G20 nations need to act on debt
The world’s most climate-vulnerable countries urgently need debt relief.
G20 nations are raking in billions of dollars in external debt payments from some of the world’s poorest countries, according to new analysis by IIED.
The analysis uses the latest available data from the World Bank’s International Debt Statistics Database, covering 60 countries the United Nations classifies as either least developed countries (LDCs) or Small Island Developing States (SIDS).
Note: All data comes from the World Bank's International Debt Statistics Database and represents estimated debt servicing payments on public and publicly guaranteed external debt owed bilaterally to G20 countries. It covers 60 countries that are members of either the Small Island Developing States (SIDS) group or the Least Developed Countries (LDCs) Group.
The data shows estimated repayments have been steadily rising over the past few years:
- 2020: $12.8 billion
- 2021: $12.4 billion
- 2022: $14.8 billion
- 2023: $25.3 billion
While the 2023 data in The World Bank International Debt Statistics Database should be considered highly provisional – and will likely be revised in the coming years due to a range of factors including changes in terms and repayment schedules – it indicates the growing debt burden facing these countries.
According to the data, G20 nations held a total of US$157.9 billion in bilateral LDC and SIDS debt by the end of 2022. A year earlier, the figure was $155 billion.
This is in addition to the debt owed to 19 multilateral organisations – such as the World Bank and International Monetary Fund – of which G20 nations are majority stakeholders. It finds that debt owed to these 19 organisations from LDCs and SIDS was estimated to sit at $141.5 billion by the end of 2022, up from $131 billion the year before.
This data only covers selected G20 multilateral organisations and is not a comprehensive look at the multilateral landscape, meaning that debt levels are likely higher. And neither of these figures include the debt holdings of private creditors based in G20 countries, such as commercial banks.
Given that many of these countries are already in debt distress or teetering on the edge, IIED is calling on G20 nations to urgently reform how the international financial system treats those most in need.
IIED director of sustainable markets, Laura Kelly, said: “Growing levels of debt are preventing some of the world’s poorest countries from adapting to climate change. Many of these countries are on the frontlines of the climate crisis – a crisis they did very little to cause.
“Meanwhile, the G20 is a roll call of some of the world’s biggest polluters. These countries are responsible for the lion’s share of the planet’s historical emissions.
“As negotiations continue on a new climate finance deal, it’s important to realise it’s not just the amount of money that’s important but also the quality of that funding and how it’s provided.
“Unfortunately, the globally financial system is often stacked against the world’s poorest countries. That’s why whatever climate deal is hammered out in Baku needs to be accompanied by a broader package of reforms that addresses some of the systemic issues.”
IIED has recommended a range of instruments that could help get money to where it matters most, especially for the most indebted countries. This includes debt-for-nature swaps, greater use of pause clauses, parametric insurance, or even outright cancellation of debt where appropriate. There should also be a greater focus on grants – rather than loans – when it comes to climate finance for the poorest countries.
For more information or to request an interview, contact Simon Cullen:
+44 7503 643332 or [email protected]
