The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
Relieving poor countries of their debt burdens and creating innovative financial instruments could help free up more than $400 billion to help people suffering the most from warming temperatures, according to a new study.
Immediate debt relief would unlock about $105 billion that could be directed toward mitigating climate change and preparing developing nations for its effects, the London-based International Institute for Environment and Development (IIED) said. And more than three times that amount could be raised by linking new debt to climate goals, such as through sustainability linked bonds.
A major issue in international climate diplomacy is how to ensure that poor countries have enough money to address the climate change they did little to create. The conundrum likely will dominate talks at the United Nations’ COP27 conference this year, especially as developing nations grapple with soaring debt and stalled growth in the wake of the coronavirus pandemic and Russia’s invasion of Ukraine.
“The climate, nature and debt crises are interlinked macroeconomic crises, and addressing one aspect without also addressing the others is unsustainable,†researcher Sejal Patel wrote in the report.
The IIED identified 58 countries in, or at high risk of, debt distress that could benefit from climate-linked initiatives. Nearly four-fifths of the possible relief would be for countries in sub-Saharan Africa that currently hold almost $350 billion in debt.
Loss and damage — jargon used to highlight the money needed by poorer countries to recover after climate-related disasters — is set to be a central topic of negotiations at COP27 in Egypt. Preliminary talks last month ended with a lack of progress, as rich nations blocked attempts to secure compensation.
Rich countries have failed to live up to their commitment to provide $100 billion in climate finance annually to poor countries. And the amounts that are needed have been estimated to be many times that, with developing countries saying the figure is closer to $1 trillion.