AOSIS calls for SIDS Compact as pandemic crisis deepens2020-10-07 Belize on behalf of AOSIS
Topic: Sustainable Development
I have the honor to deliver this statement on behalf of the Alliance of the Small Island States. We align ourselves with the statement delivered by Guyana on behalf of the Group of 77 and China. Mr. Chair, we would like to thank the Secretary-General for his reports on the subitems under the macroeconomic issues and financing for development, and for the presentations of the reports. The messages we have heard and read in relation to these reports are clear; the impact of the Pandemic is pervasive. What started as a health emergency is widely spreading as a socio-economic one. Even where countries have managed to stave off the health impacts the toll of the consequent economic repercussions have been high. Early estimations of reduced growth rates were quickly reassessed to lows not seen for decades in some regions. The negative growth rates that are now predicted for much of the world are reminiscent of the hardship and struggle we thought were notations in history. Unfortunately, the effects of the Covid-19 pandemic are not uniform. Although most economic sectors are affected, some sectors have been dealt a huge blow. Tourism and resource-based economies are severely impacted. UNCTAD’s 2020 World Investment Report notes, “Tourism-dependent SIDS will be hit the hardest, with the travel and tourism industries suffering from the demand shock and uncertainties about new restrictive measures to be introduced permanently in source countries as the global economy reopens…. The pandemic is straining the already fragile sources of finance of these economies, which will be exacerbated by lower tourism revenues in most and by the sharp fall in oil and other commodity prices in resource-based SIDS.” Really, this is no wonder. Most SIDS economies are monolithic. These dominant industries provide employment for up to a third of the population and much needed foreign exchange from investment. “Travel, tourism and hospitality projects contributed to more than half of the total of new investment announced in SIDS in 2019, compared with 16 per cent in the preceding five-year period.” Without an early recovery, FDI will begin to dry up. The effect of that will be certain disaster. In other SIDS where the economies are more diverse, the impacts are also significant. Investments into finance, ICT and renewable energy are all affected. But the Covid-19 impacts are not only observed in economic contraction. Remittances are also deteriorating. Income is low and expenditures remain high. Any room in the national budgets were immediately absorbed by the measures needed to keep populations safe and fed. Preexisting loans were reorganized, and new ones taken on where possible. But many SIDS also do not qualify for concessional financing or the emergency loans being doled out by the IFIs. The solutions we have found today, largely on our own, are the risks we bear for the future. Mr. Chair, add to this the deteriorating external debt sustainability of SIDS. The SG’s report on External Debt expounds on this point and notes that this negative position “has been of concern for many years given (their) frequent exposure to natural disasters.” To illustrate this point further, I will now quote extensively from that report. “The external debt stocks of small island developing States reached $50.4 billion in 2019, an increase of around 70 percentage points since 2009. As a result, the average rate of external debt to GDP in those States rose from 50.7 percent in 2009 and 60.5 percent in 2018 to 61.7 percent in 2019.” Mr. Chair, that is double that of any other country grouping. “External debt stocks also continued to grow faster than export revenues, leading to an increase of the ratio of external debt to exports to 172.4 percent in 2019 (from 99.6 percent in 2011 and 158.8 percent in 2018). While other indicators have remained relatively stable since peak levels of indebtedness were reached around 2015, small island developing States saw their ability to self-insure against exogenous shocks deteriorate further, with the ratio of international reserves to short-term debt falling from an already low 307 per cent in 2009 to 209 per cent in 2019.” We say all this to say yet again, small island developing States have their backs against a wall. Without targeted measures in the areas that affect us most, we will either crumble under debt or wash away from the rising seas. At this point, either, or both are very much possible. We have no interest in any of those ruinous ends. And so, yet again, we will reiterate that there must be SIDS solution for SIDS challenges. Even in the limited scope of our deliberations this year, SIDS will continue to call for a SIDS Compact to finally obtain the support committed to in 2014’s S.A.M.O.A Pathway and as far back as 1992 when SIDS attained the global classification as a special case for sustainable development. Mr. Chair, it matters not that we call for collective development if that development is kept at bay from those who need it most. Thank you.
Sub Topic: Macroeconomics