Harvard University said today it has set up a scholarship fund that converts Ecuadorean national debt into grants for students from the Latin American country to study at the prestigious institution.
Harvard said it will devote $5 million to acquire Ecuadorean debt currently worth about 15% of its face value and donate it to Fundacion Capacitar, an educational foundation in Ecuador.
The foundation will then exchange the debt obligations in Ecuador's Central Bank for government bonds worth 50% of the debt's face value.
The program is expected to provide scholarships and grants for more than 70 students and professors over the next decade. It will also provide research and study grants and internships in Ecuador for Harvard scholars.
Debt conversion has been used throughout Central and Latin America for such projects as the protection of natural resources in so-called "debt for nature" swaps. Harvard said its program is the first "debt for education" swap.
Ecuador currently has $11.2 billion of outstanding foreign debt. Of this, 58% is owed to commercial banks, 22% to international financial institutions and 20% to foreign governments.