5. August 2021

New Focus Paper: Debt Sustainability in Times of Climate Disaster and Corona

In recent years, the effects of the climate crisis, exacerbated since March 2020 by the impact of the coronavirus pandemic, have graphically highlighted what it means for heavily-indebted countries to be hit by external shocks. While the international debt architecture has responded, nevertheless, little has changed in terms of its underlying, deeply hierarchical structures. This is clearly evident from the manner in which, and by whom, the debt sustainability analyses are undertaken which form the calculation basis determining the scale of debt relief to be granted.

This Focus Paper, written by Jürgen Kaiser, aims to uncover the deficiencies in the existing system and identify the steps needed in order to produce more realistic debt sustainability analyses and thereby contribute to a fairer and more sustainable debt architecture. In order to achieve this, we will also refer to existing indices that reveal the vulnerability of states to external shocks and thereby contribute to answering the question of whether a state needs debt relief and, if so, in what amount.

Read more: Focus Paper 6: “Debt sustainability in times of climate disaster and corona – How to achieve a realistic assessment of crisis impacts?” (August 2021)