Part 6
Recommendations and Call to Action
1. Make sovereign borrowing and lending fairer across generations
Ask: Governments, lenders and international institutions should embed intergenerational fiscal equity in sovereign borrowing and lending, assessing not only whether debt can be repaid but what lasting public value is created for the generations that inherit it. The emerging UN process on responsible sovereign borrowing and lending should incorporate World Vision’s proposed Principle 16 on intergenerational fiscal equity.
2. Invest in resilience before climate shocks become fiscal crises
Ask: Governments, donors, climate funds and development banks should prioritise adaptation, anticipatory action, disaster-risk reduction and early warning systems as core economic and social investments, protecting child-critical systems and reducing the human and fiscal costs of future climate shocks.
3. Deliver faster and more effective debt solutions that create usable fiscal space
Ask: The G20, IMF, World Bank and creditors should make sovereign debt restructuring faster, more predictable and capable of restoring genuine fiscal space, including through earlier creditor coordination, debt-service suspension during good-faith restructuring negotiations, clearer rules for creditor participation and debt treatments proportionate to countries’ needs. This requires:
Faster and deeper debt treatment:
Improve creditor coordination, establish clearer timelines, suspend debt-service payments while good-faith restructuring negotiations are underway, and ensure that restructuring restores debt sustainability with sufficient space to absorb future shocks, rather than simply postponing distress.
Fair participation by all creditors:
Negotiations with different creditor groups should proceed in parallel, with clear and enforceable rules for comparable treatment and measures to prevent individual creditors from delaying or undermining collective agreements.
Better use of the full range of debt solutions:
Strengthen countries’ capacity to identify and use restructuring, refinancing, reprofiling, swaps and other liability-management options appropriate to the nature of their debt pressures.
Protection against future shocks:
Expand the use of climate-resilient debt clauses and other state-contingent mechanisms that can temporarily suspend debt-service payments following qualifying shocks, providing immediate liquidity while recovery is underway. Fiscal space released should help protect child-critical services and systems.
4. Stop adaptation finance adding to unsustainable debt burdens
Ask: Donors, climate funds and multilateral development banks should significantly increase grant-based adaptation finance for highly climate-vulnerable and debt-constrained countries, matching financing instruments to vulnerability, repayment capacity and whether investments generate revenues from which debt can reasonably be serviced.
5. Protect investment in children when fiscal pressure rises
Ask: Governments and international financial institutions should strengthen safeguards for expenditure on health, education, nutrition, child protection and social protection, protecting real per-child resources, budget execution and essential frontline inputs, rather than relying only on nominal social-spending commitments.
6. Make children visible in debt, climate and fiscal decision-making
Ask: Governments, international financial institutions and creditors should assess and report how borrowing, debt restructuring, fiscal adjustment and climate-finance decisions affect investment in children and essential services. The IMF and World Bank should ensure that implementation of the reformed Debt Sustainability Framework for Low-Income Countries meaningfully reflects long-term climate risks and the contribution of investment in climate resilience and human capital to future development and fiscal capacity. Success should be judged through child-specific outcomes, disaggregated where possible by age, gender, disability, poverty, geography and climate exposure, alongside conventional macro-fiscal indicators.
Call to Action: Our asks to the UK Government
The UK cannot solve the Inheritance Trap alone. But as a major climate donor, a leading shareholder in international financial institutions and a major legal jurisdiction for sovereign debt, it has significant influence over whether today’s climate and debt pressures become tomorrow’s inheritance for children. The UK can act directly on five of these recommendations, and its own aid cuts make the quality of what remains more important, not less. UK aid is falling to 0.3% of GNI by 2027/28110, while its ODA-funded international climate finance is now around £6 billion over three years, following the previous £11.6 billion five-year commitment.111
1. Update UK debt-relief law so private creditors play their part.
The Government should strengthen the UK’s existing debt-relief legislation so that private creditors cannot use UK courts to secure better terms than creditors participating in internationally agreed debt restructurings, and countries negotiating in good faith are protected from disruptive litigation. The current Debt Relief (Developing Countries) Bill provides an opportunity to take this forward; the Government should support effective legislation through Parliament.
2. Ensure UK climate finance does not deepen debt pressures.
The Government should reverse the move from grants to loans in UK climate finance and increase grant-based adaptation finance for the poorest and most climate-vulnerable countries, particularly those already facing severe debt pressure. Where loans are used, financing terms should reflect countries’ vulnerability, repayment capacity and debt sustainability. The UK should also extend climate-resilient debt clauses across eligible UK-backed sovereign lending.
3. Protect investment in children as UK aid falls to 0.3%.
Prevent disproportionate cuts to health, nutrition, education, WASH, protection and social protection; publish how much UK aid reaches children and where; and establish a transparent baseline for tracking and protecting investment in children as aid falls.
4. Use the UK’s global influence to make debt relief faster and fairer.
Use the UK’s 2027 G20 Presidency and its influence at the IMF, World Bank and UN to push for faster and sufficiently deep restructuring, interim debt-service relief during negotiations, clearer rules for creditor participation and greater transparency, while championing intergenerational fiscal equity in emerging international principles on responsible borrowing and lending.
5. Require major UK aid, debt and climate-finance decisions to assess their impact on children and future generations.
Introduce proportionate child-rights and intergenerational impact assessments for major UK decisions, showing who benefits, who bears the costs over time and how risks to children will be mitigated, with meaningful participation by children and young people where appropriate.
Banner Image: In Karamoja, Uganda, Babodmas and his wife Esther tend to their backyard garden. Climate-smart farming techniques have helped the family secure regular meals, store food for the dry season and build greater resilience to hunger. © 2024 Brian Jakisa Mungu/ World Vision