Angola has received approval from the World Bank and its partner Multilateral Investment Guarantee Agency (MIGA) for financial guarantees that will support a “debt-for-education” swap. This plan will allow the country to reduce expensive debt payments and use the savings to build new schools and improve education.
Under the plan, Angola will buy back up to $400 million of its costly commercial debt using a cheaper new loan backed by guarantees from the World Bank and MIGA. These guarantees reassure lenders that the repayments will be covered if problems arise, making the loan less expensive.
The money saved from lower interest payments will be invested in education projects, including building new schools. The World Bank also approved a separate $750 million development loan to support the Lobito Corridor, a transport route linking mining areas in Zambia and the Democratic Republic of the Congo to the port city of Lobito in Angola.
Debt swaps are becoming a creative way for countries facing heavy debt to fund important projects like education, health, and environmental protection.
Source: TRT Africa
