Barbados Prime Minister Mia Amor Mottley called for longer-term, affordable development financing, saying international lenders must better align loan repayment periods with the lifespan of infrastructure such as schools, clinics and water systems.
Speaking at the Accra Reset event on the sidelines of the 81st United Nations General Assembly (UNGA 81) in New York, Mottley said developing countries need greater access to blended finance, guarantees, debt swaps and other instruments to fund essential services without worsening fiscal pressures.
Her remarks highlighted the Vulnerability to Viability Compact, a financing initiative covering 77 V20 countries that seeks to improve access to longer-term and affordable capital.
“We need to have a better match on the financing that we bring with the assets’ life that we’re trying to create,” Mottley said.
She said the compact emerged from discussions with international financial institutions following the Accra Reset meeting a year earlier, adding that 16 major international financial institutions now recognise the need to change the financing paradigm.
Barbados Plans $600 Million Debt Repurchase
According to the minister, Barbados is preparing a debt-for-social swap involving the World Bank, Inter-American Development Bank, Caribbean Development Bank and Latin American Development Bank.
Under the arrangement, the institutions would work together to repurchase $600 million of Barbados’ debt, unlocking an estimated $150 million in savings for healthcare spending across the country.
The initiative follows Barbados’ previous debt-for-nature and debt-for-climate swaps.
Mottley said the debt-for-climate transaction pooled savings over 15 years to support a sewage project designed to treat water, replenish aquifers and transfer water to arid areas for agriculture.
She added that the planned debt-for-social swap would support the refurbishment of a hospital built more than 60 years ago.
Mottley Urges Reform of Global Lending System
The prime minister said short-term, high-interest borrowing limits governments’ ability to make long-term development decisions and forces them to choose which essential services to fund.
“No school is going to last only 10 years. No water main is going to last 15 years. No clinic is only going to last 15 years,” she said.
Mottley called for more effective mobilisation of savings held in Africa, the global diaspora and the wider Global South. She also urged reforms to credit ratings and greater use of guarantees and debt-resilience clauses.
She said governments should create space for citizens and domestic investors to finance infrastructure such as desalination plants, battery storage systems and photovoltaic parks, while public authorities focus on projects that attract limited private investment. Mottley argued that international financial institutions must undertake reforms similar to those demanded of developing countries.
“If countries must go through hard decisions and hard choices to be able to reform themselves to be appropriate to engage with the rest of the world, how do international financial institutions not reform themselves to do the same thing?” she said. “It cannot be one-footed,” she added.
