Converging debt and the climate crisis are hammering countries in the Global South, which have contributed far less to climate change than those in the Global North.
Egypt, the host of COP27, this year’s flagship UN climate conference, claims debt obligations are limiting its climate action, as 45% of its revenue is directed towards paying off loans. The country is far from alone – 53 others are also in need of immediate debt relief, according to the UN. The International Monetary Fund (IMF) also claims that about 60% of low-income countries are in or near ‘debt distress’.
Recent measures imposed by central banks in advanced economies are making these debt burdens even more acute. As countries such as the US hike interest rates to reduce inflation at home, it becomes even harder for lower-income countries to pay back their foreign debts, let alone invest in climate action.
