Debt and the climate crisis: a perfect storm

Over the next few days, governments from around the world will be meeting at the UN climate talks in Glasgow to discuss how best to address the climate crisis. But there is a big issue missing on the agenda… debt.

Debt might initially sound far removed from the climate crisis, but the debt of lower-income countries and the climate emergency are so intricately linked that it is impossible to address one without the other.

Current debt levels in the global South are significantly undermining governments’ ability to invest in climate change adaptation and mitigation. Last year alone, lower income countries spent $372 billion on debt repayments, resources that could have been directed instead to tackling climate change, the pandemic and social development.

"SIDS (small island developing states) are sinking, and it's not due to just the sea level rise and climate change. We are actually sinking in debt," - Lois Young, Belize's permanent representative to the United Nations and chairwoman of Alliance of Small Island States.

Meanwhile, the failure of rich nations to provide promised levels of climate finance (which were already woefully inadequate) leaves many governments with no option but to borrow to address climate change. When an extreme climate event like a hurricane takes place, governments often must take on more debt just to recover and rebuild, with loans frequently costing more because of climate vulnerability.

For example, in 2017 the Caribbean state Dominica was hit by tropical storm Maria, causing $1.3 billion worth of damage - a staggering 226% of GDP. Just days after the hurricane struck, the government had to find millions of dollars for a debt repayment that fell due, whilst also having to take on new loans to finance their recovery.

It is deeply unjust that climate vulnerable countries like Dominica are having to bear the financial burden of the climate emergency, especially given that the global North’s role in creating the climate crisis through centuries of industrialisation made possible by colonialism.

Worse still, the little climate finance that is provided by rich countries predominantly comes in the form of loans, adding to already unsustainable debt burdens and once again placing the financial responsibility of addressing the climate emergency on climate vulnerable countries.

“The continent needs grants, not just loans that exacerbate its debt burden. Rising debt and the COVID-19 pandemic have weakened poor countries’ capacity to tackle the climate crisis.” - Mr. Tanguy Gahouma-Bekale, Chair of the African Group of Negotiators on Climate Change

With the G7 presidency this year, the UK government has had ample opportunity to play a leading role on addressing global South debt, but it has failed to act. Now, with the presidency of the UN climate talks, the UK government has another opportunity. But so far, debt is nowhere to be seen on the formal agenda, despite demands from global South governments and civil society.

This is why we will be calling on Boris Johnson and his fellow world leaders at the climate summit to take urgent action on debt if we are to address the climate crisis – there is no climate justice without debt justice.

We are asking them to:

• 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, pandemic and other national needs.  

• Set up a fund for extreme climate events, and when disaster hits, automatically suspend debt repayments so countries have the resources they need to recover and rebuild.

Historic and current actions perpetrated by the global North are at the root of the climate crisis, and yet it is most deeply felt by those in the global South. The very least Boris Johnson and others can do now is ensure they take action on issues that are fundamental to addressing the climate emergency, including debt.

You can add your voice to these demands too by signing our petition and joining the Global Day of Action on climate justice on Saturday 6 November.