In a trailblazing move, Barbados has successfully launched the first-ever debt-for-climate resilience conversion, unlocking $125 million in fiscal savings to strengthen its climate adaptation efforts.
This innovative financing model allows the island nation to tackle climate change without increasing public debt—a win for both the economy and the environment.
What Does This Mean for Barbados?
The funds will be channeled into critical projects that:
- Modernize water management,
- Protect marine ecosystems,
- Strengthen water and food security.
How Did They Do It?
The deal, arranged by CIBC Caribbean and backed by $300M in guarantees from the Inter-American Development Bank (IDB) and the European Investment Bank (EIB), replaces expensive debt with more affordable, long-term financing. The Green Climate Fund (GCF) and IDB also provided upfront funding, including a $40M grant.
Why Is It Groundbreaking?
- This marks the world’s first Sovereign Sustainability-Linked Loan (SSLL) tied to water security and climate resilience targets.
- If sustainability goals aren’t met, penalties will fund further environmental initiatives through the Barbados Environmental Sustainability Fund.
- Barbados sets an example for vulnerable nations by combining financial innovation with urgent climate action.
Prime Minister Hon. Mia Mottley:
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.
Read more:
https://www.greenclimate.fund/news/barbados-launches-worlds-first-debt-climate-resilience-conversion