UK to offer loans for countries most vulnerable to climate change effects

FILE PHOTO: Daffodils are seen flowering near the Treasury building in London, Britain

LONDON (Reuters) - Britain plans to offer new loans to support countries most vulnerable to the effects of climate change, including the option to defer debt repayments in the event of catastrophes, the finance ministry said on Tuesday.

The country's export credit agency, UK Export Finance (UKEF), will provide such loans to low-income countries and small island developing states, according to the Treasury.

Details of the plans will be given at the COP27 climate summit in Sharm el-Sheikh, Egypt, where discussion between world leaders have so far focused on the need for wealthier countries to do more to help developing nations dealing with the worst effects of global warming.

"I am proud that UK Export Finance is the first export credit agency in the world to offer loans which suspend debt service payments for countries hit by climate catastrophes and natural disasters," junior finance minister James Cartlidge said in a statement.

The proposals would allow vulnerable countries to defer debt repayments to free up resources to fund disaster relief, the ministry said.

(Reporting by Muvija M; Editing by Josie Kao)