National debts have been growing in recent years, and 54 countries are now in crisis. The crushing weight of those debts mean that many countries can’t rebuild when hit by disasters such as floods and hurricanes, have little room to adapt or transition to a greener economy and are being forced to go into more debt to pay for the crisis.
It’s a huge injustice at the heart of the climate emergency.
Lower income countries are least responsible for emissions causing the climate crisis, and worst affected. It’s the richer polluting countries that should pay for the damage caused and to support the transition, something they have partly acknowledged but have so far failed to do.
Several countries in the Caribbean were devastated by hurricanes during 2017. Some of those countries were already heavily indebted, partly because of loans taken out to help with rebuilding efforts following previous disasters. In the event of environmental disaster, we call on all creditors, including the IMF and World Bank, to suspend debt payments. Debts must be reduced to a sustainable level, and assistance to rebuild must be provided as grants, not loans.
- Disasters: The UN estimates that climate-extreme events are happening at a rate of one per week, with the impacts of the climate crisis set to cost vulnerable countries up to $300 billion per year. In 2020 alone, developing countries spent $372 billion on servicing debt.
- Grants not loans: A significant amount of climate finance comes in the form of loans, contributing to the already unsustainable debt burden of many climate vulnerable countries. More than two thirds of the public climate finance delivered between 2013 and 2018 was delivered through debt-creating instruments. Between 2016-2018, Latin America and the Caribbean received an average annual flow of $12 billion in climate finance, 90% of which was in the form of loans.
- Least to blame: 29 small island developing states, making 0.7% of the global population, responsible for just 0.2% of global carbon emissions, 80% of the most damaging disasters linked to climate change happened in small island states.
- Set up a fund for climate disasters, and when disaster hits, automatically suspend debts.
- Give climate finance as grants, not loans, so that climate vulnerable countries do not have to go into more debt
- Cancel the debts of all countries that need it and make sure it doesn’t build up in the future so they can deal with the climate crisis