Exploring solutions to the Caribbean debt challenge: Debt reduction through financing for climate adaptation swaps and a Caribbean Resilience Fund

Event

Teaser:

The possibilities for integrating the twin imperatives of pursuing climate resilience and debt reduction, from a Caribbean perspective, will be considered at a side event during the 21st session of the Conference of the Parties to the UNFCCC (COP21).

Event information

Date:

-

Event type:

Meetings and technical symposiums

Participation:

By invitation

For Caribbean SIDS in particular, COP21 represents the culmination of an important process of advocacy over the past year that began

with the adoption of the SAMOA Pathway on SIDS, and was punctuated by the Addis Ababa

Action Agenda for financing development in July and by the global endorsement in September

of the new Sustainable Development Goals.

The Paris meeting, the next vital phase in this continuum, will afford us renewed perspective on

the integrated development issues that define the economic, social and environmental

vulnerability of Caribbean SIDS, with special emphasis on the significant exposure of these

island and coastal states to the varied impacts of climate change. The region is currently

shouldering a serious debt burden, the proportions of which threaten to erode the gains made.

Given the bleak medium term outlook for growth, there can be no doubt that something must be

done.



An ECLAC assessment of the debt profile of the Caribbean subregion determined that countries

can be placed into three categories, based on their debt structure: the highly indebted countries

whose debt to GDP ratios range between 99% and 135% of GDP, and whose debt servicing

absorbs a significant proportion of public expenditure; the moderately indebted with

commitments ranging between 41% and 77 % of GDP; and those few countries whose debt averages some 31 % of GDP. Eleven Caribbean states fall in the first two categories, eight of

these carrying debt to GDP ratios in excess of 60%, the level adjudged by the IMF as the

threshold for unsustainable debt.

The fiscal adjustment demands on these economies have been intense, with noticeable spillovers

across the region, including in the area of trade. In the case of the high and moderately indebted,

the significant overhang has constrained their access to international finance despite the

availability of low international interest rates. For some countries considerable efforts at

adjustment have been insufficient to reduce the stubborn debt burden. There is no respite for

these countries which, despite their vulnerability to climate change and extreme weather events,

are categorized as middle income and, by implication, considered capable of fending for

themselves.

It is in the context of these circumstances that ECLAC is offering a proposal for debt relief,

which can at once help to free-up fiscal space while responding directly to the need for

Caribbean SIDS to build their resilience and strengthen measures for adaptation to climate

change. While Caribbean countries are entitled to climate funds, they have thus far had little

success in accessing them. Consideration is now being given to leveraging such funds for debt

reduction in the Caribbean.

This side event provides an opportunity to explore, from a Caribbean perspective, the

possibilities for integrating the twin imperatives of pursuing climate resilience and debt

reduction. It is being presented in partnership with the Commonwealth Secretariat, which has

been a thought leader on the notion of climate finance swaps to provide debt relief over the past

few years, thereby providing a valuable foundation on which the ECLAC proposal has been

developed.

Welcome and Introduction

Diane Quarless, Director, ECLAC Caribbean

Presentation of the ECLAC Proposal

Daniel Titelman, Director, Economic Development, ECLAC

Perspectives on Debt Relief and Climate Finance Swaps

Deodat Maharaj, Deputy Secretary General, Commonwealth Secretariat

What Role for Multilateral Banks in facilitating debt for climate

adaptation swaps?

Amal-Lee Amin, Division Chief, Climate and Sustainability Division,

IADB

View from Caribbean Governments

Senator the Honorable Dr. James Louis Fletcher,

Minister of Sustainable Development, Energy, Science and

Technology, Saint Lucia

The Supporting Role of Regional Institutions

Garfield Barnwell, Director, Sustainable Development, CARICOM

Questions from the Floor and Discussion

Related Content:

2015-12-08 | Press Release

ECLAC Proposes Debt Relief for the English-speaking Caribbean to Invest in the Fight Against Climate Change

The United Nations regional organization presented this proposal in the framework of the international conference against global warming that is being held in Paris.