At COP29, on Thursday, 21 November 2024, Dr Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), spoke during the session titled Unlocking Fiscal Constraints for Climate Action: Sovereign Debt, Climate Risks, and Clean Energy-Fueled Growth Opportunities. The session was organised by the CPD and Boston University Global Development Polic Center.
Dr Khatun highlighted the significant financial challenges faced by the Least Developed Countries (LDCs) in addressing climate action. She explained that these nations, already contending with serious social and economic difficulties, are also among the most vulnerable to the impacts of climate change. As a result, they are forced to spend vast sums on recovery after extreme climate events, leaving them with little fiscal space to invest in necessary climate mitigation and adaptation measures.
Dr Khatun emphasised that, without these investments, such countries will continue to suffer from future climate-related disasters, creating a destructive, ongoing cycle. She argued that there is a critical need to revise how financial institutions assess these nations, suggesting that classifications should not solely focus on the risks they face but also consider the long-term benefits they stand to gain from climate action. This shift, she proposed, would help reduce borrowing costs, creating the fiscal space needed for these countries to invest in sustainable growth and climate resilience.
