Sergio Díaz-Granados | Caribbean solutions to global challenges

A few weeks ago, Antigua and Barbuda, a small island in the eastern Caribbean with 93,000 inhabitants and an area of 442 square kilometres (approximately the same size as La Paz and slightly larger than Medellín), became the epicentre of a series of solutions to overcome the challenges faced by small island developing states (SIDS), which are on the front line of the climate emergency and are at a crucial moment for their survival and socio-economic development.

One-third of all SIDS is located in the Caribbean. So, for the well-being of their inhabitants, the region must step forward and influence global discussions on renewable energy development, sustainable tourism, mobility, and especially climate action, given their high vulnerability to the catastrophic effects of natural disasters, sea-level rise, coastal erosion, and the disappearance of coral reefs.

The SIDS4 event, organised every 10 years by the UN to assess progress on sustainable development and propose partnerships and solutions, reflects the international commitment to these islands. In addition to facing high climate vulnerability, Caribbean islands face high costs of import and export and are excessively dependent on external markets and tourism, which represent nearly 26 per cent of GDP.

One of the main certainties we share in SIDS4 is that we need more international financing and resources to drive projects that have a real impact and contribute to achieving the Sustainable Development Goals (SDGs). These must come from development banks, multilateral organisations and the private sector, in a coordinated effort. Development banks will need to embrace new ideas and solutions. As John Maynard Keynes said, “When we are focused on old ideas, we are confined by those same conceptions. To innovate, we must start from scratch.”

DEVELOPMENT ASSISTANCE

In this regard, the CAF – Development Bank of Latin America and the Caribbean – is carrying out an ambitious strategy to expand development assistance options available to the Caribbean. Currently, Trinidad and Tobago, Jamaica, and Barbados are CAF members from the CARICOM grouping, and more recently, they have been joined by Bahamas, Dominica, Grenada, with Antigua and Barbuda also announcing, just two weeks ago, their intention to join our institution, allowing them access to new technical, financial, and knowledge services.

To bolster our partnerships, we have defined a series of innovative financing mechanisms for the Caribbean, including technical cooperation, loans, mobilisation of third-party resources, debt-for-nature swaps, logistical improvements to help lower the cost of living, and other tools to reinforce the development plans of the countries, all with the aim of enabling this region to advance innovative solutions that can help address some of the planet’s most pressing challenges.

Given that CAF is an approved holder of IMF Special Drawing Rights (SDRs), we are well positioned to creatively use SDRs, thus opening a new financing window for development for these countries or using SDRs as combined capital to expand development assistance. We have also committed US$15 million to the Blue Green Bank and will mobilise additional funds in support of the Bridgetown Initiative, as well as increase our financial transactions and operations in local currency.

Difficult times demand innovative and flexible solutions, and that is exactly what we are demonstrating with our new partnerships: placing the unique needs of the Caribbean SIDS at the centre of global development agendas.

Sergio Díaz-Granados, is executive president of CAF - Development Bank of Latin America and the Caribbean. Send feedback to columns@gleanerjm.com