Poorest Countries Seek Debt Relief, Citing Costs of Climate Change

Known as the Vulnerable Twenty Group, the 58 members asked richer nations to forgive their debt and invest in climate change mitigation efforts.

Nov. 2, 2022
By Paolo DeAndreis

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The rep­re­sen­ta­tives of almost 60 coun­tries of nations more vul­ner­a­ble to the effects of cli­mate change have warned that losses” and dam­ages” caused by the warm­ing planet far out­weigh their debts to richer coun­tries. Restructuring global debt, they said, is cru­cial to tack­ling the grow­ing cri­sis.

Ahead of November’s COP27 United Nations cli­mate change con­fer­ence, they pointed out that their coun­tries have suf­fered $525 bil­lion in dam­ages due to the effects of cli­mate change in the last 20 years.

Climate change has already elim­i­nated one-fifth of our wealth. In other words, V20 economies would be 20 per­cent wealth­ier today had we not been suf­fer­ing the daily toll of cli­mate loss and dam­age.- Mohamad Nasheed, for­mer pres­i­dent of the Maldives

In a note pub­lished at the end of the last meet­ing of the Vulnerable Twenty Group, del­e­gates asked rich coun­tries and cred­i­tors to adhere to the deliv­ery of $100 bil­lion a year” to the vul­ner­a­ble coun­tries.

V20 rep­re­sen­ta­tives said the funds are com­men­su­rate with the emer­gency nature of the fall­out of the global cli­mate break­down.”

See Also:Climate Coverage

A large por­tion of the global pop­u­la­tion lives in coun­tries that are the least respon­si­ble for global green­house gas emis­sions. However, many of these coun­tries have also borne the brunt of the impacts of green­house gas emis­sion-fueled cli­mate change.

Founded in 2015, the V20 Group com­prises 58 mem­bers, where approx­i­mately 1.5 bil­lion peo­ple live. The coun­tries pro­duce only about 5 per­cent of global green­house gas emis­sions.

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As a result, the V20 dis­cussed the pos­si­bil­ity of sus­pend­ing the repay­ment of €435 bil­lion in debt to richer coun­tries. The V20 also asked the World Bank and International Monetary Fund to for­give at least half of their debt, using the funds to pre­serve nature instead. The World Bank alone accounts for 20 per­cent of the V20 coun­tries’ national debts.

As eco­nomic man­agers, it has long been clear to us that cli­mate change is not a dis­tant chal­lenge,” said Ken Ofori-Atta, Ghana’s finance min­is­ter and cur­rent V20 chair, in the keynote address.

It has set ablaze not only many of the world’s forests but also our frag­ile national bud­gets,” he added. Climate change is sim­ply com­pound­ing exist­ing and increas­ingly acute fis­cal stress.”

The inter­na­tional finan­cial archi­tec­ture must become fit for cli­mate and for our devel­op­ment ambi­tions, and it must sup­port and not detract from trans­for­ma­tional changes needed in the real econ­omy toward our com­mon pros­per­ity,” Ofori-Atta con­tin­ued.

David Theis, a spokesman for the World Bank Group, con­firmed that the insti­tu­tion rec­og­nizes how many poor and small-island coun­tries are cop­ing with the sever­ity of the cli­mate cri­sis.

He added that banks are com­mit­ted to com­pre­hen­sive debt solu­tions that bring real ben­e­fits to peo­ple in poor coun­tries, par­tic­u­larly coun­tries with high debt vul­ner­a­bil­i­ties that lack the finan­cial resources to deal with the chal­lenges they face.”

Mohamad Nasheed, for­mer pres­i­dent of the Maldives, told the New York Times that repay­ing the mas­sive debt would be an injus­tice.”

We are liv­ing not just on bor­rowed money but on bor­rowed time,” he said. We are under threat, and we should col­lec­tively find a way out of it.”

The Maldives, which has already started to expe­ri­ence the impacts of sea level rise asso­ci­ated with melt­ing polar ice caps as a result of cli­mate change, was among the many out­spo­ken island states denounc­ing the global lack of action at the event.

Vanuatu, Samoa, Fiji and Palau are among the many other V20 mem­bers shar­ing the same urgency and lament­ing sub­stan­tial inac­tion by wealth­ier nations.

See Also:A Plan to Decarbonize Europe

Climate change has already elim­i­nated one-fifth of our wealth,” Nasheed said. In other words, V20 economies would be 20 per­cent wealth­ier today had we not been suf­fer­ing the daily toll of cli­mate loss and dam­age.”

In aggre­gate dol­lar terms, this is half a tril­lion in losses. And for the most at-risk coun­tries, eco­nomic losses exceed half of all growth since 2000,” he added. For the most at-risk V20 economies, the loss exceeds total growth.”

We are expe­ri­enc­ing losses and dam­ages from the cli­mate emer­gency every day, and yet we have con­tributed the least to emis­sions,” Nasheed con­tin­ued.

Since the COP21 meet­ing in Glasgow, how to deal with the dis­pro­por­tional costs of dam­age caused by extreme weather events linked to cli­mate change has been dis­cussed exten­sively, with no con­crete agree­ments reached.

One of the rea­sons for the lack of con­sen­sus is richer coun­tries fear that com­pen­sa­tion could be asso­ci­ated with lia­bil­ity for the pro­duc­ers of largest quota of green­house gas emis­sions.

Loss and dam­age is an expres­sion indi­cat­ing the impact of human-made cli­mate change, hit­ting peo­ple all over the world,” Saleemul Huq, direc­tor of the International Center for Climate Change and Development, told the Climate Brief.

Damages refer to things that can be restored, such as dam­aged houses, while losses refer to what is com­pletely lost and will never come back, like human life,” he added.

At the con­clu­sion of the meet­ing, the V20 expressed grave con­cern at the fail­ure of the G7 and G20 to align their poli­cies with Paris Agreement goals, fur­ther expos­ing the fifty-eight (58) V20 economies to mul­ti­ple and cas­cad­ing risks now and in the future.”



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