Statement delivered by H.E. Ryan Straughn, Minister of Finance, Barbados
V20 MINISTERIAL DIALOGUE X
16 April 2023
H.E. Ryan Straughn, Minister of Finance, Barbados
Barbados supports the establishment of the global sovereign roundtable to urgently review debt dynamics given the recent rapid increase in global interest rates.
Quick example, one of the MDB loans Barbados received to provide critical relief and budget support to offset the significant economic fallout due to the COVID-19 pandemic increased sharply from 1.09% in March 2022 to 5.48% in March 2023. Whilst we accept the concept of how variable rates work, this is unprecedented and is clearly not consistent with the spirit in which these loans were accessed. Therefore the work to review these interest rates is critical as the increased costs across the entire portfolio of loans would create additional debt service challenges for all of us, at the very time the world continues to experience growing and more complicated poly-crises.
Given the intensification of the climate crisis Transformation of the international financial architecture is critical for V20 countries. The United Kingdom was able to repay its debt to finance World War I over a 100-year period. This is an example of the kind of long-term concessional finance that V20 members can benefit from in order to finance climate adaptation and mitigation.
Barbados is working with the IMF and other MDBs to collaborate on the development of a clear climate finance strategy given the establishment of the Resilience and Sustainability Trust. We see this effort as critical because coordination amongst stakeholders is important if transformation of international finance is to be achieved. Let me acknowledge IMF Deputy Managing Director Bo Li for leading that charge.
Barbados restructured its debt in 2018 and at that time we included natural disaster clauses in the restructured instruments. We are pleased that some MDBs and bilateral lenders are now including both natural disaster and pandemic clauses in their operations as Barbados was the world’s first issuer of pandemic clauses when we completed a debt-for-nature swap in September 2022.
For clarity, these clauses provide a two-year moratorium of all debt service such that the affected country can utilize those financial resources to rebuild whilst also providing certainty to creditors.
The truth is however, whilst inclusion of these natural disaster clauses are indicative of progress being made, none of us as V20 members actually want to experience the natural disaster in order to trigger the financial relief.
We would rather see those resources utilized upfront to build climate resilience ahead of the natural disaster events. Therefore, Barbados would like to call for a proactive application of the natural disaster clauses for the V20 which the IMF and World Bank can coordinate in order to release resources now rather than waiting for a devastating event in order to respond. This is the kind of innovation and transformation that would benefit our citizens today rather than tomorrow.
The Bridgetown Initiative conceives of a range of reforms that we believe is critical to the well-being of the citizens of V20 member countries and therefore your continued support to drive the agenda to achieve credible action is vital. To that end, we invite members to participate both virtually and in-person in Bridgetown to help reshape the second iteration and we register our commitment to the Accra-Marrakech Agenda.