Climate resilient debt clause or 'debt pause clause'
A pause clause is a provision in sovereign debt contracts that enables the borrower to temporarily stop repaying debt service (interest, principal or both) for a pre-agreed period when a predefined event occurs. These built-in debt deferrals can be designed to be Net Present Value (NPV) neutral and not extend the instrument’s original maturity date. Also known as Climate Resilient Debt Clause or Natural Disaster Clause (Centre for Disaster Protection).
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This policy brief examines the first real-world use of debt pause clauses - contractual mechanisms that allow sovereign borrowers to temporarily defer debt payments in the wake of a disaster.
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This report offers an in-depth assessment of pre-arranged financing tools using seven key criteria for ensuring pre-arranged financing reduces the human and financial costs of disasters
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Analysing the level of effort of international development donors to support a shift towards arranging financing for disasters, before shocks happen.
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This insight paper provides an overview of the key features of debt pause clauses, also known as climate resilient debt clauses.
Read moreInternational crisis financing system
The network of global organisations funding crisis prevention, preparedness and response.
Social protection
Policies and programmes designed to reduce and prevent poverty and vulnerability throughout the life cycle.
Hazard
A natural or human process that can cause injury, damage or disruption.
Ex ante
Actions, decisions or financial arrangements made before a disaster or crisis occurs.
Risk transfer
When disaster risk is shifted to insurers or capital markets.
Shock-responsive social protection
Social protection systems adapted to scale quickly when large shocks affect many people.
