Caribbean & Central America - May 2024

Efforts by Barbados Prime Minister Mia Mottley to negotiate a trail-blazing debt-for-climate swap are advancing.

Speaking at the United Nations Financing for Development Forum in New York in April, European Investment Bank (EIB) president Nadia Calviño said she had been in conversation with Mottley over “the first ever debt-for-climate swap” which, with support from the European Investment Bank (EIB) and the Inter-American Development Bank (IDB) would allocate savings on interest payments to be used for investment in climate resilience. In Barbados’ case, these would be earmarked for water re-use and treatment which would “reinforce the resilience of the country without increasing debt levels”.

Details of the proposed swap were first released last November. Under its terms Barbados will raise US$295m through a sustainability-linked bond, with the EIB and IDB each putting up US$150m in collateral. Interest rate savings from the deal are to fund the South Coast Sewage Treatment Plant (US$108m), reducing shortages and improving wastewater systems.

The deal, if confirmed, will boost Mottley’s campaign for financial relief for Small Island Developing States (SIDS). She has argued that financial support for climate change mitigation is crowding out funding for poverty alleviation and economic development meaning that “we may save the planet and lose the people”.  

UN official in agreement

United Nations Deputy Secretary-General Amina Mohammed agreed with Barbados’ Prime Minister Mia Mottley saying that the climate agenda and the development agenda were both “in crisis” and in need of a new approach.