Action Fund

Dear ActionAid Supporter,

Nepal is paying the price of global warming even though the country contributes less than 0.1% of global emissions. That's what ActionAid Nepal's country director said after a glacier collapse triggered a flash flood that swept through villages this August. The government estimates recovery will cost $5 billion.

It's not just Nepal. Our new report, Debt Fuels the Climate Crisis found that 93.5% of the world's most climate-vulnerable countries are already in debt crisis or at serious risk of one. For these countries, debt crises often occur when they are forced to borrow from foreign governments (or private-sector financiers) to respond to crises like the COVID pandemic, climate disasters, or conflicts. They must then spend precious taxpayer money repaying debts instead of spending on basic societal needs like health care and education – or climate action. These are the same countries facing the worst floods, droughts, and cyclones, and they're being forced to spend nearly 25 times more repaying old debt than they spend on climate action.

Here's the root of it: when a climate disaster hits, governments borrow to rebuild, often at high interest rates and on short timelines. To keep up with those payments, many are pushed to expand the same fossil fuel and industrial agriculture exports driving the crisis in the first place. Debt doesn't just follow climate disasters. It fuels the next one.

In Malawi, 70% of the national budget will go to debt repayment this year, while just 10.3% of what the country needs for its own climate plan is funded. In Zambia, the government is spending over 60%, on debt repayment, while just 0.32% of the government budget reaches climate programs. In Nepal, debt repayments already eat up nearly a third of government revenue, while the country tries to recover from a glacier collapse and flash flood that will cost at least USD $4.7 billion. The issue is clear: the global financial system is built to extract wealth from the countries that did the least to cause this crisis. 

The roblem is not unfixable. Canceling unjust debt could free up enough money to fund climate plans in vulnerable countries six times over. That is what we are calling for: letting frontline communities invest in their own future instead of sending it abroad in interest payments. 

Read the full findings and what needs to happen next.