UK 'climate loan' to Jamaica will increase indebtedness

By agency reporter
4 Nov 2011

UK money will be used for a ‘climate loan’ to Jamaica, increasing its already heavy debt burden, following a decision by the World Bank this week.

Campaigners have condemned the loan, which will drive the Caribbean nation deeper into poverty. Jamaica’s foreign debt stands at $2,500 per person, and the country spends $1.2 billion a year on debt repayments. The government’s foreign-owed debts are 55 per cent of national income, making its debt burden one of the heaviest in the world.

The $10 million loan agreed this week is intended to help Jamaica adapt to the effects of climate change. But campaigners say countries like the UK should give climate funds as grants rather than loans.

Jubilee Debt Campaign spokesperson Tim Jones commented: "Debt has devastated lives across the world, bringing economic collapse and diverting money from essential public services. The Jamaican government already spends $450 per person annually on debt repayments, more than on education and healthcare combined. The World Bank and UK government should be cancelling Jamaica's debt, not adding to it with new unjust climate loans."

World Development Movement campaigner Murray Worthy added: "The UK and other rich industrialised countries bear the responsibility for causing climate change, both historically and currently. We owe it to countries like Jamaica to help them adapt to the ravages of climate change – in fact we owe them money, rather than the other way round. Climate loans do nothing to correct this injustice, and will only make life harder for Jamaicans as their government is forced to spend ever more on debt servicing.”

Climate loans using UK funds were also agreed for Bolivia and Yemen. The World Bank has so far lent $1.1 billion to developing countries in the name of climate change.

Nearly 90 per cent of the UK’s funding to help countries adapt to climate change is through loans, not grants.

The Jamaican government spends 28 per cent of the country’s revenues from exports on debt repayments, the highest amount of any developing country. This figure is a good measure of a country's debt burden, because it is specifically export revenues which are needed to pay foreign debts.

Figures all from World Bank Global Development Finance indicators.

[Ekk/3]

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