BRIDGETOWN, Barbados, CMC – The Caribbean Group (CARICOM) Committee of Central Financial institution Governors Wednesday mentioned it had entered into an settlement with the Worldwide Finance Company (IFC) that may permit Caribbean folks to learn from new climate-friendly tasks.
It said that the settlement will allow the event of a regional inexperienced finance taxonomy, paving the best way for elevated funding in climate-friendly tasks and fostering extra inclusive and sustainable financial progress.
Below the settlement, the CARICOM Committee of Central Financial institution Governors and the IFC, a member of the World Financial institution Group, will collaborate to develop tips and parameters that clearly outline inexperienced belongings.
The central financial institution governors said that the brand new taxonomy will improve local weather finance choices within the English-speaking Caribbean, encouraging extra lending and funding to assist every nation’s local weather mitigation and adaptation objectives and promote the creation of inexperienced jobs.
“This partnership with IFC represents a pivotal second for the Caribbean’s monetary resilience and local weather adaptation efforts. Whereas our area contributes lower than one p.c to world greenhouse fuel emissions, we face dipropionate local weather impacts,” mentioned Dr. Kevin Greenidge, Governor of the Central Financial institution of Barbados and Chairman of the CARICOM Committee of Central Financial institution Governors.
“By establishing clear inexperienced finance tips, we’re creating the infrastructure wanted to channel extra personal capital towards climate-resilient tasks, from renewable power techniques to hurricane-resistant infrastructure.
“This taxonomy will assist our monetary establishments higher assess and fund the inexperienced investments our economies desperately must construct again higher and stronger after every local weather shock,” he added.
IFC Regional Supervisor for the Caribbean, Ronke-Amoni Ogunsulire, mentioned that as rising sea ranges and more and more frequent excessive climate occasions threaten lives and livelihoods, Caribbean Small Island Creating States (SIDS) face a local weather monetary hole of practically US$ 55 billion by 2030.
“A sturdy personal sector and deeper local weather finance markets are important to supporting the area’s adaptation efforts and unlocking a sustainable future for its folks. We’re proud to accomplice with CARICOM on this crucial endeavor”.
The undertaking, undertaken by IFC’s Monetary Establishments Group Advisory Companies unit for Latin America and the Caribbean in collaboration with IFC’s Nation Advisory and Economics staff, will align with worldwide finest practices and market requirements, offering a basis for resilient inexperienced finance ecosystems throughout the area.
As a part of the initiative, IFC and CARICOM will have interaction key stakeholders, together with monetary establishments, regulators, and supervisory our bodies, to make sure that the native context informs the taxonomy.
The English-speaking Caribbean is very weak to local weather change dangers, together with hurricanes, rising sea ranges, and droughts, which hurt biodiversity-rich ecosystems and the livelihoods of its inhabitants.
The area’s financial system is closely depending on climate-sensitive sectors, such because the tourism sector, which accounts for round 13.9 p.c of GDP within the Caribbean. This sector loses a median of three.6 p.c of GDP yearly attributable to pure hazards.
Regardless of their small carbon footprint, nations within the English-speaking Caribbean face vital debt because of the excessive prices of recovering from frequent excessive climate occasions. The area’s debt-to-GDP ratio was 77 p.c on the finish of 2023, exceeding secure debt limits.
“Furthermore, excessive publicity to exterior macroeconomic shocks complicates catastrophe administration and limits fiscal area for growth initiatives. Strengthening local weather finance mechanisms is due to this fact not only a precedence, it’s a necessity for resilience and sustainable progress,” the central financial institution governors added.
