© 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
Pang & Co: Insight, Expertise, Dedication.
Finance
23/04/2015Pang & Co: Insight, Expertise, Dedication.

Based in Hong Kong, Pang & Co. focuses on capital market transactions and regulatory advice in Greater China, and IPOs in both the Main Board and the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited.

Read Full PostRead - Eye Icon
Navigating Regulatory Divergence in Cross-Border Retirement Plan Integration
Finance
29/07/2025Navigating Regulatory Divergence in Cross-Border Retirement Plan Integration

When companies grow internationally or merge with foreign entities, aligning retirement plans becomes a high-stakes challenge. Each country has its own tax codes, eligibility rules, vesting timelines and reporting requirements, which makes it challenging to cr

Read Full PostRead - Eye Icon
4 Essential Winter Health Hacks
News
21/01/20224 Essential Winter Health Hacks

Christmas has gone, and the January blues have well and truly set in. It’s cold, dark and miserable outside – let’s be honest, you’re feeling a little deflated. The winter can be difficult, between Seasonal Affective Disorder and freezing conditions. I

Read Full PostRead - Eye Icon
5 Cost-Efficient Ways to Strengthen Your Brand
News
28/01/20225 Cost-Efficient Ways to Strengthen Your Brand

Your brand is one of your most valuable assets. It represents everything that your company stands for. It’s what customers use to identify you and differentiate you from your competitors. Having a strong brand is essential to business growth and success.

Read Full PostRead - Eye Icon
Fast Food Franchise CFO of the Year 2024 (UAE): Darrell Edon
Finance
13/08/2024Fast Food Franchise CFO of the Year 2024 (UAE): Darrell Edon

PJP Investments Group (PJPIG) is the master franchisee of Papa John’s Pizza in the United Arab Emirates, Saudi Arabia, and Jordan, which currently owns and operates over 120 Papa John’s Pizza restaurants across these territories. As CFO, Darrell Edon drive

Read Full PostRead - Eye Icon
Kettani Law Firm – Leading Law Firm in Morocco
Leadership
12/12/2019Kettani Law Firm – Leading Law Firm in Morocco

Kettani Law Firm (KLF) is one of the largest Moroccan independent law firms with 120 staff based in its Casablanca head office.

Read Full PostRead - Eye Icon
Is There a Right Time to Invest for Growth?
News
02/09/2024Is There a Right Time to Invest for Growth?

Is There a Right Time to Invest for Growth? Investing for growth is a long-standing strategy aimed at maximizing the potential for capital appreciation over time. Whether you’re a seasoned investor or just starting, a common question often arises: is the

Read Full PostRead - Eye Icon
LEWBEN GROUP: ROOTED IN LITHUANIA, EVOLVING GLOBALLY
Finance
07/04/2016LEWBEN GROUP: ROOTED IN LITHUANIA, EVOLVING GLOBALLY

Until a few years ago, Lewben was better known among connoisseurs of art than by financiers or the business media.

Read Full PostRead - Eye Icon
Revolutionising Medical Training
Innovation
19/02/2021Revolutionising Medical Training

Established in 2017, Fusetec is a cutting-edge additive manufacturing company utilising the latest 3D technologies. Following the firm’s well-deserved success in Acquisition International’s Global Excellence Award 2020, we caught up with CEO Mark Roe to fi



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