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By Marc Jones

LONDON (Reuters) -A consortium of top multilateral development banks and climate funds launched a global task force on Monday to scale up the number and size of "debt-for-nature" swaps that cut a developing country's debt in return for protecting vital ecosystems.

Debt-for-nature swaps are attracting growing interest following a number of successful recent deals in places such as Belize and the Galapagos (NASDAQ:GLPG) Islands.

The creation of the task force, which Reuters reported was underway last week, is the most significant sign that the global club of multilateral lenders, who between them have trillions of dollars worth of firepower, are now ramping up their support for these types of deals.

It will initially be led by the Inter-American Development Bank (IDB) and the U.S. International Development Finance Corporation (DFC), lenders that between them have been involved in all of the recent swaps, which also included Barbados and Gabon.

The Asian Development Bank, the African Development Bank, France's Agence Francaise de Developpement and the European Investment Bank will also be members, as well as the Green Climate Fund and the Global Environment Facility.

"We are looking to scale up and enhance the impact of climate and nature finance," IDB President Ilan Goldfajn said.

DFC CEO Scott Nathan added that it "solidifies" a commitment by multilateral lenders to better co-operate.

The World Bank and Asian Infrastructure Investment Bank had also been expected to sign up to the group and while neither did so on Monday or commented on the reason why not, one source directly involved said both banks could still do so.

Development banks play a particularly important role in debt-for-nature swaps because they provide the credit guarantees and/or political risk insurance that make them viable.

At their simplest, the swaps work by buying up a country's bonds, often at a discount, and then replacing them with cheaper eco-labelled ones that come with the special multilateral development bank guarantees.

Those enhancements make the new bonds less of a default risk in the eyes of investors and therefore drive down their cost. Some of the savings - although not necessarily all, critics note - are then funnelled towards conservation efforts.

GAME CHANGER

Countries seen as prime candidates for debt swaps include Sri Lanka and Zambia, which are both in the process of debt restructurings, as well as Kenya, Tanzania, Colombia and a host of others in Africa and Latin America.

The new task force is expected to start work in January and will initially focus on a stock take of the deals done so far as well as the toolkit countries and multilaterals need when they undertake a swap.

The Nature Conservancy (TNC), a U.S.-based NGO that will also be involved in the new working group, estimates a third of the $2.2 trillion worth of emerging market sovereign debt globally, or as much as $800 billion, is potentially "ripe" for swapping.

TNC's Kevin Bender said the combined firepower of the enlarged set of multilateral lenders and climate funds "could be a real game changer."

"Going to $1 billion to $2 billion-sized (debt swap) deals should certainly be the next step," he said.

Others though think some issues still need to be ironed out.

Iolanda Fresnillo (LON:FRES) at the European Network on Debt and Development said there needed to be more transparency on the terms of the swaps and they needed to make a bigger impact in tackling debt.

"If you put that multilateral instrument on the table you should make sure there is a big (debt) saving because you are using public money," Fresnillo said.

Top development banks, funds set up 'debt-for-nature' task force