COVID-19 further emptied the coffers of most Caribbean governments. More than ever, Caribbean ports will have to depend on private funding for sustainable port investments through public-private partnerships (PPPs).
Many countries do not have an effective PPP framework. A regional approach may be the answer to this problem. William Ashby, Portfolio Manager of the Economic Infrastructure Division of the Caribbean Development Bank (CDB), and Damien Reeves, Economist in CDB’s Economics Department, explained the approach taken by the CDB on this matter.
Approximately 25% of Caribbean Development Bank (CDB) financing support has been in the transport sector. That sector remains among the main beneficiaries of the CDB’s project financing.
Transport is the largest contributor to regional carbon emissions and the CDB has been seeking every opportunity to further greenhouse gas reduction at the design, construction and operation phases of the projects it finances.
At the end of 2021, CDB was looking at the investment needs of more than US$1 billion over the coming 10-15 years to improve and upgrade regional port infrastructure and equipment, and in an effort to make systems more climate resilient. Port projects included alternative fuel sources and low-to-zero carbon ports, as well as e-identification and freight automation, along with tracking systems and training.
Public debt
The COVID-19 pandemic highlighted the need for effective public finance management. Most (about 13) of the 19 borrowing members countries (BMCs) now have debt ratios of more than 60%. And the average debt-to-GDP ratio increased from 65% to 82% over the same period.
Most countries have been taking steps to reduce national debt by reprioritising expenditures, or by enhancing revenues through more efficient tax collection. Some have been seeking debt restructuring. Belize, for example, recently announced plans to buy back its debt using blue bonds, in hopes of protecting its marine resources. Such instruments help to free fiscal space for necessary capital investment and green technology.
Public-private partnerships
One alternative is private port operation through public-private partnerships (PPPs). However, many countries do not have an effective legal and institutional framework to define and implement rules for private engagement in such projects that will allow them to flourish. Some countries do not have the technical capacity to structure and successfully tender PPPs in the market.
CDB does assist in overcoming such barriers to development, and has this situation in focus. It has been restructuring its in-house PPP function to better advise and service its regional clientele on this matter.
Intermediate resources
CDB has formed relationships with multi- and bilateral partners to source external financing to benefit its BMCs. In this regard, the regional institution established relationships with the UK Caribbean Infrastructure Partnership Fund, which is supporting port development in St. Vincent and the Grenadines and Montserrat. It also has partnerships with climate action funds, including the Climate Action Line of Credit, sourced through the European Investment Bank, the Green Climate Fund, and the Adaptation Fund.
Regional approach
CDB partners also with regional institutions to promote better cooperation between the private and public sectors. While there are similarities, each country’s project is unique and regional and knowhow is required to make public-private investments successful.
Jan Sierhuis is a Caribbean
maritime professional and
Portside Caribbean columnist.