The Joint Declaration and Task Force is a crucial initiative led by Multilateral Development Banks (MDBs) and Development Finance Institutions (DFIs) to address the triple crises of high debt burdens, escalating costs of climate change, and critical biodiversity loss in developing and emerging market countries. It aims to provide long-term solutions and enable the scaling up of innovative financing tools such as Sustainability Linked Bonds, Debt for Nature Swaps, and other KPI-linked instruments.

Signatories of the joint declaration: 

Agence Française de Développement (AFD)

Asian Development Bank (ADB)

Asian Infrastructure Investment Bank (AIIB)]

African Development Bank (AfDB),

European Investment Bank (EIB)

Green Climate Fund (GCF),

Global Environment Facility (GEF),

Inter-American Development Bank (IDB),

United States International Development Finance Corporation (DFC)

Secretariat:

Sustainability Linked Sovereign Debt Hub (SSDH)

This initiative exists to respond to the urgent needs of vulnerable countries facing increased debt burdens, limited access to financing, and constrained development and climate funding.

Credit enhancement mechanisms, including credit guarantees and political risk insurance (PRI), play a vital role in scaling sustainability-linked sovereign financing instruments such as debt conversions and sustainability-linked bonds. They aim to catalyse private sector capital mobilization at significantly larger multiples than traditional donor finance or concessional lending.

Current climate finance flows are insufficient and inefficient, with a significant gap in funding for adaptation, mitigation, and achieving climate and nature goals. Urgent action and increased financing are necessary to address the challenges posed by climate, nature, and debt.

The use of credit enhancement mechanisms is crucial for containing borrowing costs at sustainable levels, securing market access, attracting private investment, and achieving climate and biodiversity targets.

Examples include Belize, Ecuador, and Gabon’s debt-for-nature conversions, Barbados’ debt refinancing, and Chile and Uruguay’s sustainability-linked bonds. These success stories demonstrate tangible gains in debt reduction and sustainable financing for conservation.

The Joint Declaration and Task Force serve as a significant step toward a sustainable and resilient future by addressing the intersection of debt, development, and climate change. Collaborative efforts, global reviews, research, and targeted reforms are essential for achieving the ambitious goals outlined in the initiative.