Kate Aronoff in The New Republic (Image: Ahmed Shurau/ Getty Images):
As the United States and the world lurch toward a recession, the poorest and most vulnerable countries face a seemingly impossible set of circumstances. The group of 58 climate-vulnerable countries known as the V20 have lost 20 percent of their combined gross domestic product this century due to climate damages, according to a recent report. Meanwhile, these poorer countries also face rising food and commodity costs, the devastating effects of Covid-19, and ongoing vaccine apartheid. As the Federal Reserve moves to raise interest rates in the name of combating inflation, V20 nations appear to be reaching a breaking point. “The climate crisis is the debt crisis,” said Sara Jane Ahmed, finance advisor to the V20.
Ahead of a meeting of V20 finance ministers that began this week in Geneva—scheduled to occur on the heels of International Monetary Fund and World Bank meetings in Washington—former Maldives President Mohamad Nasheed suggested countries in the bloc might stop making payments on the $686.3 billion they owe, accounting for nearly 30 percent of those countries’ combined GDP. It’s an indicator of just how dire circumstances have become. And it ought to be a wake-up call for rich countries to put serious debt relief back on the table.
The numbers are stark: Fifty-five V20 countries are due to pay back $435.8 billion over the next six years, researchers at Boston University’s Global Development Policy Center have found. The IMF has warned that 60 percent of low-income countries overall are now either in or at high risk of debt distress. Troublingly, the institution also recently predicted that “the worst is yet to come” for the global economy. A separate IMF working paper found that just seven of 29 low-income countries in need of additional financing for climate adaptation have the necessary fiscal space to make those investments.