Barbados Proposes New World Bank Financial Facility

By Andrea Shalal
NEW YORK (Reuters) – Barbados is advocating for a new World Bank finance facility aimed at providing emergency liquidity to climate-vulnerable countries, as part of an updated Bridgetown Initiative supported by numerous developing nations.

Prime Minister Mia Mottley addressed the Council on Foreign Relations, highlighting the need for reform within international financial institutions to tackle escalating challenges such as high debt, climate change, and stagnating growth. “The success that we need is a change of attitude and a resetting of attitudes across the world,” she stated, emphasizing the importance of being recognized and heard amid these multifaceted challenges.

The Bridgetown Initiative, initially launched in 2022 and refined in 2023, seeks to make borrowing more affordable for about 70 at-risk emerging markets and developing nations. Various tax strategies, including potential levies on shipping, airlines, and the wealthy, are also being evaluated to finance the necessary advancements in climate resilience without incurring additional debt.

Bridgetown 3.0 outlines targeted actions to enhance funding for climate adaptation and bolster economies against natural disasters, while fostering sustainable long-term growth. The initiative estimates an annual need of $1.8 trillion for climate crisis mitigation and related environmental investments, in addition to $1.2 trillion to alleviate poverty and fulfill Sustainable Development Goals.

The agenda pressures international financial bodies to empower developing nations in governance and decision-making and demands reforms to the Group of 20’s Common Framework for debt treatment for more prompt resolutions.

It also proposes that the World Bank create a dedicated “universal contingent finance facility” offering low- or zero-interest emergency liquidity to climate-vulnerable countries post-natural disasters. The updated plan advocates for donor countries to inject at least $120 billion into the International Development Association (IDA) this year, while also seeking to mobilize an additional $500 billion in private funding annually.

Rajiv Shah, a former U.S. Agency for International Development administrator and Rockefeller Foundation president, praised the initiative, suggesting it could generate trillions in new funding for emerging markets and developing nations if effectively implemented.