Montevideo/New York, November 11, 2022. As the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change comes starts to wrap up, Uruguay is at the forefront of climate finance due to its innovative bond linked to climate finance, an important step towards the country's commitment to the Paris Agreement and a contribution to global public goods.

This historical bond was issued a few weeks ago under the Sovereign Sustainability-Linked Bond (SSLB) Framework and reached a demand of 1.5 billion dollars. Final maturity of the bond will be 2034. The Reference Framework was prepared jointly by the ministries of Economy and Finance; Environment; Livestock, Agriculture and Fisheries; Industry, Energy and Mining; and Foreign Affairs, with the technical assistance of the Inter-American Development Bank (IDB) and the United Nations Development Programme (UNDP).

“Uruguay’s Sovereign Sustainability-Linked Bond is an important step to more closely align the country's financing strategy with its environment and climate change targets. UNDP appreciates the invitation by the Government of Uruguay to contribute to this milestone, which can serve as an inspiration to other countries seeking to roll-out innovative financial mechanisms that can drive forward their national climate and sustainable development strategies,” said Achim Steiner, UNDP Administrator.

This Framework describes the sustainable strategic priorities of the country and establishes goals regarding performance indicators, one linked to the evolution of the intensity of greenhouse gas (GHG) emissions, and the other to the protection of native forests. The performance goals are based on the quantitative targets set by Uruguay in its Nationally Determined Contribution (NDC) to the Paris Agreement by 2025. Likewise, it proposes an innovative mechanism for reducing the interest rate if the goals of both indicators are exceeded.

UNDP works globally providing technical knowledge and advice so that governments can issue new financing instruments that contribute to the achievement of the Sustainable Development Goals (SDGs). In the case of this bond, UNDP will carry out an external and independent review of the performance indicators.

"UNDP congratulates the government of Uruguay for the issuance of this innovative bond, which not only aligns vision, action and incentives in regard to climate, but also contributes to the debate about the financing of public goods”, said Alfonso Fernández de Castro, UNDP Resident Representative in Uruguay.