OVERVIEW

France was involved in numerous debt exchanges in the 1990s. The largest debt exchanges were a debt-for-equity exchange with Morocco to the value of FF 600 million that sought to foster economic and social development through increased French investment and a debt-for-development exchange with Egypt worth FF 58 million in 1993. More recent debt exchanges have included agreements with Jordan for US$15.3 million to be invested in poverty- reduction programs and with Madagascar for US$20 million to be invested in the Madagascar Foundation for Protected Areas and Biodiversity in 2008.

However, of late France has routinely used debt exchange primarily as a mechanism to meet additional commitments undertaken as part of the Paris Club for debt relief to highly indebted poor countries (HIPCs). The enhanced HIPC will provide $39.4 billion in debt relief to highly indebted countries in present-value terms, to reduce debt in HIPC countries by 49% and their debt service by 56%.

Under France's scheme of Debt Cancellation and Development Contracts (C2Ds), the debtor nation still repays the debt to France, but the money is then reinvested in the debtor country through grants allocated to projects that have been agreed upon by both countries. With the aim of reducing poverty, potential beneficiary sectors are primary education and vocational training, health and the fight against major epidemics, the decentralisation of infrastructure and the management of natural resources.