Poor Countries Between the Losses of Climate Crises and the Burden of the Debts of Those Responsible for It

SadaNews - The British newspaper "Independent" published a report revealing that poor countries spend billions of dollars annually to repay their debts, while receiving far less funding to address the climate crisis, exacerbating their suffering and threatening vital sectors such as health and education.

The author Nick Ferris explained that an analysis from the International Institute for Environment and Development revealed that 59 countries among the least developed and small island developing states paid about $37 billion to service their debts in 2023, while receiving only $32 billion in climate assistance.

The author stated that these figures reflect a "vicious cycle," as countries are forced to borrow to cover the costs of a climate crisis they did not actually contribute to, leading to the erosion of health and education budgets and the accumulation of debt.

The writer quoted researcher Sijal Patel saying that it is a grim paradox that the most climate-vulnerable countries are the least responsible for the crisis, adding that the overwhelming debt burdens hinder their ability to cope with increasingly severe weather phenomena.

Gideon Rabinowitz, director of policy at the British Bond Network, pointed out the need for wealthy countries to take action to break this destructive cycle by re-financing international assistance, fulfilling their climate commitments, and supporting debt restructuring programs.

Rabinowitz added that the debt burdens in low-income countries have sharply increased, with these countries now spending the equivalent of 15% of their government revenues on servicing external debt, compared to only 6.6% in 2010.

The author explained that 40% of the world's population lives in countries that spend more on servicing external debt than they do on health or education, noting that an increasing number of countries are suffering from "debt distress," a condition in which countries cannot meet their external financial obligations and are forced to restructure their debts.

The pressures from debt are particularly evident in Africa, where 20 low-income countries face the risk of falling into debt distress, according to the International Monetary Fund.

The writer noted that not only are the costs of debt increasing, but the climate financing designated to help developing countries adapt to climate change and compensate for its losses still suffers from severe shortages, exacerbating the financial crisis in these countries.

Climate disasters have increased by 83% over the past two decades, displacing 22 million people annually since 2008, while estimates suggest that the world needs trillions of dollars each year to cover climate losses, adaptation efforts, and decarbonization in countries of the Global South.

Wealthy countries pledged to provide only $300 billion annually at the "COP 29" climate conference last year, placing a massive financial burden on countries that contributed the least to the climate crisis and forcing them to rely on private sector funding, which further increases their indebtedness.

The author stated that climate finance flows to the least developed countries declined in the last year for which complete data is available, dropping from $22.1 billion in 2022 to $15.7 billion in 2023.

Massive Burdens

One of the countries severely affected by the climate and debt crisis is Malawi in Southern Africa, where the debt-to-GDP ratio reached 86.4% in 2024, while public debt interest amounted to 8.4% of GDP and 49.2% of local revenues.

Charity organizations have reported that the health and education sectors in Malawi are experiencing severe funding shortages, with overcrowded classrooms and a lack of medical supplies, at a time when climate disasters, such as Cyclone Freddy in 2023, cost the country at least 1% of GDP annually.

The author added that one of the most prominent aspects of the crisis in developing countries is that the perception of risks forces them to repay their debts at interest rates much higher than those of Global North countries, even though investors working in Africa assert that this perception is exaggerated compared to reality.

Philippe Falihau, CEO of the Private Infrastructure Development Group, sees a "massive gap" between reality and perceived risks in Africa, noting that the group has raised about $47.2 billion for infrastructure projects on the continent since 2002.

Falihau added, "We established the group to go to places where no one goes, and to prove that doing business is possible there," asserting that their losses over 23 years have not been different from those occurring in Europe or North America.

The author also affirmed that the rising cost of debt limits countries' ability to borrow to develop themselves, hindering growth and increasing dependence on external financing.

Developing countries paid about $25 billion more in 2023 than they received in new loans, according to a United Nations Conference on Trade and Development report, raising questions about the current global financial system's ability to support development.

Non-governmental organizations and other advocacy groups are organizing campaigns for debt cancellation, especially following the cut in aid that exacerbated conditions, noting that the Catholic Church launched the "Jubilee 2025" campaign to cancel the debts of developing countries led by the late Pope Francisco.

The writer concluded by pointing out that the "COP 30" climate conference, which will be held in Brazil next month, and the meetings of the IMF and World Bank during this current October will increase pressure on wealthy countries to take tangible steps.

Katherine Bettingil, Executive Director of the Climate Action Network UK, emphasized the urgent need for debt cancellation and increased climate financing.

She notes that countries on the front lines are not receiving the grant-based public financing they need to tackle the climate crisis, while at the same time being under immense pressure from unjust and unsustainable debts.

Source: Independent