© Copyright Acquisition International 2025 - 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
Insurance Company Approached You To Settle A Claim: Here’s What To Do
News
07/03/2022Insurance Company Approached You To Settle A Claim: Here’s What To Do

If you have been injured in an accident, you are probably in a lot of pain. You may have to attend multiple doctor’s appointments and miss plenty of work. You just want this all to be over with and to get back to your normal life.  When an insurance

Read Full PostRead - Eye Icon
As the Auto Industry Goes High Tech,  M&A Volume has Risen by 40%
Strategy
30/04/2015As the Auto Industry Goes High Tech, M&A Volume has Risen by 40%

Hampleton Partners’ three year analysis shows rapid growth of acquisitions and UK leading European activity with 30 acquired targets.

Read Full PostRead - Eye Icon
‘Game-Changing’ PV Panels Boost Safety Charity’s Climate Credentials
Corporate Social Responsibility
12/08/2024‘Game-Changing’ PV Panels Boost Safety Charity’s Climate Credentials

DangerPoint has had PV panels and a battery storage system installed at its north Wales activity centre.

Read Full PostRead - Eye Icon
How Stakeholder Engagement in Public Sector Projects Can Building Trust
News
03/07/2023How Stakeholder Engagement in Public Sector Projects Can Building Trust

Public sector projects play a pivotal role in shaping societies and improving the lives of citizens. From infrastructure development to policy implementation, these initiatives require effective stakeholder engagement to ensure their success. Engaging stakehol

Read Full PostRead - Eye Icon
Augmenting Lives Through Artificial Intelligence
Innovation
21/01/2020Augmenting Lives Through Artificial Intelligence

Technology has proven to be a demonstrably powerful tool in helping people living with disabilities to live truly autonomous lives. In the world today, rapid advancements in areas such as artificial intelligence and machine learning have meant that empowering

Read Full PostRead - Eye Icon
Who Are the Best Credit Rating Agencies?
News
16/08/2024Who Are the Best Credit Rating Agencies?

Credit rating agencies (CRAs) play a critical role in financial markets by providing a standardized assessment of an entity’s creditworthiness. These appraisals estimate the level of risk involved with investing in debt instruments, including bonds, pref

Read Full PostRead - Eye Icon
5 Questions To Ask Before Putting AI Into Practice And A Checklist For Success
Innovation
03/01/20205 Questions To Ask Before Putting AI Into Practice And A Checklist For Success

Despite the power of Artificial Intelligence to transform the customer experience, many AI projects fail at the first hurdle. Henry Jinman at EBI.AI outlines the 5 most common mistakes and how to avoid them using a tried and tested checklist.

Read Full PostRead - Eye Icon
What Can You Use A Business Administration Degree For?
Leadership
23/12/2020What Can You Use A Business Administration Degree For?

Investing in education is always a wise decision. Many opportunities open up when you become more educated. A business administration degree emphasizes planning, administration, leadership skills, and other aspects involved in running or managing a company.

Read Full PostRead - Eye Icon
Doing Business Overseas
Finance
05/05/2016Doing Business Overseas

Landing Dione is a Consultant, who specialises in real estate management and strategies, quality management, value chain management, project management and business development.



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