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Caribbean “debt service payments should go to a resilience fund,” says top ECLCAC official!

alicia barcena

Caribbean leaders appear to be giving serious consideration to making a proposal requesting the gradual write-off of billions of dollars in external debt.

The issue was raised by Executive Secretary of the UN Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena at a high-level meeting this morning that preceded yesterday’s official opening of the 36th regular meeting of the Conference of Heads of Government of CARICOM.

She pointed out that 40 per cent of the Caribbean’s US$46 billion debt is to multinational agencies, with 14 per cent being bilateral.

Of that amount, she said, US$30 billion was accumulated between 1990 and 2014 as a result of natural disasters.

She described the situation facing regional states are serious, explaining that five Caribbean countries are among the most indebted in the world.

Bárcena said the problems are compounded by the vulnerabilities of Caribbean economies that are already facing a decline in foreign direct investment.

“Antigua and Barbuda, Barbados, Grenada, Jamaica, St Kitts and Nevis are the top five in the Caribbean,” she said. “Nobody talks about them. We all hear about Belize. Of course it represents one per cent of the global debt so we are not a systematic problem.”

The ECLAC official said “the time is ripe” for CARICOM states, along with the Caribbean Development Bank, the International Monetary Fund and the World Bank to hammer out an agreement on a proposal for debt relief.

“The debt service payments should go to a resilience fund that can probably be managed by the Caribbean Development Bank. The resilience fund should be used . . . for infrastructure adaptation, sea defence.

“Another fund that should be very important is  . . . an external micro economic fund. That fund is for external shocks. Who should support that external micro economic fund is the larger economies of Latin America, the Brazil and Columbia,” she said.

In his intervention, President of the Caribbean Development Bank Dr. Warren Smith said Caribbean leaders need to show they are serious about change by making hard decisions.

“Even as we make a case for that debt relief we need to demonstrate to those with whom we are negotiating that we are prepared to take the tough decisions to do the right thing,” he told the meeting.

“We need to change the structure of our economies. We can’t continue to do what we have done in the past and expect different results.”

The discussion was attended by UN Secretary-General Ban Ki-moon, Secretary-General of the Organisation of American States Luis Almagro Lemes, and Secretary-General of the Commonwealth Kamalesh Sharma, among other officials.

Credit: Caribbean 360

Caribbean seeks to take full advantage of new U.N. climate fund

Dr Kenrick Leslie, CBE; Credit: Earl Green

Dr Kenrick Leslie, CBE; Credit: Earl Green

The South Korea-based Green Climate Fund (GCF) is open for business, and Caribbean countries are hoping that it will prove to be much more beneficial than other global initiatives established to deal with the impact of climate change.

“Despite our region’s well-known, high vulnerability and exposure to climate change, Caribbean countries have not accessed or mobilised international climate finance at levels commensurate with our needs,” said Dr. Warren Smith, the president of the Barbados-based Caribbean Development Bank (CDB).

The CDB, which ended its annual board of governors meeting here on Thursday, May 29, had the opportunity for a first-hand dialogue on the operations on the GCF, through its executive director, Hela Cheikhrouhou, who delivered the 15th annual William Demas Memorial lecture.

But even as she addressed the topic “The Green Climate Fund; Great Expectations,” Smith reminded his audience that on a daily basis the Caribbean was becoming more aware of the severe threat posed by climate change.

“Seven Caribbean countries…are among the top 10 countries, which, relative to their GDP, suffered the highest average economic losses from climate-related disasters during the period 1993-2012.

“It is estimated that annual losses could be between five and 30 percent of GDP within the next few decades,” he added.

According to a Tufts University report, published after the 2007 Intergovernmental Panel on Climate Change (IPCC) study and comparing an optimistic rapid stabilisation case with a pessimistic business-as-usual case, the cost of inaction in the Caribbean will have dramatic consequences in three key categories. Namely hurricane damages, loss of tourism revenue and infrastructure damage due to sea-level rise.

The costs of inaction would amount to 22 percent of GDP for the Caribbean as a whole by 2100 and would reach an astonishing 75 percent or more of GDP by 2100 in Dominica, Grenada, Haiti, St. Kitts and Nevis, and Turks and Caicos.

“In the Caribbean, the concern of Small Island Developing States is all too familiar – the devastating effects of hurricanes have been witnessed by many. Although Caribbean nations have contributed little to the release of the greenhouse gases that drive climate change, they will pay a heavy price for global inaction in reducing emissions,” Cheikhrouhou warned.

Executive director of the Belize-based Caribbean Community Climate Change Centre (CCCCC), Dr. Kenrick Leslie told IPS that regional countries were now putting their project proposals together to make sure they could take full advantage of the GCF.

“The CARICOM [Caribbean Community] heads of government, for instance have asked the centre to help in putting together what they consider bankable projects and we are in the process of going to each member state to ensure that we have projects that as soon as the GCF comes on line we would be among the first to be able to present these projects for consideration.”

Leslie said that in the past, Caribbean countries had been faced with various obstacles in order to access funds from the various global initiatives to deal with climate change.

“For instance if we mention the Clean Development Mechanism [CDM], the cost was prohibitive because our programmes were so small that the monies you would need upfront to do it were not attractive to the investors.”

He said the Caribbean also suffered a similar fate from the Adaptation Fund, noting “we have moved to another level where they said we will have greater access, but again the process was much more difficult than we had anticipated.”

The GCF was agreed at the 16th session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) held in Cancun, Mexico.  Its purpose is to make a significant contribution to the global efforts to limit warming to 2°C by providing financial support to developing countries to help limit or reduce their greenhouse gas emissions, and to adapt to the unavoidable impacts of climate change. There are hopes that the fund could top 100 billion dollars per annum by 2020.

“Our vision is to devise new paradigms for climate finance, maximise the impact of public finance in a creative way, and attract new sources of public and private finance to catalyse investment in adaptation and mitigation projects in the developing world,” the Tunisian-born Cheikhrouhou told IPS.

She said that by catalysing public and private funding at the international, regional, and national levels through dedicated programming in climate change mitigation and adaptation, and as a driver of climate resilient development, the GCF is poised to play a relevant and timely role in climate action globally.

Cheikhrohou said that it would be most advisable if Caribbean countries “can think of programmatic approaches to submit proposals that are aggregating a series of projects or a project in a series of countries.”

She said that by adopting such a strategy, it would allow regional countries “to reach the scale that would simplify the transaction costs for each sub activity for the country” and that that she believes the GCF has “built on the lessons learnt from the other mechanisms and institutions in formulating our approach.

“To some extent there is embedded in the way of doing work this idea of following the lead of the countries making sure they are the ones to come forward with their strategic priorities and making sure we have the tools to accompany them through the cycle of activities, projects or programmes starting with the preparatory support for the development of projects,” she told IPS.

Selwin Hart, the climate change finance advisor with the CDB, said the GCF provides an important opportunity for regional countries to not only adapt to climate change but also to mitigate its effects. He is also convinced that it would assist the Caribbean move towards renewable energy and energy efficiency.

“The cost of energy in the Caribbean is the highest in the world. This represents a serious strike on competitiveness, economic growth and job creation and the GCF presents a once in a lifetime opportunity for countries to have a stable source to financing to address the vulnerabilities both as it relates to importing fossil fuels as well as the impacts of climate change,” he said.

Credit: Thomas Reuters Foundation; CMC/pr/ir/2014

Three criteria the Green Climate Fund MUST meet for the Caribbean to benefit

Credit: CGIAR Challenge Program on Water and Food

Credit: CGIAR Challenge Program on Water and Food

President of the Caribbean Development Bank (CDB) Dr. Warren Smith says the Green Climate Fund (GCF), a new multilateral initiative, must achieve three short-term objectives if it is to be different, make a significant contribution to transforming Caribbean economies and create low carbon, climate-resilient societies in the region.

  • First, the Board of the Fund must complete before year-end, the design work necessary to ensure that the Fund becomes operational by 2014.
  • Second, given the global scale of the climate challenge, the GCF must be well resourced. In this regard, developed countries should, by the end of this year, make firm commitments towards resourcing the initial capitalisation of the GCF;
  • Third, this Fund must pay particular attention to the needs of those developing countries which are most vulnerable to climate change.

In underscoring the importance of this Fund, Dr. Smith said,

We, in the Caribbean, share the vision of the founders of this Fund, as enunciated in its Governing Instrument that, “given the urgency and seriousness of climate change …the Fund is to make a significant and ambitious contribution to the global efforts towards attaining the goals set by the international community to combat climate change”

He continued…

To ensure that [developing] countries can access the Fund on equal terms, when it is fully operational, the Board must advance, in a meaningful manner, its work programme on climate finance readiness and preparatory support.

The  GCF Board members from Barbados and Zambia, representing the Small Island Developing States and Least Developed Countries constituencies, have called for the prioritisation of activities related to readiness and preparatory support during the design of the Fund, as developing countries in these groups have, traditionally, not accessed climate finance at levels commensurate with their high vulnerability to climate change.

Take, for example, the case of the Caribbean. Of the 694 national projects approved by the Global Environment Facility (GEF) under its climate change focal area between FY 1991 and FY 2013, only 33 national projects from CARICOM countries received support. This represents a mere USD24 million or less than 1% of the total USD2.5 billion grant financing provided by the GEF for national climate action. The amount allocated to the Caribbean must be seen in the context of a worsening of the climate change phenomenon and of economic losses in excess of USD1 billion in three Caribbean countries for 2012 alone.

This inability of Caribbean countries to access climate financing can be directly attributed to institutional constraints; to difficulty in identifying priorities and developing coherent investment programmes; and to serious deficiencies in capacity to effectively and efficiently implement projects and programmes.
It is extremely important to note that, in general, the burdensome criteria attached to accessing resources are often by themselves a deterrent to access.

The situation is complicated by the monitoring and reporting requirements to evaluate outcomes.
Therefore, if these countries and other countries with similar capacity constraints are to benefit from the GCF, it is crucial that focus is placed on “climate finance readiness” at the national, regional and international levels ~Dr. Warren Smith

Despite these challenges, Dr. Smith notes that there is consensus, at the highest political levels in the Caribbean, on the way forward.

Leaders have endorsed a Regional Climate Change Strategy and Implementation Plan to guide national and regional efforts towards building climate-resilient, low-carbon economies. This effort will require transformational change by national governments, regional organisations, civil society and the private sector, underpinned by an unprecedented level of financial resources and technical assistance. Within the context of the regional Implementation Plan, CDB has been assigned, and takes seriously, the role of spearheading the Region’s resource mobilisation efforts.

Dr. Smith says the region must boost  capacity (policy, institutional, expertise and accountability) and develop investment-ready, low-carbon climate-resilient projects and programmes to benefit from the GCF and other new flows of low-carbon, climate-resilient financing.

Dr. Smith was speaking at the launch of the Green Climate Fund Workshop on Climate Finance Readiness in Barbados on July 11, 2013. Read his speech here.

** The workshop was convened by CDB, in partnership with the Green Climate Fund and the Government of Germany through GIZ.

Dr. Kenrick Leslie, CBE, Executive Director of the Caribbean Community Climate Change Centre, also spoke at the workshop. See highlights of his speech here and/or review the actual speech here.

Also read: Dr. Ulric Trotz says the Caribbean lags in climate finance

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