it added.

The deal marks the very first time the World Bank has. taken part in a debt-for-development swap - a kind of. transaction that can assist to pay for climate, health, education. or green finance projects with the savings produced from. replacing more pricey financial obligation with less expensive one.

While such swaps have actually become increasingly popular in current. years, specialists have actually explained a lot of the transactions had actually a. multitude of entities involved, all sustaining costs which consume. into the cost savings allocated for development jobs.

Ecuador used an unique function lorry (SPV) for debt swaps. targeted at preservation projects in the Amazon rainforest and. Galapagos Islands.

Unlike other swaps that utilize expensive structures, including. offshore special-purposes automobiles and trust funds that frequently. sustain substantial deal, administrative, and monetary. costs, this operation utilizes country systems already in place,. the World Bank stated.

(source: Reuters)