Rising debt locks global south countries in fossil fuel production
Global south countries are trapped in relying on fossil fuel exploitation to generate revenue to pay debts, according to a report published today by 35 organisations including ActionAid International, Friends of the Earth International, Oil Change International, the Asian People’s Movement on Debt and Development and Debt Justice.
Countries including Argentina, Uganda and Mozambique may find it impossible to phase out fossil fuels and transition to renewable, sustainable energy sources, unless this debt-fossil fuel trap is addressed, according to the authors.
For example, Argentina is committing to fracking in the Vaca Muerta oil and gas field in Northern Patagonia as a way to solve the country’s debt crisis and wider economic problems, backed by the International Monetary Fund (IMF).
Tess Woolfenden, Senior Policy Officer at Debt Justice said:
“High debt levels are a major barrier to phasing out fossil fuels for many global south countries. Many countries are trapped exploiting fossil fuels to generate revenue to repay debt, while at the same time, fossil fuel projects often do not generate the revenues expected and can leave countries further indebted than when they started. This toxic trap must end.
“Global north countries must urgently cancel debts for global south countries to prevent further climate turmoil. The UK and US should also introduce legislation to compel private creditors to participate in debt relief so they can no longer delay negotiations for their own profits. There is no time to waste.”
Mae Buenaventura, Debt Manager at the Asian People’s Movement on Debt and Development said:
“The climate and debt crises emerged from the same system that is based on the Global North’s relentless extraction of human, economic and environmental resources to feed the drive for profit and greed. These mutually reinforcing crises are playing out in terms of lives lost and livelihoods eroded, not only for millions of people today, but also for generations yet to come. Surely, debt cancellation especially of fossil fuel debts, is the least that rich countries and lenders can do to repay the Global South, to make reparations and bring about restitution as a matter of justice.”
Arthur Larok, Secretary General of ActionAid International said:
“Countries on the front lines of the climate crisis urgently need funds to cope with impacts and to scale up green technologies. But climate disasters are pushing vulnerable countries deeper into debt, trapping them in a vicious cycle that perversely drives investment in the fossil fuels that further accelerate the crisis. When it comes to climate solutions, debt cancellation is a low-hanging fruit that can restrain expansion of climate-harming industries, and free up much-needed finance in vulnerable countries.”