Shay Brennan warns of vicious cycle linking climate shocks and debt
Shay Brennan questioned NGOs on the appetite for debt forgiveness and climate reparations, saying richer countries show limited willingness while the global south faces the brunt. He argued debt distress is tightly linked to climate shocks, criticised IMF-imposed austerity, and called for stronger corporate accountability and global governance.
Creditor breakdown and IMF role
Shay Brennan cited creditor shares as roughly 61% private creditors, 26% multilateral creditors and 14% bilateral creditors, noting China’s growing role. He warned the IMF is typically the actor that creditors turn to and that its conditions often force public sector wage and provision cuts that amount to austerity.
Human impact and evidence
He referenced an ActionAid survey of 600 public health workers across six African countries in which 97% said they lacked enough to meet food, housing and living needs. Brennan highlighted overcrowded classrooms - up to 200 children - and people waiting for medical treatment as consequences of public sector cuts.
Link between climate shocks and debt
Brennan described a vicious cycle in which climate disasters push countries into debt distress, while debt-management responses can worsen the climate crisis. He also noted other drivers such as COVID, the Ukraine war and the 2008 financial crash that have contributed to countries’ financial shocks.
International politics and Ireland’s responsibilities
He said richer countries and the EU show limited appetite to address debt in a transformative way and are pushing back against the UN global debt framework. Brennan urged governments to act where private creditors decline, called for better corporate regulation and a global governance framework, and pointed to Ireland’s high emissions and role in global finance flows - including funds channelled through Ireland’s FDI by large asset managers - while noting he did not have specifics on whether Irish institutions hold this debt.
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Thank you, Chair. Thank you, folks, for joining us today. I very much appreciate you making the effort to come in and for taking your time. I also want to commend you for all the work that you do for those less well off than us here around the world, and that's very much appreciated, and I can say by everyone in this room. I have a couple of questions, well, questions falling into maybe three categories, and I'll ask them reasonably quickly. I just want to give you a bit of time to get into the answers. So, firstly, I suppose broadly, what is the appetite for debt forgiveness, and secondly, for climate reparations, and how has this changed since the USAID withdrawal? In relation to the debt itself, it would be good to understand where these loans are from. I read somewhere, I hope I'm correct on this, but up to 40% of them are from private institutions, and if that's the case, what is their appetite for debt forgiveness? These institutions, I imagine, are banks and funds, et cetera, and they would be answerable to their shareholders. So, I would think it would be more difficult for them than from a sovereign government to forgive debt. I'm just wondering if you have any comments or thoughts on that. In relation to the interest rates on these loans, are there currently interest rates on these loans? Are these countries paying interest? If so, that perhaps is something that should be immediately addressed and those interest rates brought to zero while the discussions elsewhere are ongoing. Does Ireland or any Irish institutions hold any of this debt? What's your position on linking debt forgiveness to climate reparations? What steps are Irish NGOs taking advocating for this debt cancellation as part of climate justice? What are the main barriers that you're meeting at an international level? Finally, I note that you mentioned earlier on that the EU, among others, are pushing back against the UN global debt framework. I would like to understand why that is. Again, thank you very much for your time. Thanks. Yeah, in terms of the appetite which links, I think, to why the EU is pushing back, from the richer countries, there is limited appetite to really look at this in a transformative way. From the global south majority, there is a strong appetite to address it because they are the ones bearing the brunt of it. And I think the reasons behind that are to do with self-interest of the richer countries. And in terms of the debt, so for the debt, it's about 61% that is for private creditors, 26% for multilateral creditors, and bilateral credits about 14%. And China is playing an increasing role within this, but obviously the IMF plays a huge role within this as well. And one of the problems, whether it's a private creditor or sovereign debt, the IMF is always the person that they turn to on a one-to-one basis. And the power dynamics are very skewed. The IMF typically imposes a cut on public sectors, public sector wage bill and public sector provision, which leads to austerity in those countries. And I think that is one of the justice and fairness elements and linked to Senator Higgins' question as well around health and public services. It's having a real impact on people's ability. ActionAid did a survey of 600 public health workers across six countries in Africa, and 97% of healthcare workers said they didn't have enough to meet their food, their housing, their living needs. We're seeing children in classrooms with 200 to each classroom. We're seeing people waiting for access to medical treatment that they just can't get because of the public sector wage cuts and the cuts there. So there is such a huge moral and legal argument that debt is looked at in this way. And it is very much linked to climate because part of the reason why countries end up in debt distress is they have a massive climate shock, a climate impact. They are bearing the brunt of climate change and that puts their economy into shock. Obviously, COVID and the Ukraine war, the financial crash of 2008, they all played a role as well. But it is a massive link. And it's this vicious cycle where they're put in the debt crisis because of a climate disaster. And then their response fuelled by IMF measures leads them to exacerbate the climate crisis. So it is absolutely this vicious cycle that they are trapped in. And even if there isn't appetite, we have to push. And as Ireland, as a country where we have benefited so much from being a European country, we, you know, we have one of the highest emissions in Europe, we have these climate responsibilities and obligations. It is very much linked to this debt. And had, if we were paying the amount of climate finance that is owed to global South countries, if we paid the ODA that we had committed to, countries wouldn't be in this debt crisis either, arguably. So this moral responsibility that we have and legal obligations that we have. So I think we have to push through. And whether creditors have the appetite, you know, probably not. They're driven by their shareholders. Many organisations have asked them to cancel debt on various, for various countries and they have declined to engage. And this is where governments need to play a role. We need better corporate regulation of this. This is why we need a global governance framework. We need better accountability from corporates, because otherwise we have this constant cycle of poverty, inequality and conflict that we will not get out of. Maybe just in the time left, I was asking about any Irish institutions holding any of this debt and also the interest rate question. I don't know exactly, but I do know that many of the big global financial institutions use Ireland's foreign direct investment. So BlackRock and that example that I mentioned from Zambia, BlackRock channels significant amounts of money through Ireland's FDI, whether there are Irish institutions itself. I don't know the answer, I'm afraid, to that.
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