Beirut, 18 December 2020 (ESCWA)--The years since the global economic downturn in 2008 have seen an increase in public debt in several major economies around the world; a trend more worrying for the low and middle-income countries of the Arab region.
Given these circumstances, ESCWA launched on 15 December a Climate-SDG Debt Swap Initiative in the Arab region during a virtual expert consultation meeting, following a series of publications and expert group meetings over the past 3 years which identified debt sustainability challenges facing Arab States.
In her opening remarks, ESCWA Executive Secretary Rola Dashti called upon the international donor community to scale up financing for climate-resilient projects supported through debt swap arrangements, maintaining that the commission “will host the Debt Swap Mechanism and leverage all technical capacities and engagement with member States to support the debt swaps from inception to implementation”.
The first expert consultation on the climate/SDGs debt swap mechanism (DSM) brought together creditors, debtors, and development partners to discuss the opportunities to set a roadmap for operationalising debt swap in the middle-income countries of the region.
DSM provides a concrete window of opportunity for Arab states to finance sustainable development and climate action in partnership with their creditors, particularly in countries where continuous borrowing has become a less viable option.
This mechanism also offers win-win-win solutions for debtors, creditors and donors that can utilize debt servicing payments for achieving climate-sensitive national development objectives in line with global development goals.