Business Report :
Bangladesh is at risk of falling into a climate debt trap, said the Change Initiative’s latest report noting that while the country had no climate debt per capita in 2009, it reached $79.61 (Tk9,485) per capita by 2022.
The report titled “Equity and Justice in Climate Finance: Climate Debt Trap Risks for Bangladesh and Other LDCs” warns that reliance on debt-based climate finance could hinder economically weaker countries from adapting to the growing impacts of climate change by burdening them with debt.
As per the report, for every dollar of climate finance received as grant by Bangladesh, 95 cents are in the form of loans, creating a substantial debt burden.
The findings were discussed at an event on Sunday at the Centre on Integrated Rural Development for Asia and the Pacific (Cirdap) in the capital.
M Zakir Hussain Khan, chief executive of Change Initiative, said, “Climate change is a global problem, which cannot be bounded by geographical boundaries. The impact of this change on farmers in Mymensingh, Gaibandha in Bangladesh is the same as it is for farmers in Assam-Tripura-Rajasthan in India.”
He added, “We need a fundamental shift in climate finance. LDCs require $480 billion annually by 2030, with adaptation finance being 100per cent grant-based from 2025. Debt cancellation and innovative mechanisms like ‘debt-for-climate swaps’ are crucial for freeing up resources for climate action.”
The report finds that LDCs are disproportionately reliant on loans rather than grants for climate action, despite contributing minimally to global emissions. This reliance on debt financing is worsening their economic vulnerabilities and diverting resources from essential public services.
Bangladesh’s multilateral per capita climate debt ($2.04) is three times higher than the average for other climate-vulnerable LDCs ($0.85). This underscores the significant financial burden facing the country.
Only 30.74per cent of pledged international climate funds have been disbursed to LDCs, leaving them with insufficient resources to implement adaptation and mitigation measures.