THE INTER-AMERICAN DEVELOPMENT BANK (IBD) has unveiled some new funding measures to “support the region through development and integration”.
Barbadian finance expert Avinash Persaud, who is special adviser on climate change to the President of the Inter-American Development Bank, expects Barbados and other climate-vulnerable countries in the Caribbean to significantly benefit from the assistance.
The IDB announced the multi-country debt swap and Caribbean Multi-Donar Fund recently during the Brazil-Caribbean Summit in Brazil.
It shared that “at the request of CARICOM Chair and Barbados Prime Minister Mia Mottley, the IDB is leading the coordination with other multilateral institutions for a first-of-its-kind regional standardised debt-for-resilience multi-country swap programme”.
“This initiative will unlock fiscal space, strengthen resilience, and channel savings into regional public goods. This new framework would help bring scale, transparency, and efficiency – crucial for small states that face high costs in such transactions,” the multilateral financier noted.
Collective action
The IDB also said it was “launching the Caribbean Multi-Donor Trust Fund, an IDB platform for collective action focused on resilience, citizen security, private sector development, and food security”.
“The fund was created under the ONE Caribbean programme with initial contributions of approximately US$13 million from Canada and the United Kingdom. The IDB invites other
countries and institutions to participate in the initiative, including Brazil,” it explained.
Persaud highlighted the importance of the assistance, observing that “it’s no coincidence that climate vulnerable countries are more likely than others to be heavily indebted with little fiscal space to invest in resilience”.
“Physical climate impacts are expensive and because they are becoming more so, less uncertain and more frequent, insurance doesn’t spread out the losses as much as before. The rising costs are left to governments or the vulnerable to pay one way or another,” he said.
“The multi-country debt for resilience framework is the first of its kind where AAA-rated guarantors like ourselves commit to co-guarantee individual country debt issuance from within a group of like countries to buy back expensive debt and redirect the interest savings for national and regional resilience. These resilience investments then come without rising debt levels.
“This commitment is based around the swaps being part of standardised structures, terms and taxonomies that lower the cost of these transactions that so far have been bespoke, small and not always cheap to do.” (SC)
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