Cook Islands Call for Review of International Financial Instruments to Support SIDS

Cook Islands Prime Minister Mark Brown last night delivered the keynote address for the opening session of day two of a Virtual Roundtable on “SIDS Access to Finance – Identifying Solutions for Resilient COVID19 Recovery” co-hosted by the Governments of Belize (the current Chair of SIDS), Fiji and the United Kingdom.

In speaking to the impacts of COVID19 on Pacific Small Island Developing States (SIDS), Prime Minister Brown said, “With the COVID19 pandemic, the Pacific is now faced with a three pronged crisis: the health crisis, the consequent economic crisis and the ongoing existential threat we face from the climate change crisis.

COVID19 has exacerbated existing vulnerabilities in our region, especially evident when Cyclone Harold wreaked havoc in the Solomon Islands, Vanuatu, Fiji and Tonga in April, just as COVID-19 was spreading. The unprecedented and global magnitude of COVID19 has brought to the fore the significant inadequacies in current international financial instruments to support SIDS response and recovery and a comprehensive review of the international financial instruments available to SIDS is needed urgently.”

The virtual Roundtable was conducted as a side event to the Annual Meetings of the International Monetary Fund (IMF) and the Board of Governors of the World Bank Group (WBG), with the opening remarks for day two of the Roundtable delivered by the Honourable Aiyaz Sayed-Khaiyum, Attorney-General and Minister of Economy for Fiji; the keynote address delivered by Prime Minister Brown followed by respondents from New Zealand, the Asia Development Bank (ADB) and the Organisation of African, Caribbean and Pacific States (OACPS).

The Annual Meetings of the IMF held in October, bring together central bankers, ministers of finance and development, private sector executives, representatives from civil society organizations and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.

Prime Minister Brown called into question the relevance and responsiveness of the international financial system to the specific circumstances of SIDS, particularly in emergency situations such as that brought about by COVID19. Prime Minister Brown stated “Current financial instruments require a variation in criterion – they must recognise the special circumstances of SIDS, no matter its national income status.

If we consider the options of increased general budget support to SIDS, which are necessary fiscal instruments for responding to economic shocks, consideration should be given to ensuring this support does not impose further burden on SIDS.

To require some SIDS to pay normal market rates for liquidity support should be reviewed given such borrowing , coupled at the same time as a deep economic contraction, may result in risk of higher debt sustainability than anticipated.”

Prime Minister Brown noted international financial institutions had a vital role to play in improving the Pacific region’s access to finance through debt relief arrangements; flexible development financing modalities; revised eligibility criteria for grant and loan instruments; increased use of general budget support, including innovative development financing mechanisms and increased support for regional interventions that complement national responses.

He concluded with a challenge to all multilateral financial institutions to “not shy away from the difficult questions that must now be asked if we are to ensure the ongoing utility and positive impact of our international financial systems for SIDS.

We must capitalise on our experiences through these crises to call for and effect a reset and reorientation of the post-COVID development financing landscape. Bold commitments and decisive changes must be made at all levels; nationally, regionally and internationally.”

Prime Minister Brown’s participation in the virtual dialogue was supported by the Ministry of Foreign Affairs and Immigration and the Pacific Islands Forum Secretariat.

Queries regarding this media release including the remarks delivered by Prime Minister Brown can be directed to MFAI Director International Affairs Karopaerangi Ngatoko at Karopaerangi.ngatoko@cookislands.gov.ck
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(Source; MFAI Cook Islands press release 21st October 2020)