By Solomon Gumah
Tamale, Sept 17, GNA – Mr John Nkaw, Country Director, ActionAid Ghana has called for semi-automatic debt cancellation for developing countries spending more than 10 to 15 per cent of their national revenues on debt servicing.
He said semi-automatic debt cancellation would help to address historical inequalities associated with colonialism and contribute to the decolonisation of aid by creating fiscal space for developing countries to respond to the climate crisis.
He said the current global debt architecture appeared in colonial and required urgent reforms to free public resources for investment in climate-resilient agriculture, renewable energy, essential public services and other sustainable development priorities.
Mr Nkaw made the call in an interview with the Ghana News Agency (GNA) in Tamale while highlighting ActionAid Federation’s recent report dubbed: “Fund Our Future: Debt Fuels the Climate Crisis – How the Finance Flows”, produced in collaboration with Development Finance International.
He said the resources freed through debt cancellation could be redirected into climate-resilient and sustainable agriculture, expansion of renewable energy, a transition and transformation of the care sector.
He said developing countries needed more adaptation finance and could not continue waiting for climate-polluting nations to act on their responsibility to provide adequate resources to address the climate crisis.
The report highlighted the growing relationship between the debt and climate crises particularly how high debt burdens were limiting the ability of vulnerable countries to finance climate adaptation and build resilient communities.
It said debt was a major but fixable barrier to climate action with highly climate-vulnerable countries spending a disproportionately large share of their public resources on debt repayments rather than climate adaptation, resilience and essential public services.
It said 93.5% of the most climate-vulnerable countries were either in debt crisis or at significant risk of debt distress.
It further projected that climate-vulnerable countries would spend nearly 25 times more on debt repayments than on climate action in 2026.
The report proposed the cancellation of all unpayable or unjust external debts to ensure that no climate-vulnerable country spent more than 10% of its national revenue on external debt repayments.
It also proposed a universal agreement for the automatic cancellation of debt servicing for at least five years for countries hit by major climate-related disasters requiring urgent financing.
It said such a measure would enable affected governments to redirect resources from debt servicing towards emergency response, recovery and the building of climate resilience.
It recommended the establishment of a United Nations Framework Convention on Sovereign Debt and reforms to existing Debt Sustainability Analyses to ensure that climate-response needs, gender-responsive public services and human rights obligations were adequately considered.
The report also recommended legislative action in London and New York to require private creditors to participate meaningfully in debt restructuring processes and accept collective settlements on equal terms with other creditors.
It called for stronger regulation of credit rating agencies to address conflicts of interest and bias as well as the establishment of regional, public or multilateral credit rating agencies to provide alternative assessments of countries’ creditworthiness.
On climate finance, the report recommended that developed countries provide developing countries with sufficient public finance to meet the scale of the climate crisis, delivered primarily through grants rather than loans or other debt-creating instruments.
It said the Global South was projected to pay about US$8.8 trillion in debt repayments in 2026 compared with approximately US$39 billion in grant-based climate finance provided by the Global North in 2024.
The report said the disparity demonstrated an imbalance in global financial flows and argued that climate-vulnerable countries required greater access to predictable and grant-based finance.
It said debt and climate crises reinforced each other as climate disasters could force vulnerable countries to borrow for recovery while debt obligations constrained government spending on adaptation, resilience and sustainable development.
GNA
Edited by Albert Futukpor /Kenneth Odeng Adade
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