Policy brief no. 12 | January 2026
By Fatima-Ezzahra El Oirdani
Low- and middle-income countries (LMICs) are caught in a dangerous cycle where debt, climate shocks, and global tensions keep making each other worse. During the COVID-19 pandemic, many governments had to borrow heavily just to stay afloat, leaving them with little financial room to recover. Since then, rising U.S. interest rates, global inflation, and repeated climate disasters have made it even harder to pay back what they owe. On top of that, conflicts like the war in Ukraine have pushed up food and fuel prices, driving inflation and scaring away investors. All of this has created a “climate–debt trap” that threatens both economic stability and future development.
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