World Bank Ventures Into $422 Million Debt Swap With Ivory Coast
With support from the World Bank Group, Côte d’Ivoire will complete a debt-for-development swap, a transaction designed to improve the country’s debt profile and generate significant fiscal savings.
The money saved by replacing expensive debt with cheaper financing will be used to improve education across the country. This will be the first debt-for-development swap of its kind supported by the World Bank Group.
The swap operation will target close to €400 million of Côte d’Ivoire’s most expensive commercial debt that matures in the next five years. Thanks to a partial credit enhancement from the new World Bank Group guarantee platform, Côte d’Ivoire will buy back this high-interest debt portfolio using a commercial loan with a lower interest rate, a longer maturity, and a grace period.
The transaction will free up around €330 million in budget resources over the next five years, generating lifetime savings of at least €60 million in net present value terms—and allowing for critical investments in education.
“Our government has implemented a robust fiscal consolidation reform agenda, resulting in sound debt management,” said Robert Beugré Mambé, Prime Minister of Côte d’Ivoire. “We are proud to be the first country to operationalize the World Bank Debt for Development Swap framework, based on the joint World Bank-IMF approach, to invest in human capital outcomes. Additionally, we have utilized the World Bank Group Guarantee Platform to engage with environmental, social and governance investors through an innovative sustainability-linked loan. This pioneering approach reflects our commitment to exploring creative solutions that enhance the well-being of our citizens while contributing to the sustainability of our planet.”
The debt swap will be enabled by a policy-based guarantee. Approximately half of the €500 million guarantee will facilitate the debt swap, with the remainder enabling Côte d’Ivoire to secure a Sustainability-Linked Loan (SLL) to broaden its investor base.
“Too many countries face mounting debt service payments that are consuming the resources they could spend on development priorities like education that set them up for long-term success,” said Anna Bjerde, World Bank Managing Director of Operations. “Through a pioneering debt-for-development swap, facilitated by a World Bank guarantee, the Government of Côte d’Ivoire is aiming to address these two challenges at once. This innovative approach has strong potential for replication in other countries.”
The swap announced today differs from other recent debt-for-development swaps in several key, innovative ways. Unlike other swaps that use costly structures, including offshore special-purpose vehicles and trust funds that often incur significant transaction, administrative, and financial costs, this operation uses country systems already in place.
It also increases the ambition of an ongoing education program in Côte d’Ivoire, supported by a World Bank Program for Results financing instrument that monitors the newly agreed results and outcomes in the education sector.
This debt swap is part of a larger package of financing for Côte d’Ivoire under the Third Investment for Growth Development Policy Financing (DPF), which supports strengthening competition in key sectors, expanding equitable access to health and education services, and promoting the sustainable use of natural resources.
