DEBT-FOR-CLIMATE-SWAPS TO SUPPORT EGYPT’S CLIMATE FINANCE NEEDS FOR ADAPTATION AND RESILIENCE

While developing countries have made commitments in their Nationally Determined Contributions(NDCs) that need financing, many of them experience continuously unsustainable levels of debt. As the debt problems grow further, these countries face significant financial needs and thus, are unable to allocate enough resources to fund their NDCsespecially for adaptation and resilience. To this end, the case for additional finance for climate action in developing countries is apparent given the dangers posed by climate change, which further emphasizes the gaps in current financing instruments.Egypt is extremely vulnerable to the dire impacts of climate change which are related mainly to agriculture, water resources, human health, and the coastal zone (more specifically, the Nile Delta).  Egypt was one ofthe first Arab countries to join the cooperative global efforts to confront climate change sincetheratification of the United Nations Framework Convention on Climate Change (UNFCCC) in 1994and culminating in its hosting of COP27 in Sharm El Sheikh in November 2022. Egypt’supdated NDC and its national climate change strategy indicate that the country’s financing needs for climate change adaptation and effective implementation of climate-resilient development plans are much higher than the current and future levels of available resources.Egypt would therefore need to explore new and innovative sources of climate financing. This paper attempts to consider the use of debt reduction for climate finance; more specifically, Debt-for-Climate Swaps (DCS)as a viableinstrument in the broader context of sources of climate finance for Egypt. The paper outlines the main features of the study needed to determine the feasibility of using DCS for climate adaptation. Furthermore, the paper presents a roadmap for the potential implementation of the DCS in Egypt and the conditions for its effective and successful implementation.