Five months after the UN Climate Change Conference in Baku came to an end, I thought about what had happened as Hurricane Beryl tore through the Caribbean. Following its devastation, Grenada activated a storm provision that permitted it to temporarily suspend debt repayment.
Compared to alternative instruments, this offered much-needed liquidity at a scale, velocity, and reduced interest rates.
As hurricanes become more common and destructive owing to climate change, these clauses are an essential counterbalance to insurers who are retreating. In the end, it is not free; the avoided debt service must be repaid, but not at emergency rates and at a later, more convenient time.
