Bangladesh being trapped in a cycle of climate debt

Bangladesh ranks among the countries most affected by climate change. Excessive greenhouse gas emissions are warming the atmosphere, accelerating global climate change. While industrialized nations are primarily responsible, they have largely avoided taking responsibility for mitigating the consequences.

 

 

As a result, countries like Bangladesh - low-income and small island nations - bear disproportionate impacts, including rising sea levels and escalating natural disasters. Yet Bangladesh's own contribution to global emissions is negligible.

 

 

Despite this, the government has implemented multiple climate risk reduction strategies, financed through both domestic resources and loans from development partners. A recent event in Dhaka highlighted that, due to loans taken for climate risk reduction, every Bangladeshi citizen currently carries an average debt burden of USD 79.6 - the highest among LDCs, nearly four times the average of other low-income countries. Bangladesh's overall loan-to-grant ratio is 2.7, roughly four times that of the LDC average.

 

 

Development Partners and Climate Financing:Bangladesh receives climate finance and development assistance from institutions including:World Bank (WB),Asian Development Bank (ADB),International Monetary Fund (IMF),Japan International Cooperation Agency (JICA), Korea International Cooperation Agency (KOICA), Islamic Development Bank (IsDB), United States Agency for International Development (USAID), China Exim Bank & China Development Bank (CIDCA), European Investment Bank (EIB), EU's NDICI - Global Europe Fundects.

 

 

These agencies finance projects related to climate risk reduction, education, employment, rural infrastructure, poverty alleviation, human rights, governance, energy, transport, and sustainable development. Some also provide loans and grants for humanitarian assistance, democracy promotion, health, and economic development.

 

 

Bangladesh's Rising Debt Burden: Bangladesh's debt from multilateral development banks (MDBs) is 0.94, nearly five times the global average of 0.19. This makes Bangladesh one of the countries most vulnerable to climate change while also carrying a disproportionately high debt burden. Yet, the country accounts for only 0.5% of global carbon emissions.

 

 

 

Investments in climate adaptation and mitigation are low: the adaptation-to-mitigation funding ratio is only 0.42, less than half the LDC average of 0.88. The "Polluters Pay Principle" is being violated: Bangladesh is forced to borrow USD 29.52 per ton of CO? emitted globally.

 

 

More than half of climate finance is allocated to the energy sector, with a loan-to-grant ratio of 11.99:1. Funding for transport and storage is almost entirely loan-based (1123:1), while critical water supply projects face a ratio of 7.78:1. Misallocation is widespread: 18.84% of reported climate finance has been misdirected to fossil fuel projects, increasing Bangladesh's debt burden and undermining genuine climate solutions.

 

 

Findings from the Climate Data Risk Index 2025 (CDRI-2025) :The CDRI-2025 report includes 55 countries. Among them:13 are extremely high-risk, 34 are high-risk, 8 are medium/low-risk.

 

 

It highlights that in all LDCs, over 70% of climate finance comes as loans, violating the principle of compensation for victims of climate change as per the Paris Agreement and the 2025 International Court of Justice ruling. Between 2000 and 2023, climate-induced disasters in Bangladesh displaced or affected over 130 million people, causing USD 13.6 billion in economic losses. Yet, support for adaptation remains minimal, forcing households to spend approximately USD 88 per person annually (totaling USD 1.7 billion nationwide) for self-funded protection.

 

 

Dr. A.K. Inamul Haque, Director General of Bangladesh Institute of Development Studies (BIDS), said:"Bangladesh is extremely vulnerable. Limited grants, high debt, and private-sector overreliance increase financial pressure. Vulnerable communities face risks akin to human trafficking. Sustainable energy requires local knowledge, technology, and systemic changes. Partial solutions are insufficient."

 

The Need for a Fair Climate Finance System: To address climate vulnerability, experts recommend: Ensuring at least 70% of adaptation finance and 100% of loss-and-damage finance are grants,Canceling climate-related debt, Expanding debt-for-nature swaps,Transparent, rights-based climate finance allocation, Local-level access and accountability, Ending misallocation of funds to fossil fuel projects and Generating domestic revenue via carbon pricing and pollution taxes.

 

 

Bangladesh's low emissions but high vulnerability make it imperative to shift from loan-dependent climate finance to equitable, grant-based mechanisms. Priority should be given to climate-resilient infrastructure in coastal areas, renewable energy, and climate-smart agriculture. Only then can global climate debt traps be avoided, and climate justice ensured.

 

 

The writer is a journalist and General Secretary, Bangladesh Climate Change Journalists Forum (BCCJF)