Debt Crisis in SIDS: A Call for Rapid Concerted Action

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星期四, 12 October 2023 - 9:00am

Marrakech, Morocco

Join us for a critical and time-sensitive event aimed at tackling the urgent economic and debt crises currently facing Small Island Developing States (SIDS). SIDS have long faced debt sustainability challenges, due to their unique circumstances and vulnerabilities. The recent confluence of global crises and shocks have further exacerbated the situation: over 40% of SIDS are now on the edge of or are already grappling with unsustainable levels of debt. This severely constrains their ability to invest in resilience, climate action and the SDGs, and creating a viscous cycle of fiscal stress and climate vulnerability in SIDS.

In the past three decades, the frequency and intensity of high-impact disasters affecting SIDS have surged, with over 133% increase witnessed in 2020 alone. Due to limited resource bases, geographic isolation, and heavy dependence on food imports, SIDS face escalating economic and financial risks, compounded by their heightened exposure to environmental adversities. Swift and concrete actions are imperative.

Conventional income-based metrics often fail to fully grasp the multifaceted vulnerabilities confronting SIDS. Despite relying on external borrowing to fund development and respond to crises, SIDS frequently lack access to adequate development resources, including concessional finance or mechanisms for effective debt relief. Notably, private external debt in SIDS tends to rise during or after major disasters.

The recently introduced Multidimensional Vulnerability Index (MVI) substantiates what has long been recognized - SIDS are exceptionally vulnerable. The MVI unequivocally reveals that 70% of all SIDS score above the median, underscoring their inclination to grapple with high structural vulnerability and a lack of structural resilience across multiple dimensions of sustainable development.

We urge major stakeholders, such as the World Bank Group, the International Monetary Fund, multilateral and regional development banks, bilateral creditors, and private creditors, to proactively take decisive actions. These actions should encompass the creation of new financial instruments and the enhancement of existing ones to provide essential debt relief, encompassing debt cancellation, suspension, rescheduling, and other supportive measures, including through the Pan-SIDS debt sustainability support service.

SIDS, notably in the context of the Fourth UN Conference on SIDS in 2024 and other relevant international conferences, including the Fourth UN Conference on Financing for Sustainable Development in 2025, require particular attention.

Your active engagement and participation in this event will significantly contribute to addressing the urgent issue of debt vulnerabilities in SIDS, including proposals on immediate and medium-term solutions.