Inter-American Development Bank (IDB) Completes Historic Debt-for-Climate Operation with Barbados
Barbados Completes Unprecedented Debt-for-Climate Operation to Finance Water and Sewage Projects
The Inter-American Development Bank (IDB) announced Monday that Barbados has completed an unprecedented debt-for-climate operation to finance water and sewage projects resilient to climate change.
Debt-for-Climate Operation Details
The IDB said that with support from its international funding partners, Barbados replaced outstanding, more expensive debt with more affordable financing, generating US$125 million in fiscal savings, which will be used to enhance water resource management and increase water and food security.
Partnerships and Funding
CIBC Cay has US$300 million in guarantees, US$150 million each from the IDB and the European Investment Bank (EIB), the latter under the European Union’s Global Gateway Initiatives. The IDB and the Green Climate Fund (GCF) provide a total of US$110 million upfront funding for the project, including a US$40 million grant from the GCF.
Water Reclamation Facility
The IDB said that the water reclamation facility, one of the first in the Caribbean, will produce water suitable for agricultural irrigation and groundwater recharge. The additional fiscal space also allows investments to reduce water losses and improve the sewer system. Reducing marine and groundwater pollution will help protect marine ecosystems and nearshore reefs, groundwater quality, and public health.
Prime Minister’s Statement
"In the face of the climate crisis, this groundbreaking transaction serves as a model for vulnerable states, delivering rapid adaptation benefits for Barbados. With upfront funding from our partners, we are building a state-of-the-art facility to boost water management, food security, and resilience—showcasing how innovation and cooperation drive environmental and fiscal gains," said Prime Minister Mia Mottley.
IDB President’s Statement
"It is the first debt-for-climate operation focused on climate resilience, paired with a groundbreaking financial innovation with unprecedented partnerships," said IDB President Ilan Goldfajn. "I will have the opportunity to be in Barbados in a few days to do a deep dive on this operation and related project and see how we can replicate this model in other instances. This has an impact on scale with innovation and partnership at work."
Conclusion
This historic debt-for-climate operation marks a significant milestone in the fight against climate change, showcasing the potential for innovative financing solutions to support climate resilience and sustainable development in vulnerable countries.
Frequently Asked Questions
- What is the IDB’s role in this debt-for-climate operation?
The IDB played a key role in structuring the debt-for-climate operation, providing funding and guarantees to support the project. - What is the purpose of the water reclamation facility?
The water reclamation facility will produce water suitable for agricultural irrigation and groundwater recharge, reducing water losses and improving the sewer system. - What is the goal of the debt-for-climate operation?
The goal of the debt-for-climate operation is to finance water and sewage projects resilient to climate change, providing a model for other vulnerable countries to follow. - What is the IDB’s commitment to climate resilience?
The IDB is committed to supporting climate resilience through innovative financing solutions, as seen in this historic debt-for-climate operation.
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