DEBT FUELS THE CLIMATE CRISIS: HOW THE FINANCE FLOWS ActionAid’s fourth annual How the Finance Flows report

ActionAid's new flagship report, Debt fuels the Climate Crisis: How the Finance Flows, reveals the scale at which sovereign debt is draining resources from countries on the front lines of the climate crisis and leaving communities dangerously exposed to worsening floods, droughts, heat and hunger.

Released on 16 September, the report analyses public revenues, debt repayments, national budgets and climate plans across the 65 most climate-vulnerable countries. It concludes that debt and climate are locked in a vicious cycle, but one that can be broken through debt cancellation, grant-based climate finance, and a fairer international debt system.

• New report finds that the most climate-vulnerable countries are spending nearly 25 times more on debt repayments than on climate action, while debt servicing absorbs 65% of their combined government revenue.
• The Global South is paying approximately 225 times more in debt repayments than it receives in grant-based climate finance - US$8.8 trillion in repayments in 2026 compared with the latest figure of US$39 billion in climate grants in 2024.
• 93.5% of the most climate-vulnerable countries are in, or at significant risk of, debt distress.
• Debt cancellation in climate-vulnerable countries could fund their basic, unconditional national climate plans six times over, or cover current climate, health, education and social-protection spending combined, twice over.