(CMC) – The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, Tuesday said that the costs for resilience building in the region are estimated at US$100 billion over the next two decades.
Addressing the opening of the three-day Caribbean High-Level Forum on managing the energy transition, she said that the green energy transition is one of the most pressing issues for the world and the Caribbean.
“The financial resources required for this transition are substantial, and Caribbean governments alone cannot bear this burden. Indeed, the costs for resilience building in the Caribbean region is estimated at a staggering US$100 billion over the next two decades. This is the moment to leverage innovative financial instruments such as Guyana’s sale of carbon credits,” the IMF head said.
She told the ceremony, that has brought together government ministers, regional central bank governors, private sector stakeholders, academics, and members of civil society, that sea levels are rising, and natural disasters are becoming more frequent and intense, as Hurricane Beryl in July reminded the global community.
“A rapid global transition to renewable energy is essential to mitigate some of these climate challenges. Yet, achieving this transition is a complex journey. It requires substantial upfront investments and well-designed incentives, while balancing competing priorities for development and resilience. All at a time of limited fiscal space.”
Georgieva said despite the challenges, she firmly believes the Caribbean region has a tremendous opportunity.
“The Caribbean economies showed incredible resilience through the (COVID-19) pandemic and its aftermath. Now is the time to seize the opportunity provided by global developments to plan and coordinate a green energy transition that fosters inclusive, sustainable, and resilient growth across the region.”
“With its abundant sunshine, strong winds, and geothermal potential, the Caribbean can be a global leader in this transition and an example for the rest of the world.”
Georgieva noted that the benefits of the shift to green energy are profound as currently, many Caribbean economies are highly dependent on costly and volatile oil imports, which widen economic imbalances, expose them to the fluctuations of global commodity markets, and amplify inequality.
“For fossil fuel-producing countries in the region, the path forward will entail careful management of fiscal revenues, labour transitions, and other structural shifts. At the same time, this is an opportunity to diversify into the green energy sectors of the future, such as green petrochemicals and green hydrogen,” she stressed.
Georgieva also said achieving a fair, equitable green energy transition will require well-calibrated policies, particularly given the high level of indebtedness in the region. The IMF managing director explained that formulating well-designed incentives and strengthened regulatory frameworks is critical, including electricity pricing agreements.
“Moreover, enhancing regional coordination can help achieve economies of scale in renewable projects. The Eastern Caribbean Central Bank’s Renewable Energy Infrastructure Investment Facility illustrates the potential scope for pooling resources and aggregating projects across countries, allowing to create the scale needed to attract major private investors.”
She explained that innovative financial instruments, such as green bonds, blended finance, and guarantees and insurance mechanisms, can de-risk green energy investments and unlock the private finance required to bridge the investment gap, adding that Barbados’ debt for climate swap is a great example of an innovative approach for creating space for green investment.
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