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Recapitalising Sovereign Debt – Technical paper

COVID-19 and the linked economic downturn has put emerging countries and their economies on a pathway to a sovereign debt crisis. Many of the affected countries are rich in biodiversity. Yet this key component of their “natural capital” is rapidly diminishing and under increasing threat. Nature loss—such as deforestation, draining of wetlands, and species extinction—has reached alarming levels and is being affected by, and is affecting, climate change. There is a growing body of research making clear not only the link between nature and climate and sovereign debt, but also how nature loss is eroding many nations’ capacity to generate the economic activity needed to service and repay sovereign debt. […]