SIDS: A Special Case for Climate Finance and Debt Relief
NEW YORK, 28 July 2021 – Reforms to both financing instruments and debt mechanisms for SIDS are necessary to adapt to the growing threat of climate change and encourage sustainable development.
This was concluded at a virtual roundtable was cohosted by the Overseas Development Institute (ODI) and UNOHRLLS. The roundtable brought together high-level and other stakeholders from SIDS and partner countries to discuss climate finance and debt relief for SIDS.
SIDS are a special case for sustainable development given their array of multidimensional vulnerabilities, such as high debt levels, susceptibility to natural disasters, and increasingly severe effects of climate change.
The current financial challenges exacerbated by COVID-19 in small islands, were addressed by The Hon. Kausea Natano, Prime Minister of Tuvalu. He described collapsed exports from tourism and fisheries and decried the difficulties SIDS face accessing international financial assistance because of complex application processes and limited eligibility. He also emphasized the importance of aligning SIDS environmental agenda with their economic agenda, to ensure sustainable development in the region.
The promising potential of a Multidimensional Vulnerability Index (MVI) in addressing debt relief for SIDS was highlighted by the Hon. Gaston Browne, Prime Minister of Antigua and Barbuda. The MVI is an emerging tool for measuring a country’s vulnerability to external shocks that could be considered as a key criterion to help SIDS get access to development finance. He also stressed the need for global financing goals to be commensurate with climate and development targets in SIDS, and accounting for the new challenges from the COVID-19 pandemic.
This need for special support for small and vulnerable states to improve access to climate finance was also reinforced by the Rt Hon. Patricia Scotland QC, the Secretary-General of the Commonwealth. Ms Scotland spoke about the Climate Finance Access Hub, which helps vulnerable states to navigate the international finance system and bid for climate finance. She also emphasized the importance of a coordinated, multilateral approach among all SIDS and their development partners to achieve their common environmental and development goals.
During a discussion, priorities emerged on the special support measures needed urgently to help SIDS recover from climate, COVID and the debt crisis. These included expanding access to concessional finance, such as grants and debt relief; ambitious climate finance and adaptation measures in SIDS; and debt relief and long-term debt restructuring.
Among the more innovative solutions proposed were climate action-debt swaps, in which countries can pay down debts by funding local climate action initiatives. These were agreed as having benefits for both SIDS nationally and their development partners at the global level.