Spain is pushing other wealthy countries to allow developing nations hit by famines, droughts and hurricanes to suspend debt repayments, as climate change increases the threat from natural disasters.
Paula Conthe, the head of Spain’s Treasury, told the Financial Times that official and private creditors should incorporate emergency so-called pause clauses for natural disasters into all loans to poor countries, after Grenada became the world’s first country to use such a clause last month.
The Caribbean nation was able to suspend payments on a $112mn bond for a year after damage from Hurricane Beryl, which struck in July, triggered a clause in its debt terms agreed almost a decade ago. The interest will be added on to the bond’s principal. However, such clauses are currently rare in debt documents.