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Newsletter
Debt Relief for Green and Inclusive Recovery

Dear Readers,

At the climate change conference in Egypt (COP 27) climate finance will be a top theme. The developing countries have sucessfully put loss and damage on the official agenda for the first time. They call on developed countries to ensure sufficient and adequate financial support, particularly to the most vulnerable.

A new policy brief of the Global Development Policy Center analyzes the debt account of the Vulnerable Twenty (V20) Group of Finance Ministers, a dedicated initiative of 55 climate vulnerable economies that is at the epicenter of looming debt and climate crises which are threatening their ability to build resilient and low-carbon economies. It demonstrates why debt relief is so essential.

Your Debt Relief for Green and Inclusive Recovery Team

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New Policy Brief

Main Findings

In terms of external debt stock, the V20 as a group has a total of $686.3 billion in external public debt, amounting to 27 percent of the group’s gross domestic product (GDP). The V20’s total debt stock is one-fifth of all developing country debt (public and publicly guaranteed).

Private creditors comprise the largest share of external debt stocks in V20 countries at 36 percent, followed by the World Bank at 20 percent and MDBs not including the World Bank at 20 percent. In terms of bilateral credit, Paris Club nations hold 13 percent of V20 debt stocks and China holds 7 percent of the total.

In terms of external debt service payments, between 2022-2028, V20 countries will be responsible for almost $435 billion in payments to various creditors, with 2024 a particularly acute year at $68.9 billion. Again, private creditors top the payments list (34.6 percent), followed by multilateral institutions (16 percent) and the World Bank (12 percent). China is fifth with a share of 10 percent.

For 13 V20 countries classified as in debt distress or at high risk, the debt stock composition shows that the private sector owns 29 percent of the total debt stock, the World Bank holds 24 percent, China holds 16 percent and bilateral creditors without China also own 16 percent.

The bottom line: As the V20 Group debt portfolio is highly diverse, comprehensive debt restructuring is urgently needed across all creditor classes, rather than case-by-case bilateral negotiations with specific creditor classes.

Read the Policy Brief

Further information on our website.

Contact: Sarah Ribbert, ribbert@boell.de

This newsletter is sent to you by Heinrich Böll Foundation on behalf of the DRGR project.
For more information, please visit our website.
In cooperation with Centre for Sustainable Finance (SOAS), University of London and Global Development Policy Center, Boston University

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Photos: Newsletter header: Yukon River Delta, Alaska, NASA, all rights reserved. Infographics: By the authors of the policy brief (Ramos et al.), CC-BY-NC-ND 4.0.

Sender: Heinrich Böll Foundation, The Green Political Foundation, info@boell.de

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