Countries significantly impacted by extreme weather should have a repayment holiday on government loans and bonds, a Commonwealth report has recommended.
Countries significantly impacted by extreme weather should have a repayment holiday on government loans and bonds, a Commonwealth report has recommended.
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The report examines Grenada鈥檚 recent debt restructuring agreement, which includes a hurricane clause. It argues that countries should be given time to recover from natural disasters without having to worry about servicing debt.
鈥淭his week hurricane Matthew is wreaking havoc in the Caribbean, and we see the impact of the increase in frequency and intensity of these climatic events,鈥 said Commonwealth economic expert Heidi Tavakoli. 鈥淭his highlights the need to support countries to create strong disaster risk management strategies, backed by sound financing.
鈥淔inancial instruments that build in repayment holidays and insurance policies can make all the difference to a country recovering from a disaster. It gives them much needed breathing space to focus on recovery and the reconstruction of their infrastructure.鈥
Today will examine three important policy papers on the issue. They will also explore the possibility of expanding applications of these financial provisions to economic shocks, such as the recent global recession.
鈥淲e are hoping that ministers can learn from the examples we have provided and explore next steps for making this a reality for vulnerable countries across the Commonwealth.鈥
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The Secretariat is launching three policy research papers at its 2016 Commonwealth Finance Ministers鈥 Meeting (CFMM), which examine two real world examples of these instruments, and the scope for scaling-up the provision of ex-ante countercyclical functionality in the broader international shock financing architecture.
