How The G20 Can Help Caribbean Sids Escape From Their Debt-climate Change Trap

Caribbean SIDS are caught in a vicious, middle-income country debt-climate change trap, as the resources they need to invest in climate resilience are increasingly being diverted to repay their debts while their borrowing costs are rising partly due to climate- related vulnerabilities, leading to more debt. This unjust situation, which reflects the inequalities embedded in the global financial architecture, has made these climate vulnerable Caribbean countries the most heavily indebted SIDS worldwide. In accordance with the T20’s Track 3 ‘Reforming the International Financial Architecture’ and particularly relevant to the subtopic 3.3 on addressing the debt burden of developing countries, this Policy Brief puts forward three specific and actionable recommendations to the G20 Group so that it can help Caribbean SIDS to permanently escape from their debt-climate change trap. These recommendations are: (i) for the G20 Group to call on the World Bank to increase Caribbean SIDS’ eligibility for and greater access to concessional climate and development finance; (ii) for the former colonial powers within the G20 Group to deliver comprehensive debt relief (cancellation, forgiveness or restructuring) to Caribbean SIDS as a main form of climate reparations; and (iii) for the more industrialised countries within the G20 Group to re-channel US$500 million worth of their unused IMF Special Drawing Rights (SDRs) to the Caribbean Development Bank (CDB).