downtoearth-subscribe

The architecture for a debt-for-climate initiative

The Debt-for-Climate Initiative (DCI) is an effort to provide comprehensive debt relief for eligible countries to generate fiscal space for climate action. The DCI aims at achieving maximum creditor and debtor participation. The DCI consists of three pillars. The first pillar involves debt-stock relief for countries with an unsustainable level of debt and high climate vulnerability and risk of biodiversity loss. The second pillar provides debt flow relief by rescheduling debt maturities with or without coupon reductions for coun-tries facing liquidity problems. The third pillar engages those countries not eligible un-der the first two pillars that have high climate vulnerability and risk of biodiversity loss through debt standstill agreements. All pillars include debt-for-climate swaps as well.