Finance must break developing countries from ‘debt and disaster’ loop – UN climate chief

The executive secretary of UN Climate Change, Simon Stiell, told the ministers at COP31 that climate finance must be redesigned to lift developing countries out of a cycle of debt and disaster, adding that meeting a headline figure will not do it.

“Meeting a financial target does not always meet countries’ needs. To do that, we need to look at how finance is delivered,” Mr Stiell said on Friday at the opening of a high-level ministerial dialogue on climate finance in Antalya, Turkey.

Countries agreed at COP29 that developed nations would lead in providing $300 billion a year by 2035, as part of a wider effort to raise $1.3 trillion annually from all sources.

Mr Stiell said the roadmap for reaching those sums “must become reality”, but that the terms of the money mattered as much as the amount.

“Many developing countries are trapped in a downward loop of debt, disaster, and devastating capital costs,” he said. “The threat of floods, fires, storms and droughts hangs over them, pushing up the price of borrowing even before disaster strikes.”

He stated that the terms of finance should reflect each country’s debt position.

“Private finance, loans and guarantees are essential to achieving our collective goals. But grant-based and highly concessional finance will remain critical, particularly for Least Developed Countries, Small Island Developing States and other very vulnerable economies,” he said.

According to him, broader action on debt is also needed to prevent countries from being forced to choose between repayments and resilience.

International climate finance for developing countries reached about $137 billion in 2024, and almost 70 per cent of it came in the form of loans, according to a UN Women flagship report released on Tuesday in Antalya.

Countries in sub-Saharan Africa paid more than twice as much in external debt service between 2021 and 2023 as they received in climate finance, according to an analysis published by the Heinrich Böll Foundation.

The analysis found that interest payments consumed more than 10 per cent of government revenue in 27 African countries in 2024.

The chair of the African Group of Negotiators, Nana Antwi-Boasiako Amoah, has said that a transition could not be called just if poorer countries have to “mortgage their futures” to pay for it.

The group lost a bid on Monday for a separate agenda item on tripling adaptation finance. It now wants the target prioritised in the summit’s cover decision.

Nigeria is not on the UN’s list of least developed countries, which places it among the states the UN climate chief expects to rely more on loans, guarantees and private capital.

It needs about $337 billion between 2026 and 2035 to implement its climate commitments, according to the National Council on Climate Change.

Omotenioye Majekodunmi, the agency’s director-general, said more than 80 per cent of that will have to come from private investment, commercial debt, and international carbon finance.

About $2.5 billion a year went to climate action in Nigeria in 2021 and 2022, counting domestic and international sources, according to the Climate Policy Initiative’s tracking.

The dialogue was the last in a series that began in 2013, and its conclusions will go to COP32 in Ethiopia next year, Mr Stiell said.