BELÉM, Brazil – A landmark joint initiative designed to bolster disaster preparedness and alleviate mounting debt pressures across the Caribbean was officially launched at COP30 on November 13, 2025. The Inter-American Development Bank (IDB), CAF – Development Bank of Latin America and the Caribbean, and the Caribbean Development Bank (CDB) have joined forces to create the Caribbean Multi-Guarantor Debt-for-Resilience Joint Initiative, a pioneering effort aimed at unlocking critical fiscal space for climate resilience investments without accumulating new debt.
Addressing a Dual Crisis: Debt and Climate Vulnerability
The Caribbean region stands at the forefront of the global climate crisis, facing intensified threats from hurricanes, rising sea levels, and extreme weather events. These natural disasters frequently devastate economies, which are often heavily reliant on tourism and agriculture, leading to significant economic losses and a persistent cycle of debt. Many Caribbean nations grapple with substantial public debt, which hampers their ability to invest in crucial adaptation and mitigation measures. This new initiative seeks to break this cycle by offering a transformative approach to development finance.
The Debt-for-Resilience Mechanism Explained
At its core, the initiative leverages guarantees from multilateral development banks (MDBs) and private sector actors to facilitate debt-for-resilience swaps. This mechanism allows participating Caribbean countries to restructure or swap portions of their public debt in exchange for commitments to invest in resilience-building projects. By doing so, countries can generate vital fiscal space – funds that would otherwise be allocated to debt servicing – to invest in priority resilience measures and regional public goods. This proactive approach enables action before disasters strike, rather than relying on costly post-disaster recovery that often leads to further indebtedness.
The initiative aims to streamline these debt swaps, making them more accessible, efficient, and attractive to a wider range of investors. It is expected to attract new and non-traditional guarantors, enable larger transactions, reduce costs, and accelerate execution. Robust reporting and monitoring frameworks will be established to enhance transparency and draw in further investment.
Collaboration and Coordination: The Power of Three Banks
The IDB, CAF, and CDB are pooling their expertise and resources to drive this regional effort. Their collaboration is crucial for strengthening coordination among MDBs, national governments, and private sector partners. The initiative plans to establish a framework agreement to facilitate coordination among guarantors, while respecting each institution’s mandates and internal processes. Furthermore, the banks will work together to define common principles for guarantee terms, shared taxonomies, and key performance indicators (KPIs) for resilience investments, ensuring alignment with global benchmarks.
Investing in Collective Resilience and Public Goods
A key component of the debt-for-resilience transactions will be the inclusion of a regional public-goods element. This ensures that investments not only benefit individual nations but also contribute to strengthening collective resilience across the entire Caribbean basin. Such a focus acknowledges the interconnected nature of the region’s challenges and the benefits of shared solutions in areas like early warning systems, sustainable infrastructure, and climate information services.
This innovative approach is set to redefine how the Caribbean addresses its financial vulnerabilities and climate challenges. By creating fiscal space for essential investments in preparedness and resilience, the initiative offers a tangible pathway toward a more secure and sustainable future for the region. This development marks a significant piece of news for businesses and governments looking to bolster economic stability in the face of escalating climate risks.