Debt and the Climate Crisis: A Perfect Storm

Countries need funds to be able to address the climate crisis now, but many are trapped in repaying vast sums to their creditors every year. In 2020 alone, countries in the global South spent $372 billion on servicing debt. At the same time, extreme climate events and insufficient grant-based climate finance force countries deeperinto debt, creating a vicious cycle that can be impossible to escape.

COP26 presents a vital opportunity to ensure that debt relief is firmly on the agenda as a key ingredient for addressing the climate crisis.

This report has been co-published by Afrodad, Asian People’s Movement on Debt and Development, CAFOD, Christian Aid, Global Justice Now, Jubilee Debt Campaign, Jubilee Scotland and Latindadd,

Recommendations

To address the climate and debt crises, we are calling for:

• Debt cancellation for all countries that need it, across all creditors
• The introduction of legislation to ensure private creditor participation in debt restructuring
• Suspension of debt payments and debt cancellation in the event of a climate-extreme event
• Adequate climate finance goals of at least $400 billion per year to be agreed and delivered, withfinance provided in the form of grants including a separate mechanism for funding loss and damage,so debt levels do not increase
• A significant portion of Special Drawing Rights (SDRs) to be channelled to poorer countries in the formof grants, not loans.