CDB to create regional financing ecosystem to rescue and reposition Caribbean economies

The Caribbean Development Bank, CDB, is devising a financing programme that’s meant to assist with the rescue, recovery and repositioning of member countries for long-term growth beyond the pandemic.

The so-called ‘financing ecosystem’ will marshal funding through various means, while taking into consideration the need for a pipeline of development financing, as well as the existing debt stock of borrowing countries.

“This would require a wide spectrum of financing instruments that is underpinned by a strong regulatory environment and a well-developed financial market infrastructure,” said President of the CDB Dr Gene Leon at the bank’s annual press conference this week.

The development bank announced at the press conference that it was instrumental in mobilising US$80 million of financing for pandemic recovery for the region, in partnership with other lending institutions. Overall, the CDB itself approved US$122.6 million in projects in 2021, of which loan financing accounted for US$71.2 million, and grant funding of US$51.4 million. The size of the financing contemplated for the new recovery and repositioning programme was not disclosed.

Leon outlined several propositions, including contingent debt instruments to incentivise countries to undertake reforms to lower their debt risk, which will make future financing more affordable.

He also cited resilience bonds for climate financing; and Sustainable Development Goals-themed bonds for activities designed to meet specific SDGs. The resilience bonds are proposed to be denominated in Special Drawing Rights, the currency of the International Monetary Fund.

Leon is also proposing the creation of a secure, zero-divide regional digital network grid to facilitate enhanced services in trade, education, health, commerce, security and justice, and government service delivery.

He recommended greater focus on fostering social resilience by leveraging digital technology to enhance health services, and to increase capacity by promoting problem- solving, knowledge creation and innovation in regional education systems; and greater use of renewable energy sources and energy efficiency to accelerate the region’s shift to sustainable energy.

“Our development challenge is not merely to recover lost ground and close the distance to achieving the Sustainable Development Goals, but to fundamentally alter the development path so that our societies can be placed on a higher and more sustainable welfare path in the future,” Leon said.

CMC