Tackling Debt and Climate Challenges in Tandem: A Policy Agenda

Climate-related shocks are growing in intensity and frequency while the ability of developing countries to address mounting climate challenges is heavily impaired by unsustainable debt burdens. Achieving climate-resilient structural transformation will require many of them to take on more debt. This policy brief highlights the growing overlap between debt and climate vulnerabilities in developing countries and the urgent need for improved access by vulnerable countries to financing on terms consistent with both long-term sustainable development and debt sustainability. It proposes a policy agenda that focuses on a reform of the international debt architecture and on scaling-up public-led and affordable development financing for climate investments.