London Daily

Focus on the big picture.
Thursday, Oct 02, 2025

Barbados spearheads push on climate disaster financing

Barbados spearheads push on climate disaster financing

At the U.N. climate summit in Egypt, leaders of developing nations have repeatedly said it's not fair to expect them to cover the costs of rebuilding from devastating weather events in a warming world, plus invest in cleaner industry while they also pay much higher interest rates on loans than rich nations.
A plan put forward by Barbados Prime Minister Mia Mottley would overhaul the way much of development lending works. It is also giving voice to developing nations struggling under rising debt from climate damage.

“We were the ones whose blood, sweat, and tears financed the Industrial Revolution,” Mottley said in a scathing address. “Are we now to face double jeopardy by having to pay the cost as a result of those greenhouse gases from the Industrial Revolution?”

Debt has been growing in developing countries, sapping funds for education, health and clean energy. Much of the increase in debt in some Caribbean countries is related to extreme storms, Mottley said in a recent essay. The plan would make it easier for countries in the Caribbean, Latin America, Africa and Asia to get funds to beef up defenses against warming and put off debt payments when disasters strike.

Here's a look at the Barbados plan, dubbed the Bridgetown Initiative for the island nation's capital. Advocates say it could be a pathway to unlocking $1 trillion in climate financing.

THE BIG IDEA

The plan calls for special loan clauses that allow for suspending payments when a country is hit by a natural disaster or pandemic. That would immediately free up millions of dollars for governments to spend on relief and rebuilding. Barbados has been a pioneer in such clauses, last month issuing its first sovereign bond with a provision allowing for payments to creditors to be deferred for up to two years if the country experiences a “pre-defined natural disaster.”

The initiative includes a push to expand lending by international development banks such as the World Bank. The bank and its sister institution, the International Monetary Fund, were set up after the Second World War with the aim of financing reconstruction and reducing poverty. The power of rich countries such as the United States and Germany is built into the institutions. But the World Bank in particular has been criticized for being too risk averse in lending. The Barbados plan would change risk ratings, crucially lowering interest rates.

Another idea is setting up a Climate Mitigation Trust backed by $500 billion worth of Special Drawing Rights, dues that member countries pay in to the IMF that can be drawn in times of crisis. Much of it is held by countries that don't need it, said Avinash Persaud, Mottley's special envoy for climate. The trust could be used to borrow a further $500 billion from the private sector that could be lent out at low rates for investment in big climate mitigation infrastructure projects. Up to $5 trillion in private financing could be unlocked this way, the plan's architects say.

Other proposals include a levy on fossil fuel production or an international carbon border tax.

CREDITWORTHY

The Barbados Initiative takes aim at a central problem: Poorer nations face much steeper borrowing costs.

When most wealthy countries borrow money, they pay 1 to 4% in interest, while countries in the so-called Global South face rates of 12-14%, Mottley told reporters.

“You begin to see the disparity,” Mottley said. “The system is broken.”

Following World War II, she said, victorious Allied nations agreed to cap Germany’s debt costs so that it could rebuild. Britain refinanced its First World War debt, paying off the last of it only in 2014.

“We are simply saying in the developing world that we also need the space to be able to finance our development in the case of climate,” Mottley said. Wealthy nations account for four fifths of global greenhouse gas emissions.

Hanan Morsy, chief economist at the U.N. Economic Commission for Africa, told The Associated Press that a number of the Bridgetown Initiative’s ideas also have been advanced by African finance ministers. He pointed out another financial inequity: The green bond market which helps finance environmental projects has reached $500 billion, but only one percent reaches Africa.

RICH NATIONS

Mottley first unveiled her idea at the COP26 meeting a year ago in Glasgow, Scotland. Over the summer she and Persaud convened economists, other academics and civil society groups to work on it.

Now, she said, momentum for her ideas is gathering.

French president Emmanuel Macron was the first leader from a rich country to give his backing.

“We need a huge financial shock of concessional financing," Macron said in a speech at the opening of COP27. “We must change the rules, the rules of our major international banks, the development banks, the IMF and the World Bank,” he said. “We can’t wait for the next COP.”

To support Mottley's plan, “a group of wise minds at the highest level" has been set up, tasked with drawing up climate financing solutions by spring 2023, when the World Bank and the International Monetary Fund hold their annual meetings, Macron said.

As climate-amped disasters ratchet up the suffering, the staid international system for finance designed for an earlier age may be on the brink of change, driven by those on the front lines.

Germany, the World Bank's fourth largest shareholder, has been among those pushing for “fundamental reform," including “climate lending on better terms." Federal Reserve chief Janet Yellen said multilateral development banks need to “evolve" moving beyond their traditional work of poverty reduction to tackle climate and other global challenges.
Newsletter

Related Articles

0:00
0:00
Close
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
Disney Reinstates ‘Jimmy Kimmel Live!’ after Six-Day Suspension over Charlie Kirk Comments
U.S. Prosecutors Move to Break Up Google’s Advertising Monopoly
Nvidia Pledges Up to $100 Billion Investment in OpenAI to Power Massive AI Data Center Build-Out
U.S. Signals ‘Large and Forceful’ Support for Argentina Amid Market Turmoil
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
Vietnam Faces Up to $25 Billion Export Loss as U.S. Tariffs Bite
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Indonesia Court Upholds Military Law Amid Concerns Over Expanded Civilian Role
Larry Ellison, Michael Dell and Rupert Murdoch Join Trump-Backed Bid to Take Over TikTok
Trump and Musk Reunite Publicly for First Time Since Fallout at Kirk Memorial
Vietnam Closes 86 Million Untouched Bank Accounts Over Biometric ID Rules
×