cut expenditure on education by an average of increased deployment of debt-for-development deals 13.5% since 2020, which, despite a minor rebound, (see Chapter 2.2: Natural ecosystems), particularly 139 fell again in 2022. As referenced in Chapter 2: relating to climate-positive adaptation, to help break Human health, the lingering economic, educational the correlation between exposure to climate change 141 and healthcare overhang of the pandemic continues and debt vulnerability. However, this should not to weaken the capacity of public systems that also just be limited to environmental concerns. Social face compounding pressure from ageing populations bond issuances have already jumped sevenfold, to in advanced economies, and rapidly expanding $148 billion in 2022, targeting healthcare, education 142 populations in some developing markets. This is a and small and medium-sized enterprises. While slow-burning risk: impacts are subtle, lagged and debt swaps may not create 昀椀scal space beyond the cumulative in nature, but can be highly corrosive in speci昀椀c objective, SDG-linked conditionality may overall impact to the strength of human capital and enhance the willingness of creditors to consider debt development – a critical mitigant to the impact and relief, particularly for countries where other forms of likelihood of other global risks. 昀椀scal support, including write-downs and conditional grants, may be less likely.143 Acting today Finally, we are unlikely to be able to double down on debt to the same extent to cushion the next crisis. A more proactive approach to countries that are not In recognition of the risks posed to broader 昀椀nancial yet on the verge of debt distress could help mitigate stability, timely and deeper debt write-downs could the systemic risk of sovereign debt contagion. allow a faster return to developmental progress for Recognition of simultaneous crises – debt, climate vulnerable countries and render a future default less impacts and food security – could be integrated likely. The private sector could be incentivized to into greater 昀氀exibility and more concessional forms participate in debt restructuring through a variety of 昀椀nancing available to vulnerable markets. With of mechanisms, including issuing of new bonds particular respect to the climate agenda, there is with stronger legal protections, loss reinstatement a growing expectation that packages will include commitments and value recovery instruments – with grants, rather than rely solely on loans that add to 144 the latter enabling private creditors to gain from overall debt burdens. Bilateral and multilateral upside developments in debtor countries in the underwriting of risk could also enable much-needed future, such as GDP-linked instruments in Costa 昀氀ows of private capital, while support for longer-term 140 Rica, Argentina, Greece and Ukraine. projects that can help crowd-in private capital, such as the IMF’s Resilience and Sustainability Trust, is 145 As a complementary mechanism to more also critical. comprehensive debt restructuring, there may be Global Risks Report 2023 49