The UK is set to provide loans to nations that are struggling to combat the impacts of climate change.
UK Export Finance (UKEF) will give loans to developing countries and island nations that are most vulnerable to climate impacts, as well as defer debt repayments for overcoming climate disasters.
The delay of repayments will allow these nations to focus on rebuilding communities and parts of the country first, the Treasury has said.
By making the change, UKEF has become the first export credit agency to defer debts surrounding climate shocks.
Tim Reid, UK Export Finance’s Director of Business Group, said at COP27: “Some countries are now facing tough choices between protecting their citizens as they respond to climate shocks or paying down their debts.
“UKEF can play an important role in helping governments navigate these decisions. By suspending the debt service payments, UKEF will enable borrowing countries to focus on responding to and recovering from a crisis.
“We encourage other official creditors to consider including similar provisions in their own lending to countries most vulnerable to climate change.”
“I am proud that UK Export Finance is the first export credit agency in the world to offer loans which suspend debt service payments for countries hit by climate catastrophes and natural disasters,” added Exchequer Secretary to the Treasury, James Cartlidge.