The Caribbean island secures world’s first “debt-for-climate” swap to finance vital projects that will help it cope with the impacts of climate change.
Through a deal with international funding partners, the Caribbean island nation was able to replace outstanding debt with less expensive financing, which generated a savings of $125 million to be used to increase food security while enhancing water resources management, a press release from the European Investment Bank (EIB) said.
“In the face of the climate crisis, this groundbreaking transaction serves as a model for vulnerable states, delivering rapid adaptation benefits for Barbados. With upfront funding from our partners, we are building a state-of-the-art facility to boost water management, food security, and resilience - showcasing how innovation and cooperation drive environmental and fiscal gains,” Prime Minister Mia Mottley said in the press release.
This new debt-swap follows the island's Blue Bond Deal of two years ago, when - as part of a debt-for-nature refinancing program - Barbados unlocked $50 million in funding for conservation of its entire marine ecosystem.
Countries have been embracing more debt swaps in order to make investment funds available for nature conservation projects, Reuters reported.
The new Barbados deal sets a climate adaptation financing benchmark, those involved said. It avoids the increasing public debt burden while helping to meet the nearly $360 billion annually the United Nations has said is necessary to assist developing nations with adapting to climate change.
Water availability in Barbados for farming and other activities is far below the global average.