Breaking the Cycle: Hunger, Debt, and Climate in the Global South

Every day, millions struggle to put food on the table. In many developing countries, smallholder farmers watch their crops be destroyed by droughts or floods, and parents skip meals to feed their children. Globally, between 638 and 720 million people, or about 8.2 percent of the population, are facing hunger. In 2023, one in eight people globally skipped meals due to severe food insecurity.

At Bread for the World, we are concerned about the persistence of global food insecurity and hunger that threatens human flourishing. In many developing countries, progress towards ending hunger is too slow. At issue are several intertwined factors:

• Climate shock to agricultural systems
• Reduced food productivity and increased food insecurity
• Under-investment in agricultural development
• Debt burdens and food insecurity

These factors reinforce one another and are made worse by rising debt burdens. According to the United Nations, 54 developing countries spend more than 10 percent of their tax revenues on interest payments for external debts. This is associated with reduced funds for food, health, and education programs—leaving families even more vulnerable. Governments have fewer resources to stabilize food prices when economic shocks occur, and even a 10 percent rise in food prices can push millions more into moderate or severe hunger.

Increased Climate Vulnerability and Debt

Climate change has also been shown to slow growth in agricultural productivity. More frequent droughts, floods, and heatwaves make production harder for small farmers. The Intergovernmental Panel on Climate Change (IPCC) warns that climate change could put between 8 and 80 million people at risk of hunger by 2050.

Evidence also shows that countries viewed as vulnerable to climate change face deeper indebtedness. This is due to the assignment of higher interest rates by credit rating agencies (CRAs) because of increased climate risks. For example, the average borrowing costs for the Vulnerable 20 (V20) group of climate-vulnerable countries is higher than other developing countries with less climate risk. This reflects over $40 billion in additional payments to lenders.

While some loans for developing countries are concessional (low-interest), most are at market interest rates. These loans also tend to be financed in dollars or euros rather than the developing nation’s currency, which can make them more difficult to repay. These mounting debt payments redirect long-term investments in domestic infrastructure, agricultural production, health, and food security measures, and worsen the debt-climate-food insecurity cycle.

How can developing countries, donor countries, and CRAs break this cycle?

To break the cycle of worsening hunger, debt, and climate impacts, governments, multilateral development banks (MDBs), and private creditors must act decisively in five key areas:

1. Scale up grant-based climate finance. At COP29, nearly 200 countries agreed to triple financing for developing countries to $300 billion annually. Grants and highly concessional loans should become the norm. This would enable countries to invest in climate-resilient agriculture, social protection, and early-warning systems without adding to already high debt burdens.
2. Implement temporary standstills on debt payments following disasters. This is especially important for climate-vulnerable developing nations. Where necessary, the International Monetary Fund (IMF) should arrange for debt reductions in the most heavily indebted developing countries following climate-related disasters.
3. Follow UN Trade and Development (UNCTAD) Principles of Responsible Sovereign Lending and Borrowing. These principles help improve accountability, transparency, and shared responsibility among all borrowers and creditors.
4. Prioritize debt cancellation when possible. Developing countries need more debt cancellation to make longer-term investments in climate resilience. The IMF’s Debt Sustainability Assessments (DSAs) should also project the long-term economic impacts of climate change and then arrange for deeper debt cancellation where needed.
5. Disclose methodologies used for bond ratings. Credit Rating Agencies (CRAs) should increase transparency by disclosing their methodologies for bond ratings, which determine interest rates. This helps ensure that climate-vulnerable countries are not unfairly penalized with higher borrowing costs simply because of risk exposure.

Bread for the World has championed debt relief as both a policy and economic tool, and through the Christian value of Jubilee, which includes debt forgiveness. We must work together to provide climate-vulnerable nations with fair financing options and sustainable debt solutions so that we may be closer to finally ending hunger.

Readers can learn more on this topic in a new policy brief published here.

Lingxi Li was a Fall 2025 International Intern at Bread for the World’s Policy and Research Institute (PRI).