Proposal on debt for climate adaptation swaps: a strategy for growth and economic transformation of Caribbean economies

ECLAC advocates that the Caribbean’s high debt dilemma was not principally driven by policy missteps, or the international financial crisis. Rather, it finds its roots in external shocks, compounded by the inherent structural weaknesses and vulnerabilities confronting Caribbean SIDS and their limited capacity to respond. A major factor has been the underperformance of the export sector, partly due to a decline in competitiveness and a slowdown in economic activity especially among the tourism-dependent economies. Caribbean countries have also accumulated debt as a consequence of increased expenditures to address the impact of extreme events and climate change attendant difficulties. Most Caribbean countries are located in the hurricane belt and are also prone to earthquakes and other hazards. Indeed, a disaster resulting in damage and losses in excess of 5 per cent of GDP can be expected to hit any Caribbean country every few years. Moreover, over the period 2000-2014, it is estimated that the economic cost of natural disasters in Caribbean countries was in excess of US$30.7 billion. The English Speaking Caribbean countries are extremely vulnerable to natural disasters.

Executive Summary. -- Introduction.-- I. The debt situation in the Caribbean. -- A. The level and composition of external debt. -- B. Debt decomposition and sustainability in the Caribbean. -- C. The genesis and impact of debt in the Caribbean. -- II. Size and vulnerability: critical factors affecting Caribbean growth and development. -- A. Prospects for achieving sustainable development in the Caribbean’s current reality. -- B. Addressing structural gaps: the role of improving fiscal performance, consolidation and debt management. -- III. The role of green industries in inducing structural change. -- A. Building the case for the development of green industries in the Caribbean. -- IV. Essential elements of a framework for the operationalization of a debt for climate adaptation swap mechanism.