nestar phakati’s Post

⚡Just in: A NEW report commissioned by the governments of Colombia, Kenya, France, and Germany lays bare the devastating effect of debt burdens for many vulnerable low-income countries. The Expert Review on Debt, Nature, and Climate reveals the extent to which unsustainable debt burdens, loss of in nature, and escalating climate change are compounding one another in a hugely destructive '‘triple crises''. Ali Mohamed, Special Envoy for Climate Change-Executive office of the President of Kenya & Chair of African Group of Climate Negotiators says: “This interim report highlights the inescapable reality that we cannot address the climate crisis without tackling the growing burden of debt. Vulnerable nations are caught in a cycle of borrowing to recover from climate disasters, further straining their economies. It’s time for the global community to come together, not just to restructure debt, but to recognize that investments in nature and climate resilience are fundamental to long-term economic stability. Our goal is to turn this vicious cycle into a virtuous one, where sustainable investments lead to prosperity and resilience, rather than debt distress.” ➡️ For more information, see the full report: https://lnkd.in/dnCiCP_w Center for Global Development, BNP Paribas, University of Massachusetts Amherst, World Resources Institute, Utrecht University, Boston University Global Development Policy Center, Inter-American Development Bank, CEB - Council of Europe Development Bank, Institute of Finance and Sustainability (IFS), Bruegel - Improving economic policy, Council on Foreign Relations, Resilient Earth Capital, Universidad de Los Andes, Universidad Internacional del Ecuador, The Liquidity and Sustainability Facility (LSF), LBBW 

A great Tuesday morning! What a day! If you don’t know what " climate-sovereign debt doom loop" is, then this is a post for you! Not one country is on track for a 1.5C future based on 2030 national pledges for cutting emissions, according to the Assessing Sovereign Climate-related Opportunities and Risks Project. Climate risks increase the cost of debt, making debt servicing more difficult. At the same time, climate-related damages reduce fiscal space, making it difficult to secure debt financing for mitigation or adaptation policies to reduce climate risks. A doom loop emerges, with low-income countries particularly vulnerable.  What’s more, the review of 70 countries’ emissions and policies shows “no overwhelming trend” that wealthier countries are doing a better job of tackling climate change.  Investors largely agree that climate risks aren’t fully priced into markets, and academics are now studying what they’re calling the climate-sovereign debt doom loop to calculate the potential costs to countries. The 70 targeted for review make up 100% of the three main sovereign debt bond market indexes, according to the report.   The report’s authors concluded that more than 80% of wealthy countries aren’t contributing their proportional share of an annual $100 billion international climate finance goal, which was increased to $300 billion at the COP29 climate summit in Baku. Have a great debt doom loop Tuesday! https://lnkd.in/dZ7nrNRY

Climate negotiators are currently meeting in Bonn (#SB60) to discuss climate finance. Debt distress is restricting the ability of countries to scale up climate action. 21 former finance chiefs call for revamping the G20 Common Framework for Debt Treatment and beyond so that countries can focus on development and climate change. #COP29 #climatefinance https://lnkd.in/dW5PRiiU

The amount of finance required to meet their debt payments has also increased. In 2022, developing countries spent $443 billion to service their public debts, according to the World Bank’s International Debt Report. This number will be overtaken soon, as 2024 is projected to be the costliest debt service year yet this century, according to the *Debt Relief for Green and Inclusive Recovery*, which focuses on the linkages between debt distress and climate change. #climate #climatechange #ndrmf #nyccc #budget

According to a new report from the Debt Relief for Green and Inclusive Recovery (DRGR) Project, the world will need to spend $3 trillion a year to achieve the climate goals outlined in the Paris Agreement and the UN 2030 SDGs. #DRGR #developingnations #climategoals #SDGs #EMDE #investments #financing

Today, Treasury Secretary Janet Yellen called on global financial institutions and creditors to expedite debt relief for low- and middle-income countries—an important step given the urgency of the moment. Debt burdens are one of the greatest obstacles to climate adaptation and the energy transition. Currently, 3.3 billion people live in nations that spend more on debt interest than on healthcare or education. This leaves fewer resources to build climate resilience, adapt to climate impacts, or invest in renewable energy. In a conversation with New America Planetary Politics Senior Fellow Martha M., Laura Kelly from the International Institute for Environment and Development (IIED) shared insights on the interplay between debt burdens, development challenges, and innovative solutions that could both alleviate debt and drive a net-zero future. It’s time for collaborative strategies that promote sustainable development while tackling the climate crisis head-on.

Some of the world's poorest countries are spending a lot more on debt repayments than they're getting in climate finance. And it's getting worse. New figures from International Institute for Environment and Development (IIED) show that in 2022, the 58 countries in the analysis spent US$59 billion servicing their debts compared with the $28 billion they received in climate support. (It's worth pointing out that about half the climate finance is provided as loans, not grants). Every time these countries are hit by a climate disaster (think Hurricane Beryl tearing through the Caribbean, or devastating flooding in Bangladesh), they're forced further into debt, meaning they have less money to invest in climate resilient infrastructure. And many of these countries are the same ones who've done the least to contribute to climate change. This is why International Institute for Environment and Development (IIED) believes that debt/finance and climate are two issues that need to be dealt with together. Read more ⬇️

African environment ministers convened at the African Ministerial Conference on the Environment (AMCEN) to address urgent climate finance needs. Current funding of approximately $30 billion falls drastically short of the $277 billion required annually to achieve 2030 climate goals. The African Group of Negotiators on Climate Change, advocated for a new global climate finance target of $1.3 trillion per year by 2030, moving away from reliance on loans that exacerbate debt burdens. Many African nations face severe debt crises, with debt servicing consuming significant portions of government revenues, limiting their ability to invest in essential services and climate initiatives. To secure a sustainable future, African leaders need to prioritize investment in energy infrastructure, enhancing energy efficiency, and developing robust climate adaptation strategies. These efforts are crucial for positioning Africa as a leader in the global energy transition and the shift to a low-carbon economy. 🌐 https://lnkd.in/dbec-UgJ. #ClimateAction #AfricaResilience #SustainableDevelopment #ClimateFinance #RenewableEnergy #COP29 #ClimateGoals #Côted’Ivoire

🌿 Did you know that debt-for-nature swaps could unlock an incredible $100 billion for climate action? A recent report by the IIED sheds light on this game-changing opportunity. 🌎 Success stories: Countries like Belize, Ecuador, Barbados, Gabon, and Cabo Verde have already made strides with debt swaps, showcasing the transformative impact on both their economies and ecosystems. 💡 While these countries collectively owe $431 billion in debt, they received less than $14 billion in climate finance according to OECD figures from 2021. 💼 Urging action: As the IMF and World Bank gear up for their Spring meetings, it's crucial to consider more debt swaps to help vulnerable nations like Pakistan, Sri Lanka, Ghana, and The Gambia. 📈 Takeaway: By creating fiscal space for governments and supporting global climate efforts, debt-for-nature swaps offer a win-win solution for both finance and the environment. 💚 #ClimateAction #DebtForNature #Sustainability #DecadeofAction The Transformation Alliance H&Z Management Consulting https://lnkd.in/epwZg4Vs

We were invited to the G20 IMF/WB Sovereign Debt Roundtable to discuss how to address the twin crises of #debt and #climate. With Maia Colodenco we argued for the need of a Sustainable Financing Strategy for the Green Transition.  The twin challenge of debt and climate crises that developing economies are currently facing requires large-scale, up-front investments that allow countries to implement a well-designed climate action to boost economic growth. Focusing solely on ex-ante and ex-post debt instruments is not enough to overcome it.  Read our paper below 👇 : https://lnkd.in/dfKRB9e5 https://lnkd.in/dBw_wz9e