2024 update:

The white paper published in January 2024 established IRC as a leader on the topic, and informed subsequent papers from the World Bank, as well as enabled engagement with key government donors to educate and support the use of this transaction to address social outcomes.

Impact: Policy shift, greater awareness and recognition of this transaction as a tool to address rising sovereign debt and underfunded social outcomes.

Commitment:

IRC is aiming to replicate an innovative transaction to refinance sovereign debt in fragile contexts, resulting in new funding streams for communities at the frontlines of conflict and the climate crisis. Based on recent examples of sovereign ‘debt for nature’ restructuring, we propose a ‘humanitarian debt swap’ that will help targeted countries restructure outstanding below investment-grade commercial sovereign debt, freeing up hundreds of millions of dollars for conflict-affected, refugee-hosting, climate-prone communities.

Adopting this proposal for wide use could infuse millions of dollars of private capital into the humanitarian system. Using the ‘blue bonds’ Ecuador example, depending on a country’s debt profile, each transaction could buy back over 1B USD of sovereign debt in exchange for an estimated 300M USD towards new aid to be disbursed over a ten-year period, or longer.

The IRC is looking for partners to further develop this initiative in 2024 — please feel free to forward to those that would be interested.