The 'debt-for-nature' swaps, which reduce a country's debt in return for conservation commitments, have gained traction in recent years with deals involving the Galapagos, Islands, coral reefs and the Amazon rainforest among the most prominent.

The US International Development Finance Corporation (DFC) has been a key player, providing political risk insurance for over half of the deals done over the last five years, accounting for nearly 90% of $6 billion of swapped debt.

A source with direct knowledge of the plans said the DFC had about five swaps in the pipeline which are now in question with Chief Executive Officer-in-waiting Ben Black and US government efficiency chief Elon Musk both criticising its climate work.

The source did not specify how much debt was covered by the swaps but pointed out that the last few DFC-backed deals involved over $1 billion each.

Spokespersons for the White House and the DFC did not respond to requests for comment on future DFC involvement in such deals.

A DFC official who spoke on condition of anonymity confirmed to Reuters it stepped down earlier this year as co-chair of a global task force set up in 2023 to expand the use of debt swaps.

US Treasury Secretary Scott Bessent has also hit out at multilateral lenders for climate change work amid a broader US retreat that has seen it withdraw from the Paris Agreement to curb global warming.

Angola and Zambia and at least one Latin American country are among those whose 'debt-for-nature' swap plans risk needing to be reworked or even abandoned due to DFC uncertainty, four sources that have been directly involved in the projects said.

Angolan Finance Minister Vera Daves de Sousa said her country, which is one of the most indebted in Africa and whose rivers feed the Okavango basin, vital for endangered elephants and lions, has been talking to the DFC about two potential swaps.

--Reuters--