Climate-vulnerable countries will spend nearly 25 times more on debt — MyJoyOnline
In Ghana, MyJoyOnline reported that in 65 countries considered particularly vulnerable to climate change, debt-servicing costs in 2026 will be nearly 25 times higher than spending on climate action. These estimates were presented in a report by ActionAid and Development Finance International (DFI).
The authors of the study, “Debt Fuels the Climate Crisis: How the Finance Flows,” analyzed data on domestic revenues, sovereign debt, national budgets and climate plans in 65 countries. According to their calculations, total payments on external and domestic debt in 2026 will be nearly four times higher than spending on education, nearly seven times higher than spending on healthcare, and nearly six times higher than spending on social protection.
Debt and climate spending
On average, the countries covered by the report allocate 65% of national revenues to debt servicing. At the same time, they can budget for only 48.9% of the costs of implementing unconditional nationally determined contributions (NDCs) on average.
ActionAid and DFI described the relationship between climate vulnerability and debt as a “vicious cycle.” According to the report, floods, droughts, cyclones and heatwaves increase financial pressure on states and force them to borrow money for recovery and reconstruction.
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At the same time, debt obligations can lead to severe budget austerity and limit spending on disaster prevention, climate change adaptation, resilience-building and the transition to a greener economy. The report also warned that the need for foreign currency to make payments to creditors may deepen countries’ dependence on exports of fossil fuels and industrial agriculture.
Examples and proposals
According to the report, 70% of Malawi’s state budget in 2026 will be directed toward debt payments, while their amount will equal 129% of government revenue. Zambia is projected to spend more than 60% of its budget on debt servicing, allocating 0.32% to climate action.
In Senegal, debt-servicing costs exceed climate spending by more than 600 times; in Mozambique, by 117 times; and in Bangladesh, by 184 times. In Bangladesh, debt payments also account for nearly 73% of the budget, the study said.
The organizations call for the cancellation of debts that cannot be repaid or that they consider unjust, and for external debt payments for climate-vulnerable countries to be capped at no more than 10% of national revenues. Other proposals include automatically suspending debt servicing for at least five years for states affected by major climate disasters, as well as increasing the amount of grant-based climate finance.
