By Jay Wu
Developing countries suffering the brunt of COVID-19’s economic impact have scant resources to confront climate change. We must call on the IMF and World Bank to provide Debt Relief for a Just and Green Recovery.
The pandemic ravaged low-income nations’ economies, erasing the equivalent of 255 million full-time jobs in 2020 and setting back economic growth by 4.9% compared to pre-pandemic projections. For populations that won’t achieve meaningful vaccine access until 2023, waves of COVID strains will continue to stymie economic activity, exacerbating the already high levels of debt service. In 2021, average debt is expected to reach 61% of GDP in emerging market countries excluding China.
Meanwhile, many of the countries hit hardest by COVID-19 also face daunting adaptation and damage costs associated with climate change. Investing $1.8 trillion this decade in climate adaptation would yield an estimated 300% return in social, economic, and environmental benefits, but for developing countries, accessing such capital for resilience will be a challenge. Meanwhile, substantial losses are inevitable regardless of adaptation and mitigation measures. Even under the most optimistic carbon emission scenarios, the vast majority of coral reefs—critical for local tourism, fishing operations, and coastal protection—will disappear by 2050.
To simultaneously tackle debt and climate costs, US-based climate justice advocates should build Debt Relief for a Just and Green Recovery campaigns. Specific demands should include calling on the IMF and World Bank to perform a Debt Sustainability Analysis that includes climate risks and resilience costs, followed by offering debt relief programs outlined in the Debt Relief for a Green and Inclusive Recovery report. Advocates should note that proposals conditioning relief eligibility on adoption of debt transparency practices or green recovery strategies may be controversial both for domestic civil society actors opposed to Global North paternalism and international debtors who prefer aid with no strings attached.
International debt relief campaign narratives can adopt strategies from recent domestic debt justice movements, which have called attention to rental arrears, student loans, taxi medallions debt, and more. The many polls indicating US public support for providing international climate finance to developing countries, will be powerful tools for applying pressure on key federal stakeholders who influence decision-making at the IMF and World Bank.
While the debt crisis feared in 2020 is no longer a frequent topic of international news, it hasn’t been averted—just deferred to a later date through increased lending by creditors and cuts in public spending by debtors. Without a recovery plan that challenges IMF and World Bank austerity, this house of cards will eventually collapse. It’s time to implement Debt Relief for a Just and Green Recovery.
