Small island nations are in a bind.
Under assault from climate change, they need to spend big to protect their communities from rising seas and dangerous storms.
But a major source of income—international tourism—has dried up due to the coronavirus pandemic.
So now they’re pleading with world leaders for help and relief.
“As small island developing states, we are struggling to stay afloat literally and figuratively,” said Jerome Xavier Walcott, minister for foreign affairs of Barbados. “We are of the view that a need for adequate climate finance in the midst of the COVID-19 pandemic cannot be overstated.”
Barbados was one of several island nations to raise concerns this week with the United Nations. Their calls were aimed at the World Bank and International Monetary Fund. The World Bank-IMF annual meetings kick off in two weeks.
The pleas for debt relief came from leaders of the Bahamas, Barbados, Dominica, Grenada, the Maldives, Samoa, the Solomon Islands, Vanuatu and other small island developing countries.
They said lockdowns implemented to fight the pandemic have sent revenues plummeting, thereby crippling national climate adaptation plans and efforts to rebuild from recent tropical weather disasters. Yet they insisted that adaptation spending must proceed, as failure to build up resilience to natural disasters would cause economic pain down the road.
For example, the Pacific nation of Kiribati is considering raising the elevation of its islands, while the neighboring Solomon Islands says it’s busy fixing maritime claims before sea-level rise eats away at its land. Dominica said it may spend up to 30% of its budget to hurricane-proof buildings and infrastructure.
Many of these countries have been successful in protecting their people from the virus, as there are no reported cases of COVID-19 in nine Pacific island nations.
But this vigilance has come at a price.
“Such success was and is only possible through concerted action and stringent measures, which further exacerbate our socioeconomic crisis,” said Peter David, Grenada’s minister of foreign affairs.
The Group of 20 nations, or the G-20, has organized a temporary Debt Service Suspension Initiative (DSSI) that runs out at the end of the year. Small island governments say this assistance is very much welcome but not nearly enough.
The Maldives says its climate planning has been crippled by the pandemic. Its government has requested an extension of DSSI out to at least the end of 2021.
More aid is needed, it said.
“The toll that debt burdens have on small island developing states like the Maldives is clearer now,” said Maldives Foreign Minister Abdulla Shahid.
“But debt suspension is only half of the story for countries like ours,” he added. “We need structural change, innovative facilities, and better and greater access to concessional finance.”
IMF says it’s taking these governments’ warnings seriously.
Yesterday, IMF Managing Director Kristalina Georgieva called on the international community to reform global sovereign debt systems. In a post to the agency’s website, she and other IMF economists warned that several nations are at “high risk of a debt crisis,” especially smaller developing countries.
IMF predicts the world’s average debt ratio will have risen by a further 17% of global gross domestic product in the richer world, and by 12% of GDP in developing nations by the end of 2021. Currently, the developing world’s debt burden stands at around 60% of GDP, while the developed world is straining under a debt-to-GDP ratio in excess of 120%. The world’s debt burden is now higher than it’s ever been since the end of World War II.
IMF warned of skyrocketing debt even before the pandemic led to increased spending and decreased revenues.
Yesterday, IMF launched a report and laid out recommendations for the world’s “debt architecture.”
In a presentation of the report’s key recommendations, IMF First Deputy Managing Director Geoffrey Okamoto said the world has only avoided “a systemic debt crisis” due to record low interest rates, central bank intervention and emergency measures like DSSI. “This kind of support has bought the world some time,” he said.
Okamoto said richer nations should do more, such as extending DSSI “ideally for another 12 months” and restructuring bilateral debts.
He urged debtor nations to begin talks with their creditors as soon as possible.
“Countries with unsustainable debts should not delay restructuring and open negotiations with creditors before the situation worsens,” said Okamoto. “Delaying only increases the costs, both economic and human.”
Small island governments say they are doing just that, adding that help is needed for general debt repayment as well as climate financing, which has been made more difficult by the crisis.
Barbados commended the United Kingdom for doubling its contribution to the U.N.’s Green Climate Fund in spite of the pandemic. The Bahamas expressed its appreciation to dozens of bilateral donors and financial institutions helping it to rebuild from the destruction caused last year by Hurricane Dorian.
Dominica thanked contributors to its “climate resilience recovery plan.” And the government of the Solomon Islands publicly thanked Australia, New Zealand, Japan, China and the U.N. for their “generosity,” which Prime Minister Manasseh Sogavare said “will continue to be needed.”
Kenneth Darroux, minister for foreign affairs of Dominica, said time is of the essence.
“The situation is dire. The situation is urgent. And we welcome any support which could influence the provision of adequate financial support in a timely and applicable manner,” he said.
“Climate financing has to be new, additional and predictable,” said Maldives Foreign Minister Shahid. “Adaptation is no longer something to plan for in the future. It is our every day.”
Reprinted from Climatewire with permission from E&E News. E&E provides daily coverage of essential energy and environmental news at www.eenews.net.