LONDON (AFP) – Poor countries will have to pay back aid given to them by Britain in an international project to help them adapt to climate change, The Guardian newspaper said Saturday.
The 800-million-pound (one-billion-euro, 1.56-billion-dollar) fund was announced in November, but the daily reported almost all the money offered by Prime Minister Gordon Brown’s government would have to be repaid with interest.
The aid was expected to be made in direct grants to countries suffering storms, droughts and rises in sea levels linked to climate change, it said.
But the money is not additional British aid and will be administered by the World Bank, mainly in the form of concessionary loans which have to be paid back with interest added, The Guardian added.
It said a letter signed by two government ministers showed Britain has been urging its fellow Group of Eight countries to also contribute to the new fund, to be formally launched in July at the G8’s annual summit in Japan.
“UK contributions from the environmental transformation fund…will need to be primarily concessional loans,” the letter, signed by environment minister Phil Woolas and his trade and development counterpart Gareth Thomas, said, according to the Guardian.
“We will also talk to other donor countries about the possibility of grants.”
Woolas and Thomas wrote a separate letter to The Guardian in response to the article saying it painted “a distorted picture” of the situation.
They stressed the fund was only “one element of our response” to helping developing countries fight climate change and said a proportion of it would consist of grant money.
“Loans, especially if they have a very large grant element — like ours will — enable larger and deeper investments and can then be used again by other countries, creating a higher impact,” the two ministers wrote.
“If we cling to the sort of outdated thinking that implies that concessional loans aren’t helpful for developing economies, we will get nowhere.”
They added that recipients and donors will have an equal say on how the money is spent and that developing countries were “starting to welcome and engage in the detail.”
But several countries contacted by the paper condemned the loans, while development groups WWF and ActionAid both said funds for climate adaptation should be additional to aid in the form of grants.
“We need urgently to prepare for climate change, but we are not in a position to pay back loans,” a spokesman for the Bangladesh high commission in London was quoted as saying.
“The climate situation has not been created by us. The money should come spontaneously from rich countries and not be a loan.”
An unnamed senior Brazilian diplomat was reported to be “indignant” that poor countries should have to borrow money to prepare for the effects of climate change, adding to their debt.