Editorial | US should back Bridgetown Initiative | Commentary – Jamaica Gleaner

Caribbean countries will be grateful for the US$102 million that the United States has pledged to help address Haiti’s humanitarian crisis and to fight crime and climate change in the region.
But, as Caribbean Community (CARICOM) leaders implied in their statement after their meeting last week in The Bahamas with Kamala Harris, America’s vice president, the region would be happier with the US’s backing for a full-throttled overhaul of the global financial architecture to make it more responsive to the needs of developing countries.
More specifically, they want the Biden administration’s support for Mia Mottley’s Bridgetown Initiative, which will be the centrepiece of a conference the Barbadian prime minister will co-host in Paris later this month with France’s President Emmanuel Macron.
“The Caribbean leaders stressed the importance of reform of the global financial system to mobilise short-term liquidity for crisis response and long-term funding for sustainable development, as proposed under the Bridgetown Initiative,” the CARICOM heads of government said in their statement ,“They acknowledged the progress made to include climate-disaster clauses and noted that support is needed to finance global public goods that address mitigating their vulnerability.”
Caribbean countries, mostly small island developing states, spew less than two per cent of the greenhouse gases that cause global warming. Yet, they are among the most vulnerable to climate change.
Sand-and-sea tourism is the major economic activity for most. But their shorelines, and substantial portions of their territories, are susceptible to rising sea levels. At the same time, the region’s weather is increasingly unpredictable, with established seasonal patterns no longer assured. What, though, is clear is that the weather is generally hotter, droughts more sustained, and hurricanes tend to be more ferocious.
Further, regional countries, already hobbled by high debt, locked out of more concessional financing afforded to poorer states, find it difficult to invest in climate-mitigation and adaptation strategies. This problem has been exacerbated by the failure of developed countries to meet their promise, made in 2009, to, by 2020, mobilise US$100 billion a year for climate financing in the developing world. Indeed, climate financing is far short of the estimated US$2.4 trillion a year most analysts say developing countries need to invest, up to 2030, to implement adequate mitigation and adaptation projects. This, of course, is apart from their normal development needs.
This newspaper therefore welcomes the agreement of the spring meetings of the International Monetary Fund (IMF) and the World Bank for the institutions to lend more, and faster, to developing countries, as well as recent calls by the US treasury secretary, Janet Yellen, for the bank to pursue additional initiatives to increase its resources and more flexible lending schemes, including at the sub-national level.
In that regard, next week’s visit to Jamaica by the World Bank’s newly installed president, Ajay Banga, as a part of a global road trip, and his acknowledgement of the bank’s need for “a new playbook” to respond to the requirements of all its partners, is a potentially useful exercise.
However, in crafting his playbook Mr Banga could hardly do better than start with the Bridgetown Initiative, which, unfortunately, appears not – at least by name – to have been central to the agenda of Mr Banga’s sponsor – the United States. Or to the bank itself.
Among the more attractive of the ideas in Ms Mottley’s package is a climate-mitigation trust, backed by US$500 billion donor-guaranteed Special Drawing Rights (SDRs), which would be used to leverage private capital to provide up to US$5 trillion for lending/investment for climate-resilience projects. These loans would go directly to the projects, instead of to governments. In this context, Mr Banga’s intention to identify barriers to private-sector investment is worthwhile.
That others also support the need for multilateral development banks (MDBs) to expand their risk appetite and to put under-used capital to work should be a fillip to the proposal under the Bridgetown Initiative for MDBs to lend another US$1 trillion to governments.
It would also make sense, as Ms Mottley proposed, for the IMF to keep in place the rapid credit and financing arrangement of the pandemic period, as well as release up to US$100 billion in unused SDRs to countries in need. And as the region has proposed, the natural disaster clauses that have found their way in loan agreements should be extended.
Assistance, such as that announced by Ms Harris last week, is helpful. But having a global financial architecture that works for all its partners, including those in the Caribbean, is more likely to provide a sustainable path to a fairer world, and against the disasters of climate change.
View the discussion thread.


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