World Bank-backed plan will reduce debt costs and help fund new schools.
Angola has received approval from the World Bank and the Multilateral Investment Guarantee Agency (MIGA) for financial guarantees supporting a “debt-for-education” swap. The plan will allow the country to reduce the cost of its expensive debt and use the savings to improve education.
Through the deal, Angola will buy back up to $400 million of its costly commercial debt using a cheaper loan backed by guarantees from the World Bank and MIGA. Because the loan is less expensive, the government will save money that can be invested in building new schools and strengthening the education system.
The World Bank also approved a separate $750 million development loan to support the Lobito Corridor project. This transport route will connect mining areas in Zambia and the Democratic Republic of the Congo to the port city of Lobito in Angola, improving regional trade.
Debt swaps like this are becoming a creative way for countries with heavy debt to fund important projects such as education, healthcare, and environmental protection.
