The world’s poorest and most climate-cozy countries spend billions of pounds more to repay debt than they receive in funding to fight climate change, new research shows.
The analysis, from the International Institute for Environment and Development (IIED) -Thinking Tank, finds that in 2023 – the past year when data were available – the 59 countries representing the world’s least -developed countries and small island development states paid $ 37 billion (£ 28 billion to earn their debt but received only $ 32 billion (£ 24 climate financing.
The results reflect a “vicious cycle” where the countries are forced to borrow more money to cover the costs of a climate crisis they have hardly contributed to. This often comes at the expense of health care or education budget and leads to debt that further stacks up.
“It’s ugly ironic that the countries that are most vulnerable to the climate crisis have done the least to cause it,” said Sejal Patel, IIED Senior Researcher.
“Their crushing debt burdens make it very difficult to deal with increasingly harmful and unpredictable extremes of weather.”
Gideon Rabinowitz, director of politics and advocacy at Bond, a British network for organizations working in international development. said: “The United Kingdom and other high -income countries have to urgently act to break this devastating vicious circl turning their cuts to international assistancemeets their obligations for climate financing and supports an ambitious and comprehensive program of debt structure and relief. ”
Debt burdens in low -income countries have risen in recent years. Developing countries are now using an average of 15 percent of the public revenue serving foreign debt each year, compared to only 6.6 percent in 2010.
Forty percent of the world’s population lives in countries that spend more on international debt than health or education, while more and more countries are falling into “debt problems”: a situation where countries cannot fulfill their external financial obligations and debt restructuring is necessary.
Debt pressure is particularly felt in Africa, where 20 countries with low income are in or at risk of debt problems according to International Monetary Fund (IMF).
Not only is debt costs spiral -shaped, but the flow of climate financing aimed at helping developing countries adapt to climate change and covering climate loss and damage remains hugely underfunded.
Climate -related disasters have rose by 83 percent For two decades, according to the UN, 22 million people are estimated a year since 2008.
But at COP29 -Climate Conference last yearRich countries only promised that they would give $ 300 billion a year in climate financing and thereby put a huge financial burden on countries that have at least contributed to the climate crisis, and probably force them to rely on private financiers who will further increase national debt.
In fact, climate financing streams to least developed countries fell in the past year for which we have full data. Down from $ 22.1 billion (£ 16.6 billion) in 2022 to $ 15.7 billion (£ 11.8) In 2023.
Countries at the head of the climate intervention crisis include the South African nation of Malawi, which by 2024 so debt reaches 86.4 percent of GDP, while public debt interest is 8.4 percent of GDP and 49.2 percent of domestic income (which includes taxes and other Levies).
Well associations report that health and education systems in the country are critically underfunded, where classrooms are crowded and hospitals lacking key supplies. Meanwhile climate disasters in the country, such as Cyclone Freddy in 2023estimated to cost the country at least 1 percent of GDP annually.
An important aspect of the crisis that developing countries are facing is that the perception of risk means that they are forced to pay for debt at a much higher rate than countries in the global north. But investors who actually work in African countries say that risk perception is often far greater than actual risk.
Philippe Valahu, is the CEO of the private infrastructure development group, previously told The independent -After having mobilized approx. $ 47.2 billion For financing infrastructure projects in Africa south of the Sahara and South and Southeast Asia since 2002-to he believes there is a “massive interruption” between risk reality and the perceived risk in Africa.
“We were ready to go to places that no one goes to, showing the market as a whole that you can do business in these countries,” he said. “Inevitably, we suffer some losses. But in fact, over 23 years of existence, our losses and recovery are no different from what you would expect to see in Europe or North America.”
The high cost of debt also limits the countries’ ability to borrow more money, which would help them develop.
In 2023, developing countries paid $ 25 billion more to their external creditors than they received in fresh lending, As per the UN Trade and Development (Unctad), To raise serious questions about the ability of the existing global financial system to help countries develop.
NGOs and other press groups are fighting for debt cancellation, especially Subsequently from help shards It is also devastating countries this year. In particular, the Catholic Church has one Jubilee 2025 Debt Development Campaign It was speared by the deceased Pope Francis to cancel developmental landing debt.
With the next UN climate conference, COP30, just around the corner, and the IMF and the World Bank, which were set to hold their annual meetings in Washington DC from 13 to 18 October, pressure is set to rip up further in the coming weeks.
“We need urgent debt cancellation and a climate scaling up,” said Catherine Pettengell, CEO of Climate Action Network UK. “Countries on the front line do not get the subsidy -based public economy they need to tackle the climate crisis, and at the same time be crushed by unreasonable and unsustainable debt.”
This article was produced as part of The Independent’s Rethinking Global Aid project