March 18, 2025

Abstract

How Can the World Bank Better Support the Shared Debt, Climate, and Development Financing Challenges Facing Caribbean SIDS?

Since 2020, Caribbean SIDS have been grappling with a ‘polycrisis’ of multiple external shocks that have resulted in serious setbacks in their attempts to reduce poverty, eradicate hunger and meet other United Nations Sustainable Development Goals (SDGs). In addition, the Caribbean’s high indebtedness constrains the fiscal space for regional governments to respond to the escalating climate crisis, ensnaring these small island nations in a vicious debt-climate trap. This study examines how, in the context of ongoing reforms to make itself bigger, better and more effective, the World Bank can play a leadership role in rapidly scaling up public investment to help Caribbean SIDS better meet their shared debt, climate and development challenges in a timely and affordable manner. Among the major recommendations are for the World Bank to: offer analytical support on the various proposals associated with the UN Framework Convention on Sovereign Debt; develop a new debt relief initiative that includes middle- and high-income Caribbean countries learning from other global debt relief initiatives; pilot test the United Nations Multidimensional Vulnerability Index (MVI) as a complementary framework to guide its mobilization and allocation of concessional finance for Caribbean SIDS; shift its adaptation financing from the current project-based model to being more anticipatory, strategic and transformational in the Caribbean region; carry out a once-for-all increase of the share of basic votes to the proportion that existed when they were introduced in 1979 to protect the voting power of its smaller Caribbean shareholders; and introduce weighted voting for specific issues of global or regional importance such as climate change, ensuring a more democratic decision making process for Caribbean countries on the World Bank’s Executive Board.

Learn more