As developing countries count the mounting costs of climate change, the ongoing COVID-19 pandemic has pushed sovereign debt to unprecedented levels. This has left many nations struggling to meet the basic needs of their citizens, let alone fortify themselves against the climate crisis. To date, debt relief initiatives put forth by the G20 and others have been insufficient, while long-promised levels of climate finance from advanced economies failed to materialize at the recent COP26.
Could debt-for-climate swaps offer an innovative and simultaneous solution to both these challenges by alleviating developing countries’ debt burden in exchange for environmental commitments, thereby freeing up significant resources for countries to mount green and inclusive recoveries and achieve their climate and development goals?
This Dev Talk, jointly hosted by the OECD Development Centre and the Boston University Global Development Policy Center, will examine what debt-for-climate swaps entail and whether they can deliver with a speed and scale commensurate with the urgency of both crises.