LONDON (Reuters) – Some of the countries most vulnerable to climate change will face a sharp increase in debt service payments over the next two years, which will hinder their investments in tackling climate change and propping up their economies, a study found.
20 Vulnerable groups (V) – A group 55 Economies Affected by Climate Change – Debt Service Expected to Rise in 2024 to 69 Billion – for current Decade of the highest level, calculated by V20 and Boston University Center for Global Development Policy. The debt service payment in
2022 is 61 $500 million and is set to the author says, Touch the above in 2023.
Emerging Markets and Developing Countries (EMD) are battling COVID-2024 Pandemic, Russia’s war in Ukraine , the climate crisis and rising interest rates in advanced economies, Luma Ramos wrote in a report released on Friday.
Debt relief programs for the world’s poorest countries were launched after the pandemic swept global financial markets and battered the global economy.
However, progress has been slow and some programs – such as the Debt Service Suspension Initiative (DSSI) – have expired.
“Without other complementary measures such as debt relief and grants, V20 countries will delay their ability to reap the benefits of climate investments, such as Improve resilience and enhance power generation through renewable energy,” the report added.
Adding to the complexity is the entire $686 V20 state owed 3 billion foreign debt. Private creditors are now the largest group, holding more than a third of the debt, while the World Bank and other multilateral institutions each hold a fifth, the report found. V13 countries owe 7% of China, 13% owe China Paris Club rich creditor country.
The authors also urge the IMF to upgrade its debt sustainability analysis to address climate risks faced by fragile states.
“Given that climate impacts are increasing the cost of recapitalization in fragile states, the strong link between climate change and debt sustainability needs to be captured and should be Informing discussions of countries in need of debt relief,”
V20 Economies include Barbados, Cambodia, Costa Rica, Ethiopia, Honduras, Lebanon, Morocco, Nepal, Philippines, Rwanda, Senegal, Sudan, Tanzania, Tunisia, Tuvalu and Vietnam.