A Critical Assessment of "Debt-for-Climate Swap" Mechanisms in Selected Oil-Producing Countries ) Review article (

Abstract

Oil-rich developing nations face an unprecedented dual fiscal and climate-related challenge. On one hand, they grapple with mounting sovereign debt burdens driven by oil price volatility and the COVID-19 pandemic; on the other, they face international demands to finance clean energy transitions and climate change adaptation. This article critically evaluates the "debt-for-climate swap" mechanism as an innovative financing tool capable of addressing this dual predicament. The study concludes that while the mechanism offers a genuine opportunity to alleviate debt burdens and secure green financing, it faces fundamental challenges regarding national sovereignty, creditor conditions, and suitability for economies that rely on oil for more than 70% of their revenue. Finally, the article offers recommendations tailored to Iraq and other selected oil-producing nations.