Here's how we can defeat debt and strive for sustainability post COVID-19

The document warns of a looming global debt crisis where nearly 40% of emerging- and frontier-market sovereign external debt is at risk of default. The authors argue that debt-service burdens will hinder climate goals and may force countries to increase fossil-fuel extraction. They propose expanding the concept of 'debt-for-nature swaps' into 'debt-for-climate swaps' to provide fiscal space for sustainable investments and avoid 'stranded assets'.

• Market analysts estimate that nearly 40% of sovereign external debt in emerging and frontier markets could face default within the next year, with developing countries facing repayments of $2.6-3.4 trillion in 2020 and 2021.
• The G20's Debt Service Suspension Initiative has seen low uptake because debtor countries fear the perception of markets and rating agencies, while private-sector lenders have largely failed to provide meaningful forbearance.
• High debt-service requirements may create a 'doom loop' for producer countries by forcing them to prioritize export revenues through increased fossil-fuel use and extraction, while neglecting climate-resilient infrastructure.
• The authors propose a 'debt-for-climate swap' facility, expanding on 1980s and 1990s 'debt-for-nature swaps', to link debt relief to investments in climate adaptation, mitigation, and social equity.
• Transitioning the global economy to limit warming to 1.5ºC could create approximately 150 million jobs, but requires that over 80% of proven fossil-fuel reserves remain unextracted to meet Paris climate agreement goals.

APA

Gallagher, K. P., & Griffith-Jones, S. (2020). Here's how we can defeat debt and strive for sustainability post COVID-19. World Economic Forum. https://www.weforum.org/stories/climate-action/global-debt-for-climate-swaps/

Chicago

Gallagher, Kevin P., and Stephany Griffith-Jones. Here's how we can defeat debt and strive for sustainability post COVID-19. World Economic Forum, 2020. https://www.weforum.org/stories/climate-action/global-debt-for-climate-swaps/.

Wikipedia

{{cite press release |last1=Gallagher |first1=Kevin P. |last2=Griffith-Jones |first2=Stephany |title=Here's how we can defeat debt and strive for sustainability post COVID-19 |publisher=World Economic Forum |date=21 August 2020 |url=https://www.weforum.org/stories/climate-action/global-debt-for-climate-swaps/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{gallagher2020heres, author = {Gallagher, Kevin P. and Griffith-Jones, Stephany}, title = {{Here's how we can defeat debt and strive for sustainability post COVID-19}}, publisher = {World Economic Forum}, year = {2020}, month = aug, url = {https://www.weforum.org/stories/climate-action/global-debt-for-climate-swaps/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }