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. The paper highlights issues that may affect the incentives of sovereign governments and creditors to adopt them. It builds on confidential advice to the UK-chaired Private Sector Working Group by the Centre for Disaster Protection and has been informed by a private roundtable discussion with key legal, sovereign finance and development experts convened by the Centre in March 2023.
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 pre approved loan released automatically when agreed crisis conditions or triggers are met.
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