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Debt-for-climate swaps in the COVID-19 era: killing two birds with one stone?

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  • Essers, Dennis
  • Cassimon, Danny
  • Prowse, Martin

Abstract

The COVID-19 pandemic has further fuelled problems of debt sustainability in developing countries and has sapped the fiscal resources needed to finance climate mitigation and adaptation efforts. We examine whether “debt-for-climate” swaps, instruments whereby debtor countries are relieved from their contractual debt obligations in return for local climate-related spending commitments, may be helpful in tackling worrying debt levels and climate concerns simultaneously.

Suggested Citation

  • Essers, Dennis & Cassimon, Danny & Prowse, Martin, 2021. "Debt-for-climate swaps in the COVID-19 era: killing two birds with one stone?," IOB Analyses & Policy Briefs 43, Universiteit Antwerpen, Institute of Development Policy (IOB).
    • Handle: RePEc:iob:apbrfs:2021001
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    File URL: https://medialibrary.uantwerpen.be/files/8518/3c19c9f6-c58c-4297-8726-11fa79606ed8.pdf
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    References listed on IDEAS

    as
    1. Danny Cassimon & Martin Prowse & Dennis Essers, 2014. "Financing the Clean Development Mechanism through Debt-for-Efficiency Swaps? Case Study Evidence from a Uruguayan Wind Farm Project," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 26(1), pages 142-159, January.
    2. Jeremy Bulow & Kenneth Rogoff, 1991. "Sovereign Debt Repurchases: No Cure for Overhang," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1219-1235.
    3. Cassimon, Danny & Essers, Dennis, 2013. "A chameleon called debt relief," IOB Working Papers 2013.01, Universiteit Antwerpen, Institute of Development Policy (IOB).
    4. Danny Cassimon & Dennis Essers & Achmad Fauzi, 2014. "Indonesia's Debt-for-Development Swaps: Past, Present, and Future," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 50(1), pages 75-100, April.
    5. Cassimon, Danny & Prowse, Martin & Essers, Dennis, 2009. "The pitfalls and potential of debt-for-nature swaps: a US-Indonesian case study," IOB Working Papers 2009.07, Universiteit Antwerpen, Institute of Development Policy (IOB).
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    Cited by:

    1. Mr. Marcos Chamon & Erik Klok & Mr. Vimal V Thakoor & Mr. Jeromin Zettelmeyer, 2022. "Debt-for-Climate Swaps: Analysis, Design, and Implementation," IMF Working Papers 2022/162, International Monetary Fund.
    2. Chekir, Hamouda & Kessler, Martin & Albinet, Charles, 2024. "Debt-to-Sustainability Swaps (D2S): A Practical Framework," FDL Policy Notes 2404, CEPREMAP.
    3. Coulibaly, Yacouba, 2024. "Resource-backed loans and ecological efficiency of human development: Evidence from African countries," Ecological Economics, Elsevier, vol. 224(C).
    4. Yacouba Coulibaly, 2023. "Can Resource-backed Loans Mitigate Climate Change ?," Working Papers hal-04072352, HAL.
    5. Baghdadi, Leila & Labidi, Moez, 2023. "Public Debt, Growth, And Stabilization In Tunisia: A New Narrative for a Structural Reform Agenda," FDL Policy Notes 2310, CEPREMAP.
    6. Coulibaly, Yacouba, 2025. "The effects of resource-backed loans on deforestation: Evidence from developing countries," World Development, Elsevier, vol. 188(C).
    7. Yannis Dafermos, 2023. "Towards a climate just financial system," Working Papers 259, Department of Economics, SOAS University of London, UK.
    8. Quentin Paul & Romain Svartzman & Pierre-François Weber, 2023. "Debt-for-nature swaps: a two-fold solution for environmental and debt sustainability in developing countries? [Échanges dette nature : une double solution pour la soutenabilité environnementale et ," Bulletin de la Banque de France, Banque de France, issue 244.
    9. Juliette Caucheteux & Sam Fankhauser & Sugandha Srivastav, 2025. "Climate Change Mitigation Policies for Developing Countries," Review of Environmental Economics and Policy, University of Chicago Press, vol. 19(1), pages 69-89.
    10. Felicia Wartiainen & Bram Boer & Pieter Pauw & Henny Romijn, 2024. "Addressing the Twin Crises of Debt and Climate: Exploring Unconditional Debt Cancellation," Development, Palgrave Macmillan;Society for International Deveopment, vol. 67(3), pages 187-196, December.
    11. Altanshagai Batmunkh & Agus Dwi Nugroho & Maria Fekete-Farkas & Zoltan Lakner, 2022. "Global Challenges and Responses: Agriculture, Economic Globalization, and Environmental Sustainability in Central Asia," Sustainability, MDPI, vol. 14(4), pages 1-21, February.
    12. Maia Colodenco & Yanne Horas & Anahi Wiedenbrug, 2024. "A Piece in the Puzzle? The Narrow Developmental Potential of Debt for Nature Swaps," Development, Palgrave Macmillan;Society for International Deveopment, vol. 67(3), pages 270-279, December.
    13. Joseph Otsayi Udenyi & Benedict Akombo & Ilemona Adofu & Obadiah Gimba, 2025. "Green Investment Outcomes, External Debt, and Economic Resilience in Africa: A Dynamic Panel Analysis of Emerging African Economies," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(9), pages 9031-9043, September.

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