Multilateral agencies agree to package to boost island’s climate change resilience
By Marlon Madden
Barbados’ efforts to build climate resilience and drive private sector-related nature capital investment have received a major boost.
Prime Minister Mia Mottley announced on Friday, during the New Global Financing Pact Summit in Paris, that multilateral financing agencies have agreed to an integrated package of innovative initiatives to accelerate the island’s transition to net zero, boost resilience, enfranchise workers, and draw in private sector investment.
According to a statement from the Prime Minister’s Office, Barbados has identified four areas for support from international partners – the establishment of the Cabinet-approved Blue Green Bank; more resilient infrastructure through new low-cost, long-term loan Instruments from development finance institutions; better and more affordable private/public partnerships (PPPs) and the development of new non-debt investments in nature and social capital.
Officials said the suit of initiatives reflected a new “systems approach” between the Government, its Resilience and Sustainability Facility (RSF) at the International Monetary Fund (IMF) and the island’s long-standing financing partners – the Inter-American Development Bank (IDB), World Bank Group, Development Bank of Latin America and the Caribbean (CAF), European Investment Bank (EIB), and Green Climate Fund (GCF).
Prime Minister Mottley said the new pact was necessary if the country was to overcome the challenges associated with major shocks.
“Alongside new capital, innovative instruments, partnerships and new ways of working together are critical if we are to overcome the challenges posed by climate, pandemics and debt,” she said.
“These new, integrated, initiatives announced today are the embodiment of what can come out of new cooperative ways of working together.”
The Government had decided earlier this year to use US$10 million from the fiscal space created by the RSF as capital for a first-of-its-kind Blue Green Bank that will facilitate private investment in domestic low-carbon, climate-resilient infrastructure.
“This capital will support five times that lending amount. It will pave the way for other partners, including GCF, CAF and IDB, to support the Blue Green Bank through technical support or capitalisation, with GCF proposing to its Board in July to become a co-founding partner in the bank,” said the release.
It noted that once established, the Blue Green Bank will help finance over US$250 million of green investments in affordable homes, hurricane-resilient roofs, the electrification of public and private transport, and other Paris-aligned investments.
Henry Gonzalez, Executive Director ad interim of the GCF, indicated that the board of that institution would consider making “a substantial investment in the new Bank at its meeting next month”.
In relation to the building of more resilient infrastructure through new low-cost, long-term loan instruments, the statement indicated that such funding from the EIB, CAF, IDB, GCF and RSF will support Government investment in resilient water and waste treatment infrastructure, flood and coastal protection and support its efforts to transform state-owned enterprises and enfranchise workers.
“The EIB has made available US$18 million of grants from the European Union (EU) to support climate-resilient water, sanitation, and clean ocean projects across the Caribbean to back a US$165 million loan facility.
“The GCF will offer up to US$1.5 million in grants per project for end-to-end project preparations, innovation, and transformational impact, and to prepare investment proposals for further GCF funding,” it said.
The World Bank Group’s Multilateral Investment Guarantee Agency has made available investment guarantees to help reduce the cost of private sector financing. Meanwhile, the World Bank Group’s International Finance Corporation will support Barbados in developing the first large-scale onshore wind project in the country and enhance the resilience of the grid.
“The Government of Barbados is working with its development partners to build on the success of the 2022 Blue Bond with IDB and The Nature Conservancy, which released approximately US$50 million of new financial resources for marine conservation. Particular focus is on a new generation of instruments to support investments in nature and social capital,” said the statement.
“Together, these initiatives will help Barbados meet its resilience objectives and protect its citizens, whilst helping transform the economy and protect its pristine natural environment,” it added.
