Liberia is among 11 countries along with Sierra Leone that are the most vulnerable in the world and have the fewest resources in terms of domestic fiscal space and international support to fight climate change, a new report published March 21 said.
The external bet of these countries should be waived in a debt-for-adaptation swaps scheme to placed them in readiness to build climate resilience, the researches – Chetan Hebbale a Graduate Research Assistant at the Initiative for Sustainable
Energy Policy at Johns Hopkins University School of Advanced International Studies and Johannes Urpelainen -Nonresident Senior Fellow at the Center on Regulation and Markets, suggested.
“Rather than exclusively focusing on conservation, recipient countries who have debt forgiven should direct those funds towards climate adaptation activities, with a focus on building resilience against sea level rise, flooding, droughts, and
“This would be a uniquely powerful tool to enable emerging and developing economies to climate-proof both their economies and public finances.”
The most venerable countries have a total of $32 billion in external debt o bilateral and multilateral creditors. Liberia alone carries a share of $1 billion.
The report urged the United States to leverage its role as the primary funder of the IMF and World Bank to bring together the Paris Club creditors and get them serious about putting debt-for-adaptation swaps on the front-burner of the climate finance discussion, particularly for Chad, Sudan, Zimbabwe, Guinea-Bissau, Liberia, Tonga, Mauritania, Sierra Leone, Burundi, Ethiopia, and Afghanistan.
“These countries are the most vulnerable in the world and have the fewest resources to deal with it. The U.S. should advocate for the inclusion of debt forgiveness towards the annual $100 billion climate finance goal set by developed countries. This will motivate other developed-nation debt holders to also pursue bilateral debt-for-adaptation swaps.”
Former President Ellen Johnson Sirleaf has welcomed the report.“Climate change is disproportionately affecting the global south, particularly women and girls and will continue to do so,” she twitted Thursday.
“I urged leaders to take this report seriously and make a change.”
African finance ministers meeting in the Ethiopian capital Addis Ababa have agreed to consider swapping debt to invest in climate action.
Egyptian finance minister Mohamed Maait said that his country is one of many that is now having to add heavy climate coststo budgets stretched thin by external debt — which takes up to 17% of countries’ spending in some cases — and other basic needs.
“What am asking every day and every hour is where do I get the money to protect our people from climate extremes,” Maait said as reported by the Associated Press adding that borrowing was often the only option for some nations.
Yet “many countries simply cannot access international financial markets because of rising interest rates,” Hanan Morsy, the chief economist of the U.N. Economic Commission for Africa told the roundtable Monday evening. Morsy added that private sector investments in climate finance are lower in Africa than in any other part of the world.
Ministers also discussed bonds that would help increase private financial flows as well as “blended finance” models that would combine development funds and private capital as potential solutions for climate funding.
In 2022 the International Monetary Fund established a $50 billion climate loan pot to help low and middle-income nations access affordable and longer-term financing to respond to shocks associated with climate change. Rwanda became the first African nation to receive a loan of $319 million.
But another $50 billion pot pledged by the World Bank is only sending around 5% of its funds to the ten most climate vulnerable countries, according to a recent study by the Center for Global Development.
– Festus Poquie with AP filing on ministers’ meeting