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Nature's dividends.

To the delight of environmental groups and legions of preservation-minded people everywhere, Brazil has opted to join the growing ranks of Latin American nations engaged in debt-for-nature swaps. The amount is not large in relative terms--$100 million--but from the environmentalist point of view the fact that Latin America's largest country has made an initial commitment is of extreme significance. The official announcement on July 2 by President Fernando Collor de Mello authorizes the development of environmental safeguards in Brazil, financed by the conversion of foreign debt. The debt-for-nature scheme is being implemented currently in Bolivia, Costa Rica and Ecuador.

How does it work? As explained by economy ministry officials, foreign companies or entities interested in environmental preservation will be able to purchase Brazilian debt bonds totaling $100 million. This money will be deposited in a Patrimonial Fund paying an annual interest of six percent on the nominal value of the donations. The interest thus earned--$60,000 at the end of the first year--will then be made available to finance one or more specific environmental or ecological protection programs.

Brazilian Economy Minister Marcilio Marques Moreira declared "the conversion will be carried out in such a way as to avoid any inflationary pressures on the economy. The debt bonds purchased will never return to the market." Thus, Brazil's national debt, the largest in Latin America, will be automatically reduced. The minister announced that the program will be carried out in successive stages, the first in the amount of $100 million. The amount of debt involved in later stages will be set by a government commission which will oversee the selection and execution of projects.
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Title Annotation:Brazil permits debt-for-nature swap to fund environmental protection program
Author:Goethals, Henry
Publication:Americas (English Edition)
Date:May 1, 1991
Previous Article:The bard with a different accent.
Next Article:For the common good.

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