Countries most vulnerable to climate change are spending nearly 25 times more on debt repayments than on climate action, according to a new report by ActionAid International.
The report, Debt Fuels the Climate Crisis: How the Finance Flows, says debt servicing is absorbing about 65 percent of combined government revenue in the 65 most climate-vulnerable countries.
It also finds that 93.5 percent of these countries are either already in debt distress or at significant risk of falling into debt distress.
According to ActionAid, the Global South is expected to pay about US$8.8 trillion in debt repayments in 2026, compared with just US$39 billion in grant-based climate finance received in 2024.
The report was released on September 16, 2026, during Global Week of Climate Action, which runs from September 14 to 20.
The report argues that the debt burden is restricting governments’ ability to invest in climate adaptation and resilience, leaving communities increasingly exposed to floods, droughts, extreme heat and food insecurity.
ActionAid International Secretary-General, Arthur Larok, says the debt and climate crises cannot be treated as separate issues.
“For too long, the debt and climate crises have been treated separately. This research exposes how tightly they are connected and quantifies the devastating cost involved.”
He says action on debt could unlock significant resources for countries facing the worst impacts of climate change.
Debt and climate crisis linked
The report describes a cycle in which climate disasters force vulnerable countries to borrow to finance recovery, while debt repayments and austerity measures subsequently reduce funding available for climate adaptation, public services and economic development.
ActionAid says pressure to generate foreign currency to service external debt can also encourage governments to expand fossil fuel extraction and industrial agriculture, potentially contributing to further environmental degradation and emissions.
Teresa Anderson, Global Lead on Climate Justice at ActionAid International and one of the report’s authors, describes debt as a “triple whammy” for climate-vulnerable countries.
She says countries are borrowing to rebuild after climate disasters, while austerity measures weaken their resilience and debt repayment pressures can encourage further resource extraction.
ActionAid is therefore calling for the cancellation of unjust and unsustainable debt and for climate finance to be provided primarily through grants rather than loans
ActionAid Ghana calls for debt cancellation
In Ghana, ActionAid Country Director John Nkaw is calling for major reforms to the international debt system.
He argues that the existing debt architecture disproportionately constrains developing countries and is calling for what he describes as semi-automatic debt cancellation for countries spending more than 10 to 15 percent of their revenue on unjust debt servicing.
“This would free up public resources for climate-resilient and sustainable agriculture, renewable energy, a just transition and investment in the care sector,” he says.
Mr. Nkaw also called for increased adaptation finance for developing countries, arguing that vulnerable countries cannot afford to wait for climate-polluting nations to act.
Calls for global debt reform
ActionAid and its partners are calling for a number of measures to address the debt and climate crises. These include:
Cancelling unpayable or unjust debt for countries spending more than 10 percent of their revenues on external debt repayments; Suspending debt payments automatically for countries hit by climate disasters, across all categories of creditors; Establishing a UN Framework Convention on Sovereign Debt to provide indebted countries with a greater role in debt-resolution processes; Requiring private creditors to participate meaningfully in debt restructuring; Reforming credit-rating systems to address perceived conflicts of interest and bias and Providing climate finance as grants rather than loans or other debt-creating instruments.
Other calls include Reforming debt-sustainability assessments to take climate action, public services and human rights into account and Conducting public debt and climate audits in countries facing debt crises.
By Richard Bright Addo
