Climate Funding For Poor Countries Should Not Add To Their Debt Burden


Financing received through the proposed Green Climate Fund should not exacerbate developing countries’ debt burdens, an independent United Nations human rights expert has said, calling for international banking institutions not to have too great an influence on the fund.

“Climate finance should be provided in the form of grants and not loans,” UN Independent Expert on foreign debt and human rights Cephas Lumina said in a statement.

“Climate loans will add to the existing external debt burdens of recipient
countries, many of which simply do not have the capacity to repay further loans
without undermining their already precarious development prospects.”

The Green Climate Fund was created during last year’s conference in Cancún,
Mexico, to help developing nations protect themselves from climate impacts and
build their own sustainable futures.

But the fund has not been launched yet, and Secretary-General Ban Ki-moon called
on developed countries this week at the UN Climate Change Conference in Durban,
South Africa, to inject the necessary capital to kick-start it.

Mr. Lumina called on UNFCCC members to ensure the fund adopts a “country-driven
approach and promotes meaningful and effective participation of all
stakeholders, including communities, farmers, workers, women and other
marginalized groups.”

Mr. Lumina also stressed the Fund’s financing decisions should not be
disproportionately influenced by the joint World Bank (WB) and International
Monetary Fund (IMF) Debt Sustainability Framework (DSF), due to the history of
the two multilateral creditors.

“The DSF is biased by its very nature, is based on questionable growth
assumptions and is concerned only with capacity to repay, not what the impacts
of payments are,” he noted.

During last year’s UN Climate Change Conference, countries decided to invite the
World Bank to serve as interim trustee of the Green Climate Fund. However, this
decision has sparked concern among climate change activists, human rights groups
and some developing countries.

“The Bank should not have a central role in the new climate finance mechanism,”
Mr. Lumina said. “Its problems with unsuccessful projects, history of forcefully
encouraging developing countries to implement economic policies that have an
adverse social impact, and its record of financial support for projects harmful
to the environment that may have contributed to climate change, suggest that it
may not be the most legitimate institution for managing and delivering climate

Mr. Lumina, who serves in an unpaid and independent capacity and reports to the
Human Rights Council, also warned against the over-reliance on private capital
as he said this would subordinate public interest to the unregulated pursuit of

“Climate finance is not as a matter of charity, and should be seen as a legal
obligation under the UNFCCC and a moral responsibility on the part of those that
have contributed the most to it.”

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