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Debt for Climate Swaps: Lessons for Caribbean SIDS from the Seychelles' Experience.

Many small island developing states (SIDS) in the Caribbean, which are highly vulnerable to environmental shocks, have public debt burdens indicating solvency challenges, while others show signs of heightened debt vulnerabilities (CDB 2013; Commonwealth Secretariat 2013). At the same time, they are already feeling the effects of climate change. Natural disasters (mainly hurricanes) have become more frequent and intense in the Caribbean. Additionally, the region's tourism-based economies are already being affected by sea-level rise, storm surge, and erosion, as well as extreme impacts such as coral bleaching, flooding, and drought (UNECLAC 2011). Unfortunately, these heavily indebted SIDS have not been able to generate sufficient financing for their climate adaptation programmes, which are beyond their already strained fiscal capacities. Innovative financing mechanisms such as debt for climate swaps could help these countries fund their costly climate adaptation programmes, as well as reduce their onerous debt levels. In 2016, the Seychelles, a SIDS in the Western Indian Ocean region, secured an innovative debt for climate swap deal with its Paris Club creditors, (1) South Africa and the Nature Conservancy. (2) The debt for climate swap deal redirected a portion of the Seychelles' current debt payments to fund the creation of the second largest protected marine area in the Indian Ocean, an area larger than Germany (NatureVest 2016). This is the world's first debt swap aimed at ocean conservation and climate resiliency and it has reduced the Seychelles' debt position. The use of both public and private funds creates a new co-investment model for future debt for nature swaps in other areas of the world. There is significant potential for Caribbean and other SIDS, with limited experience of such innovative financing instruments, to learn from the Seychelles' debt swap deal and for the international community to ensure future debt for climate swaps are as effective as possible.

The rest of this article is structured as follows: a discussion of the debt and climate finance challenges facing Caribbean SIDS; an outline of the rationale for placing debt for climate swaps on the menu of post-2015 innovative financing instruments; a look at the Seychelles' debt for climate swap; an analysis of the feasibility of Grenada--which is heavily indebted and at the forefront of climate adaptation efforts--undertaking a debt for climate swap; a summary of findings and lessons, and the direction for future research.

Debt and Climate Finance Challenges facing Caribbean SIDS

In this article, Caribbean SIDS (3) comprise 14 countries--ten islands and four on the mainland--that share the characteristics of small states. Caribbean SIDS have higher levels of per capita income and rank more highly on the human development index than most other SIDS around the world. Nonetheless, they share many development challenges with other SIDS: slow and volatile economic growth, a significant incidence of poverty and income inequality, high public debt, and an acute vulnerability to natural disasters (mainly hurricanes and floods) and climate change (Commonwealth Secretariat 2012).

High public debt hampers the efforts of Caribbean SIDS to build economic resilience against these development challenges, especially to climate change (IMF 2013a). Sahay (2004) notes that, in general, public debt ratios over 50-60 percent of GDP signal heightened debt vulnerabilities. By this measure, at the beginning of the 1990s, only three Caribbean SIDS had public debt distress levels--Guyana, Jamaica, and St. Kitts & Nevis. Since then, however, debt has mushroomed in many other countries, placing the Caribbean region among the most heavily indebted regions in the world. At the end of 2015, four countries--Antigua & Barbuda, Barbados, Grenada, and Jamaica--had debt beyond 90 percent of GDP (see Chart 1). Seven of them--Trinidad & Tobago, The Bahamas, Belize, Dominica, St. Kitts & Nevis, St. Lucia, and St. Vincent & the Grenadines--had public debt in the range of 60 to 90 percent of GDP. The remaining three--Guyana, Haiti, and Suriname--had relatively low public debt, at less than 60 percent of GDP.

Several factors help explain why Caribbean SIDS have accumulated debt so rapidly. The first relates to the high frequency and intensity of natural disasters, in the wake of which Caribbean governments have to increase public spending immediately to support recovery and reconstruction efforts. These large and unplanned expenditures are often funded by external debt. Rasmussen (2004) found that the six countries in the Eastern Caribbean (4) rank in the top ten most disaster-prone countries in the world. Since 2000, a record number of eight Category 5 hurricanes have occurred in the Atlantic Ocean. Three of them--Ivan (2004), Emily (2005) and Dean (2007)--caused substantial damage to several Caribbean SIDS. Ivan, in particular, had a devastating impact on Grenada, causing damage in 2004 valued at 200 percent of Grenada's GDP (World Bank 2016). The Caribbean also faces the threat of earthquakes and volcanoes. Haiti is yet to recover from the catastrophic earthquake of January 2010, which caused unprecedented damage and losses, estimated at 120 percent of its 2009 GDP. The Haitian earthquake killed more than 200,000 people, injured 250,000, and made 1.5 million homeless (International Monetary Fund 2010). After more than two decades, Montserrat is still recovering from the 1995 eruption of the Soufriere Hills volcano, which left the southern half of the island uninhabitable and distressed the economy (Caribbean Development Bank 2013). Kick 'em Jenny, a submarine volcano located some eight kilometres north of Grenada, is the most active volcano in the region, having erupted at least thirteen times since it was discovered in 1939, most recently in July 2015 (World Bank 2016).
Chart 1. Caribbean SIDS: Gross Public Debt
(2015,% of GDP)

Haiti               26
Suriname            44
Guyana              48
Trinidad & Tobago   61
The Bahamas         64
St Vincent          73
St. Kitts & Nevis   68
St. Lucia           82
Belize              82
Dominica            86
Grenada             92
Antigua & Barbuda   94
Barbados           106
Jamaica            120

Source: IMF (2017)

Note: Table made from bar graph.


Fiscal slippage is the second factor which has contributed to high indebtedness in some Caribbean SIDS (CDB 2013). The average overall fiscal balance worsened in nearly every Caribbean country during the 2000s, compared to the period 1990-1997. As public debt grew, so did debt-servicing costs. Hence, part of the reason for the deterioration in the overall fiscal balance is the rise in interest-related expenditures. However, even the primary fiscal balance, which excludes interest costs, has deteriorated in almost every Caribbean SIDS, suggesting that weaknesses in fiscal policy were partly behind the sharp rise in public debt.

A third factor relates to the Caribbean's high vulnerability to external shocks. The onset of the global financial crisis in 2007-2008 worsened the already precarious debt situation for Caribbean SIDS, given the region's close ties to the United States and Europe, which were at the center of the crisis (IMF 2013b). Finally, throughout the Caribbean region, in many instances governments assumed responsibility for the losses of public enterprises and private financial entities. The most striking of such public intervention was the bailout of Jamaica's financial sector in the mid-1990s when the government assumed significant debt, worth some 40 percent of GDP (CDB 2013).

As public debt continued to accumulate, many Caribbean SIDS found the structure of their external debt changing over the last two decades. Whereas bilateral and multilateral debt dominated external debt portfolios in the 1980s and early '90s, there has been a shift to more expensive commercial borrowing and domestic debt. Falling concessional aid flows from traditional Western donors, such as the UK, the US, and Canada, since the 1990s pushed many Caribbean SIDs towards non-traditional bilateral donors (Commonwealth Secretariat 2013). Further, favourable conditions in the international capital markets spurred Caribbean countries, with newly assigned credit ratings from the international ratings agencies, to rely heavily on commercial bond issues as a source of financing (CDB 2013).

By the end of 2015, Caribbean SIDS had accumulated more than US$27 billion in total external debt, equal to about 12 percent of their combined GDP (see Table 1). A little more than one-fifth of this external debt is owed to official bilateral creditors, mainly developed countries that are members of the Paris Club group. For some Caribbean SIDS, such as The Bahamas, Barbados and Jamaica, bilateral debt is a small proportion of total debt, while in other SIDS, such as Antigua & Barbuda, Haiti and Suriname, it is a sizeable proportion.

With dwindling aid from traditional bilateral donors in the 1990s, the Caribbean turned towards non-traditional bilateral lenders for external financing. This shift meant traditional bilateral lenders who are members of the Paris Club now hold an increasingly smaller share of the external debt of Caribbean SIDS. Instead, non-Paris Club creditors have been emerging as new bilateral lenders in the Caribbean region, especially the People's Republic of China, Taiwan, Kuwait, Trinidad and Tobago, and Venezuela. Six Caribbean SIDS--Antigua & Barbuda, Grenada, Guyana, Haiti, St. Lucia and St. Vincent--now owe the majority of their bilateral debt to these non-Paris Club creditors (CDB 2013).

During the global crisis of 2007-2008, some Caribbean governments such as Dominica, Jamaica, St. Lucia, and St. Vincent & the Grenadines turned to the IMF and other multilateral lending agencies for increased financial assistance. Others, including Grenada and Haiti, turned to the IMF for quick-disbursing, emergency financial assistance to support recovery and reconstruction efforts in the face of natural disasters. In the external debt portfolios of Caribbean SIDS, the share of multilateral loans mainly from the IMF and World Bank reached more than one-third of total external debt by the end of 2015 (see Table 1).

Faced with a compression of official aid resources, Caribbean governments resorted to private debt flows, particularly commercial bank lending and bond issues, to close their funding gaps. At 35 percent of total external debt, private debt constitutes the single largest source of external financing for Caribbean SIDS. In several of them, namely The Bahamas, Barbados, Belize, Jamaica, and Trinidad & Tobago, bonds issued on the international capital markets comprise a large share of total external debt (see Table 1). The predominance of private debt means that most of it is on non-concessional terms, which imposes a heavier debt service burden on Caribbean SIDS.

Any debt relief proposal for Caribbean SIDS must therefore take into account the diversity in their external debt profiles. The Paris Club has historically represented a useful, if imperfect, group in which Caribbean SIDS governments could renegotiate their bilateral debt with some of their most important official creditors (UNDP 2010). However, it provides debt treatments in the form of rescheduling rather than reduction. As non-Paris Club creditors hold an increasingly larger share of the external debt of Caribbean SIDS, the Club's informal renegotiation structures may become less useful in coming years, and there would be need for a new financial architecture that recognises the catalytic role of these non-Paris Club creditor countries.

For the most part, Caribbean SIDS--except for Guyana and Haiti--have not been included in international debt relief initiatives such as the IMF and the World Bank's enhanced Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI). These global initiatives seek to address the multilateral and bilateral debt burdens of some of the world's poorest and most severely indebted countries. Guyana and Haiti were the only two Caribbean SIDS considered both heavily indebted and poor enough to receive enhanced HIPC and MDRI assistance (Commonwealth Secretariat 2013). In 1997, the IMF and the World Bank agreed to support a comprehensive debt-reduction package for Guyana, while in 2006 they deemed Haiti eligible for significant debt relief assistance. As a result, there has been a significant decline in the public indebtedness of these two Caribbean SIDS. Yet for others, such as Belize and Grenada, which are deemed at high risk of debt distress in the future, multilateral lenders are their most important creditors, and these countries could benefit immensely from being included in international debt relief initiatives.

The growing indebtedness of Caribbean SIDS to private creditors complicates any debt-restructuring process. In order to restructure private debt, debtor countries are obliged to approach private lenders on an ad hoc basis to negotiate a solution. In practice, this can be a complex, lengthy, and arduous process since many countries have a large and diverse set of commercial creditors. This can stretch the capacities of small countries. In contrast, creditors (and creditor committees) are often well-resourced. Belize's third restructuring of its Super Bond in early 2017 is a case in point. The Bondholder Committee, representing the majority of creditors and formed to negotiate with the government, rejected the initial proposal from the Belizean government. Instead, the Bondholder Committee endorsed a revised proposal which included their condition that the Belizean government must seek assistance from the IMF if it fails to meet certain fiscal targets (San Pedro Sun 2017), a stipulation that impacts the sovereignty of Belize. In essence, when it comes to debt-restructuring operations, there are no fixed rules. There is currently little predictability or fairness--either for debtors or creditors--in the outcomes of ad hoc debt-restructuring negotiations (UNDP 2010). High public debt among Caribbean and other SIDS illustrates the need for strengthened approaches to sovereign debt restructuring in a post-2015 financing for development landscape.

Climate change compounds the development challenges posed by high public debt (Commonwealth Secretariat 2013). More than half of Caribbean SIDS, which are classified by the United Nations Environment Program (UNEP) as either highly vulnerable or extremely vulnerable to environmental shocks, have public debt distress (see Table 2). At one end of the spectrum, Barbados, Grenada, and Jamaica are classified as extremely vulnerable to environmental shocks and are highly indebted. At the other end of the spectrum, Guyana and Suriname are assessed as resilient in the face of environmental events with low debt, though this was partly due to Guyana having benefited from substantial debt relief and debt forgiveness granted by the international community. Antigua & Barbuda is the only Caribbean SIDS assessed as vulnerable to environmental shocks and highly indebted. Both The Bahamas and Belize are considered at risk from natural disasters and moderately indebted.

Caribbean SIDS are responsible for less than one percent of global greenhouse gas emissions but are severely affected by climate change. Rising sea levels, hotter temperatures, and increasing hurricane intensity threaten economies and households throughout the region. According to the Intergovernmental Panel on Climate Change (IPCC 2014), sea-level rise in the Caribbean region has occurred at a rate of about two to four cm per decade over the past three decades. Coastal properties, along with roads and other infrastructure are vulnerable, as are those who live and work there. Almost one-third of Caribbean tourism resorts face flooding risk and their beach assets would be substantially damaged or destroyed by combined sea-level rise and storm surge (Caribbean Catastrophe Risk Insurance Facility 2010).

Despite greater precipitation during storms and other peak periods, more frequent and longer droughts are expected in parts of the Caribbean this century. Average temperatures in the region have increased by 0.1[degrees]C to 0.2[degrees]C per decade over the last three decades (UNECLAC 2011). Rainfall patterns have shifted, with the region expected to see more intense droughts. The Caribbean includes seven of thirty-six water-stressed countries in the world. The Food and Agriculture Organization (FAO) classifies Barbados, St. Kitts & Nevis, and Antigua & Barbuda as water-scarce because they have less than 1,000 cubic metres of freshwater resources per capita (FAO 2016).

Extreme weather events could potentially become more frequent, causing hurricanes of greater intensity in the Atlantic Ocean. EM-DAT has 238 records of disasters in the Caribbean caused by hurricanes between 1950 and 2014. Acevedo (2016) found that, for the 148 disasters with information on damages, it cost the Caribbean US$352 billion (in constant 2010 US$) over the last sixty-five years. Climate change will only exacerbate these costs going forward. In a global warming scenario of high greenhouse gas concentrations and high global temperatures, Acevedo (2016) estimated that the average annual hurricane damage in the Caribbean could increase between 22 and 77 percent by the year 2100.

Climate change is most likely to impact Caribbean tourism severely. Caribbean SIDS are heavily dependent on tourism, which accounts for around 15 percent of the region's GDP and 13 percent of total employment (World Travel and Tourism Council 2015). In 2015, the Caribbean hosted more than 22.5 million international visitors, and tourism receipts reached almost US$30 billion. Climate is an important driver of Caribbean tourism demand which largely depends on the "sun, sand and sea" brand to attract visitors. Tourists, most of whom come from the US, Canada, and Europe, would be unwilling the visit the Caribbean if the tourist attractions (beaches and coral reefs) were negatively affected.

The anticipated decline in the tourism industry would also negatively impact the airline sector, the most popular mode of transport for visitors to the Caribbean. Higher temperatures would also have serious consequences for agriculture, commercial fisheries, and marine ecosystems (UNECLAC 2011). This may lead to increased food imports at a time when world food prices are spiking upwards because of droughts and floods in the major agricultural countries. Energy is another pressing concern for the Caribbean. There is a high dependency on imported fossil fuels for energy, except in Trinidad & Tobago, which is an oil and gas exporter. As temperatures rise in the region, which is already hot for most of the year, this will further raise the demand for energy (IDB 2011).

While there remains debate about the exact costs due to climate change, several studies have found the impact will be highly significant in the Caribbean. Bueno et al. (2008) found the potential annual costs to the Caribbean based on just three categories of effects--hurricane damages, loss of tourism revenue, and infrastructure damage due to sea-level rise (exclusive of hurricane damage)--could reach US$22 billion by 2050 and US$46 billion by 2100. These costs represent 10 percent and 22 percent, respectively, of the region's 2004 GDP. A 2010 study by the Caribbean Catastrophe Risk Insurance Facility (CCRIF) found regional SIDS can expect annual losses from climate risks to vary significantly across countries, ranging from 1 percent of GDP in Antigua & Barbuda to 6 percent of GDP in Barbados. ECLAC (2011) found climate change under different socio-economic scenarios and carbon emission trajectories would cost the Caribbean up to 5 percent of annual GDP between 2011 and 2050.

While these estimates include a high degree of uncertainty, because they do not address all the potential effects or possible results of adaptation actions, they do indicate that capital investments required to finance the climate change adaptation efforts of Caribbean SIDS are considerable and likely to be beyond the capacities of many governments. Crucially, the ability of Caribbean SIDS to adapt to climate change will depend not just on the actions of national governments but more critically on the volume and availability of external finance for climate adaptation.

Debt for Climate Swaps

At the 15th session of the Conference of the Parties to the UN Framework Convention on Climate Change (UNFCCC) in Copenhagen in 2009, developed nations promised to provide US$30 billion for the period 2010-2012 to help developing countries adapt to climate change, and they committed to mobilise long-term financing of a further US$100 billion per year by 2020. In December 2015, when the Conference of Parties to the UNFCCC gathered in Paris to adopt a new climate agreement, they remained committed to the US$100 billion target, but were silent on the type of climate finance architecture needed to implement adaptation programmes. (5) Instead, the international community indicated climate finance support could be mobilised from a variety of sources, including debt for climate swaps, a variant of debt for nature swaps (Warland and Michaelowa 2015).

Debt for nature swaps were originally conceived to deal with the rapid loss of biodiversity in heavily indebted developing countries (Sheikh 2016). They come in three forms--three-party debt swaps, bilateral debt swaps, and multilateral debt swaps. In a three-party swap, an international conservation NGO purchases a debtor country's external debt on the secondary market at a discounted rate compared to the face value of the debt. Money to buy the debt initially may come from the NGO, governments, banks, or other private organisations. The debt is generally sold back to the debtor country for more than it was purchased for by the NGO, yet less than what it was on the secondary market. The proceeds generated are typically put into a fund for conservation projects, which is administered by the conservation organisation, representatives from local environmental groups, and the debtor government.

Bilateral debt for nature swaps take place between two governments. In a bilateral swap, a creditor country forgives a portion of the public bilateral debt of a debtor nation in exchange for environmental commitments from that country. Multilateral debt for nature swaps are similar to bilateral swaps but involve international transactions of more than two national governments. In total, recorded debt for nature swaps generated about US$1,034 billion in conservation funding from 1987 to 2010 (see Table 3). Of this amount, bilateral and multilateral swaps together generated nearly US$900 million in conservation funding. While three-party debt for nature swaps were numerous, they resulted in substantially less conservation funds, amounting to US$140 million.

Three-party swaps began to diminish by the 2010s, as higher prices of debt on the secondary market made it difficult and less attractive for environmental NGOs to purchase such debt for resale. The Seychelles' 2015 debt for climate swap became the first debt for nature swap since Madagascar's debt transaction in 2008.

So far, debt for nature swaps have not been widely used by Caribbean SIDS. In 1991, the US concluded a bilateral debt for nature swap with Jamaica, forgiving a part of the island's official debt obligations to it and using US$37.5 million in conservation funds to finance the Environmental Foundation of Jamaica. In 2001, The Nature Conservancy, the US and Belize entered into a three-party debt for nature swap to preserve approximately 23,000 acres of rainforest in Belize. This was the first three-party debt for nature swap of its kind under the US Tropical Forest Conservation Act 1998 and it reduced almost US$10 million of Belizean debt, in exchange for payments to local conservation organisations. Since 2011, Antigua & Barbuda has been in discussions with The Nature Conservancy about a debt for climate swap, but there was little progress up to mid-2017.

Developing countries have had extreme difficulty in accessing donors' financial commitments to climate change, including the US$100 billion climate finance pledge. Such difficulty partly stems from the complexity of the global climate finance architecture; the inability of developing countries to satisfy certain conditionalities linked to climate finance; and issues of absorption capacity with respect to the amount of funding. Evidently, the international community has to resolve this significant climate finance implementation gap.

Recognising this difficulty, the UNDP (2010) proposed multiple-creditor debt swaps to convert official sector debt repayments into climate change adaptation resources. Under this proposal, participating creditors would simultaneously 'club together' to agree on a debt swap for a particular country (or countries). The debt service which would have been paid to several lenders is then paid by the debtor in local currency into a central trust fund (or adaptation account) for funding initiatives consistent with national adaptation strategies. This idea, while more ambitious since it involves a simultaneous commitment from multiple creditors, would free up greater volumes of finance and could be used to reduce both bilateral and multilateral debt for developing countries.

Another option, developed by Mitchell (2015), proposes a Commonwealth multilateral debt for climate swap initiative. This mechanism has the potential to provide significant debt relief while helping small states to unlock pledged climate finance for adaptation projects. Basically, the Commonwealth's multilateral debt for climate swap initiative requires donors to write off small states' multilateral debt using their climate finance pledges, and commits to providing payment in local currency of the debt service into a local trust fund over ten to fifteen years. The trust fund would be governed by respective national Central Banks and the funds would be used to finance climate change adaptation projects. Based on 2010 data, and assuming 100 percent write-down of small states' multilateral concessional debt stock, the total cost of the Commonwealth's proposed initiative could range from an estimated US$4.5 million to US$4.5 billion, depending on donors' preferred eligibility criteria.

The rationale underpinning both debt for climate swap proposals described above is simple. On the one hand, developed countries have pledged climate finance resources to developing countries, including climate-vulnerable SIDS, but these pledges have not been transformed into actual disbursements. On the other hand, there is an unsustainable debt overhang in many climate-vulnerable SIDS. Debt for climate swaps provide a ground-breaking way of using climate funds to assist in alleviating these twin challenges. There is significant potential to expand debt for climate swaps as part of the post-2015 innovative financing for development strategy so that Caribbean SIDS without experience of such instruments can learn from others and the international community can ensure future debt swaps are as effective as they can be.

THE SEYCHELLES DEBT FOR CLIMATE SWAP

The Seychelles provides a prime example of how debt for climate swaps can form part of the post-2015 menu of innovative financing instruments to deal with unsustainable debt in climate-vulnerable Caribbean SIDS. About a decade ago, the Seychelles was struggling with seemingly insurmountable problems: an overvalued fixed exchange rate, plummeting foreign exchange reserves, a bloated and pervasive public sector, and an unsustainable debt burden. By 2007, its fiscal deficit had reached 8 percent of GDP, public debt (two-thirds foreign) 131 percent of GDP, and official reserves fell to two weeks of imports. The government sought IMF support to launch a comprehensive economic reform programme and restructure its Paris Club debt.

Strong policy implementation by the Seychellois authorities bore fruit over the next ten years (2007-2017). Growth was restored, fiscal imbalances became moderate, public debt was almost halved (to 70 percent of GDP), and official reserves were rebuilt to four and half months import cover (see Table 4). The medium-term outlook appears positive, but challenges remain. About one-third of the GDP of the Seychelles depends on fisheries like tuna, and another quarter on ocean-based tourism. Since climate events have a direct effect on tourism and fisheries, this heavy reliance on these two limited sectors, along with its low-lying island geography, makes the Seychelles extremely vulnerable to the threats of climate change, especially increased storm frequency, rising sea levels, storm surge, and coral bleaching from warmer ocean temperatures.

The Seychelles' ocean space is almost 3,000 times larger than its land area. Beyond its 460 square kilometers of land territory, the Seychelles comprises 1.3 million square kilometers of blue ocean space, making it the central driver of its economy and future. For this reason, the Seychelles has been pioneering the "blue economy" concept, (6) the purpose being to establish a cost-effective, self-maintaining and adaptable solution to protecting its people, at-risk coastal communities, and the economy. After three years of negotiation, the government of the Seychelles, in February 2016, finalised a landmark agreement with the Paris Club and South Africa on an innovative US$30 million debt for climate swap. Paris Club creditors hold 15 percent of the Seychelles' external debt (see Chart 2). The three-party deal, which was designed by The Nature Conservancy, enables the government of the Seychelles to receive immediate debt relief from its Paris Club creditors, while redirecting a portion of current debt payments to fund marine conservation.

Under the debt swap operation, The Nature Conservancy funded a special purpose vehicle in the Seychelles called the Seychelles Conservation and Climate Adaptation Trust (SeyCCAT). The SeyCCAT is an independent, national public-private trust created to fund and manage marine conservation and climate adaptation initiatives. The Nature Conservancy capitalised SeyCCAT through a mix of US$23 million in impact loans and US$5 million in grants. SeyCCAT subsequently transferred this US$28 million in funds to the government of Seychelles to implement the debt buyback. The government bought back US$29.6 million of debt which would have been due to Paris Club creditors between 2015 and 2021 at a moderate 5.4% discount.

In the second phase of the operation, the government of the Seychelles plans to repay SeyCCAT at the face value of these claims over an extended period of time, partly in local rupee currency. These regular payments will fund the creation of new marine protected areas in the Seychelles to improve resiliency of its coastal ecosystems. Once complete, this project will result in the second largest marine reserve in the Indian Ocean, with approximately 400,000 square kilometers of the Seychelles' territorial waters classified as marine protected areas and 200,000 square kilometers classified as fish 'replenishment grounds'. This network of marine protected areas is equivalent to the size of Germany (NatureVest 2016). A portion of the payments has been set aside for a perpetual endowment to fund the project permanently. After twenty years, the endowment is expected to be fully capitalised at nearly US$40 million and will pay out almost US$2 million per year to fund continued marine conservation and climate adaptation activities.

Under the debt deal, the government of the Seychelles extended its debt repayment period to its Paris Club creditors from eight to 20 years. This reduces the government's annual debt service by more than US$2 million, freeing up funds for other needs. It also converted 70 percent of the payments into local rupees, rather than US dollars, reducing the call on the country's official reserves. In addition, The Nature Conservancy plans to transfer the impact investment loan to the holding of another investor and put recouped dollars into new projects, a proven approach that enables the Conservancy to mobilise large sums quickly and extend conservation benefits globally.

The Seychelles' debt swap boasts many firsts: it is the first debt swap designed explicitly for climate adaptation and the first to include impact investments made with the intention to generate an environmental impact along with a financial return. It is the first time the Paris Club has supported a debt swap, partly due to the leadership of the French government, also for the government of South Africa, making it also the first South-South debt swap. By combining public and private funds--each leveraging the other--the Seychelles' debt swap creates a new co-investment model for debt for climate swaps in other areas of the world, notably for Caribbean and other SIDS.

Feasibility of a Debt for Climate Swap for Grenada

Similar to many SIDS, Grenada's economy is shaped by its remoteness, small land mass, limited natural resource base, and fragile ecosystems (World Bank 2016). Grenada, known by many as the 'Spice Isle' for its production of nutmeg, cloves, and other spices, has shifted over the years away from agriculture to an economy dominated by tourism. For almost two decades, Grenada has been grappling with low growth and high debt. Grenada was hit hard by Hurricane Ivan in 2004, which affected growth prospects, and further by the global financial crisis in 2008, which led to persistent fiscal deficits and sizeable debt accumulation.

In 2015, eleven years after Hurricane Ivan devastated Grenada and ten years after a comprehensive debt restructuring exercise triggered by Ivan (whose damage is still very much in evidence), Grenada undertook a second comprehensive restructuring of its public debt, which had climbed to more than 100 percent of GDP (see Table 5). Grenada entered into an IMF-supported programme which allowed it to conclude debt-restructuring agreements, after protracted negotiations with three main creditors: the Export-Import Bank of the Republic of China (Taiwan); commercial bond holders of Grenada's previously restructured 2025 sovereign bond; and Paris Club creditors. Of note is that Grenada was able to negotiate an innovative 'hurricane clause' with its Paris Club creditors, which allows the country to defer principal and interest debt service payments, or to fast-track debt-restructuring operations in the event of a hurricane or insured natural disaster. Despite this progress, Grenada's external debt remains "in distress".

Grenada is highly vulnerable to the adverse impacts of climate change. Most of the island's infrastructure is located in the coastal zone, making the economy vulnerable to impacts of sea-level rise, inundation, erosion, and storm surges, while the steep slopes are vulnerable to landslides. Ivan caused direct and indirect losses of US$889 million, destroyed 90 percent of all property, rendered inoperable 70 percent of hotel infrastructure, affected 85 percent of nutmeg exports and caused a decline of 24 percent in GDP (World Bank 2016). The following year, the effects of Hurricane Emily further retarded recovery. Grenada's vulnerability to these natural disasters continues to cause costly damage to the infrastructure, socioeconomic sectors, environment, and local livelihoods.

Like the Seychelles, Grenada is also setting its sights on developing its 'blue economy'. Grenada's ocean space is eighty times larger than its land area. Beyond its 345 square kilometers of land territory, Grenada has almost 27,500 square kilometers of ocean space. Recognising the rich marine ecosystem and increasing environmental pressures, the Spice Isle has created marine protected areas and committed to creating more. The government committed to conserve effectively at least 25 percent of its nearshore marine area and at least a quarterof its terrestrial area by 2020, as a means to contribute to the sustainable livelihood of its people and to contribute to protection of the world's biodiversity (Hurley 2017). Grenada is the first country to initiate a national 'masterplan' for blue growth, which identifies opportunities in areas such as fisheries and aquaculture, blue biotechnology, renewable energy, research and innovation. The masterplan proposes a 'Blue Growth and Oceans Governance Institute' which seeks to house many of the leading global ocean research centres, and promote Grenada's vision of optimising the coastal and marine resources around the Caribbean (Hurley 2017).

Grenada is currently considering a three-party debt for nature swap, similar to the one done by the Seychelles. The Nature Conservancy is championing the current proposal which plans to swap some of Grenada's bilateral debt for investments in a marine protected area. Given the structure of its external debt, Grenada is likely to be more successful engaging its non-Paris Club creditors on a debt for climate swap proposal. This is because non-Paris Club creditors hold nearly one-tenth of Grenada's external debt (see Table 6), far more than its Paris Club creditors who hold less than 1.5% of Grenada's debt. Furthermore, in November 2015, the Paris Club undertook its second debt rescheduling for Grenada in a decade and is therefore unlikely to consider another debt operation for Grenada in the absence of exceptional circumstances.

Indeed, Trinidad & Tobago is Grenada's single largest bilateral non-Paris Club creditor. Grenada owes the twin republic some US$33 million, which represents more than 3.5% of its debt. It, therefore, seems more feasible for Grenada to initiate discussions with Trinidad & Tobago on the debt for nature swap proposal and then extend discussions to its three other main non-Paris Club creditors, namely, Taiwan, Kuwait, and Venezuela.

Grenada's multiple-creditor debt swap could follow a similar format to the Seychelles' debt for climate swap. The general mechanics of the swap would be as follows:

1. The Nature Conservancy establishes a new, national trust in Grenada to fund and manage "Blue Growth" marine conservation and climate adaptation initiatives. The new trust will be capitalised through impact loans and additional grants raised from donors. Or, The Nature Conservancy could use the already existing Grenada National Trust as the special purpose vehicle, after appropriate reorganisation of its governance and operations to meet the requirements of stakeholders.

2. The trust subsequently lends these funds to the government of Grenada to implement the debt buyback from its non-Paris Club creditors. The government would buy back a portion of Grenada's debt to these creditors at a discount to be negotiated.

3. The government of Grenada agrees to repay the trust at the face value of these claims over an extended period of time in local Eastern Caribbean currency.

4. These regular payments will fund specific "Blue Growth" initiatives in Grenada with a portion of the payments set aside for a perpetual endowment to fund the trust permanently.

Such a multiple-creditor debt for climate swap between Grenada and its non-Paris Club creditors has several advantages for Caribbean SIDS. First, it shows South-South debt swaps can be replicated in the region, which so far has been unable to mobilise new resources to deal with high debt and climate adaptation activities. The Nature Conservancy could eventually transfer the impact investment loan into the holding of another newly created trust in another Caribbean SIDS, say Antigua & Barbuda, with which it has been in discussions, and put these recouped funds into new climate adaptation projects. This would mobilise large volumes of climate finance quickly and extend conservation benefits throughout the Caribbean region.

Secondly, the deal is likely to be closed faster with non-Paris Club creditors than with Paris Club and commercial creditors since it is being negotiated among countries with strong economic, business, and social relationships. There's no compelling evidence to suggest any of Grenada's non-Paris Club creditors would be unwilling to engage in such a worthwhile venture. The debt for climate swap between the Paris Club and the Seychelles took three years to negotiate, but once negotiations were finalised, there was a predictable funding stream in place.

Finally, Grenada would see a sharp fall in its public debt burden which could put the country on a more sustainable debt trajectory. If its non-Paris Club creditors agreed to swap 100 percent of their claims on Grenada, this would free up US$80 million in conservation funding and Grenada's public debt would fall by more than eight percentage points of GDP, reaching a more sustainable 60 percent by 2020. A debt for climate swap with its non-Paris Club creditors would yield a debt reduction for Grenada that is eight times more than if all its Paris Club creditors agreed to swap all of their claims. Apart from the debt reduction, Grenada could also negotiate to extend its debt repayment period with its non-Paris Club creditors. This would reduce the government's annual debt service, freeing up much-needed funds for other budgetary priorities. The government of Grenada could also convert most of the payments to the national trust fund into local currency EC dollars, rather than US dollars, reducing the call on the country's limited official reserves.

CONCLUSION

Debt for climate swaps could help Caribbean SIDS reduce their heavy debt levels as well as tap into the considerable volume of climate finance resources pledged to fund adaptation programs. Three-party debt for nature swaps have so far generated less conservation funding than bilateral swaps, but they were generally viewed as more successful because they established strong governance frameworks to monitor progress on specific conservation projects. The Seychelles' 2016 debt for climate swap demonstrated the potential of this instrument to form part of the post-2015 innovative financing for development strategy. It's the first debt swap designed explicitly for climate adaptation and the first to include impact investments. It's also the first time the Paris Club supported a debt swap. The combination of public and private funds created a new co-investment model for future debt for nature swaps.

The Seychelles' debt for climate swap offers several lessons for Caribbean SIDS desirous of undertaking similar debt deals (The Nature Conservancy 2015). Firstly, patience is necessary. Debt swaps are complex and time consuming and require coordination and communication with several stakeholders. The Seychelles' debt swap took three years to complete. Broad stakeholder consensus was required to obtain policy commitments from government, mobilise funding from foundations such as the World Bank's Adaptation Fund, and obtain NGO support to reduce heavy transaction costs in the form of legal and administrative fees. Secondly, high-level commitments are critical. The Seychelles had official buy-in on its debt swap at the highest level of government, especially from its former Minister of Finance Jean-Paul Adam, who willingly shared the Seychelles' experience and growing importance of the blue economy at several small states' international fora, including the Inaugural Caribbean Region Dialogue held at the April 2015 IMF/World Bank annual meetings. Similarly, Grenada has high-level commitments through Prime Minister Keith Mitchell and former Ambassador to the United Nations, Dr. Angus Friday, both of whom have been strong global advocates for small states' debt initiatives in general and Grenada's Blue Growth model in particular.

Thirdly, engagement with the Ministry of Finance is key, in addition to the ministry with a focus on the environment. Financial aspects of the debt swap fall under the purview of the Ministry of Finance, while the environmentally focused ministry would determine the programme on how to spend the proceeds from the swap. Engagement of these two ministries will influence the overall success and coordination of the debt swap. The Seychelles solved this issue by adding 'blue economy' responsibility to its Ministry of Finance.

Finally, the scale and nature of the conservation matters. The amount of debt relief needs to be measurable, as multiple percentage points of GDP, and specific climate-adaptation projects must attract the interests of international NGOs, foundations, and financial institutions. While the Seychelles' debt for climate swap did not reduce the country's nominal obligations, it re-profiled debt service, reduced a near-term hump, and replaced a portion of foreign currency obligations with domestic currency debts to an internationally accepted conservation project which protects almost one-third of the Seychelles' exclusive economic zone.

Grenada is one Caribbean SIDS well suited to implement a debt for climate swap. Its debt is currently unsustainable despite two debt restructurings, and it has developed a national climate change adaptation masterplan based on 'blue economy' growth and development. Given the structure of its external debt, Grenada should consider a debt for climate swap proposal with its non-Paris Club creditors, who hold more of its bilateral debt than its Paris Club creditors. Under this proposal, Grenada's four main non-Paris Club creditors--Trinidad & Tobago, Taiwan, Kuwait and Venezuela--could simultaneously 'club together' to agree on a debt swap. The debt service to these bilateral lenders would instead be paid by Grenada in local currency into a single trust fund for mutually agreed spending on blue economy climate adaptation projects.

If these non-Paris Club creditors agreed to swap 100 percent of their claims on Grenada, this would free up US$80 million in conservation funding for the island and move it closer to debt sustainability lowering its public debt by more than eight percentage points of GDP and helping it to reach a more sustainable 60 percent of GDP. In fact, Grenada should first initiate discussions with Trinidad & Tobago, its single largest bilateral creditor, on the multi-creditor debt for nature swap proposal and then include its three other main non-Paris Club creditors. Such a deal would prove debt for climate swaps can be successfully replicated in the Caribbean.

Going forward there are at least three potential areas for further research on debt for climate swaps, especially as they relate to SIDS. Firstly, it would be important to evaluate the medium-term impact of the Seychelles' debt swap on economic growth to see if the anticipated benefits materialise. A second area of research is the role that private funds can play in leveraging climate finance investments, since the improved debt situation of the climate-vulnerable SIDS improves its credit risk rating, making it more attractive for private investments and reducing the required rates of return on capital. Finally, there is a need to develop a feasibility framework to determine which climate-vulnerable SIDS with unsustainable debt levels should participate in debt for climate swaps. Such a framework should consider the technical feasibility of debt relief, the prospects for creditor participation, mechanisms to unlock donor funding, and the capacity of debtor SIDs to participate in a debt swap.

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Hurley, G. 2017. "From Spice Isle to Blue Innovation Hub: Grenada's Vision for the Future." UNDP Oceans Blog. http://www.undp.org/content/undp/en/home/blog/2017/3/1/From-Spice-Isle-to-Blue-Innovation-hub-Grenada-s-vision-for-the-future.html

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Mitchell, T. 2015. "Debt Swaps for Climate Change Adaptation and Mitigation: A Commonwealth Proposal." London: Commonwealth Secretariat.

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Sheikh, P. 2016. "Debt for Nature Initiatives and the Tropical Forest Conservation Act (TFCA): Status and Implementation." Washington, DC: Congressional Research Service.

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(1) The Paris Club is an informal group of creditors mainly comprising the large developed countries whose role is to find coordinated and sustainable solutions to payment difficulties experienced by debtor developing countries. Between 1956 and 2017, the Paris Club reached 433 debt rescheduling agreements with 90 debtor countries.

(2) Founded in 1951, The Nature Conservancy is the world's leading environmental NGO dedicated to advancing conservation efforts. It has protected more than 119 million acres of land and 5,000 river miles, and operates more than 100 marine conservation projects globally.

(3) In this study, the fourteen Caribbean SIDS refer to the ten island economies of Antigua & Barbuda, The Bahamas, Barbados, Dominica, Grenada, Jamaica, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines, and Trinidad & Tobago, and the four mainland countries of Belize, Haiti, Guyana and Suriname. The terms Caribbean SIDS and the Caribbean are used interchangeably throughout this paper.

(4) The six countries that comprise the Eastern Caribbean are Antigua & Barbuda, Dominica, Grenada, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines.

(5) Since its introduction, the US$100 billion mobilisation target has been central to framing long-term negotiations on climate finance, but the ensuing climate finance discussions have been forced to confront ambiguity. Principally at issue is the lack of a common understanding on what constitutes climate finance.

(6) The 'blue economy' concept considers the ecological systems that provide so many of the services linked to the ocean economy as underlying and sometimes invisible natural capital assets (for example, fish stocks, coral reef systems, beach and water quality, and mangroves), which help support the more visible, produced capital (machinery and structures) and intangible capital (skills, expertise) (World Bank 2016).

Deuda por Permutas Climaticas: Lecciones para los SIDS del Caribe a Partir de la Experiencia de las Seychelles

Jwala Rambarran

Los mecanismos innovadores de financiacion, como la deuda para los canjes climaticos, podrian ayudar a los SIDS del Caribe (siglas en ingles de pequenos estados insulares en desarrollo) a financiar sus costosos programas de adaptation climatica, asi como a reducir sus altos niveles de deuda publica. En 2016, Seychelles obtuvo el primer canje en el mundo de deuda por clima por medio de un acuerdo con el grupo de acreedores de paises desarrollados del Club de Paris, destinado a la conservation del oceano y la resistencia climatica. Este articulo extrae lecciones para los SIDS del Caribe a partir de la experiencia de las Seychelles. Destaca la necesidad de la paciencia y el compromiso politico de alto nivel con el acuerdo. La coordination entre los ministerios de finanzas y el medio ambiente es fundamental. Son importantes la escala y la naturaleza de la conservation. Granada es idonea para contraer un canje de deuda por clima pero, a diferencia del caso de Seychelles, la transaction debe realizarse con el grupo de acreedores de paises en desarrollo no perteneciente al Club de Paris, comenzando con Trinidad y Tobago, su mayor acreedor bilateral.

Palabras clave: Adaptation climatica, canje de deuda, resiliencia, Club de Paris, conservation, Seychelles

Dette Pour les Echanges Climatiques: Lecons pour les PEID des Caraibes de l'experience des Seychelles

Des mecanismes de financement innovants tels que la dette pour les echanges climatiques pourraient aider les PEID des Caraibes (petits Etats insulaires en developpement) a financer leurs couteux programmes d'adaptation au changement climatique, ainsi qu'a reduire leur dette publique elevee. En 2016, les Seychelles ont obtenu la premiere dette au monde pour un accord d'echange climatique avec le groupe des creanciers des pays developpes du Club de Paris, visant la conservation des oceans et la resilience climatique. Cet article tire des lecons pour les PEID des Caraibes de l'experience des Seychelles. La patience et l'engagement politique de haut niveau sont necessaires. La coordination entre les ministeres des finances et l'environnement est essentielle. L'echelle et la nature de la conservation sont importantes. La Grenade est bien placee pour endosser une dette climatique mais, contrairement au cas des Seychelles, la transaction devrait etre conclue avec le groupe des creanciers non-membres du Club de Paris, en commencant par Trinite-et-Tobago, son principal creancier bilateral.

Mots-cles: Adaptation au climat, echange de dette, resilience, Club de Paris, conservation, Seychelles
Table 1: Caribbean SIDS: Creditor Composition of Public External Debt
(2015, US$ millions)

Country            Bilateral  Multilateral  Commercial   Bonds  Other

Antigua & Barbuda    334          160            25          -    -
The Bahamas           72          221           457        900    -
Barbados              18          454           290        552    -
Belize               642          657             -      1,053    -
Dominica              35          249            30          -    -
Grenada               97          280             -        193   47
Guyana               433          692             -          5   13
Haiti              1,875          163             -          -    -
Jamaica              783        3,529           290      5,700  290
St. Kitts            100           50           101         44    -
St. Lucia             40          233             1        160   77
St. Vincent          128          179            13          -    -
Suriname           1,170          702             -          -  461
Trinidad & Tobago    290          715           111      2,048    -
Total              5,918        8,195         1,468     10,495  811

Country             Total

Antigua & Barbuda     519
The Bahamas         1,650
Barbados            1,314
Belize              3,382
Dominica              314
Grenada               616
Guyana              1,144
Haiti               2,038
Jamaica            10,592
St. Kitts             295
St. Lucia             511
St. Vincent           320
Suriname            2,333
Trinidad & Tobago   3,164
Total              27,037

Source: IMF (2017)

Table 2: Caribbean SIDs: Public Indebtedness and Environmental
Vulnerability (2015)

Indebtedness         Extremely   Highly       Vulnerable  At risk
                     vulnerable  vulnerable

Highly Indebted      Barbados                 Antigua
(Debt/GDP > 90%)     Grenada
                     Jamaica
Moderately Indebted  Trinidad &  St. Vincent              The Bahamas
                     Tobago
(Debt/GDP 50-90%)    St. Lucia   St. Kitts &              Belize
                                 Nevis
                                 Dominica
Less Indebted                    Haiti
(Debt/GDP < 50%)

Indebtedness         Resilient


Highly Indebted
(Debt/GDP > 90%)

Moderately Indebted

(Debt/GDP 50-90%)


Less Indebted        Guyana
(Debt/GDP < 50%)     Suriname

Sources: CDB (2013); IMF (2017)

Table 3: Debt for Nature Swaps: Country, Type and Conservation Funds
Generated, 1987-2010

Country        Three-Party   Non-US Bilateral  US Bilateral    Total
               Swap Funding  and Multilateral  Swap Funding
                             Swap Funding
Argentina                                          3.1           3.1
Bangladesh                                         8.5           8.5
Belize                                             9.0           9.0
Bolivia            3.1              9.6           21.8          34.5
Botswana                                           8.3           8.3
Brazil             2.2                                           2.2
Bulgaria                           16.2                         16.2
Cameroon                           25.0                         25.0
Chile                                             18.7          18.7
Colombia                           12.0           51.6          63.6
Costa Rica        42.9             43.3           26.0         112.2
Dominican          0.6                                           0.6
Republic
Ecuador            7.4             10.8                         18.2
Egypt                              29.6                         29.6
El Salvador                         6.0           55.2          61.2
Ghana              1.1                                           1.1
Guatemala          1.4                            24.4          25.8
Guinea Bissau                       0.4                          0.4
Honduras                           21.4                         21.4
Indonesia                                         30.0          30.0
Jamaica            0.4                            37.5          37.9
Jordan                             45.5                         45.5
Madagascar        30.9             14.8                         45.8
Mexico             4.2                                           4.2
Nicaragua                           2.7                          2.7
Panama                                            20.9          20.9
Paraguay                                           7.4           7.4
Peru              12.2             52.7           58.4         123.3
Philippines       29.1             21.9            8.3          59.3
Poland             0.1            141.0                        141.1
Syria                              15.9                         15.9
Tanzania                           18.7                         18.7
Tunisia                             1.6                          1.6
Uruguay                                            7.0           7.0
Vietnam                            10.4                         10.4
Zambia             2.5                                           2.5
Total            138.1            499.6          396.2       1,033.9

Source: Sheikh (2016)

Table 4: Seychelles: Selected Economic Indicators, 2013-2020

Nominal GDP (2014): US$1,349 million
Per capita GDP (2014): US$14,770
Population (2014): 91,359
Main products/exports: tourism, canned tuna

                                  Estimates            Projections
                            2013   2014   2015   2016   2017   2018

                                        percentage change
Real GDP                     5.0    6.2    5.7    4.4    4.1    3.4
Inflation (end of period)    3.4    0.5    3.2    1.5    3.9    3.4
                                         percent of GDP
Fiscal Balance               0.3    2.1    0.9    0.0   -0.4   -0.3
Public Debt                 70.8   70.5   70.6   70.5   67.9   61.4
External Current Account   -12.1  -23.0  -15.3  -17.7  -17.9  -17.5
Gross Official Reserves
(months of imports)          3.2    3.9    4.5    3.8    3.7    3.7

                            Projections
                            2019   2020

                           percentage change
Real GDP                     3.3    3.3
Inflation (end of period)    3.0    3.1
                           percent of GDP
Fiscal Balance               0.1    0.4
Public Debt                 55.4   49.7
External Current Account   -16.9  -16.4
Gross Official Reserves
(months of imports)          3.7    3.5

Source: IMF (2016a)

Table 5: Grenada: Selected Economic Indicators, 2013-2020

Nominal GDP (2014): US$912 million
Per capita GDP (2014): US$12,734
Population (2014): 107,000
Main products/exports: tourism, nutmeg, student services

                                  Estimates            Projections
                            2013   2014   2015   2016   2017   2018

                                         percentage change
Real GDP                     2.4    7.3    6.2    3.0    3.1    2.7
Inflation (end of period)   -1.2   -0.6    1.0   -0.2    2.6    2.0
                                          percent of GDP
Fiscal Balance              -7.3   -4.7   -1.2   -0.2    1.3    1.8
Public Debt                108.1  101.8   91.7   89.2   72.9   67.2
Current Account Balance    -23.2  -16.5  -16.5  -12.1  -15.3  -15.7
Net Imputed
International Reserves
(months of imports)          4.1    4.6    5.4    5.4    4.7    4.6

                            Projections
                            2019   2020

                           percentage change
Real GDP                     2.7    2.7
Inflation (end of period)    2.0    2.1
                           percent of GDP
Fiscal Balance               1.8    1.7
Public Debt                 62.2   57.5
Current Account Balance    -16.2  -16.4
Net Imputed
International Reserves
(months of imports)          4.6    4.5

Source: IMF (2016b)

Table 6: Grenada: Composition of External Debt (2015)

                                                     Percent of
                               Stock (US$ millions)  Total Debt   GDP

External Debt                  616.4                 68.3        62.6

Central Government             595.8                 66.0        60.5
Multilateral                   280.0                 31.0        28.5
CDB                            134.7                 14.9        13.7
IDA                             77.7                  8.6         7.9
IBRD                            14.9                  1.7         1.5
IMF                             29.3                  3.2         3.0
Other                           23.4                  2.6         2.4

Official Bilateral              97.1                 10.8         9.9
Paris Club                      10.8                  1.2         1.1
France                           4.5                  0.5         0.5
Russia                           0.3                  0.0         0.0
US                               3.0                  0.3         0.3
UK                               3.2                  0.3         0.3
Non-Paris Club                  86.2                  9.6         8.8
Kuwait                          17.0                  1.9         1.7
Taiwan                          19.4                  2.1         2.0
Trinidad & Tobago               32.9                  3.6         3.3
Venezuela                       10.0                  1.1         1.0
Other                            6.9                  0.8         0.7

Commercial                     192.6                 21.3        19.6

Arrears                          3.4                  0.4         0.3

Overdue Membership Fees         22.8                  2.5         2.3

Central Government Guaranteed   20.6                  2.3         2.1

Source: IMF (2016b)
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Date:Jun 1, 2018
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