Bangladesh was placed among the high-risk countries in a new global climate debt assessment, which cautioned that the country could slip into the ‘very high risk’ category by 2031 because of its heavy reliance on climate loans.

The Climate Debt Risk Index 2025 (CDRI’25), released on 14 November by Change Initiative in partnership with Young Power in Social Action (YPSA), indicated that Bangladesh’s loan-to-grant ratio remained one of the highest among vulnerable economies, putting it on a precarious trajectory as climate shocks intensify and fund disbursement continues to lag.

According to the report, climate-vulnerable nations were being pushed toward a deepening debt trap as loan-dominated climate finance, slow delivery of committed funds, and growing exposure to extreme weather combined to squeeze already-limited fiscal space.

The assessment, which covered 55 low-income and climate-exposed countries, classified 13 as ‘very high risk,’ 34 as ‘high risk,’ and only two as ‘low risk.’

Sahelian states and parts of coastal West Africa registered the highest systemic threats, while several small island developing states (SIDS) were ‘one loan away from insolvency’.

South Asia showed an uneven pattern, with some economies holding exceptionally loan-heavy climate portfolios.

The index integrates climate exposure, finance structure, debt indicators, income levels, credit ratings and resource stewardship into a 0–100 score, with projections for 2028 and 2031.

The analysis suggested that by 2031 Bangladesh could move into the ‘very high risk’ category because of its heavy dependence on loans for climate action.

Bangladesh’s loan-to-grant ratio was reported at 2.70, one of the highest in South Asia, in contrast to Nepal’s 0.10.

This imbalance was assessed as adding further fiscal strain at a time when climate impacts were becoming more severe.

The report also pointed out that Bangladesh’s disbursement-to-commitment ratio stood at 0.63, indicating that committed funds for climate projects were not being released or implemented quickly enough.

Its adaptation-to-mitigation ratio of 0.42 showed that financing continued to lean toward mitigation projects, despite the country’s well-documented exposure to cyclones, salinity intrusion and flooding.

According to the report, these trends demonstrated that ‘climate hardship is financing banks, not protection,’ noting that climate-labelled loans were already consuming a growing share of annual debt repayments in countries such as Cabo Verde, Niger, the Solomon Islands — and Bangladesh.

Across the 55 countries assessed, governments paid $47.17 billion to creditors in 2023 but received only $33.74 billion for climate action.

On average, people in these nations now carry $23.12 in climate-labelled public debt, with South Asians holding the highest per-capita burden at $29.87.

Debt per tonne of emissions is steepest for low-emission economies, with Niger at around $103, Rwanda at $93 and Bangladesh at roughly $29.5, underscoring what researchers call a structural climate-justice imbalance.

‘Too many nations are paying twice — first for the damage, then for the debt,’ said lead author M Zakir Hossain Khan.

He said that where needs were sharpest, money was still arriving late and largely in the form of loans, which was weakening fiscal space and delaying essential protection.

The report also pointed to widespread misclassification of climate finance, saying that billions of dollars reported by OECD countries over the past decade had been channelled into coal plants, hotels, chocolate shops and other activities unrelated to climate action.

It cited examples such as coal-fired power plants in Bangladesh and Indonesia, a Marriott hotel in Haiti financed by the United States, and luxury chocolate shops in Asia backed by Italy.

The assessment added that the World Bank had overstated as much as $41 billion in untraceable spending, while Belgium had included a rainforest-themed romance film in its climate finance reporting.

According to the report, such practices inflated official figures, distorted funding priorities and eroded trust in a system that was already failing the most vulnerable.

With COP30 approaching, the report characterised delayed, loan-heavy climate finance as both an economic threat and a violation of rights.

Analyst Samira Basher Roza said that frontline youth were asking why countries were borrowing to survive a crisis they had not caused, and she urged a grant-first approach, faster fund delivery, and debt-relief solutions for nations with limited fiscal space.

Arifur Rahman, Chief Executive of YPSA, said that climate debt was rising most rapidly in countries such as Bangladesh that had contributed least to global warming, and that fair financing was essential to protect lives and uphold climate justice.

Mizan R. Khan of LUCCC stated that current IMF and G20 debt frameworks were failing low-income countries, describing loan-based adaptation support as a blatant travesty of climate justice.

The report urged developed nations to make grants the default for adaptation and loss and damage, deliver full debt relief, scale up debt-for-nature swaps, and establish an ‘Earth Solidarity Fund.’

It recommended that multilateral banks shift toward rights-based, grant-focused portfolios and link debt relief to nature protection and resilience.

For vulnerable countries, including Bangladesh, the report suggested measures such as carbon pricing, pollution taxes, strategic philanthropy, and the creation of national Natural Rights Funds financed through redirected fossil-fuel subsidies and CSR resources.