Green transition in islands hamstrung by debt, says Antigua & Barbuda PM

Excerpt from Reuters

With its tourism-reliant economy bowed by debt, and facing climate shocks and now the COVID-19 crisis, the tiny Caribbean nation of Antigua and Barbuda will require more international funding to transition to green energy, its prime minister said.

Gaston Browne, a former banker and businessman who came to power in 2014, said his island country of less than 100,000 people had decided to slow down an earlier drive to switch to renewable energy, to avoid tipping itself further into debt.

He told the Thomson Reuters Foundation that, with pandemic restrictions preventing international tourist travel, the nation’s economy was likely to shrink by about 30% in 2020-21, pushing up its debt-to-GDP ratio from just under 70% to 95%.

That is a serious problem shared by other already fiscally squeezed small island states, many of which now face a “perilous situation of debt” due to economic woes caused by the pandemic, Browne said.

“I am afraid we could find ourselves in a debt crisis and that all of the (development) gains we have made over the last several decades… could be eroded,” he told the Thomson Reuters Foundation in a phone interview.

That would reduce the ability of governments to borrow money to help them ditch dirty imported fuel oil, which most rely on as their main supply of energy, and instead install technology to move to cleaner sources such as solar and wind, he noted.

If COVID-19 results in an economic “lost decade”, on top of other pressures on island nations, pushing back deadlines to achieve carbon neutrality may be prudent, he added.

Antigua and Barbuda has an official target to cut its planet-heating emissions to net zero by 2050, but Browne said he was aiming for his country to become carbon-neutral by 2040.