Guarantee Small Island Developing States (SIDS) greater and better access to long-term finance

The leadership of the United Nations (UN) and the broader international community, including more than 50 Heads of State and Government, is focusing on the smallest and most vulnerable member countries this week with the Fourth International Conference on Small Island Developing States (SIDS4-SIDS4) held in Antigua and Barbuda. This meeting reviews the sustainable development progress of SIDS over the last decade and adopts a new platform for action for the next ten years.

Of the 57 countries identified as SIDS by the UN, 29 are in the Caribbean, comprising 16 Member States and 13 territories. The Economic Commission for Latin America and the Caribbean (ECLAC) is committed to providing essential and specific support to this subregion in its pursuit of sustainable development. The 2024 Atlantic hurricane season, which begins June 1, just two days after the conference ends, is projected to be the hottest and most active on record, underscoring the extreme vulnerability of these countries to climate-related impacts. .

Beyond its vulnerability to climate change, the subregion faces high levels of debt, a consequence of low growth and high financing costs in capital markets, aggravated by the increasing frequency and severity of hurricanes and tropical storms. In 2017, Category 5 hurricanes Irma and Maria caused extensive damage in the Caribbean amounting to approximately $97 billion, and Hurricane Dorian in 2019 resulted in $3.4 billion in loss and damage in the Caribbean alone. Bahamas.

The subregion also faces fiscal stress due to other external shocks. The COVID-19 pandemic crippled tourism-dependent economies in the Caribbean, bringing many governments to the brink of insolvency. Amid high debt and servicing costs, public investment in social infrastructure and services has stagnated or even declined in some cases.

The Caribbean debt squeeze and its impact on growth are well known. ECLAC’s econometric analysis reveals a negative relationship between debt and growth in the Caribbean. Since the global crisis of 2008-2009, the Caribbean has not experienced robust growth, and its performance in trade and foreign direct investment (FDI) has also declined. Six SIDS have debt-to-GDP ratios exceeding 100%. Genuine development and planned resilience are unattainable when scarce resources are diverted to debt repayment.

High debt negatively impacts sovereign credit ratings, subjecting the Caribbean to higher borrowing costs. However, the subregion has limited access to concessional financing for investment in resilience and growth due to its upper-middle and high-income status, a metric that ignores its high vulnerability and capacity limitations.

The main message of the SIDS4 Conference is the urgency of ensuring greater and more sustained access to long-term, low-cost financing for these small countries. This is reinforced by his call for “a seat at the table” where decisions will be made on reforming the global financial architecture.

ECLAC has been integrally involved in supporting this effort. During the preparatory stage, ECLAC assessed development progress in Caribbean SIDS over the last decade. The Commission also led the preparation of a key interactive dialogue at SIDS4 on “Improving critical forms of financing and aid effectiveness through collaborative partnerships: A conversation”. Along with the dialogue on climate finance, this is a crucial discussion, as the most formidable obstacle facing SIDS is how to ensure access to finance for investment in their sustainable development.

ECLAC is also launching the OPCC Parliamentary Observatory on Climate Change and Just Transition, providing parliamentarians from the Caribbean and Latin America with a common data platform to support their leadership and legal precedent in environmental legislation. Recognizing the importance of data for informed decision-making, ECLAC will co-lead five parallel events, including three on geospatial information management.

Prime Minister Gaston Browne, the government and people of Antigua and Barbuda deserve recognition for organizing and hosting this important conference. His tireless efforts have ensured his success. The conference outcome document, The Antigua and Barbuda Agenda for SIDS (ABAS), focuses on partnerships, more effective support from the United Nations and the basic development rights of islanders, all framed by the Goals of Sustainable development. It also calls for more robust international support to accelerate the implementation of the Paris Agreement on climate change and for the early capitalization and operationalization of the proposed Loss and Damage Fund.

The SIDS4 Conference anticipates tangible results, including the launch of a SIDS Center of Excellence, which will encompass a SIDS Data Centre, a technology and innovation mechanism and an Island Investment Forum. This initiative aims to provide the necessary social and economic support that SIDS need to plan their resilient survival and prosperity strategy.

Attention is also being paid to the development of a Multidimensional Vulnerability Index, recognizing the impact of a country’s vulnerabilities on its development trajectory. Additionally, a Debt Sustainability Support Initiative will be launched, promising multifaceted and innovative support for indebted SIDS. ECLAC and other regional commissions look forward to the presentation of the design document and the operationalization of the service to offer support to the islands of the world.

To promote public awareness of this important meeting for the Caribbean, the commission has created an impactful campaign, encouraging the world to “Imagine a World without Islands.” This provocative campaign highlights the cultural, environmental and economic contributions of the islands, emphasizing the need for their preservation and support.

High-level political commitments have been made, but these come with compromises from all sides. This time they come with a duty to all involved, especially the donor community and the UN system, to do more to support development in SIDS. ECLAC is firmly committed to this effort.