Jakarta. The US announced Tuesday that it had agreed to forgive Indonesia’s debt worth $35 million. In return, the money initially earmarked for the debt repayment will go into initiatives aimed at supporting coral reef ecosystem conservation in Indonesia.

According to the US Embassy in Jakarta, both governments -- alongside some environmental non-governmental organizations (NGOs) -- recently inked a debt-for-nature swap to protect Indonesia’s coral reef ecosystems. The NGO signatories were Yayasan Konservasi Alam Nusantara, Yayasan Konservasi Cakrawala Indonesia, Conservation International Foundation, and The Nature Conservancy. 

"By forgiving this debt and redirecting the funds back to Indonesia through this debt-for-nature swap, we are taking concrete action to protect Indonesia's invaluable coral reefs and support sustainable development,” the US Mission to Indonesia’s chargé d’affaires ad interim Michael F Kleine said Tuesday.

The initiatives under this pact will focus on Lesser-Sunda, Banda, and Bird’s Headscapes, according to Kleine. An oversight committee made up of representatives from both governments, NGO swap partners, and other civil society organizations will manage the funds generated from the debt-for-nature swap. Some of the priority programs will include conserving globally threatened species that depend on coral reef ecosystems, as well as promoting sustainable use of coral reef biodiversity, to name a few.

US-Indonesia had struck the freshly launched act under the Tropical Forest Conservation Act, which got reauthorized as the Tropical Forest and Coral Reef Conservation Act in 2019. This act is known to enable countries to refinance their debts by redirecting the money toward environmental conservation. The reauthorization added coral reef conservation to be eligible for this debt-for-nature swap.

Both countries have made similar deals under the same act in the past. As a case in point, Indonesia and the US agreed on swapping nearly $30 million in debt money for Sumatra’s tropical forest restoration initiatives back in 2009. They also had another debt-for-nature swap in 2011, with the forgiven debt amounting to $28.5 million and the money going to forest conservation in Kalimantan.