What this tool is
The Debt Swap Explorer prices a debt-for-development swap from one explicit set of annual cash flows and then shows the same transaction from three seats at the table: the Ministry of Finance deciding whether to do it, the funder deciding whether to subsidize it, and the investor deciding whether to sell into it. Every number on the page can be traced to a cash flow in a specific year. Nothing is inferred from rules of thumb.
It is a screening and communication tool, built in a day as a working sketch. It is not a pricing system, and it does not replace transaction advisors, a debt sustainability analysis, or legal and cost due diligence.
Where it comes from
The analytical starting point is the work of David Mihalyi and Diego Rivetti at the World Bank. Their Debt Swap Calculator (with its User Guide, July 2025) gave the field something it lacked: a standardized, transparent way to compare the debt being retired with the debt that replaces it, after years of deals assessed with inconsistent and often nominal metrics. The joint World Bank-IMF Debt for Development Swaps: An Approach Framework (2024) states the principle the calculator operationalizes: net benefits should be calculated as the present value of debt-service savings including all transaction costs, not as nominal savings.
This Explorer reimplements that engine from first principles, validates it against the User Guide's published example, and then extends it where a decision needs more than the refinancing math. The default scenario you see on loading the Explorer is the User Guide's worked example, and the engine reproduces the guide's published results: nominal savings of 24.8 / 53.3 / 80.6 / 193.6 m$ over 1, 2, 3, and 5 years, and average time to maturity moving from 7.1 to 6.5 years. The same engine exists twice, once in Python (the tested reference implementation) and once in JavaScript (this page); the browser console logs a self-check on every load confirming the two agree.
The cash-flow engine, precisely
Time is annual. Year 0 is today; no payments fall in it. For each existing instrument the user supplies principal outstanding, a fixed interest rate, final maturity, a repayment profile (equal installments after any remaining grace period, bullet at maturity, or equal thirds over the last three years), any prepayment fee or buyback premium, and, for bonds, the market price as a percentage of par.
Interest accrues each year on principal outstanding at the start of that year. The cash needed to retire the portfolio, and hence the principal of the new instrument, is the sum over instruments of: loans at par times one plus the prepayment fee, and bonds at market price plus the premium. Upfront fees on the new financing (arrangement, guarantee, syndication, legal) are a single time-zero cost. These conventions match the World Bank calculator exactly.
Discounting uses a mid-year convention: a flow in year t is discounted
by 1/(1+d)^(t−0.5). Headline results are, for the debtor: nominal
debt-service savings over one to five years net of upfront fees; the net present value
of debt-service savings net of upfront fees; and the change in debt-service-weighted
average time to maturity. All of these correspond one-for-one to the World Bank
calculator's dashboard.
What we add, and why
1. The development commitment is a cash flow, not a footnote
A debt swap is not a refinancing. Its defining feature is the commitment to spend part of the savings on development. The refinancing math alone therefore overstates the fiscal space a swap creates. The Explorer models the committed spending stream explicitly (an annual amount, a start year, a duration) and reports both the net present value after honoring the commitment and the year-by-year net fiscal space: old service minus new service minus committed spending. This is the number a budget director actually lives with, and it is the reason the "net gain after commitment" card can be negative even when the refinancing NPV is positive. As Adil Ababou's FDL policy note argues, what swap proceeds buy best is long-term, regular, predictable, protected expenditure; modeling that stream explicitly is what lets Finance and Health (or Environment) negotiate over one set of numbers.
2. A funder lens
Swaps normally need a subsidy to work: a guarantee, credit enhancement, or donor contribution that makes the new financing cheaper than the debtor's market rate. The Approach Framework is blunt that this subsidy has an opportunity cost and should be weighed against direct alternatives, including a plain grant. The Explorer takes the subsidy's grant element as an input and reports leverage: the present value of committed development spending per dollar of subsidy. This is a first-order metric, not a full additionality assessment, which Ababou notes is "notoriously hard, if not impossible" to measure precisely.
3. An investor / market-consistency lens
The calculator's savings arise mechanically from replacing one service stream with another, but the economic source of the gain is buying claims below their contractual present value. The Explorer makes this explicit: it reports the present value of the retired flows at the chosen discount rate against the cash actually paid to retire them. When that gap is small, transaction costs will likely eat the deal, which is the Approach Framework's warning about swaps for countries whose debt trades near par.
Where we deliberately follow the World Bank tool
Annual periodicity; maturities entered as calendar years against a user-set current year (set a past year to analyze a historical deal on its own terms); fixed-rate instruments (floating rates should be converted to fixed-equivalent before entry); the three stylized repayment profiles; no payments in year 0; mid-year discounting; a fixed-rate or observed-yield-curve discount basis; the buyback funding formula; fees treated as a time-zero cost; and a spreadsheet export of all cash flows and results. These are sensible simplifications for a screening tool and keeping them makes the two tools directly comparable.
Where our numbers can differ from the calculator
Two implementation notes for users comparing outputs. First, the deployed calculator's yield-curve mode interpolates linearly between observed points (with flat extrapolation beyond them, capped at 0–30%), while its User Guide describes a log-linear regression fit; small differences in curve-mode NPV can arise from that divergence. The Explorer's yield-curve mode follows the deployed behavior (linear interpolation, flat extrapolation, the same 0-30% cap). Second, the calculator reports a line for savings "from maturity extension," computed as the new-debt amount times a marginal rate times the change in average maturity, floored at zero; per the guide the marginal rate is the selected discount factor, while the deployed fixed-rate mode hardcodes 5%. That line is a duration-matching heuristic rather than a cash flow. The Explorer reports it in the savings table for comparability, labeled as a heuristic and following the guide's definition, but keeps it out of the NPV figures; the value of the extension already shows in the debt-service chart and the ATM change.
What this tool does not do
It does not model default or restructuring risk (the Approach Framework notes a future credit event can wipe out realized gains, so PV-positive is necessary, not sufficient). It does not integrate with a DSA or produce debt-sustainability indicators; it says nothing about ratings spillovers or distressed-exchange classification; it does not handle currency risk (all flows are in one currency, nominally USD); it does not measure additionality or development outcomes; and it does not estimate the transaction costs themselves, which in real deals have run into the tens of millions of dollars. Judgments about whether a swap is appropriate at all, versus restructuring, ODA, or doing nothing, belong to the frameworks cited below, not to a calculator.
Sources
| Source | What it contributes |
|---|---|
| Rivetti & Mihalyi, World Bank Debt Swap Calculator and User Guide (July 2025) | The standardized refinancing engine this tool replicates and validates against. |
| World Bank & IMF, Debt for Development Swaps: An Approach Framework (2024) | The assessment principles: PV-based net benefits, transaction costs, opportunity cost of subsidies, when swaps are appropriate. |
| Ababou, Debt For What Swaps? Guiding Principles for the Allocation of Debt Swap Resources, FDL Policy Note (Feb 2025) | The allocation lens: swap proceeds suit long-term, regular, predictable, protected spending; additionality; the north-star vision. |
| World Bank, Global Hub on Debt for Development Swaps | Institutional home of the calculator and deal knowledge base. |
Built by Teal Insights. The Python reference model, its tests, and this site's source are in the project repository. This open-source preview uses open-licensed typefaces (Source Serif 4 and Inter, both SIL OFL); no proprietary fonts are shipped.