Prime Minister Mia Mottley of Barbados is championing a groundbreaking proposal for Small Island Developing States (SIDS) to suspend debt repayments following disasters or crises. Speaking at the 28th Conference of the Parties (COP) in Dubai, Mottley emphasized the pressing need for such measures amidst the ongoing crisis faced by SIDS.
She highlighted that Barbados could free up approximately 20% of its GDP within two years through this arrangement, underlining its potential as a significant fiscal relief tool. Mottley applauded the World Bank and its President, Ajay Banga, for recognizing SIDS’ unique needs, mentioning that existing financial instruments from the World Bank could incorporate ‘debt pause clauses’ for immediate relief.
The Prime Minister elaborated on innovative financial mechanisms like debt-for-nature and debt-for-claim swaps, citing their benefits, such as funding environmental initiatives like the Barbados Marine Trust. She noted the World Bank’s role in releasing US$50-60 million over 15 years through these approaches.
Mottley also announced a debt-for-climate swap plan for this year, aiming to repurchase US$300 million of debt to finance a critical sewage treatment plant in Barbados, in collaboration with several international financial institutions.
She addressed the growing issue of uninsurance and under-insurance in the Caribbean, exacerbated by climate-related events and high insurance premiums. This situation, Mottley argued, underscores the need for fiscal resources to protect families and businesses from climate impacts.
Finally, PM Mottley called for global cooperation and support, pointing out the unique challenges SIDS face, such as vulnerability to natural disasters, climate change, economic shocks, and limited resilient development resources. These challenges, she argued, impede their growth and highlight the necessity for international solidarity.
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