Poor countries will be able to pause their debt repayments if hit by climate disaster, under plans announced by the World Bank at the finance summit in Paris.
The international development organisation said it would insert new clauses in any agreements with developing countries, allowing them to suspend debt payments in the case of extreme weather events, starting with some of the poorest and most vulnerable nations.
The UK also said it would apply similar arrangements to its loans to 12 countries in Africa and the Caribbean.
Debt relief for governments struggling with the impacts of the climate crisis has been a key demand of poor countries. However, the World Bank will only apply the clauses to new loans, and the announcements do not add up to the debt forgiveness that some countries would like to see.
Carly Munnelly, a senior adviser at Save the Children, said: “While such clauses are helpful, they are insufficient for addressing the crippling debt burdens faced by many countries today, which are undermining governments’ capacity to invest in children’s health, education and other rights.”
Mia Mottley, the prime minister of Barbados, told the summit that the world needed not just reform but “absolute transformation” of the global financial system, to help developing countries emerge from poverty in a low-carbon way, and to cope with the impacts of the climate crisis.
“That transformation is required because, while the world knew since the 1890s that we were facing warming of the climate, we chose not to heed the advice of scientists,” she said.
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