21 August 2024, Climate Home News: In a world first, Grenada activates debt pause after Hurricane Beryl destruction. More creditors are agreeing to suspend debt payments in the wake of weather disasters, but experts say greater financial relief will be needed. As Hurricane Beryl swept through the Caribbean in early July, its deadly passage left a trail of destruction across the island nation of Grenada. Winds of up to 240 kilometres per hour flattened entire neighbourhoods and toppled power and communication lines, causing damage equivalent to a third of the country’s annual economic output, according to early government estimates. Many Grenadians cast their minds back 20 years when a similarly powerful storm – Hurricane Ivan – brought the island state to its knees, triggering a vicious circle of financial distress that eventually led to a debt default. But, unlike in 2004, officials this time could deploy a tool that has been widely discussed in climate circles to provide financial help in the wake of fierce storms: hurricane clauses built into its agreements with international creditors. Grenada last week became the first country in the world to use such a provision in a government bond which will allow it to postpone debt repayments to private investors, including US investment firms Franklin Templeton and T. Rowe Price. The move will save the Caribbean island nation a total of around $30 million in payments due this November and in May next year. While the money owed will be added to future bills, in the meantime the cash injection will help fund immediate recovery efforts and keep essential services like healthcare and education running, a senior official in Grenada’s Ministry of Finance told Climate Home. The government is now “in talks” about triggering similar clauses with other creditors. Fighting the debt trap. Grenada’s use of debt suspension clauses will be seen as a litmus test for their effectiveness in shoring up disaster-hit economies, as major international financial institutions like the World Bank promise to offer them more widely to climate-vulnerable countries. Read more here