A tale of two emergencies - the interplay of sovereign debt and climate crises in the global south
Our latest report focuses on the climate emergency and how it has become a wider focus of policy discussions around debt, as extreme climatic events and environmental hazards increase both the cost of borrowing and the risk of debt crises in countries in the global south that are often already bearing large external debt stocks.
Read the report in English, Spanish, Portuguese and French.
The climate emergency has become a wider focus of policy discussions around debt, as natural disasters increase both the cost of borrowing and the risk of debt crises in countries in the global south that are often already bearing large external debt stocks. Similarly, unsustainable debt levels can mean less fiscal space and opportunities to face the challenges of adaptation and mitigation, as well as to recover from loss and damage after a climate disaster. In this context, the need to transition globally towards a more sustainable and equitable economy will not be possible without sustainable, responsible and fair climate finance, as well as finance for transition that does not exacerbate debt vulnerabilities in the global south. In a nutshell, climate justice will not be possible without economic and debt justice.
This briefing constitutes Eurodad’s first general approach to how sovereign debt dynamics interact with climate finance and climate crisis impacts in the global south and vice-versa. The main objective of this analysis is to support Eurodad members and partners in their strategies and actions both on debt and on climate, by providing a general overview of the interactions between both dynamics. The briefing not only looks at issues that are relevant to the interrelation between indebtedness and climate vulnerabilities in the global south, analysing how climate crises exacerbate debt vulnerabilities but also how existing debt vulnerabilities weaken countries’ capacity to deal with the climate emergency.
It also specifically looks at the cumulative impacts of climate and debt crises on women’s rights and gender justice. Finally, the briefing analyses the shortcomings of some of the current climate finance approaches and mechanisms in relation to the risks they pose to climate resilience and debt sustainability. The briefing also outlines some policy recommendations that could help countries in the global south deal with the interconnected impacts of sovereign debt and climate crises in a more fair and sustainable way.
Click here to read the full report.