Climate Finance Should Not Add To The External Debt Burdens

GENEVA (8 December 2011) – The United Nations Independent Expert on foreign debt and human rights, Cephas Lumina, urged the international climate change gatherings currently underway in Durban, South Africa, to ensure that finance under the proposed Green Climate Fund does not exacerbate the external debt burdens of recipient countries.

Mr. Lumina also called on the Transitional Committee for the Design of the Green Climate Fund and the international representatives at the seventeenth Conference of Parties to the UN Framework Convention on Climate Change 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 marginalised groups.

“Climate finance should be provided in the form of grants and not loans, given that many of the potential recipient countries are not only poor but also have high external debt burdens and some have recently benefitted from international debt relief,” the expert said. “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. Loans also have the potential to undermine the enjoyment of human rights by those who shoulder the burden of climate change: women, rural and indigenous peoples and the poor in developing countries.”

Mr. Lumina stressed that funding decisions under the Fund should not be unduly influenced by the Joint World Bank/ IMF Debt Sustainability Framework (DSF). “As the brainchild of two major 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,” the Independent Expert noted.

At the sixteenth session of the Conference of the Parties in Cancun, Mexico, in December 2010, Parties to the UN Framework Convention on Climate Change decided to invite the World Bank to serve as the interim trustee of the Green Climate Fund, subject to review three years after its operationalization. However, that decision and the possibility of the World Bank assuming a key role in the Fund has sparked concern among many climate change activists, human rights groups and some developing countries.

“The Bank should not have a central role in the new climate finance mechanism,” the expert 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 finance.”

Mr Lumina also underscored the need to avoid over-reliance on private capital and market-based instruments for climate finance as these would cause the public interest to be subordinated to the unfettered pursuit of profit.

“Climate finance is not as a matter of charity, and should be seen as a legal obligation under the United Nations Framework Convention on Climate Change and a moral responsibility on the part of those that have contributed the most to it,” the Independent Expert stressed.

Mr. Cephas Lumina is an Advocate of the High Court for Zambia and an Extra-Ordinary Professor of Human Rights at the University of Pretoria. He was appointed Independent Expert on the effects of foreign debt and other related international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights by the United Nations Human Rights Council in 2008. He is independent from any government or organization and serves in his individual capacity. The mandate covers all countries.

Learn more about the mandate of the Independent Expert, visit: http://www2.ohchr.org/english/issues/development/debt/index.htm

Check the Independent Expert’s 2010 report to the UN Human Rights Council: http://daccess-dds-ny.un.org/doc/UNDOC/GEN/G10/131/56/PDF/G1013156.pdf?OpenElement

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