Historic Debt Conversion for River Conservation Completed in El Salvador

On October 16, 2024, a significant financial transaction was completed in El Salvador, involving the repurchase of $1.031 billion in outstanding bonds at a discount. This deal, valued at $1 billion, was facilitated by multiple stakeholders, including the U.S. International Development Finance Corporation and the Government of El Salvador. The savings generated from this transaction will be allocated to conservation efforts, specifically targeting the Lempa River watershed. Over the next 20 years, $350 million will be dedicated to the Rio Lempa Conservation and Restoration Program, marking the largest funding commitment for conservation through a debt conversion. The Government of El Salvador has committed to several initiatives to enhance water security and ecosystem restoration. These include establishing a zonal organization for watershed management, approving a National Integrated Water Resources Plan, and creating a monitoring system for water resources. Additionally, the government plans to declare 75,000 hectares as protected aquifer recharge zones by 2044. This transaction is notable as it represents the world's first debt conversion specifically aimed at watershed conservation and water security. The collaboration among public and private entities, including ArtCap Strategies as the financial advisor, sets a new precedent for future environmental financing initiatives. President Nayib Bukele emphasized the dual benefit of this transaction, highlighting its potential to foster economic growth while preserving vital natural resources. The commitment from international partners further underscores the importance of sustainable development in the region.