A new report from the anti-debt campaigners Debt Justice and partners in affected countries has shown that Richer countries and private lenders are trapping heavily indebted countries into reliance on fossil fuels.
According to the report, the pressure to repay debts is forcing poor nations to continue investing in fossil fuel projects to make their repayments on what are usually loans from richer nations and financial institutions.
The group is calling for creditors to cancel all debts for countries facing crisis – and especially those linked to fossil fuel projects.
“High debt levels are a major barrier to phasing out fossil fuels for many global south countries,” said Tess Woolfenden, a senior policy officer at Debt Justice. “Many countries are trapped exploiting fossil fuels to generate revenue to repay debt while, at the same time, fossil fuel projects often do not generate the revenues expected and can leave countries further indebted than when they started. This toxic trap must end.”
The report showed that the debt owed by global south countries has increased by 150% since 2011 and 54 countries are in a debt crisis, having to spend five times more on repayments than on addressing the climate crisis.
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Daniel Ribeiro, who is the programme coordinator for the Mozambican environmental campaign Justiça Ambiental, said the country’s debt burden had been doubled by loans taken without parliament’s permission from London-based banks in 2013, based on projections of earnings from its gas field discoveries.
According to reports, Mozambique was plunged into a debt crisis when oil and gas prices fell in 2014-16, Ribeiro said, but the solutions from international lenders to bail out the country have relied on loans being repaid through future gas revenues.
“The debt caused by fossil fuels are being structured to be paid back by fossil fuels, solidifying a vicious cycle of having to move forward and having very severe consequences of not wanting to continue with fossil fuels,” Ribeiro said.
Suriname was said to have faced a similar situation after defaulting on its debt, when in 2020 it agreed a deal that would give creditors the right to almost 30% of Suriname’s oil revenue until 2050. Sharda Ganga, the director of the Surinamese civil society group Projekta, said they had hoped the deal would have remained within the country’s climate commitments.
Story was adapted from the Guardian.
