Barbados Prime Minister Mia Mottley is urging international lenders to overhaul the way climate-vulnerable countries access development finance, arguing that cheaper and longer-term funding is essential for investments in water, healthcare and education.
Speaking to the OPEC Fund Quarterly, Mottley said the Vulnerability to Viability (V2V) Compact seeks to help countries exposed to climate shocks secure the resources needed to protect lives and livelihoods while reducing their dependence on expensive debt.
“It means that ordinary people can have access to the things they need to be able to protect their lives and their livelihoods,” Mottley said, adding that access to water, education and affordable healthcare are central to building economic resilience.
The initiative seeks to do so as developing nations face mounting pressure from climate disasters and rising borrowing costs, which have strained public finances and limited governments’ ability to invest in long-term infrastructure and social services.
Mottley argued that current financing structures force countries to repay loans over relatively short periods even when the assets being financed, such as water systems, schools and hospitals, generate benefits over decades.
“Right now, if we are forced to borrow at high rates, the interest and the high debt service crowd out other things that are essential to development,” she said.
She questioned why governments should finance infrastructure projects with loans lasting just 10 or 15 years when some facilities, particularly water systems, could remain in use for a century.
“You may end up building a school with 10-year money, but you do not have enough time to build up the capacity of the children who come out of that school to help you repay the loan,” Mottley said.
The V2V Compact proposes more affordable and predictable financing to allow governments to channel resources into productive sectors while strengthening public services. According to Mottley, investments in education, healthcare and water security are critical foundations for sustainable economic growth.
To demonstrate that vulnerable nations are willing to share the burden, Barbados has established a resilience and regeneration fund financed jointly by workers, employers and the state.
“We are not asking for charity,” Mottley said. Under the framework, employees and self-employed workers contribute 0.25% of their salaries to the fund, employers match those contributions and the government adds an amount equivalent to 0.35% of gross domestic product each year.
“We are helping ourselves, but we recognize that that will not be sufficient to bridge the gap and to build the resilience that is necessary to fight the many crises we are facing,” she added.
Mottley said multilateral institutions such as the OPEC Fund for International Development have a key role to play in closing the financing gap, describing their support as an example of cooperation among developing economies.
“Those who have are coming together to help those who have not yet, and that is the best example not just in international finance, but in morality too,” she said.
