DFC Announces $1 Billion in Political Risk Insurance for Ecuador’s First Debt Conversion to Support Terrestrial and Freshwater Conservation in the Amazon

Debt conversion for Ecuador expected to unlock approximately $460 million in funding for the Amazon Biocorridor Program over the next 17 years to support conservation and people.

QUITO, ECUADOR - Today, the Republic of Ecuador, with the support of the U.S. International Development Finance Corporation, the Inter-American Development Bank (IDB), The Nature Conservancy (TNC), and Bank of America announced the financial close of a debt conversion enabled by $1 billion in political risk insurance (PRI) from DFC. The debt conversion refinanced approximately $1.53 billion of Ecuador's international bonds, generating over $800 million in net fiscal savings for Ecuador by 2035. The transaction is also expected to generate approximately $460 million to support the Amazon Biocorridor Program (Programa Biocorredor Amazónico, BCA) for conservation of terrestrial and freshwater ecosystems in the Ecuadorian Amazon - representing the largest amount raised for conservation by any debt conversion to date.

"Ecuador is a key U.S. ally and one of DFC's largest markets worldwide," said DFC CEO Scott Nathan. "Today's announcement underscores DFC's commitment to leveraging innovative financial tools to reduce sovereign debt, strengthen resilience to economic coercion, and raise money for biodiversity. DFC and the United States are proud to have enabled this debt conversion transaction to benefit the Amazon Biocorridor Program."

As the world becomes increasingly vulnerable to biodiversity loss and climate change, the Amazon Biocorridor Program is part of an innovative, resilient response. The forests, rivers, and wetlands of the Amazon region mitigate climate change and provide critical food, freshwater, and cultural, economic, and climate benefits to local communities, the people of Ecuador, and beyond. Like the rest of the world, Ecuador faces rising average temperatures, changes in rainfall patterns, and extreme weather events - all of which directly impact human health and livelihoods.

The combination of DFC's PRI and IDB's liquidity guaranty provides critical credit enhancements, which, in turn, will catalyze additional investment to support a comprehensive terrestrial and freshwater conservation program co-designed with Indigenous people and local communities to advance biodiversity conservation, climate resilience, and the well-being of communities in the Ecuadorian Amazon. This is the fifth debt conversion supported by DFC's PRI and follows transactions in Belize, Ecuador (the Galapagos), Gabon, and El Salvador.

The Amazon Biocorridor Program, a management model for effectively conserving the Ecuadorian Amazon region, aims to improve the management of 4.6 million hectares of existing protected areas and protect an additional 1.8 million hectares of forests and wetlands. This model will also protect 18,000 kilometers of rivers, bolster climate resilience, and support human well-being. This new debt conversion, the first of its kind in the Amazon region, will provide a sustainable funding stream to support the implementation of the Amazon Biocorridor Program.

The debt conversion is expected to generate $400 million ($23.5 million per year over 17 years) plus an estimated $60 million in endowment returns over time. Of the $23.5 million per year, $19 million will fund the Amazon Biocorridor Program annually ($323 million in aggregate), including TNC's technical support. An additional $4.5 million annually ($76.5 million in aggregate) will capitalize an endowment that is expected to generate approximately $60 million in additional returns for a total projected end value of $137 million by 2041, bringing the total funds for conservation expected to be unlocked by the debt conversion to approximately $460 million overall.

Most of the conservation funding unlocked by the debt conversion will be disbursed through grants from a new independent conservation trust fund, Fondo del Biocorredor Amazónico (Amazon Biocorridor Fund, or the BCA Fund). The BCA Fund will focus on the Ecuadorian Amazon and be run by a local board of directors, including representatives from the government, Indigenous groups, local communities, academia, the financial, sustainable development, and production sectors, and TNC. It will follow international standards for conservation trust funds to ensure transparency and accountability, adopting clear procedures for identifying grantees and issuing public reports annually, including independent audit reports.

"The Government of Ecuador reaffirms its commitment to conserving the Amazon region by implementing innovative financing mechanisms. As part of a responsible fiscal management framework, we have carried out a financing operation that not only alleviates the burden of public debt but also ensures sustainable resources for the development of the BCA. This sustainable financing model exemplifies our leadership in addressing environmental and climate challenges for the benefit of current and future generations. Thanks to the coordinated efforts of an inter-institutional team, with the guidance of Enosis Capital as the Technical Advisor and Financial Structuring Agent of the Republic and the Global Green Growth Institute, we have secured credit benefits that link our public finances to concrete actions for the preservation of this invaluable ecosystem," said Juan Carlos Vega, Ecuador's Minister of Economy and Finance.

"The Amazon Biocorridor Program is not simply a strip of territory; it is a comprehensive management model that strategically addresses the major environmental challenges of our time. Through innovative mechanisms in financing and conservation, this program places the Amazon at the center of a transformative vision that not only protects one of the most biodiverse ecosystems on the planet but also ensures the long-term resilience of Ecuador, the Amazon region, and the entire world. The Government of Ecuador, through the Ministry of Environment, Water, and Ecological Transition, is proud to lead an initiative that demonstrates how conservation and innovation can converge to ensure the well-being of our communities and foster truly sustainable economic development," said Inés Manzano, Minister of Environment for Ecuador.

"We are happy to support Ecuador's first-of-its-kind operation in the Amazon to scale up sustainable financing for environmental protection," said IDB President Ilan Goldfajn. "The Amazon plays a key role in maintaining global environmental balance and is a priority for the IDB, which we promote through our Amazonia Forever program. This type of operation helps our countries advance biodiversity conservation and build resilience to climate change," he added.

"This joint effort between the Ecuadorian government and TNC is a significant milestone for conservation in the Ecuadorian Amazon," said Galo Medina, Director of TNC's Ecuador program. "The Amazon Biocorridor Program will help protect one of the most biodiverse regions on the planet and ensure that conservation benefits reach the people who depend on these ecosystems. This initiative exemplifies how the combination of innovative financial mechanisms, the technical expertise of an organization like TNC, and the leadership of a government committed to Amazonian conservation can drive both environmental sustainability and the well-being of local populations, which are fundamental elements for building a resilient and prosperous future for Ecuador."

"Our role in this transaction highlights the expanding interest and opportunity for private capital to invest in a new asset class focused on nature and biodiversity," said Augusto Urmeneta, president of BofA Latin America and head of Latin America, Global Corporate and Investment Banking at Bank of America. "This transaction for the Republic of Ecuador demonstrates a model that can be replicated with other developing nations worldwide."

The Amazon Biocorridor Program will support the establishment of new protected areas and the improved management of existing ones. Indigenous peoples and nationalities are participating in the co-design of the Amazon Biocorridor Program's conservation efforts, ensuring they have a role in decisions that impact their territories and well-being. Through participatory planning, the program will combine local knowledge and scientific evidence to guide strategies that enhance ecological connectivity and resilience. The initiative will promote a robust framework of social and environmental safeguards designed to protect cultural diversity and support the well-being of local communities.

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The U.S. International Development Finance Corporation (DFC) partners with the private sector to finance solutions to the most critical challenges facing the developing world today. We invest across sectors including energy, healthcare, infrastructure, agriculture, and small business and financial services. DFC investments adhere to high standards and respect the environment, human rights, and worker rights.  

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