20 January 2022
Professor Ulrich Volz, the Director of the SOAS Centre for Sustainable Finance, joined senior officials from climate-vulnerable countries, the International Monetary Fund (IMF) and civil society to discuss the looming debt crisis in the Global South.
As developing countries count the mounting costs of climate change, the ongoing COVID-19 pandemic has pushed sovereign debt to unprecedented levels. This has left many nations struggling to meet the basic needs of their citizens, let alone fortify themselves against the climate crisis. To date, debt relief initiatives put forth by the G20 and others have been insufficient, while long-promised levels of climate finance from advanced economies failed to materialize at the recent COP26.
This OECD Development Talk, jointly hosted by the OECD Development Centre and Boston University’s Global Development Policy Center, examined the potential of debt-for-climate schemes for alleviating developing countries’ debt burden in exchange for sustainability commitments, thereby freeing up significant resources for countries to mount green and inclusive recoveries and achieve their climate and development goals.
Besides Prof Volz, speakers included Alagie Fadera, the Director of National Development Planning at The Gambia’s Ministry of Finance and Economic Affairs; Iolanda Fresnillo, Policy and Advocacy Manager for Eurodad; Thierry Watrin, Green Economy and Climate Change Advisor at Rwanda’s Ministry and Economic Planning; and Jeromin Zettelmeyer, the IMF’s Deputy Director of the Strategy, Policy and Review Department. The event was moderated by Ragnheidur Elín Árnadóttir, the Director of the OECD Development Centre. A video recording of the event is available on YouTube.
Prof Volz is co-chair of the Debt Relief for Green and Inclusive Recovery (DRGR) Initiative, which was launched in the summer of 2020, when it became apparent that COVID-19 would further deteriorate debt sustainability in many countries of the Global South and not only constrain their ability to respond adequately to the health and social crisis brought about by the pandemic, but also to the impending climate and biodiversity crises that are threatening their long-term development. The DRGR Initiative has since published two much-noted reports that have influenced the policy discourse on the debt crisis:
Volz, U., Akhtar, S., Gallagher, K.P., Griffith-Jones, S., Haas, J., and Kraemer, M. (2021). Debt Relief for a Green and Inclusive Recovery: Securing Private-Sector Participation and Creating Policy Space for Sustainable Development. Berlin, London, and Boston, MA: Heinrich-Böll-Stiftung; SOAS, University of London; and Boston University.
Volz, U., Akhtar, S., Gallagher, K.P., Griffith-Jones, S., Haas, J., and Kraemer, M. (2020). Debt Relief for a Green and Inclusive Recovery: A Proposal. Berlin, London, and Boston, MA: Heinrich-Böll-Stiftung; SOAS, University of London; and Boston University.