Wednesday, October 27, 2021

Can Poor Countries Pay?

 Jubilee Debt Campaign, a leading anti-poverty charity, show that 34 of the world’s poorest countries are spending $29.4bn (£21.4bn) on debt payments a year compared with $5.4bn (£3.9bn) on measures to reduce the impact of the climate emergency.

Uganda had said it would spend $537m between 2016 and 2020, including funds from international agencies and donors, on climate-related projects to adapt the country’s infrastructure and deal with climate emergencies. However, the $107.4m annual budget is dwarfed by external debt payments which will total $739m in 2021, rising to $1.35bn in 2025.

Ausi Kibowa, from the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI), based in Uganda, said: “Owing to the immense financial pressure on Uganda from the debt crisis, the Ugandan government is unable to spend what is need to protect people from the damage inflicted by climate change. Furthermore, it is intensifying fossil fuel extraction in order to pay the debt. To address climate injustice, debt relief must be part of the forthcoming UN climate talks."

Heidi Chow, executive director of Jubilee Debt Campaign, said, “Lower income countries are handing over billions of dollars in debt repayments to rich countries, banks and international financial institutions at a time when resources are desperately needed to fight the climate crisis,” she said.“In Glasgow, wealthy polluting nations need to stop shirking  their responsibilities and provide climate finance through grants, as well as cancel debts.”

International bodies such as the World Bank and the International Monetary Fund (IMF) have encouraged developing world countries to fund development projects using bank loans and bonds. Borrowers expect interest rates to fall over time as they became trusted to make regular repayments. But low income countries still regularly pay more than 10% interest on loans compared to an average 1.5 to 2.5% paid by rich countries.

Poorer countries spend five times more on debt than climate crisis – report | Climate crisis | The Guardian

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