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·    The deal generated US$125 million in fiscal savings which will be channeled into new resilience investments.
·    The debt conversion represents innovative financing model for climate adaptation that avoids increasing the burden of public debt.

Barbados has successfully completed an unprecedented debt-for climate operation to finance water and sewage projects resilient to climate change. Through support from its international funding partners, Barbados replaced outstanding, more expensive debt with more affordable financing, generating US$125 million in fiscal savings which will be used to enhance water resource management and increase water and food security. 

CIBC Caribbean, as lead arranger, successfully closed the Sustainability Linked Loan transaction last week. The loan was backed by US$300 million in guarantees – US$150 million each from the Inter-American Development Bank (IDB) and the European Investment Bank (EIB), the latter under the European Union’s Global Gateway Initiative. With the support of the guarantees, Barbados secured a long-tenor, local currency loan at favorable conditions arranged by CIBC Caribbean, with regional banks investing in the transaction.  

The debt conversion will create the necessary fiscal space to finance upgrading the South Coast sewage treatment plant into a modern water reclamation facility plus several associated facilities. The water reclamation facility, one of the first in the Caribbean, will produce water with a suitable quality for use in agricultural irrigation and groundwater recharge. 

The additional fiscal space also allows for investments to reduce water losses and improve the sewer system. The reduction in marine and groundwater pollution will help protect marine ecosystems and nearshore reefs, groundwater quality and safeguard public health. The IDB and the Green Climate Fund (GCF) are providing a total of US$110 million upfront funding for the project, including a US$40 million grant from the GCF. 

Barbados, one of the world’s most water-scarce countries, faces an average per capita water availability four times less than the global average—a challenge set to worsen with climate change. It also faces a large annual food import bill, as farmers lack water to expand crop production.

The debt-for-climate conversion has been structured as a Sovereign Sustainability-Linked Loan (SSLL), marking the first SSLL tied to a sovereign water security project. The sustainability targets underpinning the loan relate to the volume and quality of reclaimed water generated by the upgraded plant. If the targets are not met, the government incurs a financial penalty, which will be paid into a specialized trust for environmental investments, the Barbados Environmental Sustainability Fund. 

IDB and CIBC Caribbean acted as Sustainability Structuring Agents with the support of CIBC’s Global Sustainable Finance Team. Sustainalytics, a leading provider of second-party opinions for sustainability-linked financial instruments, reviewed Barbados’ Climate Resilience Sovereign Sustainability-Linked Financing Framework to which the SSLL is aligned. They found that the Framework aligns with international best practices, assessing the Key Performance Indicator (KPI) as “strong” and the Sustainability Performance Target (SPT) as “highly ambitious.”

The transaction will help Barbados advance its resilience plans outlined in the country’s Updated Nationally Determined Contribution (NDC) and its Investment Plan for Prosperity and Resilience, in alignment with the Paris Agreement and the country’s Roofs to Reefs Program, by enhancing climate resilience through increasing water availability and food security and preventing marine pollution. 

Prime Minister Hon. Mia Mottley, SC, MP:
“In the face of the climate crisis, this groundbreaking transaction serves as a model for vulnerable states, delivering rapid adaptation benefits for Barbados. With upfront funding from our partners, we are building a state-of-the-art facility to boost water management, food security, and resilience—showcasing how innovation and cooperation drive environmental and fiscal gains.”

IDB President Ilan Goldfajn: 
“This is an important milestone in several dimensions. It is the first debt-for-climate operation focused on climate resilience, paired with a groundbreaking financial innovation with unprecedent partnerships,” said IDB President Ilan Goldfajn.  “I will have the opportunity to be in Barbados in a few days to do a deep dive on this operation and related project and see how we can replicate this model in other instances. This is impact at scale with innovation and partnership at work.” 

EIB President Nadia Calviño: 
“The European Investment Bank is providing innovative financing solutions to support those most vulnerable to climate change, alongside our partners, the Inter-American Development Bank, the Green Climate Fund and the European Commission,” said EIB Group President Nadia Calviño. “As the Climate Bank, we are proud to be part of the first debt-for-climate resilience conversion, which will support vital investments in Barbados and could give us an important model for other such operations in the future.”

CIBC Caribbean’s Chief Executive Officer, Mark St. Hill:
“Barbados’ initiative enhances climate resilience and sets a benchmark for sustainable adaptation for the Caribbean. CIBC Caribbean is honored to again collaborate with the Government of Barbados and multilateral agencies like the IDB and EIB in setting precedents for innovative financial mechanisms that drive environmental stewardship in our region.   This partnership underscores our commitment to accelerating climate action and fostering sustainable development across the Caribbean.”

GCF Executive Director, Mafalda Duarte:
“Debt-for-climate conversions can support responses to two overlapping crises: constraining debt and the escalating climate emergency. The Green Climate Fund is a proud partner of Barbados in bringing a coalition of financiers together, all backing an innovative financial instrument aimed at helping the island nation achieve its development and climate goals.”

A new report from the Inter-American Development Bank (IDB) examines inclusion policies for people with disabilities in Latin America and the Caribbean, analyzing existing gaps and presenting evidence-based disability inclusion policies in the education, health, employment and social protection sectors.

The study “Seeds to Inclusion: What We Know and What We Don’t Know about Disability Policy“ describes the situation of people with disabilities based on an analysis of recent household surveys, reviews the regional landscape of public policies on the issue, and evaluates the evidence of inclusion policies.

“This report offers a rigorous review of the evidence on the effectiveness of disability inclusion policies and programs in Latin America and the Caribbean and around the world, providing a solid basis for decision-making on programs to be expanded or piloted in the region,” said Eric Parrado, chief economist and general manager of the IDB’s Research Department.

Disability in the Region

Household surveys show that one in seven people has a disability, a proportion that increases with age. Considering the regional population’s accelerated aging, the number of people with disabilities is expected to increase to 150 million by 2050.

On the other hand, most children with disabilities in the region attend and complete elementary school. However, gaps persist, particularly at higher levels, and inclusive education remains elusive in most countries.

While most children with disabilities in the region attend and complete primary school, gaps persist, particularly at the higher levels. Effective implementation of inclusive education remains a regional challenge.

In terms of health, people with disabilities have greater medical needs. Although access to health insurance does not differ greatly between people with and without disabilities, according to household surveys, the former spend a larger share of their budget on health expenses and face accessibility barriers.

In the workplace, most working-age adults with disabilities are employed (56.4%-68.0%). However, they are more likely to hold informal jobs and make 88 cents for every dollar earned by their peers without disabilities with the same experience and education.

Similarly, households with members with disabilities are 5.7 percentage points more likely to be in the lowest two income quintiles than households with no members with disabilities.

What the evidence says

The publication highlights successful policies being implemented in the region, such as vocational training to promote employment and interventions that support inclusion in education, including resource classrooms and grants to fund assistive devices.

It also mentions effective policies implemented in other regions of the world but not in Latin America and the Caribbean. Causal evidence from other regions suggests that policies such as the presence of co-teachers or assistants can facilitate the learning of students with and without disabilities in inclusive classrooms. These practices stand out as possible pilots in the region.

The report also identifies important knowledge gaps that hinder formulation of effective policies. Numerous interventions with sound theories of change are commonly implemented in the region, but lack rigorous evidence on their impact. These interventions range from skills upgrading and training programs for employers in labor markets, to personal assistance programs and accessibility interventions in health and social protection. While these policies are considered promising, more robust evidence is needed to guide policymakers.

Research Priorities Survey

The report also includes the results of an accessible online survey conducted with the help of organizations of people with disabilities in the region. The survey inquired what should the priorities of research on inclusion policies be.

Most respondents indicated that the focus should be on research in the education sector, in particular on inclusion of children with and without disabilities in regular schools.

The Inter-American Development Bank (IDB) has approved a $300 million loan to give Peruvian families in the low and lower-middle-income brackets greater access to loans for proper housing.

The Global Credit Program approved by the IDB’s Executive Board of Directors will benefit over 17,000 households with loans for purchasing or improving a home. At least 50% of the financing will be earmarked for women heads of household.

The program’s resources will expand the MIVIVIENDA Fund’s mortgage portfolio, exclusively targeting households that earn less than four times the monthly minimum wage. The MIVIVIENDA Fund will channel the program’s funding to eligible financial institutions via sub-loans.

At least 39% of the loan’s resources will be allocated to sub loans for purchasing green homes that cut down consumption of energy, water, and embodied energy in building materials by a minimum of 20%.

The program will also provide financing for home improvement loans to close the housing quality gap. An estimated 30% of urban households in Peru live in substandard dwellings that lack basic infrastructure (water, sewage, electricity) or are built from poor-quality materials.

This initiative complements efforts by the Ministry of Housing, Construction, and Sanitation and by the MIVIENDA Fund to close the housing gap and develop a more inclusive formal housing market. The program is designed to reduce poverty and bolster economic recovery.

The IDB loan has an 11.5-year repayment term and a 7.5-year grace period.
 

BUENOS AIRES – The 10th edition of Outsource2LAC, the premier event for knowledge-based services (KBS) investment and trade in Latin America and the Caribbean, gathered over 1.000 entrepreneurs, companies, and government representatives from 32 countries.

During the forum, more than 2.000 business-to-business (B2B) and business-to-government (B2G) meetings were held, covering areas such as software development, technological solutions (chatbots and mobile applications), automation, cybersecurity, web design, video game development, agricultural technologies (AgTech), telemedicine, and financial technologies (Fintech). Other areas discussed were solutions with emerging technologies such as artificial intelligence (AI), augmented reality, and cloud computing.

This edition, on December 4-5, featured prominent industry experts, SMEs, startups, academics, and public sector representatives, who discussed the present and future of exporting digital services and solutions in the region. Buyers and investors from Asia, Europe, the United States, and Canada attended, along with 21 trade and investment promotion agencies from the region.

“Digital transformation is a key driver for growth, competitiveness, and productivity in Latin America and the Caribbean. Our region is emerging as a major player in global services exports, driven by the creativity and talent of its people and the capacity for technological adoption, adaptation, and innovation of its companies and startups,” said Fabrizio Opertti, Manager of the Integration and Trade Sector at the IDB.

Through Outsource2LAC, Opertti explained, “we connect the region’s companies with global opportunities, recognizing that knowledge-based services drive productivity, diversify exports, and generate high-value jobs while promoting innovation, sustainability, and inclusion.”

The first day included panels and special presentations on key topics, including the adoption of AI and its impact on the globalization of knowledge-based services, the potential of local tech ecosystems for generating growth and innovations in shared services centers. Other areas discussed were the role of AI infrastructure in boosting innovation and competitiveness in digital services, and opportunities in exporting telemedicine services.

During the event, the BID for the Americas program was presented. The program is designed to foster business opportunities and strengthen economic ties between 26 Latin American and Caribbean countries and key partners in Europe, North America, and Asia. It also aims to connect companies from these countries with procurement, trade and investment, and co-financing opportunities. 

During the event, the “BID for the Americas App” was introduced— a cutting-edge mobile and desktop application powered by artificial intelligence. The platform connects companies with procurement opportunities in IDB-financed projects, including those in the information technology sector.

The second day covered topics such as talent transformation in the era of AI, new revenue models for Fintech, monetizing digital services using AI, challenges and opportunities for attracting venture capital, innovations in global shared services centers, the cross-media expansion of video games, and the acceleration of technological adoption in the AgTech industry.

Participants highlighted the importance of public goods promoted by the IDB, including trade and foreign investment promotion, innovation, strengthening regulatory frameworks, and human capital development, in close collaboration with key industry players. The IDB has played a central role in financing such initiatives in countries like Argentina, Chile, Colombia, Uruguay, and Jamaica, reaffirming its commitment to the international promotion of the sector.

Outsource2LAC 2024 was organized by the IDB and its business social network ConnectAmericas, in collaboration with Argentina’s Ministry of Economy, the Secretariat of Innovation of Argentina, Science and Technology under the Chief of the Ministerial Cabinet, the Argentine Investment and International Trade Agency (AAICI), and the Ministry of Foreign Affairs, International Trade and Worship of Argentina.