© 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
Abundant Opportunities in Botswana
Finance
05/12/2016Abundant Opportunities in Botswana

BDC is a development finance Institution tasked with the industrialisation of Botswana.

Read Full PostRead - Eye Icon
Dell to Acquire EMC in Biggest Tech Deal of All Time
M&A
16/10/2015Dell to Acquire EMC in Biggest Tech Deal of All Time

Dell has agreed to acquire EMC for $67 billion or £33.15 a share, by far the biggest technology deal of all time.

Read Full PostRead - Eye Icon
Mastering Expansion: Proven Strategies for Scaling Your Service Business
News
15/02/2023Mastering Expansion: Proven Strategies for Scaling Your Service Business

Multiple site expansion of a service company can have numerous advantages, but it necessitates a deliberate strategy.

Read Full PostRead - Eye Icon
The Smart Choice
Innovation
13/02/2017The Smart Choice

Remfry & Son is a well-established law firm which continues law practice first established in 1827 by its founder Mr. Henry Oliver Remfry of England U.K. and carried on under the name of Remfry & Son by Mr. Chughtai Mirza Jamiluddin, Advocate. Professional pra

Read Full PostRead - Eye Icon
Financial Literacy for Students: Important Points
Finance
08/07/2021Financial Literacy for Students: Important Points

People who create school curricula suppose they do everything right, and the curriculum contains all required courses. However, we see that a large number of college students are unprepared for an independent life. We mean they have little basic knowledge, inc

Read Full PostRead - Eye Icon
Trust, Honesty and Care
Finance
01/06/2022Trust, Honesty and Care

Alpha Global Wealth (Alpha) is a small boutique family office in the heart of Geneva, taking care of 150 international expatriates living and working in Switzerland. Join us as we take a closer look at the firm.

Read Full PostRead - Eye Icon
Essential Tips on Getting a Title Loan
News
06/03/2024Essential Tips on Getting a Title Loan

Are you ready to deal with an emergency if one comes up? You know something is bound to go wrong at some point, whether it’s a broken water pipe, car repair bill, or unforeseen medical expense. You don’t have the cash to cover the costs in an accou

Read Full PostRead - Eye Icon
The Role of the CIO Changing Thanks to AI and Digital Transformation
Innovation
24/05/2023The Role of the CIO Changing Thanks to AI and Digital Transformation

The chief information officer (CIO) is instrumental in helping companies use technology well and achieve stated goals. However, the role of the CIO is becoming significantly different than it once was.

Read Full PostRead - Eye Icon
Effective Strategies for Enhancing Employee Productivity in the Digital Era
News
07/06/2023Effective Strategies for Enhancing Employee Productivity in the Digital Era

As the digital revolution sweeps across every industry, the rules of the game are swiftly changing. With an array of technologies available at our disposal, the methods to boost employee productivity have evolved significantly.



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