In this note we assess the potential short-term fiscal impact of these instruments. We look at three major natural disasters over the past two years and assess how much relief each country would have received if DSCs had been included in the totality of their external debt instruments.
Debt suspension clauses (DSCs) are having their moment in the international policy arena spotlight. Also known as “pause clauses” or climate-resilient debt clauses, DSCs are mechanisms that allow a country to temporarily suspend debt repayments for a pre-agreed period (generally 1-2 years) if a natural disaster hits. They feature prominently in the Bridgetown Agenda, which calls on all major lenders to include DSCs in their debt instruments to better absorb climate shocks.
AsiaOne has launched EarthOne, a new section dedicated to environmental issues because we love the planet and we believe science. Find articles like this there. LONDON - Countries hit by climate change-driven disasters such as flooding and hurricanes will automatically be able to freeze debt payments under new plans laid out by the bond market rule setting International Capital.