Barbados Secures US$300 Million in Debt-for-Climate Guarantees
Barbados Prime Minister Mia Mottley has welcomed the decision by the Inter-American Development Bank (IDB) and the European Investment Bank (EIB) to provide guarantees totaling US$300 million to support an innovative debt-for-climate operation that will help the island unlock much-needed resources to invest in critical climate adaptation projects while safeguarding other priorities such as social spending on health and education.
The Collaboration
The two financial institutions said they each approved a US$150 million guarantee, marking the first time they have provided joint guarantees for a single operation in the Caribbean.
Key Takeaways
* The IDB and EIB have provided guarantees totaling US$300 million to support a debt-for-climate operation in Barbados.
* The guarantees will help the island unlock resources to invest in critical climate adaptation projects while safeguarding other priorities.
* The operation is the first time the two financial institutions have provided joint guarantees for a single operation in the Caribbean.
Benefits
“This groundbreaking collaboration between the IDB and the EIB marks a historic moment for Barbados and sets a robust, scalable model for other vulnerable nations. With these loan guarantees, we are securing our nation’s water and food resources and fortifying our resilience against the ever-looming threat of the climate crisis,” said Prime Minister Mia Mottley.
“This initiative exemplifies how innovative climate financing can drive meaningful change, ensuring a sustainable future for our people and planet,” she added.
Implementation
The IDB and EIB said that the combined effort on innovative climate financing and project preparation will amplify the scale and impact of Barbados’ investment in climate-resilient infrastructure. The two banks added that the guarantees would be used in a debt-for-climate conversion plan announced late last year.
The plan creates fiscal space, allowing the government to invest in resilience, which would only be possible if the current budgetary limitations exist.
Future Plans
The guarantees will also help Barbados advance its resilience plans outlined in the country’s Updated Nationally Determined Contributions (NDC) under the Paris Agreement and the Roofs to Reefs Programme by holistically increasing water availability and food security and enhancing the country’s resilience.
Conclusion
The debt-for-climate guarantees provided by the IDB and EIB mark a significant step forward in the global effort to address climate change. The operation demonstrates the potential for innovative financing to drive meaningful change and ensure a sustainable future for vulnerable nations.
FAQs
Q: What is the purpose of the debt-for-climate guarantees?
A: The guarantees are intended to support Barbados’ efforts to invest in critical climate adaptation projects while safeguarding other priorities.
Q: How much are the guarantees worth?
A: The guarantees are worth US$300 million, with the IDB and EIB each providing a US$150 million guarantee.
Q: What are the benefits of the guarantees?
A: The guarantees will help Barbados unlock resources to invest in critical climate adaptation projects, fortify its resilience against climate change, and ensure a sustainable future for its people and planet.
Q: How will the guarantees be used?
A: The guarantees will be used to support a debt-for-climate conversion plan announced late last year, which creates fiscal space for the government to invest in resilience.