Global Gateway: EU to support Barbados in upgrading climate resilient infrastructure for clean water

Global Gateway: EU to support Barbados

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 will be achieved through a ‘debt for climate swap' which will provide much-needed funding for the upgrade of the Barbados South Coast Sewage Treatment Plant. This will 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 $295 million equivalent of debt, structured as a Sustainability Linked Bond (SLB) or a Sustainability Linked Loan (SLL). This issuance will be backed by a $300 million guarantee. The European Union will provide, through the European Investment Bank (EIB) a $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 will 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 to 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 to be upfront financing.

EU-LAC Global Gateway Investment Agenda

Presented to the EU-CELAC Summit in Brussels, July 17^th 2023, the European Union - Latin America and the Caribbean Global Gateway Investment Agenda (GGIA) highlights potential investment projects to help address the region's infrastructure needs, while creating local added value and promoting growth, jobs and social cohesion, helping to achieve the Sustainable Development Goals. It will allow both sides to work together on identifying fair green and digital investment opportunities in Latin America and the Caribbean, which will benefit from the open environment generated by trade and investment agreements.

The Investment Agenda revolves around the following pillars:

• A fair green transition
• An inclusive digital transformation
• Human development
• Health resilience and vaccines

Global Gateway

Global Gateway represents the European Union's effort reduce the worldwide investment disparity and boost smart, clean and secure connections in digital, energy and transport sectors, and to strengthen health, education and research systems. It provides sustainable investment opportunities to enhance the prosperity and security of our global partners and Europe alike.

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