Rémy Riou, the head of the French Development Agency, revealed in an interview with Reuters during the UN Climate Change Conference "COP28" that the agency intends to start including disaster relief provisions in the lending conditions for vulnerable countries. Riou stated during "COP28," held in the UAE, that the issue of reforming development banks' mechanisms for dealing with disasters was prominently on the conference agenda: "We will be among the first to propose the use of flexible debt clauses to address climate change."
He added, "The idea is to focus on a list of 26 countries that share these double vulnerability traits," pointing out that most of these countries are classified as Least Developed Countries or Small Island Developing States. These climate change response debt provisions allow countries to suspend debt repayments and redirect funds toward rapid response and recovery plans, rather than waiting for relief financing from other sources.
This initiative from the French Development Agency, which has lent over €12.2 billion ($13.2 billion) for developmental projects, follows similar commitments from various international multilateral entities, including the World Bank. The French Development Agency recently published a research paper outlining the dual challenges faced by some countries due to macroeconomic weaknesses and environmental issues, using analysis to support the implementation of flexible debt clauses.
The World Bank also announced that it would expand the use of flexible debt provisions to address climate change impacts, encompassing all current loans in eligible countries and increasing the number of countries on the list to 45. The African Development Bank announced it would apply similar provisions to all sovereign loans starting in 2024, while the Inter-American Development Bank, the European Bank for Reconstruction and Development, and the European Investment Bank indicated they would also begin utilizing them.
