Shock resilient loans – an innovative way of bolstering resilience to climate risks

The consequences of climate change are devastating for many developing countries. In the event of extreme events, they are often forced to use scarce budget funds for emergency aid, which further weakens their economic power. The new instrument of crisis-resilient loans, which are linked to climate risk insurance, relieves them of their payment obligations in the event of damage and thus ensures greater liquidity in a crisis while maintaining their creditworthiness. This issue of Development Policy Compact provides an overview of the concept, its advantages and challenges.

Shock resilient loans – an innovative way of bolstering resilience to climate risks (PDF, 190 KB, accessible)