DebtTalks Swapping Debt for Development
9 snips
Nov 5, 2025 Pablo Saavedra, World Bank Vice President for Prosperity, dives into innovative debt-for-development swaps aimed at easing financial burdens for countries. He explains how these swaps can lower transaction costs and extend loan maturities, providing nations with much-needed breathing room. The conversation also addresses the balance between concessional and market-rate loans, plus the importance of leveraging domestic revenue to close global development finance gaps. Saavedra emphasizes the World Bank's strategic role in supporting fragile economies and fostering sustainable growth.
AI Snips
Chapters
Transcript
Episode notes
World Bank Reinvented Debt Swaps
- Pablo Saavedra recounts how past debt-for-development swaps were costly, complex and used third-party structures like Irish banks and Delaware lockboxes.
- He explains the World Bank redesigned the swap using in-house program-for-results structures to cut transaction costs and scale impact.
Three Goals Of The New Swap Model
- The swap pursues three goals: lower cost, extend maturities, and channel savings into development programs.
- Using program-for-results lets governments trace expenditures while avoiding heavy ring-fenced transactions.
Guarantees Lower Cost Without Full Concessions
- World Bank guarantees lower commercial loan costs and extend maturities, though they are not strictly concessional credits.
- Guarantees typically cover partial risk (about 60%), leveraging private finance and increasing loan size and liquidity.