Guyana leads region with Climate Resilient Debt Clause Agreement

Dr Ashni Singh, Senior Minister in the Office of the President with Responsibility for Finance and the Public Service, has signed a Climate Resilient Debt Clause (CRDC) Agreement with the World Bank at the Ministry of Finance, along with an agreement for the activation of the World Bank’s Rapid Response Option (RRO).
A release from the Finance Ministry has said the CRDC is a debt management tool that allows for the deferral of debt payments for up to two years, should Guyana experience a natural disaster, such as flooding.
Guyana is the first country in the Caribbean Region to sign the updated CRDC, and this has taken place following intense lobbying by Government for the bank to include appropriate climate change phenomena, such as floods, droughts, and public health emergencies that are unique to this country’s circumstances.
Should the country experience such a disaster, the CRDC, once activated, would also reduce the burden on Government’s resources to finance disaster response and recovery efforts.
The second agreement signed with the World Bank is the Rapid Response Option (RRO) which, if activated, would see existing resources quickly repurposed for emergency response, should there be a crisis such as a natural disaster, health shock, or conflict event. Guyana can, in such a situation, repurpose up to ten percent of its undisbursed balances in its Investment Project Financing and Program for Results (PforR) operations per year for quick disbursement.
During the signing, Dr Singh explained that “notwithstanding Guyana’s improved economic circumstances in recent years, we continue to be a country that is extremely vulnerable to climate and other potentially catastrophic events,” as he recalled that the country has, over time, experienced multiple episodes of flooding, including in 2005, when floods devastated Guyana’s economy and posed damages in excess of 60 percent of GDP.
Minister Singh added, “The bank has been partnering with us on building our resilience to natural disasters and to catastrophic events; and not least, of course, is the support for the Flood Risk Management Project, amongst others. But increasingly too, the international community, as well, has recognised the importance of instruments that can respond more effectively to exogenous shocks, extreme climatic events, or other natural disasters and catastrophes.”
Signing on behalf of the Bank was World Bank Group Representative to Guyana, Diletta Doretti, who underscored the significance of the signing as she lauded the Finance Minister for his intense lobbying efforts, and for pointing out, when he perused the agreement months before, that the CRDC needed to include natural disasters relevant to Guyana, as it only catered for hurricanes and earthquakes.
The Finance Ministry has said it can be recalled that, in July this year as well, Dr Singh presented to Parliament two amendatory loan agreements, including one which amended the Export Finance Facility Agreement, dated June 14, 2022, between the Co-operative Republic of Guyana, represented by the Ministry of Finance as the Borrower, and UK Export Finance as the Lender, and the UniCredit Bank Austria AG as the Agent and Arranger, for an amount of EUR 161,016,949.15 for the Guyana Paediatric and Maternal Hospital Project.
This amendatory agreement facilitated the inclusion of a Climate Resilient Debt Clause into the original agreement, with Guyana being one of the first countries to adopt the CRDCs directly as part of its loan agreement with the UK Export Finance.