By Benjamin Flowers
The Economic Commission for Latin America and the Caribbean (ECLAC) has proposed debt relief and the creation of a sub regional fund to help Small Island Developing States (SIDS) deal with the effects of climate change.
ECLAC presented the strategy during a side event at the 21st Conference of Parties (COP21) of the United Nations Conference on Climate Change (UNCCC) held in Paris, France this month.
The proposal for debt relief is structured to help SIDs free-up financing which would have otherwise been used for debt servicing to invest in building resilience and strengthening measures to adapt to climate change. The strategy emphasized that the countries must use the finance from the debt relief for that purpose.
Apart from the debt relief, ECLAC also proposed that a fund be formed specifically for the purpose of assisting SIDs with their adaptation and their efforts to mitigate the effects of climate change.
ECLAC justified the need for the measures by presenting estimates which showed that between 2000 and 2014 natural disasters caused damage of at least US $27 billion in English-speaking Caribbean countries.
Daniel Titelman, director of the regional organization’s Economic Development Division, presented the proposal, explaining that a 2013 assessment of 10 Caribbean countries showed their total debt percentages ranging between 76 and 130 percent of their Gross Domestic Product (GDP).
Titelman explained that the debt recorded for Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Jamaica, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines was unsustainable and would further render the countries vulnerable to the effects of climate change.
The total public debt, both internal and external, of the first 10 countries along with Anguilla, Guyana, Montserrat, Suriname and Trinidad and Tobago – amounted to almost US $50 billion, equivalent to 72 percent of sub-regional GDP.
Of that $50 billion, close to US $30 billion was internal debt and nearly 18 billion to external debt, 46 per cent of which is owed to private creditors and 54 percent to public creditors.