Commissioner for International Partnerships, Jutta Urpilainen, has announced the EU’s intention to support the upgrading of Barbados’ climate-resilient infrastructure for clean water, in line with the Global Gateway investment agenda presented at the EU-CELAC Summit in July.
This would be achieved through a ‘debt for climate swap’ to provide much-needed funding for the upgrade of the Barbados South Coast Sewage Treatment Plant. This would advance the country’s efforts to mitigating the impacts of climate change, reducing chronic water shortages and improving wastewater systems.
Commissioner Urpilainen and Barbados’ Prime Minister Mia Mottley met on Thursday in Paris the framework of the Paris Peace Forum.
Commissioner Jutta Urpilainen said: “The EU is fully committed to supporting climate-resilient infrastructure projects in our partner countries. The Small Island Developing States, like Barbados, are paying the highest price for their exposure to natural hazards. Barbados is taking a crucial step towards a greener, more sustainable future, and we are proud to be part of this transformation. With the Global Gateway investment agenda, we are following up on July’s EU-CELAC Summit commitments to deliver the digital, green and fair transitions with our Caribbean partners. This initiative aligns with our priorities and shows how international partnerships can drive positive change.”
Prime Minister Mia Mottley said: “The global community has recognised that the only way we will overcome the many challenges posed by the climate crisis is through new levels of partnership and cooperation. The support from the EU under Global Gateway underlines how such partnership can accelerate critical investments and support vulnerable populations at a crucial time in our history. This innovative financing structure, a world’s first for resilient infrastructure, can provide a new avenue to allow climate-vulnerable states to accelerate critical investment in adaptation in a manner that does not jeopardise public debt dynamics.”
President of the European Investment Bank, Werner Hoyer, said: “Tools like debt-for-climate swaps can create the necessary fiscal space for essential investments, especially in the most climate vulnerable countries. At the EIB we look forward to making this new scheme operational and impactful. Together with the European Commission, we are proud to work with trusted partners like Barbados and the IDB on this highly innovative financial tool.”
President of the Inter-American Development Bank, Ilan Goldfajn, said: “To make a difference in addressing climate change at the scale we need and enhance resilience, innovative financial mechanisms like this debt -for-climate swap in Barbados are critical. That is why the IDB is squarely focused on working with partners and countries to develop creative approaches, in particular for vulnerable small islands. We would like to thank the European Commission and the European Investment Bank for joining forces with us to support Barbados.”
The announced partnership will allow the Government of Barbados issuing approximately €276 million ($295 million) equivalent of debt, structured as a Sustainability Linked Bond (SLB) or a Sustainability Linked Loan (SLL). This issuance would be backed by a €280 million ($300 million) guarantee.
The European Union would provide, through the European Investment Bank (EIB) a €140 million ($150 million) guarantee while the Inter-American Development Bank (IDB) will make available another guarantee of the same amount.
These freed-up proceeds from the debt swap would be used to pay for the upgrade of the South Coast Sewage Treatment Plant, a multi-faceted project that aims to increase existing water supplies, mitigate the impacts of climate change, combat seawater intrusion and rising sea levels, diversify potable water sources, as well as reduce the environmental impact of treated effluent on marine life and the local ecosystem.
In addition to helping address many challenges linked to water in Barbados, it will also contribute to generate much-needed employment opportunities for the local population. The total estimated cost for the upgrade is €100 million, which requires upfront financing.
