Debt-to-Sustainability Swaps (D2S): A Practical Framework

Hamouda Chekir, Martin Kessler and Charles Albinet

No 2404, FDL Policy Notes from CEPREMAP

Abstract: Amidst growing liquidity challenges and mounting debt burdens, governments have to forego some of their priorities, especially when they represent long-term commitments, such as sustainability investment. Debt-To-Sustainability Swaps (D2S) have become a popular tool to address this dual tension. Yet, their limitations are also well known: they are fit for purpose in a limited number of cases, and tend to be complex arrangements. When are D2S useful? How much can they reduce debt? What are the conditions for a meaningful sustainability impact? This paper describes when and where swaps are useful, and goes beyond these considerations by proposing a practical guide on the economics, impact and governance of such transactions.

Keywords: Sovereign Debt; Liquidity Challenges; Debt Burdens; Governments; Green Finance; Climate Finance; Sustainable Finance; Debt-To-Sustainability Swaps (D2S); Economics; Governance (search for similar items in EconPapers)
Pages: 33 pages
Date: 2024-06
New Economics Papers: this item is included in nep-env
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https://findevlab.org/wp-content/uploads/2024/07/F ... te_D2S_June-2024.pdf

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Persistent link: https://EconPapers.repec.org/RePEc:cpm:notfdl:2404

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