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The need for debt-for-climate swaps
Dec 16,2020 - Last updated at Dec 16,2020
By Shamshad Akhtar, Kevin P. Gallagher, Stephany Griffith-Jones, Jörg Haas and Ulrich Volz
ISLAMABAD A global debt crisis is looming. Even before COVID-19 swept the world, the International Monetary Fund had issued a warning about developing countries’ public debt burdens, noting that half of all lower-income countries were “at high risk of or already in debt distress”. As the economic crisis worsens, these countries are experiencing steep output contractions at the same time that COVID-19 relief and recovery efforts are demanding a massive increase in expenditures.
According to the United Nations Conference on Trade and Development, developing countries’ repayments on their public external debts will cost $2.6-$3.4 trillion just in 2020 and 2021 alone. Hence, market analysts now suggest that almost 40 per cent of emerging- and frontier-market sovereign external debt could be at risk of defa
10th Dec 20, 9:19am
By Kevin Gallagher and Rebecca Ray
According to new estimates, China now finances overseas development at nearly the same level as the World Bank. With countries currently struggling to combat COVID-19, protect the vulnerable, and mount a green and inclusive recovery, this significant increase in global development funding could potentially bring major benefits to the world economy.
But, like any huge influx of capital into the developing world, China’s financial assistance also poses large risks – especially regarding debt distress, biodiversity loss, and climate change.
A new
interactive dataset from Boston University’s Global Development Policy Center tracks the overseas sovereign loan commitments of China’s two global policy banks – China Development Bank and the Export-Import Bank of China. Between 2008 and 2019, China’s global development finance totaled $462 billion, just $5 billion short of the World Bank’s sovereign commitments in