The Government is on track to finalise an ambitious financial manoeuvre worth $600 million in which Barbados’ debt is being swapped for capital to fund the long-anticipated upgrade of the South Coast Sewage Treatment Plant.
Prime Minister Mia Mottley, making the announcement on Tuesday night during a St James Parish Speaks public forum, said the administration has started negotiations with three global entities for the upgrade which she said would be done “without increasing a cent in debt”.
Responding to a plea from St James resident Patrick Williams for the establishment of the long-discussed West Coast sewage system, Mottley revealed to the audience at the Frederick Smith Secondary School that the Government recently engaged in negotiations with the Inter-American Development Bank, the European Investment Bank, and the Green Climate Fund. These talks are focused on structuring the debt swap to reshape the country’s environmental future.
Last year, the country successfully executed a debt-for-nature swap which involved repurchasing $150 million of Barbados’ debt, securing it at more favourable interest rates. The accrued interest savings, spanning a 15-year period, were earmarked for the establishment of the Barbados Marine Conservation Trust, ensuring sustainable funding of US$50 million to US$60 million over the next 15 years, without increasing the national debt burden, said Mottley.
“We are doing this without increasing a cent in debt. But that is because we have built credibility in being able to discuss the climate issues and to show that water scarcity was already a problem before the climate crisis really started to be exacerbated for us. And, therefore, we need to be able to work with the partners in order to be able to see how we can maintain our debt, but get the additional money to do things that if we weren’t using this modality, we would have to look for another, in the case of the blue bonds, another $100 million to $120 million in debt. [We] don’t have that.”
In the latest endeavour, swapping debt for climate impact aims to repurchase US$300 million (BDS$600 million) of Barbados’ debt, with the resulting interest savings allocated to financing the South Coast Sewage Treatment Plant’s transition to tertiary treatment standards at the Graeme Hall plant on the edge of the famed wetlands.
Mottley explained that the move not only addresses sewage treatment but also revitalises aquifers and opens up the possibility of using the treated water for agricultural purposes.
“We hope that we can get that completed in the next 12 months,” the prime minister told the audience. “That is just the financing part of it. And then of course you have to do the execution part which should take about 18 months or so. So, we hope that within the next two and a half years or sooner, we can take care of that.”
Simultaneously, the government has tasked the Barbados Water Authority (BWA) with resolving funding for the West Coast Sewage Project, she said.
The prime minister explained that this is why her administration has been fighting “so hard” to be able to get the partners internationally to do “these kinds of innovative things where you can get US$50 million one way and possibly $80 million, $90 million….”
Mottley emphasised that these efforts are a direct response to the mounting environmental challenges Barbados faces, particularly regarding climate-induced water scarcity.
By proactively engaging with international partners and advocating for grant funding, she argued that the Government is taking concrete steps to mitigate the impact of climate change on the island.
Mottley said she did not yet know how much would come from the debt-for-climate swap, but said she believed it would be enough to finance most if not all of the upgrade for the South Coast Sewage Treatment Plant to tertiary level.
The prime minister argued that when her administration has to make the case for the BWA to get $80 million in grant money, it is because of what the world is doing to this country by way of polluting the climate.
“But if we don’t go and make the case, what will happen? You get what? Nothing,” she asserted.
The prime minister was flanked by Attorney General Dale Marshall, Deputy Prime Minister and Minister of Water Resources Santia Bradshaw, Foreign Minister Kerrie Symmonds, who is MP for St James Central, MP for St James South Sandra Husbands, the minister for foreign trade, and St James North MP Edmund Hinkson at the town hall meeting.