ActionAid says climate-vulnerable nations spend 25 times more on debt than climate action

Climate-vulnerable countries are being pushed deeper into a cycle of debt and climate-related disasters, with governments spending nearly 25 times more on debt repayments than on climate action, a new report by ActionAid International has revealed.

The report, titled “Debt Fuels the Climate Crisis: How the Finance Flows,” released on September 16, 2026, examines public revenues, debt repayments, national budgets and climate plans across 65 of the world’s most climate-vulnerable countries.

According to the report, debt servicing absorbs approximately 65 percent of the combined government revenue of the countries studied, significantly limiting the resources available for climate adaptation, public services and sustainable development.

ActionAid estimates that countries in the Global South will pay approximately US$8.8 trillion in debt repayments in 2026, compared with the latest recorded US$39 billion in grant-based climate finance in 2024.

The report further indicates that 93.5 percent of the most climate-vulnerable countries are either in debt distress or at significant risk of debt distress.

Debt crisis undermining climate action

ActionAid says the debt crisis and climate crisis are increasingly reinforcing each other.

Climate disasters can force vulnerable countries to borrow heavily to rebuild infrastructure and support affected communities.

At the same time, high debt repayments and austerity measures can leave governments with fewer resources to invest in climate resilience and essential public services.

The organisation also warns that pressure to generate foreign exchange to service external debts can encourage countries to expand activities such as fossil fuel extraction and industrial agriculture, potentially increasing environmental degradation and climate vulnerability.

ActionAid International Secretary-General Arthur Larok said the findings demonstrate the close connection between the two crises.

“For too long, the debt and climate crises have been treated separately.

This research exposes how tightly they are connected and quantifies the devastating cost involved,”

He said reducing the debt burden could unlock significant domestic resources for climate action and enable vulnerable countries to strengthen their resilience.

ActionAid demands climate finance without new debt

ActionAid's Global Lead on Climate Justice, Teresa Anderson, said debt is creating multiple challenges for countries already experiencing severe climate pressures.

She called for debt cancellation and climate financing that does not increase the debt burden of vulnerable nations.

The organisation says approximately two-thirds of what wealthy countries classify as climate finance comes in the form of loans rather than grants, with some loans carrying high commercial interest rates.

Nkaw calls for major debt architecture reforms

In Ghana, ActionAid Ghana Country Director John Nkaw has joined calls for major reforms to the global debt architecture, arguing that heavily indebted countries require greater fiscal space to invest in climate resilience and sustainable development.

“The current debt architecture looks colonial. There is a need for semi-automatic debt cancellation for countries spending more than 10 to 15 per cent of their revenue on unjust debt servicing,”

Mr. Nkaw said debt relief could free resources for climate-resilient agriculture, renewable energy, a just transition and investment in the care sector.

He also called for increased adaptation finance for developing countries, stressing the urgency of supporting communities facing growing climate vulnerabilities.

Senegal highlights the scale of the challenge

The report points to Senegal as an example of the severe imbalance between debt servicing and climate investment.

It projects that Senegal's debt servicing in 2026 will exceed 96 percent of government revenue, while spending on debt is expected to be more than 600 times its budgeted allocation for climate action.

ActionAid Senegal Country Director Khaita Sylla said the figures illustrate the difficult choices confronting governments as they try to meet debt obligations while financing climate resilience and essential public services.

ActionAid pushes for global debt reforms

The calls come as organisations mark the Global Week of Climate Action, running from September 14 to 20.

ActionAid and its allies are advocating reforms to the international financial system, including cancellation of unpayable or unjust debt for countries spending more than 10 percent of their revenues on external debt repayments.

They are also calling for the automatic suspension of debt payments for countries hit by climate disasters, stronger participation of private creditors in debt restructuring and reforms to credit-rating agencies and debt-sustainability assessments.

ActionAid further wants climate finance to be delivered primarily through grants rather than loans or other debt-creating instruments.

The campaign forms part of ActionAid's #FundOurFuture initiative, which calls for debt cancellation, a fossil-free future and increased grant-based financing for climate adaptation and community-led solutions.