COP29: Pacific Debt Surging As Climate Impacts Hit

With Pacific countries swamped by surging climate debt, New Zealand has the moral authority to head off a regional debt crisis, says Caritas Aotearoa New Zealand.

A new report from Caritas has revealed the total annual finance needs for Pacific nations facing climate change mitigation, adaptation, loss and damage costs could conservatively sit at around $1.5bn USD.

Estimates of climate financing delivered annually between 2015 and 2020 sit at $0.4-0.6bn, pointing to an annual financing gap in the region of $1bn. The result has been surging sovereign debt levels across the region, notably in Fiji, Tonga and Vanuatu.

Caritas Aotearoa New Zealand's Advocacy Lead Tony Sutorius notes that New Zealand has the rare distinction that all of our contributions to global climate mitigation are delivered in the form of grants, rather than debt.

"We feel this is something to be proud of and provides this country with real authority to lead and encourage action on the global stage, to head off the emerging Pacific debt crisis" he says.

The IMF estimates $850m is needed annually just to cover climate adaption in the Pacific.

In Fiji, the government spends more money each year servicing its existing debt than it does on health or education services, let alone climate adaptation. Adaptation spending in other countries is also drowned out by debt servicing costs.

Caritas' newly released 'Weathering the Storm' report examines the tensions between debt and climate challenges in the Pacific, coinciding with COP29 which is underway in Baku, Azerbaijan.

Many Pacific countries have significantly increased their debt to GDP ratios in recent years. The report examines this debt in the context of an urgent requirement for these countries to invest in climate adaptation and mitigation, and to cover climate related loss and damage.

The report's findings underscore what Caritas is seeing across the region.

"Caritas Aotearoa New Zealand works extensively with local partners and communities across Oceania" says Advocacy Lead Tony Sutorius.

"Climate change isn't a future thing for communities in the Pacific – it's happening right now.

"We work with communities losing their food sources due to changing ecosystems, their fresh water to salination, and even their land to the ocean. With the new cyclone season starting this month, the fear of unprecedented devastation from winds and seas is very real.

"Meanwhile, Pacific countries impacted by climate damage are now emerging with debts that are accumulating at an alarming rate. This has serious implications for our region."

Cardinal Soane Mafi, Bishop of Tonga and Niue and President of Caritas Oceania, said "For those of us in the Pacific, the connections between debt and climate disasters are important ones to consider. In many developing countries, and countries that are vulnerable to climate change, governments are paying more in interest and other debt servicing obligations than they are on health, education, or climate adaptation. Action must be to be taken to forgive debt and prevent it in the future."

Caritas' report has three clear recommendations:

1. An immediate increase of climate finance – additional to official aid to the Pacific to ensure that mitigation, adaptation and loss and damage are adequately funded.
2. The delivery of finance as grants, not loans, via a UN vehicle rather than banks.
3. A response to the sovereign debt crises, allowing for the cancellation or restructuring of unsustainable and illegitimate debts, alongside better assessments, more transparency and greater protections for vulnerable countries.

The full report is available here.

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