Natural disaster debt pause offered by Canada

As Barbados was placed until tropical storm watch on Wednesday, Canada offered to pause debt repayments for Caribbean countries hit by natural disasters.

Prime Minister Justin Trudeau made the announcement on Wednesday as he met with Caribbean leaders on day one of the Canada-CARICOM summit in Ottawa.

“Canada will now offer climate debt resilient clauses (CDRCs) in all sovereign lending,” he told the summit during a session on climate change.

The Bridgetown Initiative, a set of recommendations on debt relief, low-interest lending and climate change promoted by Prime Minister Mia Mottley had advocated for such climate clauses.

Like the debt clauses the World Bank offered in June, Canada’s promise of pauses on repayment due to natural disasters would apply only to new loans.

Addressing the World Bank debt pause clause, Mottley pointed out that it applied only to the principal of a loan, not to the interest and therefore offered little help to countries in crisis.

“Instead of having debt pause clauses for all existing debt for vulnerable countries, we are now being told that it is likely to be future debt,” she said.

Mottley said philanthropy and multinational companies “must play their part” to help the World Bank finance climate adaptation and other initiatives among developing countries, such as those in the Caribbean.

“So that we have three sources of funding: public money, private-sector capital … and philanthropy, and we can then have a World Bank that is scaled up to help meet the needs of the world,” the Barbadian leader said.

The discussions on Wednesday came as Barbados and several other countries were under a tropical storm watch following the development of Tropical Storm Tammy.

The Barbados Meteorological Services said the system is projected to pass north of the island on Friday.

The threat of the weather system prompted Dominica’s Prime Minister Roosevelt Skerrit to leave the summit earlier than planned. (BT)