V2V Compact launched to unlock climate finance
Barbados and the OPEC Fund unveiled the Vulnerability to Viability (V2V) Compact in Vienna to improve access to affordable capital for 78 climate-vulnerable economies, with more than 15 development finance institutions signing on. The initiative aims to secure longer repayment terms, align financing with national priorities and focus initially on water, education and health.
The Vulnerability to Viability (V2V) Compact was launched at the OPEC Fund Development Forum in Vienna, bringing together 78 climate-vulnerable economies and over 15 development finance institutions in a bid to lower the cost of capital and better align financing with national development needs.
A joint undertaking between the OPEC Fund and the government of Barbados in its role as chair of the Climate Vulnerable Forum and the V20 finance ministers, the Compact builds on the Bridgetown Initiative’s principles to improve financing for countries most exposed to climate shocks.
Prime Minister Mia Mottley said the Compact was designed to address inequities in the global financial system and place vulnerable countries at the centre of decisions affecting their development. "Countries lead, and finance institutions align," she said. The Compact seeks to secure financing on more favourable terms, including longer repayment periods, more predictable funding and stronger alignment between development funding and national priorities.
It aims to combine affordable and predictable financing, private capital mobilisation and shock-responsive financial tools meant to help countries maintain essential services and strengthen resilience before and after climate-related disasters. At launch, participating institutions named include the Caribbean Development Bank, African Development Bank, Asian Development Bank, Inter-American Development Bank, World Bank Group and the International Fund for Agricultural Development, along with members of the Arab Coordination Group.
Abdulhamid Alkhalifa, President of the OPEC Fund, described the Compact as an example of "solidarity, partnership and practical action," noting the Fund has provided approximately US$17 billion in support to V20 countries over the past five decades. For British Virgin Islands residents, the Compact is directly relevant.
Like other small island developing states, the BVI faces high exposure to hurricanes, flooding and drought, while often paying higher borrowing costs despite contributing little to global emissions. Greater access to longer-term, lower-cost and shock-responsive finance could help the BVI shore up water systems, sustain health and education services after storms, and align investment with local recovery and resilience priorities.
Work is already underway to operationalise the initiative. A white paper outlining implementation mechanisms is expected to be presented at the World Bank and IMF annual meetings in Bangkok in October. Officials say the Compact’s success will depend on translating high-level commitments into concrete financing deals that prioritise vulnerability, resilience and locally led development.
Primary source: VINO