PM hails groundbreaking $240m debt-for-climate swap

Prime Minister Mia Mottley on Tuesday defended a groundbreaking debt-for-climate swap as a global first that will finance a $240 million upgrade to critical infrastructure, including the South Coast Sewage Treatment Plant, without increasing the national debt. 

She described the initiative to lawmakers in the House of Assembly as a “transformative” solution to tackle climate resilience and modernised infrastructure.

She declared: “The same debt we were going to pay this year, next year, 2026… is the exact same debt that will be paid.

“The difference is that on the other side of the balance sheet, you’re going to have an asset that is now a tertiary treatment plant that changes what was the situation for the last few decades.”  

Mottley stressed that the initiative marked a significant first in global climate finance: “This is the first debt-for-climate swap that will get back a capital sum upfront to build a project upfront. What is here is the ability to repurpose debt in a way that not only meets our obligations but provides immediate financing for critical infrastructure.”  

The prime minister outlined additional projects under the deal, including the installation of a pipeline, a seven-megawatt solar energy system with battery storage, and upgrades to water infrastructure. She noted that these investments would modernise the island’s systems and strengthen climate resilience.  

Mottley also stressed that taxpayers would bear no extra cost, as the arrangement involves restructuring existing debt at lower interest rates.  

“Not a dollar, not a cent. It is coming out purely of taking our existing debt and instead of paying eight per cent… we pay only 3.25 per cent and get a treatment plant… a pipeline… [and] a seven-megawatt solar system with battery storage,” she said.  

Opposition Leader Ralph Thorne.

Mottley further noted that the deal had garnered international recognition, with financial leaders from the International Monetary Fund, European Investment Bank, and Inter-American Development Bank praising the country’s innovative approach.  

Her remarks came in response to Opposition Leader Ralph Thorne, who dismissed the transaction as “just another loan” and questioned its originality. He argued that similar arrangements had been made by other countries as early as 1987 and accused the government of misleading the public into believing it was “unprecedented”.

“Is the government replacing local debt with foreign debt? That is a question of particular importance,” Thorne said, adding that such a move could contradict the administration’s objectives of decreasing the national debt. He also raised concerns about whether the project admitted to untreated sewage being pumped into the sea.  

Mottley rubbished these claims, framing the initiative as a critical investment in the country’s future.  

She said: “This is not a conservation effort. This is a capital project intended to protect the water resources of Barbados, augment the water available to farmers, bring down the cost of food, and allow those ploughing the food to earn a living to support their families. If that is not groundbreaking, I don’t know what is.” (SM)

Also see Page 6.