Debt-for-climate swaps, like their antecedents in debt-for-nature swaps, are typically an arrangement whereby a sovereign government and a single creditor engage in debt relief conditioned on the sovereign making climate-friendly investments or policy reforms.
This policy brief by the The Task Force on Climate, Development and the International Monetary Fund, - which builds on a previous working paper on debt-for-climate swaps - evaluates some of the areas outlined in that paper and highlights how the IMF can build on it to advance a comprehensive instrument.
As the IMF continues to work towards developing an instrument linking debt restructuring and climate investments, the task force urges the IMF to consider a number of policy recommendations, including the need to recognize the relationship between climate impacts and debt accumulation, acknowledge that climate investments are growth enhancing and reduce sovereign risk, and expand debt sustainability analyses.