This is a presentation on debt relief, climate and nature in COVID-19 recovery by Stephany Griffith-Jones emeritis fellow at the Institute for Development Studies, and financial markets director at the Initiative for Policy Dialogue in New York. It was given as part of an online webinar on 30 March 2021 that explored emerging research into sustainable and innovative post-pandemic debt management with outcomes for nature and climate. This event was part of the IIED Debates series and was hosted by the International Institute for Environment and Development (IIED) in partnership with the International Development Research Centre (IDRC). More details: https://www.iied.org/triple-win-managing-debt-climate-nature-pandemic-recovery

1. 'A triple win: Managing debt, climate and nature in the pandemic recovery'
Scaling up intervention on Debt, Climate and Nature
Learning from Heavily Indebted Poor
Countries (HIPC) Initiative

2. Global solution to deal with twin challenge: Debt and Climate
2
IMF/World Bank, 2020
 Covid-19: impact on Debt and Climate
 Emerging and developing countries’ debt
already high before Covid-19
 Pandemic worsened situation
 Fiscal pressures & emergency spending
squeezing out investment in climate change
adaptation/mitigation
 Debt Service Suspension Initiative (DSSI)
helped but more needed
 Growing call for more debt relief
 Strong case for linking debt with – financing
climate & nature programs
 In developing a global initiative on debt and
financing climate and nature projects:
Is there anything we can learn from the
Heavily Indebted Poor Countries (HIPC)
Initiative?
Reminder: Enhanced HIPC Initiative
• Launched by WB/IMF: 1996 & updated in 1999
• Comprehensive framework to deal with debt
burden of eligible countries
• 39 countries eligible under Initiative
• Somalia going through process

3. Towards scaled up international – Debt, Climate and Nature initiative
Learning from the HIPC Initiative
 Brought all concerned parties to work together – no piece-meal approach
 Linked to macro framework, tracking reform, etc. – to eliminate debt overhang
as impediment to economic growth
 Coordinated effort of multilateral, bilateral – Paris Club and non-Paris Club
members and commercial creditors
 HIPC (MDRI) provided around US$99 billion in debt relief
 Strengthened links between debt relief, poverty reduction and social policies
 Increase in social spending funded by savings from debt relief – including for
health and education
• Comprehensive
framework
• Targeting different
types of debt
• Links to poverty
reduction
• Promoting local
ownership
 E.g.: Countries developing own Poverty Reduction Strategy Paper (PRSP) –
bottom-up consultation, involving civil society participation
• Criteria used to
measure
progress
 Yes, conditionalities built-in, but countries formulated strategy indicating how
to use funds saved from debt relief to reduce poverty
 E.g.: Increased expenditure on social services was prominent among
indicators of countries’ commitment to poverty reduction
• Focus on debt
management  Besides debt reduction, debt management strengthening was there as well

4. Mapping elements from HIPC into New scaled-up Initiative
in trying to support “greener” recovery post-Covid-19
4
Learning from HIPC Mapping into New Initiative – Debt, Climate & Nature
 Comprehensive framework was
and is still important
 ”Scaling-up” requires getting all parties on board, buy-in
from international community, political commitment (G20),
buy-in from creditors, etc.
 Process: learn from what worked; E.g.: ”flexibility” brought in
 Trying to bring in different
creditor groups & types of debt
 Pilot may start with one type of debt / instrument
 But initiative will aim at bringing in different types of debt –
after assessing debt portfolio structure (evolved since HIPC)
 From clear link to poverty
reduction: focus now on
Climate & Nature
 SDGs – Several indicators linked to environment
 Target scaled-up climate/nature programs in countries
 E.g.: biodiversity, livelihoods, inclusiveness
 Local ownership remains
important
 Focus on countres’ needs: local climate strategy will be
driving force: Projects relevant for concerned country
 Defining criteria to mesure
performance
 Use key Performance Indicators (KPI) of climate and nature
activities – to track performance and impact
 Debt relief and Debt
management
 Covers both debt reduction and active debt management
 Debt for nature & climate swap; Climate-related products

5. THANK YOU