IMF and World Bank add climate risk to low-income debt assessments

On September 21, Reuters reported that the IMF and World Bank boards approved the first overhaul since 2017 of their joint debt-sustainability framework for low-income countries, adding deeper treatment of domestic debt, climate change and data transparency. The revised framework is scheduled to become operational in the second half of 2027; the institutions said 14% of low-income countries were already in debt distress and 33% were at high risk. For lenders, sovereign advisers and infrastructure sponsors, climate exposure will become more explicit in the analytical baseline used to assess financing capacity and restructuring options. Counsel should expect stronger demands for consistent climate, fiscal and domestic-debt data in sovereign transactions, even before the framework formally takes effect.