Seigo­nie Mo­hammed

Cli­mate Change Ed­i­tor

seigo­nie.mo­hammed@guardian.co.tt

An­talya, Türkiye: Bar­ba­dos Prime Min­is­ter Mia Mot­t­ley has sharply crit­i­cised the in­ter­na­tion­al fi­nan­cial sys­tem, ques­tion­ing why coun­tries most vul­ner­a­ble to dis­as­ters are of­ten re­quired to pay more to bor­row mon­ey, even as they strug­gle to re­build.

Her com­ments at COP31 in Türkiye car­ry a warn­ing for Trinidad and To­ba­go, where a ma­jor cli­mate dis­as­ter could leave the Gov­ern­ment fac­ing a cost­ly re­con­struc­tion bill while still hav­ing to meet its ex­ist­ing debt oblig­a­tions.

“Do you ever recog­nise that those who lend are paid the most, by those who are the most vul­ner­a­ble?” Mot­t­ley asked dur­ing a high-lev­el dis­cus­sion host­ed by the gov­ern­ment of Nepal.

At the dis­cus­sion, ti­tled Full Bill of a Dis­as­ter, Mot­t­ley ar­gued that in­ter­na­tion­al lend­ing rules must change to give vul­ner­a­ble coun­tries greater fi­nan­cial pro­tec­tion when dis­as­ters strike.

For Trinidad and To­ba­go, the is­sue goes be­yond re­pair­ing flood­ed homes, dam­aged roads and pub­lic in­fra­struc­ture. A ma­jor dis­as­ter could force the Gov­ern­ment to spend heav­i­ly on emer­gency re­lief and re­con­struc­tion, while dis­rup­tions to busi­ness­es and eco­nom­ic ac­tiv­i­ty put pres­sure on rev­enue.

If the coun­try had to bor­row more to meet those costs, fu­ture bud­gets could face high­er debt re­pay­ments, leav­ing less mon­ey avail­able for health­care, ed­u­ca­tion and oth­er na­tion­al pri­or­i­ties.

Mot­t­ley is call­ing for new loan agree­ments to in­clude nat­ur­al dis­as­ter and pan­dem­ic claus­es that would al­low gov­ern­ments to sus­pend pay­ments on both the prin­ci­pal and in­ter­est of their debts for two years.

She said the tem­po­rary pause would give coun­tries time to re­store es­sen­tial ser­vices and re­build com­mu­ni­ties with­out im­me­di­ate­ly di­vert­ing scarce re­sources to cred­i­tors.

Her ap­peal was ac­com­pa­nied by a point­ed chal­lenge to in­ter­na­tion­al lead­ers.

“How many more events must hap­pen be­fore we do the right thing?” she asked.

The Unit­ed King­dom’s Spe­cial Rep­re­sen­ta­tive for Cli­mate Mat­ters, Rachel Kyte, al­so called for wider adop­tion of debt-pay­ment paus­es.

“We would like to see all cred­i­tors au­to­mat­i­cal­ly in­voke debt pause claus­es. We would like to see coun­tries de­mand­ing that all cred­i­tors give them a debt pause clause,” Kyte told the gath­er­ing.

She said the UK in­tend­ed to push the is­sue through the G20.

The fi­nan­cial risks fac­ing dis­as­ter-hit coun­tries ex­tend be­yond im­me­di­ate debt re­pay­ments. Nepal’s Fi­nance Min­is­ter, Dr Swarn­im Waglé, told the meet­ing that his coun­try faced a re­con­struc­tion bill ap­proach­ing US$5 bil­lion fol­low­ing a dev­as­tat­ing dis­as­ter in Au­gust.

He warned that a pos­si­ble down­grade to Nepal’s sov­er­eign cred­it rat­ing could cre­ate an­oth­er fi­nan­cial set­back. A cred­it rat­ing helps lenders as­sess the risk of lend­ing to a gov­ern­ment. A down­grade can make bor­row­ing more ex­pen­sive, adding to the cost of re­build­ing.

“This is not macro­eco­nom­ic mis­man­age­ment on our part. This was a nat­ur­al dis­as­ter. And don’t pun­ish us for a dis­as­ter that was be­yond our con­trol,” Waglé said.

Mot­t­ley al­so wants de­vel­op­ment banks to pro­vide longer-term fi­nanc­ing for es­sen­tial in­fra­struc­ture. She pro­posed loans last­ing 40 to 50 years, with re­pay­ment mora­to­ri­ums of 15 to 20 years.

Gov­ern­ments need more favourable terms to re­build schools, health­care fa­cil­i­ties and wa­ter sys­tems with­out sac­ri­fic­ing oth­er ur­gent de­vel­op­ment pri­or­i­ties, she ar­gued.

For Trinidad and To­ba­go, the de­bate rais­es ques­tions about whether ex­ist­ing dis­as­ter-fi­nanc­ing arrange­ments and bor­row­ing agree­ments would pro­vide suf­fi­cient pro­tec­tion af­ter a cat­a­stroph­ic event.

Debt-pay­ment paus­es would not erase what a coun­try owes. Sub­ject to the terms of the agree­ments, they would pro­vide tem­po­rary re­lief while re­cov­ery takes place.

Mot­t­ley’s chal­lenge to world lead­ers is that vul­ner­a­ble coun­tries should not have to face a sec­ond fi­nan­cial cri­sis sim­ply be­cause they are re­cov­er­ing from a nat­ur­al dis­as­ter.