Debt-for-Climate Swap

A Debt-for-Climate (DFC) Swap is a financing mechanism in which creditors agree to cancel, restructure, or refinance part of a country's debt in exchange for commitments to invest the resulting fiscal savings in climate-related projects. These projects may include renewable energy, climate adaptation, ecosystem restoration, or resilience measures. Debt-for-climate swaps are intended to address both debt burdens and climate finance needs, particularly in developing economies facing fiscal constraints and increasing climate risks.