A DEBT TO OFFSET

Offering debt relief in lieu of climate action could allow rich countries to pay for their acts of historical injustice, while helping the poor ones manage mounting public borrowings and climate change challenges

-  BIPSA NANDA

COUNTRIES PROMINENTLY vulnerable to climate change and the loss of natural biodiversity are often the ones least able to afford the investment to strengthen resilience. This is because of their debt burden. Gradually, these factors combine to put the affected countries in jeopardy; they face prolonged fiscal crisis, which forces them to rely on the mercy and the aid of the international community to stay afloat.

International organisations and multilateral development banks exercise multiple types of measures to help highly vulnerable countries survive financial catastrophes caused by climate change impacts. However, in the past decade, debt-for-climate swaps has grown relatively popular among low- and middle-income countries. Multilateral development banks and multilateral organisations such as the United Nations Development Programme (UNDP) have also been advocating this instrument as a debt-relief measure. According to an article by officials with the International Monetary Fund (IMF), debt-for-climate and debt-for nature swaps seek to free up fiscal resources so that governments can improve resilience without triggering a fiscal crisis or sacrificing spending on other development priorities.