Compass Pillars

Debt, fiscal space, and macroeconomic constraints

• Rebalancing
• Reshaping

Debt sustainability and fiscal space are central to translating the Baku-to-Belém investment agenda into implementation. Meeting estimated investment needs in EMDEs will require substantial debt financing alongside grants, equity, and other capital. Currently, elevated borrowing costs, the risk of further increases in sovereign bond yields, and limited fiscal buffers, all particularly prevalent in EMDEs and climate-vulnerable economies, continue to threaten debt sustainability and constrain investment capacity (IMF, 2026b). The central challenge is to translate debt stabilization into sustainable fiscal space for productive investment while strengthening resilience to future shocks. Affordable borrowing, fiscal capacity, and resilience to economic and climate shocks are therefore critical to countries' capacity to invest.

Domestic Financial Systems: Public Resource Mobilization

• Rebalancing
• Reshaping
• Revamping

Domestic public resource mobilization is essential to scaling climate and development investment, particularly for adaptation, nature, and other priorities where private investment remains limited. Domestic public finance is expected to account for nearly 60% of incremental domestic financing requirements by 2035, requiring a fourfold increase from current levels. Meeting this depends on stronger revenue mobilization, more effective public spending, and climate-aligned fiscal policies.

Domestic Financial Systems: Domestic Financial Sector and Capital Markets

• Revamping
• Reshaping
• Re-channeling

Domestic financial systems will need to contribute around USD 750 billion annually to climate and development investment by 2035, implying a nearly tenfold increase in climate finance from domestic financial institutions and markets (Bhattacharya et al., 2025). Banking, pension, and insurance assets in EMDEs, projected to grow from USD 17 trillion in 2022 to USD 46 trillion by 2040, are a substantial potential source of long-term investment, but mobilizing them requires deeper capital markets, appropriate frameworks, and stronger capacity (Huisman et al., 2024).

Country Platforms

Country platforms connect national climate and development priorities with investment programs and financing strategies, coordinating policy reform, project preparation, and domestic and international finance. Building on the first Just Energy Transition Partnerships (JETPs), the model is expanding to adaptation, resilience, nature, agriculture, sustainable cities, and wider economic transformation, accelerated at COP30 by new national and regional platforms, the Country Platforms Hub, and growing support from MDBs and climate funds