Sovereign Debt: The Elephant in the Room of Climate Finance

It is high time to recognise and address the close relationship between sovereign debt distress and climate action. Climate-related shocks are becoming more frequent and severe throughout the world, bringing devastating humanitarian, ecological and economic consequences. More than ever, it is urgent for countries to invest in green resilience.

But for a large number of developing countries, high debt service is curtailing government spending, leaving little or no fiscal space to target much-needed green investment. Moreover, rising interest rates and credit downgrades are making refinancing of existing debt excessively costly, threatening to trigger a wave of sovereign defaults. More and more countries are trapped in a vicious circle between debt and climate vulnerability.

Against this background, it is crucial to advance the discussion on innovative financial mechanisms that will enable the implementation of the Paris Agreement. The cover decision of COP27 already noted with concern the increasing indebtedness of developing country parties: Can COP28 go beyond and deliver real progress? How could the COP outcome reflect the debt crisis?

On December 3 from 11:00-11:45AM GST | 2:00-2:45AM EST, join the Debt Relief for a Green and Inclusive Recovery (DRGR) Project for a COP28 side event on the debt-climate nexus.

The DRGR Project is a collaboration between the Boston University Global Development Policy Center, Heinrich-Böll-Stiftung and the Centre for Sustainable Finance, SOAS, University of London that argues it is time for comprehensive debt reform. Utilizing rigorous research, the DRGR Project seeks to develop systemic approaches to both resolve the debt crisis and advance a just transition to a sustainable, low-carbon economy in partnership with policymakers, thought leaders and civil society around the world.

Programme:

Welcome and Introduction: Jörg Haas, Co-Chair, Debt Relief for a Green and Inclusive Recovery Project

Keynote: Susana Muhamad (Minister of Environment and Sustainable Development, Colombia)

Panel discussion: How can the COP 28 outcome reflect the debt crisis in developing countries?

● Adriana Abdenur, Special Presidential Adviser, Brazil

● Rishikesh Ram Bhandary, Assistant Director, Global Economic Governance Initiative, Boston University Global Development Policy Center

● Jean-Paul Adam, Sustainable Debt Coalition

● Norbert Gorissen, Deputy Special Envoy for Climate Action, Germany