© 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
Consolidations Taking Place in the International Money Transfer Space
Finance
05/10/2021Consolidations Taking Place in the International Money Transfer Space

And as we move into Q4 2021, more firms in the international money transfer industry are set to add to the fireworks. Overall, though, the industry is about to get less crowded.

Read Full PostRead - Eye Icon
The Future of Trading Has Arrived: Say Hello to Tradu
Finance
30/11/2023The Future of Trading Has Arrived: Say Hello to Tradu

Tradu is an innovative new trading platform backed by leading global investment firm, Jeffries, offering users a seamless multi-asset trading experience.

Read Full PostRead - Eye Icon
How To Measure The ROI For Hotel Management Software
Strategy
20/01/2020How To Measure The ROI For Hotel Management Software

Hotel management software provides a lengthy list of services to help you calculate your hotel's return on investment. To measure and improve your ROI, you'll also want to take a look at a few major aspects of your business.

Read Full PostRead - Eye Icon
CEO of the Month, Belgium: Jan De Backer, FLUIDDA
Leadership
28/10/2015CEO of the Month, Belgium: Jan De Backer, FLUIDDA

FLUIDDA develop proprietary diagnostics for lung diseases, such as asthma, chronic obstructive pulmonary disease and lung fibrosis.

Read Full PostRead - Eye Icon
6 Things to Do Before Implementing An ERP System
Strategy
23/11/20216 Things to Do Before Implementing An ERP System

Usually, when an individual or organization plans to implement new software or system into their infrastructure, preparation is necessary, and that’s especially true when it comes to ERP systems.

Read Full PostRead - Eye Icon
2016’s Most Innovative Hedge Fund Manager, Singapore
Finance
01/07/20162016’s Most Innovative Hedge Fund Manager, Singapore

APS Asset Management was founded in 1995 by its CIO, Wong Kok Hoi, in Singapore. In what started as a pioneer among home-grown boutiques, the firm has continued to go from strength to strength.

Read Full PostRead - Eye Icon
Committed to Care
Legal
23/07/2019Committed to Care

Templars Law is a full service law firm with extensive knowledge regarding how to handle the legal needs of clients in Nigeria’s peculiar business environment.

Read Full PostRead - Eye Icon
Transparency, Integrity, Communication, Kindness
Corporate Social Responsibility
08/08/2022Transparency, Integrity, Communication, Kindness

Founded in 1996, Edkey Inc is a non-profit organisation which manages 28 schools and programmes across Arizona including 17 Sequoia Charter Schools. It works together with families to provide high quality educational services for their K-12 children by creatin

Read Full PostRead - Eye Icon
A Business’s Guide To Shipping Overseas For The First Time
News
01/08/2022A Business’s Guide To Shipping Overseas For The First Time

Today, business operations are scaling new heights. Thanks to digitization and globalization, business owners can now transact globally without hassle. As part of the growth in the business industry, you can ship goods overseas for your global clients. However



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