35. Caribbean Debt Restructuring and Climate Finance - Thomas Laryea

On this episode of the show, Rasheed is joined by international lawyer Thomas Laryea, who specializes in the mediation process for sovereign debt restructuring. As a senior lawyer with the IMF, Thomas holds a unique vantage point at the tables of the negotiation between state debtors and creditors when financial instability requires a reevaluation of ongoing agreements.

The Caribbean is no stranger to Laryea's field, with several members having undergone their own restructuring processes. Of particular note is Suriname's own recent restructuring, which came under scrutiny in the public eye for it's long-winded execution and apparent delays brought about by the largest creditor, China. Thomas explores the intricacies of of the negotiation process, an outlines factors that could lead to the perception of overdrawn negotiations.

What makes a good or bad deal? There's no one size-fits all for restructuring. Sovereign debt restructuring is handled case-by-case. Dynamic solutions must be brought to the table to bring each party as close as possible to their perceived conditions for a win. The negotiations must also account for future investment opportunities and ideally provide new vehicles for additional financing in the long term.

Climate change poses a significant threat to the Caribbean region with many territories lacking the necessary financing to implement infrastructural and policy changes needed to weather the upcoming crises. Here, Thomas offers advice for governments seeking funding solutions across both private and public liquidity pools. The climate conundrum will be a broad challenge for small island states, and broad solutions will therefore be required to meet that challenge.