Reparations and Justice for Nepal, Not Loans!

The World Bank is exploiting the flash floods in Nepal to sell climate loans. If it succeeds, the people of Nepal will be forced to pay for the cost of rebuilding—with interest.

The Asian Peoples’ Movement on Debt and Development (APMDD) grieves with and for the people of Nepal, following the catastrophic floods that have devastated communities, lives and livelihoods across the country and forebodes greater untold suffering in the weeks to come. The disaster starkly manifests the unjust burdens of the climate crisis, bearing down on impacted Himalayan communities who least contributed to it and are now paying an enormous price for a crisis they did not create.

In the face of the massive catastrophe, the World Bank has offered emergency assistance amounting to NPR 25 billion, which may alarmingly be sourced from Nepal’s Disaster Resilience Development Policy Credit with Catastrophe Deferred Drawdown Option (Cat DDO), approved by the Bank in October 2024.

Cat DDO funds are concessional loans that the Nepalese people will be obligated to pay in due time as they struggle to recover and rebuild their livelihoods, homes and communities. These loans also come with far-reaching policy and institutional conditionalities aligned with the IMF and the World Bank’s macroeconomic framework. These include imposing regressive taxes, enabling foreign direct investments with tax incentives, liberalizing markets, lifting capital controls, and austerity measures that cut social spending.

It is most reprehensible that the World Bank is turning a climate catastrophe into a lending opportunity, as it is doing to Nepal and many other Global South countries that negligibly contributed to the climate crisis. Loans ultimately shift the costs of climate destruction onto the people of Nepal. Meanwhile, the Global North governments, fossil fuel corporations, and financiers most responsible for the climate crisis—including the World Bank—not only continue to operate in impunity, but exploit climate disasters to extract even more profit.

The people of Nepal owe nothing to the World Bank. If anything, it is the World Bank, and the governments of the Global North, that owe a massive debt to the people of Nepal and the Global South, having invested billions into decades of fossil fuel proliferation and ecological destruction. Instead of viciously seeking to profit from the flash floods, the World Bank must stop funding fossil fuels, and immediately undertake comprehensive debt cancellation for Nepal and the Global South, to free up much-needed fiscal space for adaptation and loss and damage.

Furthermore, Global North governments must immediately scale up public and grants-based climate finance delivery for adaptation and loss and damage, directly channeled through the UN climate funds, rather than through intermediaries such as the World Bank. It is estimated that Nepal will need a whopping $4 to $5 billion to recover from the flash floods, significantly dwarfing the mere $822 million pledged to the Fund for Responding to Loss and Damage (FRLD). The FRLD should also facilitate the rapid disbursement of emergency funds for Nepal, and for all Global South countries caught in the thick of climate disaster.

APMDD demands no less than climate justice for the people of Nepal. We reject the false solution of loans presented as climate finance. We must stop attempts at every turn to normalize borrowings as the solution, and stop treating the debt and climate crisis as mere problems of liquidity. We demand not debt, charity, or aid, but the payment of reparations for climate debt; the fulfillment of the legal, historical, and moral obligations of the Global North to the Global South; and the building of resilient homes and communities hand-in-hand with the ushering of equitable institutions and systems anew.

Reparations and justice for Nepal, not loans!

Cancel the debt! Climate Justice Now!

#PayUp for Climate Debt, Climate Finance and Reparations!