© Copyright Acquisition International 2024 - 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
Property Acquisition CEO Secures Success
Leadership
08/10/2019Property Acquisition CEO Secures Success

London’s premier property Search, Investment, Development and Acquisition firm, Rehoboth has consistently delivered for the UK’s most prestigious property owners and developers. Rehoboth engages in development projects with industry partners to help allevi

Read Full PostRead - Eye Icon
Striving for Perfection
Leadership
13/02/2017Striving for Perfection

SARC is a firm with 17 senior partners and a pan India presence with foot prints in London and Toronto. To win the 2017 Ones to Watch in Consultancy award is of course a great honour, one feels great and on top of the world.

Read Full PostRead - Eye Icon
CEO of the Year – Belgium
Innovation
06/05/2016CEO of the Year – Belgium

Kollector has developed an information system which provides real time statistics about radio broadcasting and online distribution, worldwide.

Read Full PostRead - Eye Icon
Chronos Therapeutics Acquires Pre-clinical Programmes from Shire
Leadership
20/07/2016Chronos Therapeutics Acquires Pre-clinical Programmes from Shire

Chronos Therapeutics Ltd (Chronos), the private biotech company focused on ageing diseases, brain and nervous system disorders, today announced the acquisition of three pre-clinical development programmes targeting Central Nervous System (CNS) diseases from a

Read Full PostRead - Eye Icon
Seven Post-Pandemic Office Tech Trends to Look Out For
Innovation
08/04/2021Seven Post-Pandemic Office Tech Trends to Look Out For

As the pandemic has affected all aspects of our lives, the need for a new way of working is also affected. With that in mind, John Williams, Head of Marketing at Instant Offices reveals the top seven Proptech trends that aim to keep employee safe in a post-COV

Read Full PostRead - Eye Icon
What to Do to Benefit from the 9/11 Victim Compensation Fund
Corporate Social Responsibility
08/11/2022What to Do to Benefit from the 9/11 Victim Compensation Fund

The 9/11 victim compensation fund is the fund that was created for monetary compensation to the families who lost their loved ones, victims who got injured, and others who got ill resulting from the toxic dust after the collapse of the Twin Towers during the v

Read Full PostRead - Eye Icon
Care By the Sea
Leadership
09/03/2021Care By the Sea

So much more than simply a domiciliary care agency, Overington Care does not merely assist people to live an independent life in their own homes, it also has a strong focus on the mental wellbeing of its clients and its staff. Founder and owner, Nichola, tells

Read Full PostRead - Eye Icon
A Step-by-Step Guide to Starting Your Dropshipping Business
News
31/01/2022A Step-by-Step Guide to Starting Your Dropshipping Business

It’s no secret that dropshipping is one of the fastest-growing industries in eCommerce. It is a convenient, low-risk business model that you can easily start with just a little capital. You don’t have to worry about managing the stock of goods, and you sim

Read Full PostRead - Eye Icon
An Expert in Their Field
Finance
01/11/2016An Expert in Their Field

Pero Family Farms is a food production company based in Delray Beach, Florida focused on encouraging families to make better food choices.



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 14 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