Caribbean Leaders Discuss Debt for Climate Adaptation Swap, Caribbean Resilience Fund
1 October 2019: The UN Economic Commission for Latin America and the Caribbean (ECLAC) Executive Secretary, Alicia Bárcena, highlighted the potential of a ‘Debt for Climate Adaptation Swap’ initiative during several events that convened during the UN Climate Action Summit and the 74th session of the UN General Assembly’s (UNGA) High-level Week. ECLAC has advocated for such an initiative at a number of events leading up to the 2019 Secretary-General’s Climate Action Summit.
According to ECLAC, the Caribbean region has experienced over 385 climate-related disasters since 1990. Since 2000, the region has suffered eight disasters with an annual cost of between 33% and 200% of the affected countries’ gross domestic product (GDP). Annual losses from catastrophic climate events in the Caribbean are estimated at USD 3 billion dollars. In addition to these vulnerability challenges, Caribbean countries are among the most highly indebted in the world. In 2018, the average Caribbean debt was 70.5% of GDP.
The Debt for Climate Adaptation Swap initiative aims to respond to the Caribbean’s vulnerability to climate change and natural disasters and the region’s high level of debt. Bárcena met with the Prime Minister of Antigua and Barbuda, Gaston Browne, the Prime Minister of Saint Lucia, Allen Chastanet, and the Prime Minister of Saint Vincent and the Grenadines, Ralph Gonsalves, on 23 September, on the sidelines of UNGA 74, to discuss the Debt for Climate Adaptation Swap initiative and establishment of a Caribbean Resilience Fund. Bárcena explained that the proposal goes beyond traditional debt restructuring because it “links debt relief to investment in sustainable development and green economy projects.” She said the proposal offers a strategy to direct increased resources towards investment in climate adaptation projects and green industries to build resilience while also providing “fiscal space and relief to economies overburdened by public debt and debt serving costs.”
The proposal links debt relief to investment in sustainable development and green economy projects.
According to ECLAC’s estimates, a reduction in the debt-to-GDP ratio of 12.2% in Antigua and Barbuda, Saint Lucia, and Saint Vincent and the Grenadines would allow the countries to generate at least 1% of GDP growth. ECLAC estimates that this increased GDP growth would then help to restore the average growth rates of these three countries to levels similar to those before the “global financial crisis.”
The Caribbean Resilience Fund aims to attract concessional and grant resources from countries and organizations that want to support building climate resilience in the Caribbean. Bárcena proposed hosting the Fund at a regional institution, such as the Caribbean Development Bank (CDB). Bárcena reiterated her call for a Debt for Climate Adaptation Swap initiative during a keynote address at the high-level meeting to review progress on the priorities of small island developing States (SIDS) through the implementation of the SIDS Accelerated Modalities of Action (SAMOA) Pathway. In her address, Bárcena called for concessional funding and special trade treatment for middle-income countries (MICs) in the Caribbean. Noting that Caribbean countries have debts of USD 52.6 billion, she proposed that a Debt for Climate Adaptation Swap finance a resilience fund. The meeting’s High-level Political Declaration urges a number of actions, including support to SIDS to mitigate and adapt to climate change through diverse approaches, including by exploring debt swap initiatives.
Bárcena has previously advocated for the Debt for Climate Adaptation Swap initiative. In 2018, she highlighted the initiative during a special session of the UN Economic and Social Council (ECOSOC), which focused on helping vulnerable SIDS to build climate resilience. At the November 2018 session, Bárcena said SIDS will not achieve the 2030 Agenda for Sustainable Development without finding an effective way to adapt to climate change. She said ECLAC is suggesting a Debt for Climate Adaptation Swap Initiative, describing it as a proposal for the Green Climate Fund (GCF) to acquire Caribbean debt at a discount to give “fiscal breathing space” for countries to focus on building resilience.
Participants also discussed the possibilities of a debt swap model to integrate island resilience, climate financing and biodiversity in some of the most vulnerable SIDS at the Ministerial Week held at the 21st session of the Conference of the Parties (COP 21) to the UNFCCC in 2015. [UN News Story] [ECLAC Press Release] [SDG Knowledge Hub Story on High-level Meeting] [IISD RS Coverage of High-level Meeting] [IISD RS Summary of High-level Meeting] [SDG Knowledge Hub Story on ECOSOC SIDS Meeting] [SDG Knowledge Hub Story on COP 21 Ministerial Meeting] [SDG Knowledge Hub Story on UN Climate Action Summit]