Debt-for-Climate Swaps for Small Island Developing States: An Innovative Approach to Preventing a SIDS Debt Crisis
Mounting debt levels is arguably one of the most important factors that impede development and perpetuate poverty. There are now a number of initiatives to assuage the debt burden of the most indebted poor countries. Debt relief, when structured properly, can achieve sustainable levels of debt and provide the fiscal space and macroeconomic environment conducive to sustainable development and climate action.
Small Island Developing States (SIDS) are a group of countries with unique characteristics and common developmental challenges when it comes to financing for development. The fears of unsustainable levels of debt in SIDS have turned into reality as SIDS debt is now significantly worse as a result of the COVID-19 crisis. As part of a COVID-19 economic rescue package for SIDS, the international community have an opportunity to address simultaneously the crises of debt, advance climate protection and enable SIDS to fully implement the Sustainable Development Goals, the SAMOA Pathway and the Paris Agreement. This High-Level Side Event aims to to align the discussions of debt-for-climate swap with the Financing for Development Forum and to provide space for member states, climate finance experts, civil society, the private sector and the United Nations systems and institutions to discuss and present proposals on how to advance the implementation of debt for climate swap for SIDS and how other developing countries can benefit.