IRC Calls on Multilateral Development Banks and Development Finance Institutions to Deploy Credit Guarantees to Help Unlock Humanitarian Debt Swaps in Fragile Contexts

June 24, 2026 - 11:28

The International Rescue Committee has released a new policy paper calling on multilateral development banks and development finance institutions to deploy credit guarantees as a tool to unlock humanitarian debt swaps in fragile and conflict-affected states. The proposal outlines a concrete roadmap for converting sovereign debt into funding for emergency relief, a mechanism that has largely been reserved for environmental or health programs.

Debt swaps typically allow a country to redirect debt payments toward agreed-upon domestic spending, often in exchange for policy reforms. The IRC argues that this model could be adapted for humanitarian purposes in nations too unstable to attract traditional investment. By offering credit guarantees, development banks would reduce the risk for private creditors, making it easier for struggling governments to negotiate swaps without defaulting.

The paper highlights that many fragile states spend more on debt servicing than on health or education. In contexts like Afghanistan, Yemen, or South Sudan, where conflict and climate shocks compound economic collapse, the IRC says debt relief could free up billions for life-saving aid. The proposal also calls for simplified eligibility criteria and faster approval processes, noting that current debt swap frameworks are too slow for acute humanitarian crises.

The IRC emphasizes that this approach does not require new funding from donor governments. Instead, it leverages existing financial instruments to redirect resources where they are most needed. The organization is urging the World Bank, regional development banks, and national development finance institutions to pilot the model in at least two fragile states by the end of 2025.