Climate Resilient Debt Clauses

CRDCs are a practical tool designed to help vulnerable countries manage debt sustainably while responding to climate shocks. Introduced at the Paris Summit for a New Global Financial Pact in June 2023, the initiative was launched by countries including the UK, France, Barbados, Ghana, Spain, Canada, and the US.

They jointly called on more bilateral, multilateral, and private creditors to include CRDCs in their lending by 2025, enabling borrowing countries to pause debt service during climate-related disasters and provide fiscal space for crisis response. 

Goal: To promote broader and fairer adoption of debt pause clauses across bilateral, multilateral, and private lenders, while fostering inclusive dialogue among borrowers, lenders, and stakeholders to identify practical solutions and challenges, including those related to credit ratings.

Impact: Pilot CRDCs were launched by the World Bank during IMF-WB Annual Meetings and COP28 (2023): clauses were proposed for "small states" on new loans and existing debt stock (interest and principal); (ii) CRDCs were adopted in 2024 by the EIB, and are under consideration for AFD, AfDB and EBRD. At COP28, the IDB announced the future implementation of its CRDC 2.0, (iii) at a discussion organised by the 4P, France, Canada, UK and other partners at the Fourth International Conference on Small Island Developing States (SIDS-4) on 28th May 2024, partners agreed on the need for more systematic data gathering on CRDCs to promote broader adoption of CRDCs based on best practice

Key leading countries: Barbados, Canada, France, Ghana, Spain and the UK