During COP27’s Finance Day, the UK has announced that it will be allowing the deferral of some of the debt payments that belong to countries that have been significantly hit by climate disasters.
The two-year deferral will be granted to countries that will need large amounts of money to rebuild after a climate disaster hits. The UK’s Treasury Minister, James Cartlidge stated that:
“In the wake of a disaster, they face painful trade-offs between rebuilding their communities and making debt repayments.”
The UK believes that this decision should not given and that a country hit by a disaster has the right to rebuild.
The UK’s export credit agency is the first to add this climate resilient debt clause when it lends money to the overseas buyers that buy goods and services from Britain.
These deferrals were met with positivity as Barbados’ Prime Minister, Mia Mottley’s envoy, Avinash Persaud claimed that:
“Adopting these clauses in debt instruments is the single most impactful way of making the international financial system fitter for the new world of shocks and for international development. I cannot commend this initiative by the UK Government enough.”