Desk Report: Bangladesh, already grappling with a growing external debt burden, is owed an astounding $5.8 trillion in climate debt by wealthy, high-polluting nations, according to a report released this month by ActionAid. The report, titled “Who Owes Who?”, calls for urgent debt cancellation and greater financial justice on the global stage.
The $5.8 trillion figure represents the historical and projected atmospheric appropriation by wealthy nations since 1992, based on low-range estimates, highlighting an enormous imbalance in global debt obligations. The report stresses that while low- and middle-income countries continue to struggle with massive debt repayments, high-income countries evade their financial obligations related to climate damages and reparations.
As the global debt crisis deepens, 54 countries, including Bangladesh, face a critical situation where essential services and climate actions are being slashed to meet external debt repayments. Bangladesh’s external public sector debt stood at $84.44 billion as of September 2024, with $4.77 billion paid to creditors in 2023. This has forced the country to divert resources away from public services to service its debt, despite being one of the most vulnerable nations to climate change.
In 2024, Bangladesh allocated just 3.08% of its national revenue to health and 11.73% to education, while a significant 16.9% was spent on external debt repayments. ActionAid’s Bangladesh Country Director, Farah Kabir, emphasized the need for debt cancellation and freedom from the “colonial debt structures” to tackle both the ongoing debt crisis and the climate emergency.
The report also highlights that lower-income countries collectively paid $138 billion in debt servicing last year, sacrificing vital sectors like health, education, and sustainable development to satisfy wealthy creditors. At the same time, these nations continue to face the financial burden of climate change, exacerbating inequality.
The global debt owed by wealthy, high-polluting nations for climate-related damages and obligations totals $107 trillion, more than 70 times the total external debt of low- and middle-income countries, which stands at $1.45 trillion.
ActionAid calls for debt cancellation and reparations for climate damages as part of global efforts to address both the financial and climate crises. The report also stresses the disproportionate impact of climate change on women and girls, urging global leaders to unite in demanding urgent action.
The findings of this report reinforce the pressing need for structural changes in the global financial system to address the twin crises of debt injustice and climate change, as Bangladesh and other vulnerable nations continue to bear the brunt of an unjust financial system.