Small Island States call for a systemic debt shake up at IMF and World Bank Meetings

April 8, 2021
  • Press Release

New York – 08 April 2021 – The G20’s agreement to extend the Debt Service Suspension Initiative (DSSI) to the end of 2021 only goes some of the way to solving the huge debt issues COVID-19 and climate change have served up to island nations, says the Alliance of Small Island States (AOSIS). 

The G20 made the decision at the spring meetings of the IMF and World Bank this week.

“Many have likened this move to kicking a can further down the road. But it’s not even a whole can,” said Ambassador Webson of Antigua and Barbuda, Chair of AOSIS. “More than half of the world’s small island states don’t even qualify for this debt relief, due to outdated and illogical criterion.”

Due to the COVID-19-related collapse of tourism, a primary industry for Small Island Developing States (SIDS), as well as unrelenting climate impacts, most islands are in dire straits and simply have no more fiscal space within which to maneuver, he explained.

“We are squeezed on all sides, yet due to the arbitrary designation of ‘middle-income’ status, many of us are told that we do not need assistance. This is ludicrous in a year when our debt-to-GDP ratios are beyond maxed out and when even in the best of times, a hurricane can easily wipe out an entire year’s GDP in one fell swoop,”

Ambassador Webson believes that expansion and extension of the debt suspension initiative is an important first step, but only one piece of a larger puzzle.

“Debt suspension can buy us invaluable time, and the initiative should be extended beyond 2021 – or further – for however long it takes for all countries to put their heads together and come up with a fairer, more inclusive system that will help us build resilience to the effects of climate change and achieve sustainable development.”