
Report: G20 Nations Profited $50bn in Debt Repayments from Developing Countries amidst Covid

Debt-Stricken Nations Hardest Hit by Climate Crisis Pay $50bn to G20 Creditors During Pandemic
Debt-stricken countries that are heavily impacted by the climate crisis have paid a staggering $50 billion to G20 creditors since the start of the Covid-19 pandemic, according to a report by the International Institute for Environment and Development (IIED). This analysis sheds light on the financial burden faced by the world’s poorest and most climate-vulnerable nations as they struggle to repay their debts to the 20 richest countries in the world.
The report, based on the latest data from the World Bank, comes ahead of the upcoming meeting of G20 finance ministers and central bank governors in Gandhinagar, India. It reveals that the payments made by 58 Least Developed Countries (LDCs) and Small Island Developing States (SIDS) reached $21 billion in 2022, which is an increase from $14 billion in 2021 and $13 billion in 2020.
The increasing debt repayments mean that the world’s poorest countries, which also face the greatest risks from climate disasters, are trapped in an ongoing cycle of financial burden. This situation is exacerbated by globally record-shattering temperatures and intensifying extreme weather events such as cyclones, floods, and droughts. There are now calls to allocate more funds for climate resilience, adaptation, and mitigation. However, these countries are forced to spend more on debt repayments than on protecting lives.
Despite significant repayments in the last two years, G20 countries still held a cumulative bilateral debt of $155 billion from LDCs and SIDS in 2021. Various factors, including the global economic slowdown triggered by Russia’s invasion of Ukraine, the Covid-19 pandemic, and the rise in global prices and interest rates, have worsened the economic strain on these countries. Consequently, many nations are on the verge of default.
The analysis also reveals that G20 countries hold substantial amounts of debt through multilateral institutions such as the World Bank and European Development Fund. In addition to bilateral deals, these organizations, in which the G20 countries are stakeholders, held an additional $131 billion of debt from LDCs and SIDS in 2021. The actual figures are expected to be even higher due to incomplete data. Moreover, the analysis does not consider the debt held by private creditors based in G20 countries, including banks.
The IIED is urging the G20 to establish a fairer financial system that addresses the needs of countries on the front line of the climate crisis. Dr Tom Mitchell, executive director of IIED, describes the debt burden as an “injustice” for the people of the least developed countries who bear little responsibility for causing the climate crisis.
“The huge debt burdens on some of the countries most at risk from climate change means they are forever paying back interest to much wealthier nations who have done the most to cause the climate crisis,” Mitchell said. “This is an injustice.”
The IIED report proposes several measures that the G20 could adopt, including debt cancellations or debt swaps for climate and nature, which entails forgiving or restructuring loans in exchange for climate adaptation measures.
There is an increased call for the world’s largest polluters to take responsibility for the worsening impacts of the climate crisis. The G20 countries include the world’s biggest economies, which have either been the biggest polluters since the Industrial Revolution or have become major contributors more recently, such as India and China.
The world’s poorest countries have contributed the least to the climate crisis, yet they face the greatest risks from its consequences, including cyclones and droughts. In contrast, the G20 includes countries that bear the highest levels of historical and current greenhouse gas emissions, many of which attained economic power through conquest and colonization.