A new study has shown that the capacity to effectively respond to climate-related emergencies in most countries that are vulnerable to climate disasters is been hampered due to debt.
Conducted by international charity ActionAid and released on the sidelines of the World Bank and International Monetary Fund (IMF) Spring Meetings, the research revealed that 93 per cent of countries in the Global South that face most impact from a warming planet are also under significant debt distress.
According to the report, Somalia, Malawi, and Mozambique are among the nine highly climate-sensitive countries that are already reeling under debt distress. It added that forty countries highly susceptible to climate crisis are at moderate or high risk of debt distress while only four countries facing climate disasters are at low risk of debt distress.
Discussions on economic policy options for Global South countries took centre stage as when World Bank shareholders gathered in Washington for their annual spring meeting on Monday.
This report sounded the alarm for urgent need for debt cancellation for climate vulnerable countries and a radical transformation of global debt management to address this pressing crisis.
“The debt crisis and climate crisis are inextricably linked, creating a vicious cycle that traps vulnerable countries in a downward spiral,” warned David Archer, ActionAid International’s head of programmes and influencing.
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The study also revealed that 38 out of 63 most climate vulnerable countries are slashing spending on vital public services to service their debt, jeopardising their ability to effectively respond to climate disasters.
Mr Archer pointed the finger at the World Bank, IMF, and private banks based in wealthy countries for hindering climate progress by imposing stringent conditions on debt repayments for climate-vulnerable countries.
“These debts are entrapping countries in a detrimental cycle, forcing them to cut public spending and invest in activities that harm the climate just to repay their debts,” said Mr Archer.
The report called for immediate debt cancellation for countries most vulnerable to climate change and a comprehensive overhaul of global debt management to break free from this harmful entanglement.
International financial institutions are facing growing calls to make finances available to poor countries facing increasing pressure due to climate crisis. Countries like Pakistan, which are under critical debt burden and suffered devastating floods last year, have demanded debt relief in the past. Organisations are calling for urgent action to close the funding gap amid the ongoing high level meetings.
Story was adapted from the Independent.
