Abstract
As an innovative financial mechanism to explore additional funds for social development programs in developing countries, debt swaps for development, including debt-for-education swaps, became popular between the 1980s and 2000s. Their popularity, however, seems to have diminished since the beginning of the 2010s. This article describes debt swaps for development with a focus on debt-for-education swaps, explaining how they became popular, examining why they have lost momentum, and exploring whether debt-for-education swaps are a feasible option for funding social development programs. Despite recent economic recovery and growth worldwide, one of the key obstacles for achieving the United Nations’ Sustainable Development Goal 4—to ensure inclusive and equitable quality education and promote lifelong learning opportunities for all—remains inefficient funding for education programs in developing countries. Based on the findings, this article argues for the feasibility of debt-for-education swaps to ...
Highlights
In May 2015, UNESCO, UNICEF, the World Bank, UNFPA, UNDP, United Nations (UN) Women, and UNHCR organized the World Education Form in Incheon, Republic of Korea
We have so far explained what debt swaps for development are, focusing on those for education, and how debt-for-education swaps have been used by looking at cases between El Salvador and Spain, Cameroon and France, and Indonesia and Germany
As these cases partially suggest, whereas debt-for-development swaps in general were popular from the end of the 1980s to the 2000s, debt-for-education swaps were popular in the mid-2000s arguably because education was a top priority on the international development agenda after the World Education Forum in Dakar in 2000 (Ito, 2012)
Summary
In May 2015, UNESCO, UNICEF, the World Bank, UNFPA, UNDP, UN Women, and UNHCR organized the World Education Form in Incheon, Republic of Korea. To support this action, Spain contributed 10 million USD over four years in the form of debt swaps to the construction of rural schools and the purchase of educational textbooks (UNESCO, 2011). Spain contributed 10 million USD over four years in the form of debt swaps to the construction of rural schools and the purchase of educational textbooks (UNESCO, 2011) Under this agreement, instead of making repayments to Spain, the Ministry of Finance of El Salvador deposited funds into a special account at the El Salvador’s Central Bank (Cassimon, Prowse, & Essers, 2011). Given the German-Indonesian debt-for-education swaps with a long-term original repayment schedule, the impact of this debt swap was small
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