Simon Cullen’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 

📢 NEW Report! 📚 The interim report from the Expert Review on Debt, Nature, and Climate has just been released, drawing attention to the alarming ‘triple crisis’ of 📈soaring debt, 🌱declining nature, and 🔥increasing climate impacts. Commissioned by Colombia, Kenya, France, and Germany, this report highlights how vulnerable low- and middle-income countries are caught in a vicious circle of rising debt and intense climate shocks, hindering investments in climate resilience and sustainable development. 🌟 Ultimately, this 'vicious circle' means there is no addressing the climate crisis without addressing the debt crisis 📊 Key Findings include: ➡️ Nations are forced to borrow more for disaster recovery, worsening their debt situation.  ➡️ The current Debt Sustainability Frameworks of the World Bank and IMF fail to address the interconnectedness of debt, climate, and nature loss.  ➡️ Urgent reforms are needed to create a more sustainable fiscal environment. The report emphasizes that a ‘virtuous circle’ of inclusive and environmentally sustainable growth is achievable, but it requires strong domestic policies and international financial support. Vera Songwe and Moritz Kraemer, co-chairs of the Expert Review, urge the global community to unite in addressing these pressing challenges. 📚 Read the full interim report here ⬇️ 🔗 https://lnkd.in/dnCiCP_w #ClimateCrisis #DebtSustainability #SustainableDevelopment #WBGMeetings

Yesterday at #COP29 the World Bank announced that it was expanding its Climate Resilient Debt Clauses to include droughts and floods. However, the IMF is yet to announce debt pause clauses for its financing arrangements. But, it already has an instrument called Catastrophe Containment and Relief Trust that can provide debt relief to countries. Marina Zucker and I wrote up a policy brief on how the IMF could sell just 4% of its gold reserves to replenish the Catastrophe Containment Relief Trust https://lnkd.in/gc35bt6b More $$$ alone won't be enough though. More countries also need to be eligible to actually access the CCRT. Reuters summary of the brief here: https://lnkd.in/g5ZM9qvC

Sri Lanka could benefit from Debt-for-Nature Swaps (The International Institute for Environment and Development) IIED, suggests that debt-for-nature swaps could generate $100Bn to combat climate change. These swaps involve forgiving the debts of under developed nations in exchange for their commitment to protect ecosystems like barrier reefs and rainforests. The estimate is based on the possibility of such swaps occurring in many of the 49 less developed countries deemed most vulnerable to debt crises. Belize, Ecuador, Barbados, Gabon, and Cabo Verde, have already engaged in such swaps in recent years. Many debt-distressed countries, which are also severely affected by global warming, are exploring this option. According to data from the IMF and WB, the countries in focus collectively owe $431Bn, primarily to wealthier govs, IMF, pension funds, and hedge funds. They received less than $14Bn in climate finance in 2021, significantly below what is required for climate change mitigation and adaptation efforts. IIED aims to promote more debt swaps at the upcoming IMF and WB Spring meetings. Countries such as Pakistan, Sri Lanka, and The Gambia as potential beneficiaries. Gambia is vulnerable to sea level rise, requires substantial investment in flood prevention and wetland preservation. Ghana, currently restructuring its debt like Sri Lanka, is another suitable candidate. Protecting its rainforests could benefit Ghana's cocoa bean exports, crucial for the chocolate industry. The debt swaps not only create fiscal space for governments but also help achieve global climate and nature conservation goals. Many countries have expressed interest in exploring this option. https://lnkd.in/gt83SmhQ

Debt-for-nature swops could give $136 billion boost to climate fight, says report. LONDON - Debt-for-nature swops, in which poorer countries have debt written off in return for protecting eco systems such as barrier reefs or rainforests, could provide US$100 billion (S$136 billion) for the fight against climate change, a new report has calculated. The British-based non-profit International Institute for Environment and Development (IIED) based the estimate on the possibility of debt swops in many of the 49 less-developed countries seen as most at risk of debt crises. Belize, Ecuador, Barbados, Gabon and Cabo Verde have all done such swops in recent years and Ms Laura Kelly, the director of IIED’s sustainable markets research group, said many of those in debt distress and also often most threatened by global warming were looking at them. The IMF and World Bank, whose figures the analysis is based on, estimate the countries focused on collectively owe US$431 billion, mostly to wealthier governments, the IMF itself and pension and hedge funds. At the same time, these countries received less than US$14 billion in climate finance, according to 2021 figures from the Organisation for Economic Cooperation and Development, which is significantly less than they need to limit climate change or at least adapt to it. The aim of IIED’s report is to encourage a drive for more debt swops at the upcoming IMF and World Bank Spring meetings, which start later this week. Ms Kelly said countries that could benefit included Pakistan, Sri Lanka and The Gambia in West Africa, which is at “huge risk” of sea level rise, she stressed, and needs to invest heavily in flood prevention and wetland preservation. Ghana too, which like Sri Lanka is now restructuring its debt, is another obvious candidate. One of its key exports, cocoa beans used for chocolate, could thrive if more is done to protect its vital rainforests. “For governments (that do debt swops) it creates some fiscal space, but also it helps to achieve outcomes in terms of climate and nature that have global impact,” Ms Kelly said, adding that many countries were interested in potentially doing them. REUTERS https://lnkd.in/dPnk9-qg

Many Small Islands are past colonies.. and so suffer from chronic resource scarcity - largely due to past exploitation of their resources by colonizing powers ... with many of the latter being responsible for the ongoing increasing GHG emissions that create catastrophic climatic impacts --> which harm Small Islands such as hurricanes, storm surges etc --> that occur EVERY YEAR across regions like the Caribbean --- so its a continuous cycle of constant and increasing debt as these resource scarce nations - which apart from past exploitation, have been forced to into even further debt by having to seek consessional loans to clean up the almost yearly bouts of descruction (so no $ left for adapation or to adequately address basic needs such as healthcare) -- due to emissions being caused by many of their past colonizers ... yet adaptation financing remains scarce ... and global financing mechanisms remain fixed (for the most part) within archaic constructs developed when climate change was not a global concern ...how does this make any sense from a climate justice perspective? Caroline Mair-Toby Denyse S. D. Michelle Mycoo #climatejustice #decolonization https://lnkd.in/d5bN-5uK

👁️ DEBT SERVICE OF LDC´S TWICE AS HIGH AS CLIMATE FINANCE RECEIVED The International Institute for Environment and Development  (IIED) has analyzed the debt service and the climate finance received by 58 Least Developed Countries (LDCs) and Small Island Developing States (SIDS). Around 1.2 billion people live in these countries. Climate change is an existential problem for many heavily indebted LDCs and SIDS because they are so highly exposed to climate impacts yet have very little fiscal room to adapt. Some key findings from IIED’s analysis: - The 58 countries spent US$59 billion repaying debts in 2022 compared with $28 billion they received in climate finance. Of the $28 billion provided in climate finance in 2022, just over half ($14.8 billion) was provided as loans rather than grants. - For 26 countries, debt repayments in 2022 cost more than they received in total bilateral foreign aid (of which climate finance is a subset). IIED proposes, among other things: - Lower-income countries should be given easier access to money through grants and concessional finance. - There needs to be more comprehensive debt relief to support developing nations free up budget space for climate change adaptation. - Investors and government lenders should make greater use of debt-for-climate-and-nature swaps. #ClimateFinance #ClimateJustice #DebtForClimateAndNatureSwaps.

Yesterday, ODI hosted an event with The World Bank to discuss the issue of the rising debt repayments in SIDS with #CaboVerde Deputy PM Olavo Avelino Garcia Correia, World Bank VP Ed Mountfield, Gail Hurley Henry Mooney Mark Flanagan and Manuela Francisco   Our discussion came as Katie Surma of Inside Climate News reported on RESI's new work on the inequity of rising debt repayments, climate loss and damage and SIDS development, and why reforms to the international finance and debt architecture are needed.  With debt interest payments far outstripping their climate budgets, small islands' are struggling to find the funds to invest in vital services like health and education as well as prepare for climate change-driven events. Some early findings from our paper include:   ➡ Total external debt service payments over the past decade (2013 – 2022) amount to over $46 billion for 23 SIDS were data was available.  ➡ That’s three times the climate resilience finance flows, which stood at $12.7 billion for the same period.  ➡ Average debt payments now risk outstripping the entire annual average healthcare budget for a typical small island state ➡ With a number of SIDS owing 50% or more of their total debt to multilateral development banks, new action by the World Bank, including debt forgiveness clause for more severe disasters is urgently needed   Read the story on Inside Climate News. https://lnkd.in/evGsMUfT   The RESI paper on this is due out in May ahead of the #SIDS4 conference:    #SIDS #WorldBank #debt #climatefinance #climatechange #climateresiliance #climateadaptation #MDBs

https://lnkd.in/dMA4E_hq Climate spending may make emerging nations with high debt insolvent A further 19 developing countries lack the liquidity to meet the spending targets without help, though they would not approach default thresholds debt. The report called for an overhaul of the global financial architecture, alongside debt forgiveness for the most at-risk countries and an increase in affordable finance and credit enhancements. Emerging countries will pay a record $400 billion to service external debt this year, and 47 of them cannot spend the money they need for climate adaptation and sustainable development without risking default in the next five years, according to a report released on the eve of IMF/World Bank spring meetings.

DEBT AND THE ENVIRONMENT: FINANCING ECOCIDE Indebted countries have not just borrowed money — they have mortgaged the future. Nature puts up the collateral. The environment is a little-noticed victim of the debt crisis in the Third World, yet one day we shall all pay for the damage this crisis does to ecosystems. Our economies have short-time horizons at best: bottom lines register quarterly or yearly profits; budgets are annual; and, for a banker, three months can be a very long time. Each nation-state has a license to inflict damage on the planet as a whole, and global mechanisms for costing (much less stopping) this process do not exist. National economies, both socialist and capitalist, proceed, for the most part, as if there were no long-term costs for anything. There is no sense of solidarity with the future. Many neo-classical economists still flatly deny even the theoretical possibility of limits to growth and refuse the notion that pollution and environmental destruction should figure in their equations. Anything difficult to quantify simply gets left out. Since the IMF and the World Bank are peopled with neo-classical economists of strict observance, it is not surprising that their loans and adjustment programmes pay scant attention to ecological costs. It will be a long time before anyone can fully estimate exactly what these costs are (and by then it may well be too late), but there is already enough evidence to show clearly that the present road is not only wrong but stupid even in economic terms. The price of cleaning up the mess now being made in the Third World is going to be horrendous, and it can only be added to the present debt bill. In all too many cases damage will be irreversible. DEBT AND DESTRUCTION There are two debt/environment connections. The first is borrowing to finance ecologically destructive projects. The second is paying for them — and all the other elements of debt-financed modernisation — by cashing in natural resources. The two are necessarily intertwined. Many of the grandiose projects that helped to put Third World countries on the debt treadmill to begin with are environmental disasters in their own right. Mega-projects are part of the standard development model; they pay no heed to future penalties for present recklessness. Large dams and hydro-projects are typical examples, now admirably documented by Edward Goldsmith and Nicolas Hildyard.... Source : Ethica Institute of islamic finance #Debt #Climatechange #Ethicalfinance #Greenfinance https://lnkd.in/grfUyFcD