Disaster Risk Financing Term Sheet: Debt Pause Clauses
A debt pause clause allows governments to temporarily pause debt repayments following a shock, freeing up funds to support crisis response and recovery.
This Term Sheet covers the key terms and conditions of debt pause clauses available from six Multilateral Development Banks and three bilateral creditors. It is part of our Disaster Risk Financing Term Sheets series – practical notes designed to help governments and practitioners understand and compare the financial instruments available in the international system.
Key Findings
Key Terms Used In This Report
A provision in sovereign debt contracts that enables the borrower to temporarily stop repaying debt service for a pre-agreed period when a predefined event occurs.
A predefined threshold that activates payments or actions within risk financing mechanisms.
Related Publications
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Debt Pause Clauses Confront Their First Disaster: From Hurricane Beryl To Broader Policy Momentum
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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Demystifying Pre-Arranged Financing For Governments: A Stocktake Of Financial Instruments From International Financial Institutions
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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Innovations In Sovereign Debt: Taking Debt Pause Clauses To Scale
This insight paper provides an overview of the key features of debt pause clauses, also known as climate resilient debt clauses.
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