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the world’s poorest and most climate sensitive countries Spending billions of pounds more paying off debt than getting funding to fight climate Changing, new research shows.
Analysis by the International Institute for Environment and Development (IIED) think tank shows that in 2023 – the most recent year for which data was available – 59 countries representing the world’s least developed countries and small island developing states committed US$37 billion (£28 billion) to repay their debts, but only $32 billion (£24 billion) in climate finance. Billion) received.
The findings reflect a “vicious cycle”, where countries are being forced to borrow more money to cover the costs. A climate crisis to which they have barely contributedThis often comes at the expense of health care or education budgets, and leads to even greater debt.
“It is a grave irony that the countries that are most vulnerable climate crisis “We have at least tried to cause this,” said Sejal Patel, a senior researcher at IIED.
“Crushing them loan “The burden makes it increasingly difficult to deal with increasingly damaging and unpredictable extreme weather conditions.”
Gideon Rabinowitz, Director of Policy and Advocacy at Bond, the UK network for organizations working in international development. Said: “The UK and other high-income countries must take urgent action to break this devastating vicious cycle.” Reversing its cuts in international aidMeet our climate finance commitments and support an ambitious and comprehensive program of debt restructuring and relief.
The debt burden in low-income countries has increased in recent years. Developing countries now spend on average 15 percent The percentage of government revenue spent each year on repaying foreign debt was only 6.6 percent in 2010.
Forty percent of the world’s population lives in countries that spend more on international debt than on health or education, while more and more countries are falling into “debt crisis”: a situation where countries cannot meet their external financial obligations, and debt restructuring is necessary.
The pressure of debt is particularly felt AfricaWhere 20 low-income countries are in or at risk of debt crisis, according to International Monetary Fund (IMF).
Not only are debt costs rising, but the flow of climate finance, intended to help developing countries adapt to climate change and cover climate loss and damage, is grossly underfunded.
climate related disasters are increased by 83 percent According to the United Nations, 22 million people have been displaced annually in the two decades since 2008. It is estimated that trillions of dollars of financing will be needed each year to cover climate loss and damage, climate adaptation and decarbonization efforts in the Global South.
but at COP29 climate conference last yearRich countries had only pledged to provide $300 billion annually in climate finance, placing a heavy financial burden on countries that have contributed least to the climate crisis, and potentially forcing them to rely on private financiers which would further increase national debt.
Climate finance flows to least developed countries actually fell in the most recent year for which we have complete data. Falling from $22.1bn (£16.6bn) in 2022 to $15.7bn (£11.8) in 2023.
Countries at the forefront of the climate-debt crisis include the southern African country of Malawi, where debt is set to reach 86.4 percent of GDP by 2024, while public debt interest stands at 8.4 percent of GDP and 49.2 percent of domestic revenue (which includes taxes and other duties),
Charities report that health and education systems in the country are severely underfunded, with classrooms overcrowded and hospitals lacking critical supplies. Meanwhile, climate disasters in the country, such as Cyclone Freddy in 2023It is estimated that the country is losing at least 1 percent of its GDP annually.
A key aspect of the crisis facing developing countries is that risk perception means they are forced to service debt at much higher rates than countries in the Global North. But investors who actually work in African countries say the perception of risk is often much higher than the actual risk.
Philip Valahu, CEO of Private Infrastructure Development Group, mentioned earlier Independent – which has raised approximately $47.2 billion in financing for infrastructure projects in sub-Saharan Africa and South and South-East Asia since 2002 – believes there is a “huge gap” between the reality and perceived risk in Africa.
“We were designed to go to places where no one goes and show the mass market that you can do business in those countries,” he said. “Inevitably we have to suffer some losses. But actually in 23 years of existence, our losses and recovery are no different than what you would expect to see in Europe or North America.”
The high cost of debt also limits countries’ abilities to borrow more money, which would help them grow.
In 2023, developing countries paid $25 billion more to their external creditors than they received from fresh debt, According to United Nations Trade and Development (UNCTAD), Serious questions are being raised about the ability of the current global financial system to help countries develop.
NGOs and other pressure groups are particularly campaigning for loan cancellation after aid cuts They are also disastrous countries this year. In particular, the Catholic Church has a Jayanti 2025 Debt Cancellation Campaign It was led by the late Pope Francis to cancel developing country’s debt.
With the next UN climate conference, COP30, just around the corner, and the IMF and World Bank set to hold their annual meetings in Washington DC from 13 to 18 October, pressure is set to increase in the coming weeks.
“We urgently need debt cancellation and increased scale of climate finance,” said Catherine Pettengale, executive director of Climate Action Network UK. “Frontline countries are not getting the grants-based public finance they need to tackle the climate crisis and are being burdened by unfair and unsustainable debt.”
This article was produced as part of The Independent Rethinking global aid Project