US puts a price on Sri Lanka s forests
the us congress has reportedly approved a us $5-million waiver, thereby quantifying the debt-for-nature swap offer made to Sri Lanka more than two years ago. It is widely believed that this sum is peanuts, considering that Sri Lanka owes the us close to us $1 billion and that the latter would establish control over a sizeable chunk of the island nation's forest wealth if the deal is struck.
The us had initially put forward the proposal in April 2001 under its Tropical Forest Conservation Act (tfca) of 1998 (see: Debt trap, October 31, 2002). The tfca allows developing countries to divert amounts meant for loan repayment towards domestic forest management activities. The catch is that as a quid pro quo the us gets to have a say in conserving the debtor nations' rainforests.
In Sri Lanka the mechanics of the scheme would involve creation of a fund in local currency, into which the government will pay its dues. The amount deposited will be equivalent to the value of debt reduction, allowing the country to save foreign exchange. A board