IDB, CAF and CDB Launch Debt-for-Resilience Plan for Caribbean At COP30

The newly launched initiative aims to take this mechanism to scale by leveraging guarantees from multilateral development banks and private-sector partners.

At COP30, three major regional development banks — the Inter-American Development Bank (IDB), CAF–Development Bank of Latin America and the Caribbean, and the Caribbean Development Bank (CDB) — unveiled a groundbreaking Caribbean multi-guarantor debt-for-resilience joint initiative aimed at transforming how the region prepares for disasters and manages long-term financial pressures. This historic collaboration signals a significant step toward strengthening climate resilience in one of the world’s most vulnerable regions, while easing the crippling debt burden many Caribbean nations face.

The Caribbean is widely recognized as a climate hotspot, where hurricanes, floods, coastal erosion, and rising sea levels intensify year after year. Small island states shoulder some of the world’s highest disaster-related economic losses relative to GDP, all while struggling with high public-debt levels that limit their capacity to invest in prevention and adaptation measures. Debt-for-resilience swaps — which convert existing debt service obligations into investments in climate resilience — have increasingly emerged as a promising tool to break this cycle.

The newly launched initiative aims to take this mechanism to scale by leveraging guarantees from multilateral development banks and private-sector partners. Rather than adding new debt, the approach will free up fiscal space that governments can channel into priority climate-resilience projects — from early-warning systems and resilient infrastructure to regional emergency coordination and climate-smart public services.

Three Central Goals to Strengthen Regional Resilience

The Joint Initiative is designed around three core pillars:

1. Scaling up debt-for-resilience swaps to provide fiscal flexibility for countries to invest in long-term climate resilience, environmental protection, and disaster preparedness.

2. Strengthening coordination among MDBs, governments, and private-sector partners to streamline processes, share knowledge, and accelerate future transactions. This includes creating a shared operational framework to reduce transaction complexity and delays.

3. Improving transparency, monitoring, and evaluation standards to ensure accountability, attract investor confidence, and mobilize new forms of climate-aligned financing.

With these shared goals, the initiative intends to create a regional facility under a Framework Agreement, which will serve as a hub for collaboration among guarantors. While each institution will maintain its own operational procedures and approval systems, the facility will harmonize principles, definitions, and standards — making future debt-for-resilience swaps more predictable, cost-effective, and scalable.

A Unified Regional Framework for Larger and Faster Transactions

Debt swaps often involve complex negotiations, variable terms, and long implementation timelines. The Joint Initiative seeks to eliminate these barriers by establishing:

• Common principles for guarantee terms

• Shared climate-resilience taxonomies aligned with international best practices

• Jointly developed key performance indicators (KPIs)

• Streamlined transaction structures compatible with legacy debt portfolios

By setting consistent standards, the participating development banks expect to attract non-traditional guarantors, such as institutional investors, climate funds, and philanthropic organizations — greatly expanding the pool of available financing for resilience.

Better alignment of processes will also lower costs, simplify due diligence, and reduce the time it takes to bring a debt-swap transaction from concept to execution. This, in turn, should encourage larger, more ambitious operations that can significantly support the region’s long-term adaptation needs.

Ensuring Regional Benefits and Public Goods

A defining feature of the initiative is its commitment to ensuring that every debt-for-resilience swap includes a regional public-goods component. This reflects the shared nature of climate risks in the Caribbean, where storms and rising seas do not respect national borders.

Examples of regional public goods that may be financed include:

• Joint disaster-response systems

• Regional meteorological and climate-data platforms

• Shared resilient infrastructure (such as inter-island fiber-optic systems or emergency supply chains)

• Strengthening coordination between Caribbean disaster-management agencies

By focusing on these collective-benefit investments, the initiative strengthens not only individual country resilience, but also the stability and preparedness of the entire Caribbean basin.

A New Era of Caribbean Climate Finance

Debt-for-resilience mechanisms have gained global attention in recent years, especially as climate-vulnerable nations call for more equitable and innovative financing instruments. The Caribbean has been at the forefront of such innovation, with recent debt swaps in Barbados and Belize serving as global models.

The IDB–CAF–CDB joint initiative promises to expand these early successes to a regional scale, creating a more predictable, efficient, and collaborative system for climate-resilience financing.

By simplifying multi-guarantor cooperation, the initiative is expected to:

• Unlock greater private-sector participation

• Reduce pressure on national budgets

• Expand investment in climate-critical public goods

• Accelerate adaptation ahead of intensifying climate threats

This transformational effort aligns with global calls at COP30 for climate-finance reform and represents a major milestone in rethinking how small island developing states can protect their people, economies, and ecosystems without exacerbating debt vulnerabilities.

As climate impacts intensify, the Caribbean’s ability to act before disasters strike — rather than after — will be essential. The new debt-for-resilience joint initiative offers a pathway toward that future: one where financial stability and climate security go hand in hand.