How to defuse the climate-debt time bomb for small island states
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Last year, the assessed rising debt in these islands and found that interest payments were eroding crucial public spending on healthcare and education.
Debt also means are not able to build more resilient systems to help them cope with ever , rising seas and changes to coastlines and habitats.
A new briefing paper shows that between 2026 and 2028, these small island nations are projected to in debt service to external creditors, with $12 billion going to official creditors and $15.3 billion to private creditors, according to World Bank statistics.
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The World Bank and regional development banks need to step in and help lower borrowing costs by, for example, providing credit guarantees and more concessional finance and, by scaling up offers of debt swaps to make debt cheaper like the recent debt for , more climate resilient infrastructure can be built.
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For example, if a country invests $150 million to build its renewable energy infrastructure, creditors would forgive a portion of its debt or reduce interest rates.
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