The Need for Debt-for-Climate Swaps

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.