Climate loans - A good or bad idea?

In my last post I discussed whether or not developed countries have a moral obligation to take some responsibility of those displaced by climate change induced environmental disasters. One of the approaches taken by developed countries to help those affected by climate change is, through multilateral banks, to provide climate loans. These loans are designed to help developing countries deal with the impacts of climate change; however there is alot of controversy surrounding these loans..... (Link to an article about a row over the EU's climate loan policy

Nepal is an example of a country were the possibilty of loans from multilateral banks to help them fight the impacts of climate change is being investigated. Many civil societies and non-governmental organisations oppose these loans as they say it is unfair to burden an already climatically vunerable country, like Nepal, with loans in the name of dealing with climate change. Climate loans have long been opposed by many environmental organisations as they say they are against what they class as climate justice. Krishnal Lamsal, who works for the Local Intitatives Biodiversity Research and Development organisation (non-governmental) in western Nepal questionned "How can they even think about giving a climate loan when they know that climate change is not a problem we created, and that it was the developed world?". This view is shared by many in Nepal itself. On the other hand, the government agrue that, in the long run, the money will be good for the country. The proposed loan of US$60m is a component of the Strategic Programme on Climate Resilience (SPCR) being agreed between the government and the donors that include the World Bank, Asian Development Bank and the International Finance Corporation. In addition US$50m is likely to be given in the form of a grant. Many critics of the proposed climate loan argue that it should all be provided in the form of grants as the idea of a US$60m loan will shackle this developing country with debts and this belief has provoked them to advise that the government only accept the grants and not the loans. Although Nepal recently prepared a National Adaptation Programme of Action which needs funds to implement its projects aimed at helping people to cope with the immediate effects of climate change; the Environment Ministry claim that "The loan is not at all going for adaptation projects they are actually for climate resilience that include long term projects like, for instance, building bridges, embankments, development of resilient seeds in agriculture etc,".

Personally, I don't think that giving loans to developing countries is neccessarily a great idea but I also don't think that grants, although they are better than loans, are not going to benefit the country greatly in terms of their ability to deal with the impacts of climate change. Simply throwing money at a country is not enough as countries, like Nepal, also need advisors and scientists to ensure that they utilise this money in a sustainable way. However this is clearly a controversial issue (like most of the issues in the energy module it seems!) and so everyone is likely to have a different opinion. So, do you think that climate loans are a good idea or do you think there are other, more sustainable, ways of helping developing countries fight the impacts of climate change?