Debt Costs Overshadow Climate Finance In Small Island Statesreport

Debt Costs Overshadow Climate Finance In Small Island Statesreport

LONDON, 11 Oct (Reuters) – Small island developing countries, hard hit by climate change and often in debt, are spending at least 18 times what they owe on climate finance.

A report by the European Debt and Development Network (Eurodad) found that 37 island and coastal countries, home to around 65 million people, received a total of $ 1.5 billion in climate finance between 2016 and 2020.

Yolanda Fresnillo, one of the authors of the report, writes that countries from the Dominican Republic to Samoa "urgently need to increase their financial capacity to face multiple challenges and crises".

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Eurodad's report, which includes more than 50 NGOs, says 22 countries returned more than $ 26.6 billion to their foreign creditors over the same period.

According to the report, the level of the islands' public debt has risen from an average of 66% of gross domestic product in 2019 to nearly 83% in 2020 and will remain above 70% until 2025.

Other countries have sought assistance from the International Monetary Fund, with the number of countries with programs increasing from three in 2019 to 20 in 2020 and 2021.

In June, the foundation's board of directors approved a $ 60 million program for Cape Verde, and Barbados signed a $ 293 million deal in late September.

The report says more than 80% of the islands are in debt, according to the IMF and World Bank's debt sustainability analysis or criteria set by civil society groups Debt Justice UK and Jubilee Germany.

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This week, as policymakers from around the world gather for the annual IMF and World Bank meeting in Washington through October, the debate will be on how to support small and fragile economies facing the fallout from COVID-19 and of Russia. war in Ukraine. sixteen.

However, while Treasury Secretary Janet Yellen made debt restructuring a top priority, senior Treasury officials said Tuesday that they do not expect any major progress on debt this week.

Some researchers also note that decision making at the IMF has run into difficulties. They say the quota system, which is based on the size of the economy, means that low- and middle-income countries, which are more likely to borrow, have little influence on the decisions of lenders.

"When poor public finances spend more on debt service than investment to build a more resilient economy, countries will enter a debt cycle exacerbated by an unsustainable climate," writes Lara Merling of the Climate Policy Center. Boston University "Global Development Studies" article. was released on Tuesday.

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Reporting by Karin Stroker and Andrea Shallal from Washington. Curated by Michael Perry and Tomasz Janowski

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President Biden and Vice President Harris speak at the Climate Leaders Summit – April 22, 2021

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