Publication - Guaranteeing sustainable development: Debt Relief for a Green and Inclusive Recovery

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Guaranteeing sustainable development: Debt Relief for a Green and Inclusive Recovery
Debt Relief for a Green and Inclusive Recovery (DRGR)
Published in
April 2023
The Intergovernmental Panel on Climate Change has said it is “now or never” to make the investments necessary to limit warming to 1.5 degrees Celsius—without which, the world faces catastrophic human, ecological and economic costs (IPCC 2022). Moreover, the Independent High-Level Expert Group on Climate Finance estimates that $1 trillion per year is needed in emerging markets and developing economies (EMDEs) other than China to accomplish the Paris Climate Agreement targets and achieve the UN 2030

Sustainable Development Goals (SDGs) (Songwe et al. 2022).

Concomitantly, at precisely the moment when substantial investment is needed to meet shared climate and development goals, a debt crisis is emerging in the Global South that will create lost decades of development and put our shared climate goals out of reach. This crisis is compounded by the lack of an effective sovereign debt workout mechanism. While the G20 is to be commended for establishing an emergency ‘Common Framework’ in the midst of multiple crises, there is now a consensus that the Common Framework has fallen short in its inability to engage all creditor classes in negotiations and to link debt relief with development and climate goals. In a step toward more comprehensive reforms that are needed, the Common Framework needs immediate reform to provide debt relief for a green and inclusive recovery.

The Debt Relief for Green and Inclusive Recovery (DRGR) Project is a collaboration between the Boston University Global Development Policy Center, Heinrich-Böll-Stiftung and the Centre for Sustainable Finance, SOAS, University of London, that argues it is time for comprehensive debt reform. Utilizing

rigorous research, the DRGR Project seeks to develop systemic approaches to both resolve the debt crisis and advance a just transition to a sustainable, low-carbon economy in partnership with policymakers, thought leaders, and civil society from around the world. Our proposal has been endorsed and called for by the Group of Vulnerable 20 Finance Ministers, now 58 finance ministries across the Global South. Debt relief will not be enough to put the world economy on a better path and must be part of new forms of liquidity, concessional and grant financing, and affordable private sector finance.