© Copyright Acquisition International 2026 - All Rights Reserved.

Article Image - How Debt Impacts Climate Disasters
Posted 16th May 2023

How Debt Impacts Climate Disasters

Most of the countries that are vulnerable to climate disasters are also struggling with debt, which is making it harder for them to respond effectively to climate-related emergencies.

Mouse Scroll AnimationScroll to keep reading

Let us help promote your business to a wider following.

How Debt Impacts Climate Disasters

Most of the countries that are vulnerable to climate disasters are also struggling with debt, which is making it harder for them to respond effectively to climate-related emergencies. This was revealed in a new report by international charity ActionAid, which said that 93% of countries in the Global South that are most affected by global warming are under significant debt distress. 

Of the 63 most climate-vulnerable countries, only four are at low risk of debt distress, while nine are already reeling under debt distress, including Somalia, Malawi, and Mozambique. The report highlights the urgent need for developed countries and international financial institutions to provide financial support and debt relief to climate-vulnerable countries to enable them to build resilience and adapt to the worsening impacts of climate change.

What Is The Environmental Cost of Debt?

The report, which was released during the World Bank and International Monetary Fund (IMF) Spring Meetings, disclosed that 38 of the 63 most climate-vulnerable countries are cutting back on essential public services to service their debt. 

The situation is further exacerbated by the fact that these countries are forced to repay their debts in foreign currencies, mainly US dollars, which compels them to invest in extractive industries like fossil fuels and large-scale industrial agriculture, exacerbating environmental degradation and worsening climate change impacts.

According to the report, the debt crisis and climate crisis are inextricably linked, creating a vicious cycle that traps vulnerable countries in a downward spiral. David Archer, ActionAid International’s head of programmes and influencing, warned that urgent debt cancellation for climate-vulnerable countries and a radical transformation of global debt management is needed to address this pressing crisis. 

The report also called for immediate action from international financial institutions to make finances available to poor countries facing increasing pressure due to the climate crisis.

What Is An Example of the Climate Impact of Debt?

The report cited Malawi, which recently suffered the brunt of cyclone Freddy, displacing over half a million people and causing widespread destruction, as an example of a nation weighed down by debt. The country’s government is being forced to allocate limited resources to repay old loans, leaving it ill-equipped to rebuild and recover from cyclone Freddy. 

The situation is similar in Ghana, which defaulted on its $28.4bn external debt in December. The country is forced to spend more on debt servicing than on education and health, perpetuating a destructive cycle where the country lacks the necessary resources to invest in climate adaptation, resilience, and disaster preparedness.

John Nkaw, country director at ActionAid Ghana, stated that the country needs about 60% of its debt canceled if it is to return to a path of sustainability. He added that if they are free of debt, Ghana would be able to strengthen small and medium-sized businesses, invest in renewable sources of energy, smallholder farmers, and agroecology. However, these choices are not an option at present. 

The report also revealed that 42 other African countries are at high risk of debt distress due to the impacts of climate change and other factors. These countries face a vicious cycle where they are forced to spend more on debt servicing, leaving fewer resources to invest in climate adaptation, resilience, and disaster preparedness.

Categories: Finance, News


You Might Also Like
Read Full PostRead - Eye Icon
$100BN in Blockbuster Deals Mark the Year Europe’s Tech Industry Came of Age
Finance
18/11/2016$100BN in Blockbuster Deals Mark the Year Europe’s Tech Industry Came of Age

The European technology industry has come of age in 2016, according to analysis by tech M&A advisory firm Magister Advisors. Unprecedented M&A interest from Asian buyers, together with a strong IPO market for the best European tech businesses, has driven an un

Read Full PostRead - Eye Icon
How to Incorporate Cryptocurrency in Your Business
Finance
28/09/2021How to Incorporate Cryptocurrency in Your Business

Companies and various brands around the world are starting to incorporate cryptocurrency, particularly Bitcoin, in operational and transactional purposes. While its value is still in a volatile state, more and more people are waking up to its advantages. If yo

Read Full PostRead - Eye Icon
6 Trade Show Tactics That Maximize B2B Leads
Strategy
23/04/20266 Trade Show Tactics That Maximize B2B Leads

Research shows that while attending trade shows leads to many business cards and conversations with potential clients, those client relationships do not necessarily turn into business relationships. In fact, on average, 80% of B2B clients require a minimum of

Read Full PostRead - Eye Icon
I Have a Unique Business. Can a Buyer Be Found?
News
07/11/2022I Have a Unique Business. Can a Buyer Be Found?

Putting your business on the market for sale is a considerable undertaking, regardless of its uniqueness. This is why it's essential to avoid the mistake of selling your business to the first investor or company that makes an offer. The search for the ideal bu

Read Full PostRead - Eye Icon
Classic Car Insurance: Reasons You Need to Protect Your Investment
Legal
04/05/2023Classic Car Insurance: Reasons You Need to Protect Your Investment

Classic cars are a mark of elegance and durability, making them a valuable addition to your collection of vehicles. Due to their unique features, they will often require special care to last them through the years, allowing you to eliminate wear and tear that

Read Full PostRead - Eye Icon
The Truth About “Guaranteed” Links in SaaS
News
21/07/2025The Truth About “Guaranteed” Links in SaaS

In the digital marketing sphere, links play a crucial role in enhancing a software-as-a-service (SaaS) company’s online presence. Many businesses are drawn to the promise of “guaranteed” links, hoping to boost their search engine rankings swi

Read Full PostRead - Eye Icon
Schwartz Advisors Advises Olympus Imported Auto Parts in its Acquisition by Genuine Parts Company
M&A
30/03/2016Schwartz Advisors Advises Olympus Imported Auto Parts in its Acquisition by Genuine Parts Company

Schwartz Advisors, an M&A advisory and strategic planning firm for the automotive aftermarket, announced that the firm has acted as exclusive sell-side advisor to Olympus Imported Auto Parts.

Read Full PostRead - Eye Icon
Should Real Estate Investment Be Part Of Your Acquisition Plan in 2023?
News
10/05/2023Should Real Estate Investment Be Part Of Your Acquisition Plan in 2023?

The real estate market is rarely out of the media now. The pandemic saw huge rises in property prices. And demand for homes went through the roof. Now though, high inflation and mortgage rate hikes are causing consternation for buyers.

Read Full PostRead - Eye Icon
What Is An ETF?
Finance
20/12/2018What Is An ETF?

Exchange Traded Funds, or ETFs as they are better known, are traded on a stock exchange, rather like a stock itself. Giving you a brief overview of this often overlooked or misunderstood asset class is Hannah Stevenson, Staff Writer here at Acquisition Interna



Our Trusted Brands

Acquisition International is a flagship brand of AI Global Media. AI Global Media is a B2B enterprise and are committed to creating engaging content allowing businesses to market their services to a larger global audience. We have a number of unique brands, each of which serves a specific industry or region. Each brand covers the latest news in its sector and publishes a digital magazine and newsletter which is read by a global audience.

Arrow