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debt relief
Global South Debt Relief Benefits Everyone
Private creditors’ current power to disrupt sovereign debt resolution has negative ripple effects on our own people in the US, especially the most vulnerable.
Jul 10, 2026
Amid a succession of financial shocks, the Middle East war being only the most recent, developing countries’ debt levels are alarmingly high and continuing to rise. These burdens make it even more difficult for governments in the Global South to meet the basic needs of their populations. And because the world is interconnected through international trade and financial markets, these developing country debts boomerang back to harm ordinary people in the United States and other advanced economies as well.
To effectively address this growing crisis, we need to recognize that the debt landscape is very different today than it was in the late 1990s and early 2000s, when global leaders agreed on relief initiatives worth more than $130 billion. Back then, private creditors held only about 5% of developing country debt. The rest was in the hands of public creditors, including the United States, UK, Germany, and other Group of 7 rich country governments, as well as multilateral financial institutions such as the International Monetary Fund and the World Bank, which the G7 largely control.
Today, more than 60% of developing country debt is owed to private creditors who typically have the power to sue for full payment even when collective talks or international community initiatives for debt relief are ongoing. The mere threat of litigation gives these private creditors disproportionate leverage that puts debtors at a disadvantage and erodes debt relief gains. During Ethiopia’s prolonged struggle to access debt reductions under the G20 Common Framework, for example, private bondholders threatened to sue rather than make an effort similar to that of public creditors.
What can be done? One promising approach involves working the levers of power in the jurisdictions that govern private debt contracts. More than 90% are issued in New York and the UK. And over the past year, a bill to crack down on predatory private creditors gained real traction in the New York legislature. The “Champerty Fix Act” would prevent private creditors with debt contracts in that state from purchasing heavily discounted debt and then litigating to collect in full, instead of constructively engaging in debt negotiations. The bill would also significantly cut the high interest rates that debt crisis countries pay on claims under litigation.
Lifting the burden of unsustainable debts is the morally right thing to do—and it is in our interest.
With support from a coalition of religious, business, union, anti-poverty, environmental, development, and diaspora organizations, the bill passed the New York Senate and had enough support to pass in the Assembly, but that chamber’s leader chose not to bring it up for a vote by the time the session ended in early June. Supporters continue to demand that the Assembly be re-opened for a vote on the matter before the end of the year.
This legislation would be a huge win for the billions of people in countries where high debt payments divert essential financing for poverty reduction, social services, and development progress. It would also benefit workers, savers, consumers, and taxpayers in advanced economies—including the United States. Private creditors’ current power to disrupt sovereign debt resolution has negative ripple effects on our own people, especially the most vulnerable.
When debt crises affect US trade partners, jobs and wages that depend on import- and export-dependent companies in the United States inevitably suffer. And when inflation goes up due to supply chain disruptions in countries undergoing debt crises, consumers quickly feel it in the prices of their groceries and other everyday goods.
Pensions and other savings vehicles in the United States have exposure to indebted developing economies either directly—when they invest in instruments they issue—or indirectly—when they invest in US companies that have trade or investment in such countries. Reducing the time it takes a country to go from a debt crisis to a lasting restructuring—which currently averages 10 years—would significantly improve returns for our pensions and savers.
Taxpayers also have a stake in ensuring that taxpayer-funded debt relief does not bail out private creditors unwilling to negotiate fairly. In current restructuring deals, private creditors typically get repayments that are 20 percentage points higher than those received by public lenders.
Debt relief for the poorest has strong religious foundations that cut across multiple faith traditions and has been a landmark bipartisan pillar of US policy under every administration since the late 1990s.
Last year, Treasury Secretary Scott Bessent and his counterparts in all G20 countries adopted a declaration on debt sustainability. As the United States took over this year’s Presidency of the G20, he reaffirmed this direction by making the improvement of debt restructurings and debt transparency a priority. Building checks on private creditors in jurisdictions whose courts they use as leverage would go a long way toward supporting these goals by facilitating successful debt renegotiations.
Lifting the burden of unsustainable debts is the morally right thing to do—and it is in our interest.
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'Only the Beginning': Santa Marta Summit Heralded as New Dawn in Fight to End Fossil Fuel Era
“Amid a tense geopolitical context and worsening climate extremes, Santa Marta helped spark a feeling of renewed energy, but delegates must now follow through to deliver action, not just words," said a senior climate adviser at Greenpeace.
Apr 30, 2026
Environmental activists are hopeful after a six-day climate summit in Colombia resulted in a coalition of more than 50 countries agreeing to start developing plans to move away from planet-heating fossil fuels. But they say action must now follow talk.
In marked contrast to the annual United Nations climate summits, which have been routinely overrun by oil and gas industry lobbyists and concluded with agreements that largely ignore the imperative to divest from fossil fuels, Shiva Gounden, the head of Greenpeace's delegation this week in Santa Marta, said the conference that concluded Wednesday "was a breath of fresh air, a real sign that the wind is finally shifting."
The 59 nations that attended the First Conference on Transitioning Away from Fossil Fuels did not ultimately end with a binding agreement to transition away from fossil fuels within a specific timeframe, which activists say is urgently necessary as global heating rapidly approaches 1.5°C above preindustrial levels.
Many of the world's biggest polluters—including the United States, China, and India, as well as petrostates like Saudi Arabia, Qatar, and the United Arab Emirates—were also absent.
However, the summit did end with attendees, nearly half of whom are fossil fuel producers and who represent more than half of global gross domestic product, agreeing to form tangible "frameworks" for how they plan to transition away from a fossil-fueled model of capitalism that Colombian President Gustavo Petro decried as "suicidal."
Perhaps the single biggest breakthrough at the conference was France's unveiling of a national roadmap to phase out fossil fuels in the coming decades. It became the first developed nation to lay out such a plan, with the goals of removing coal from its national grid by 2027, phasing out oil by 2045, and fossil gas by 2050.
The French climate envoy, Benoit Faraco, described it not only as an obligation but an opportunity: “This process has made us realise we want to be an electro-superpower,” he said, according to The Guardian. “We want to be the electricity Saudi Arabia of Europe, selling green electrons to the UK, Ireland, Germany, and other countries.”
Many attendees also agreed that any collective movement away from fossil fuels would require addressing the debt crisis in the Global South, which many countries—especially those in Africa, where national debts have doubled in the past five years—have found themselves cranking up fossil fuel production to cope with.
While the conference concluded without any binding plan for debt forgiveness, which many delegates from developing countries had proposed, the participants agreed that poorer countries would need support to move out of debt and finance a green transition.
"Fossil fuel dependency deepens economic instability, fuels conflict, and traps countries in cycles of debt," said Bronwen Tucker, public finance lead for Oil Change International. "As long as Global South countries remain locked in this system, while Global North governments write the financial rules, public resources will continue to flow away from people and toward the systems driving crisis."
Laura Caicedo, the campaigns coordinator at Greenpeace Colombia, described the conference as "an important space to put the just energy transition on the agenda ahead of the Climate COP," which will take place in Turkey this coming November.
"There is willingness and a sense of fresh momentum that is worth celebrating," she said. "But this is only the beginning: more time is needed for this process to mature into a true platform for dialogue that can inform decision-making in this and other cooperation spaces on key energy issues."
The next conference on Transitioning Away From Fossil Fuels is set to occur early next year in Tuvalu, a low-lying Pacific island nation that is at risk of becoming uninhabitable within decades due to sea-level rise.
While climate activists were heartened by the progress made in Santa Marta, Gounden said countries need to come to Tuvalu with concrete plans.
“When we get to Tuvalu, the conversation has to change," she said. "We can’t just bring more ambition; we have to bring proof of implementation."
This week's conference took place against the backdrop of the US and Israel's war in Iran, where US President Donald Trump has suggested a key goal is to "take the oil" controlled by Iran. The obstruction of oil shipments has become a critical piece of strategic and economic leverage and simultaneously inflicted chaos upon the global economy, disrupting humanitarian aid for some of the world's poorest and most vulnerable people.
"Amid a tense geopolitical context and worsening climate extremes," said Rodrigo Estrada, Greenpeace International's senior climate adviser, "Santa Marta helped spark a feeling of renewed energy, but delegates must now follow through to deliver action, not just words."
While the war has sent energy companies' profits soaring, the climate advocacy group 350.org estimated this week that the continued blockade of the Strait of Hormuz could cost households and businesses an additional $600 billion to $1 trillion.
"It’s never been clearer that fossil fuel phase-out is imperative for stability and peace," Tucker said. "Every step away from fossil fuels weakens the outsized power and wealth that allows the US to wage illegal wars in the name of energy dominance."
At the next conference, she added, "The richest polluting countries must show they are serious. Canada, Norway, the UK, and the EU must make real plans to accelerate their fossil fuel phaseout at home and come to the table with real economic collaboration."
Mariana Paoli, the climate policy lead for Oxfam, said the lack of action by rich countries was "disappointing" and needed to change.
"Wealthy governments have still not stepped up to provide sufficient climate financing for poorer countries, which face the brunt of the impacts of the climate crisis," she said. "Rich countries hold the historical responsibility for the climate crisis, therefore they must not only move first and faster but also provide finance at scale for others to follow them."
"A just transition," she said, "must make rich polluters pay for the crisis they have caused."
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The Global South Needs Fair, Equitable, and Enduring Climate Finance
While the developed world is rapidly changing its relationship with the rest of the world, the price of not providing climate finance will be economic losses, health impacts, increased disaster costs, food insecurity, biodiversity loss, and infrastructural damage.
Feb 17, 2025
The global commitment to fair climate finance is at a crossroads. COP29 concluded with a disappointing New Collective Quantified Goal on Climate Finance, or NCQG, leaving developing nations at risk of being left behind. With the U.S. withdrawing from the Paris agreement and slashing development aid, prospects for more ambitious fair climate finance are disappearing out of sight. Decisions like these not only threaten global cooperation on climate change but will also fail to meet its core purpose in supporting the most affected communities in adapting to and mitigating climate change. Now, more than ever, fair and equitable climate finance—such as increased grant-based funding and debt relief—is critical.
In Africa, the impacts of climate change are stark and undeniable. Extreme weather events on the continent surged from 85 in the 1970s to over 540 between 2010 and 2019, causing over 730,000 deaths and $38.5 billion in damages. The increasing frequency and severity of floods, droughts, and storms are threatening food security, displacing populations, and putting immense stress on water resources. According to the World Bank, climate change could push up to 118 million extremely poor people in Africa into abject poverty by 2030 as drought, floods, and extreme heat intensify. A stark reality that underscores the urgent need for robust climate finance to implement adaptation and mitigation strategies to safeguard and secure the continent's future.
Without stronger commitments to public grants and additional funding, developing countries risk falling into a cycle of debt that hinders climate action.
At the same time, climate response remains critically underfunded in Africa. From the figures released by the Climate Policy Initiative, the continent will need approximately $2.8 trillion between 2020 and 2030 to implement its Nationally Determined Contributions (NDCs) under the Paris agreement. However, current annual climate finance flows to Africa are only $30 billion, exposing a significant funding gap for climate adaptation and mitigation strategies.
Climate Finance at COP29
COP29's main objective was to deliver on a finance goal that would see the world off the tipping point. However, after two weeks of nearly failed climate diplomacy, negotiators agreed to a disappointing $300 billion annually by 2035. This amount falls short of the $1.3 trillion per year figure, supported by the Needs Determinant Report, that many developing countries had advocated for.
Nevertheless, the Baku to Belem Roadmap has been developed to address the climate finance gap. This framework, set to be finalized at COP30 in Brazil, offers a crucial opportunity to refine finance mechanisms to effectively and equitably meet the needs of developing countries.
Why the Finance Outcome of COP29 Could Leave Developing Countries Behind
Beyond the insufficient funding, the NCQG lacks a strong commitment to equity, a key principle of the Paris agreement. The principle of Common but Differentiated Responsibilities (CBDR) emphasizes that developed countries should bear a greater share of the financial burden. However, the NCQG merely states that developed nations would "take the lead" in mobilizing $300 billion, reflecting a lack of firm commitment.
A major concern is the climate debt trap for developing nations. Much of the climate finance provided is in the form of loans rather than grants, worsening existing debt burdens and limiting investments in sustainable development. Without stronger commitments to public grants and additional funding, developing countries risk falling into a cycle of debt that hinders climate action.
Moving Forward: Shaping Conditions for Fair, Equitable, and Enduring Climate Finance
To ensure COP29's finance outcomes do not leave the Global South behind, several actions are needed.
Firstly, debt relief is crucial. Approximately 60% of low-income countries are already in or near debt distress. Between 2016 and 2020, 72% of climate finance to developing nations was in loans, while only 26% was in grants. Reducing debt burdens would allow developing countries to allocate more resources to climate projects, improve fiscal stability, and attract additional investments.
Similarly, given the mounting climate finance debts in low-income developing countries, increased grant-based financing for climate action is needed. In 2022, developed countries provided around $115.9 billion in climate finance to developing countries, but a significant portion was in the form of loans. Heavy reliance on debt-based financing exacerbates financial burdens on these nations. Grant-based finance, on the other hand, aligns with equity principles and ensures that funding effectively supports adaptation and mitigation.
Another potential path is leveraging private sector investment. The private sector plays an essential role in climate finance. However, its involvement often prioritizes profit over genuine climate benefits. Strategies must ensure that private investments align with climate justice principles. To address this, approaches are needed such as those used by Bill and Melinda Gates.
Lastly, implementing robust governance and transparent mechanisms is critical. This includes developing detailed reporting templates, public participation in decision-making, and clear monitoring systems to track climate finance flows and prevent double counting.
While the developed world is rapidly changing its relationship with the rest of the world from aid to trade, the price of not providing equitable, grant-based, public climate finance will be economic losses, health impacts, increased disaster costs, food insecurity, biodiversity loss, and infrastructural damage. Quite simply, taking the equity conditions into account is the way forward if we are to ensure that the outcomes of COP29 leave no low-income developing nation in the Global South behind.
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