Climate change and debt present a toxic mix for many of the worlds most vulnerable developing countries. Disasters are becoming more frequent and severe. Yet many of the most climate vulnerable countries also face substantial debt problems. In some cases, this reflects excessive borrowing. In many others, it is more a reflection of their innate vulnerability with exposure to shocks such as cyclones or earthquakes leaving them unable to sustainably manage levels of debt that other countries might find relatively manageable.
When disasters strike, continuing to make debt repayments is extremely difficult. Revenue and foreign exchange income dries up and whatever is available would be much better spent on relief, recovery and rebuilding.
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Read the full article at: https://www.lowyinstitute.org/the-interpreter/de-risking-developing-country-debt