Remarks by
Dr. Ibrahim Zuhuree
Deputy Permanent Representative of the Republic of Maldives to the United Nations,
at the Interactive Roundtable on Fostering debt sustainability and strengthening the global financial safety net
High-level Dialogue on Financing for Development
5 October 2023
Mr. President, Mr. Secretary-General, Excellencies, Distinguished Delegates,
Navigating the pathway to debt recovery and growth in the post-COVID-19 era has been fraught with new hurdles. Escalating pressures on food and energy. Continuing difficulties with supply chains, and geopolitical disputes and increasing conflicts.
The pandemic compounded debt vulnerabilities that had been rising across developing countries for the last decade, driven by higher debt servicing costs, narrowing fiscal space. Despite record aid in 2022, aid flows still fall short of commitment, with loans overtaking grants. The global financing safety net must be strengthened.
We would like to highlight four pivotal areas of focus.
First, even before the pandemic, the financing available for development, particularly for SIDS, was insufficient. We need a global response to guarantee the necessary liquidity support for SIDS, to facilitate a recovery commensurate with the scale of the debt burden exacerbated by the COVID-19 crisis. And so, international financial institutions must reassess their eligibility criteria to facilitate more accessible concessional loans and grants for SIDS. They must look beyond GDP as the sole measure of development. The answer lies with adopting the Multidimensional Vulnerability Index, at the earliest!
We urge international financial institutions and development partners to use the MVI as a tool, ensuring that the vulnerabilities of SIDS are integral to decision-making, thus enabling easier access to affordable financing and debt relief.
Second, to bridge the escalating SDG financing gaps, a concerted effort that involves enhanced MDB lending, guided by balance sheet optimization and de-risking private investment through credit guarantee enhancement, is vital. Stakeholders including the World Bank Group and IMF, must spearhead this change.
Third, we must reinforce our resilience to climate change. As a Small Island Developing State, our national budgetary resources are simply not enough to address the impacts of climate change. Despite contributing less than 0.003% of global carbon emissions, the Maldives increased spending on climate change adaptation and mitigation by 3,210% between 2011 and 2022. That is a total of 587 million dollars during this period. This is 587 million dollars that could have been directed towards our development priorities. It is evident that climate-related risks, factor heavily into long-term fiscal sustainability. We need to embrace the mandates of the Paris Agreement and the Glasgow Climate Pact of 2021, to secure a sustainable future.
Fourth, we need effective multilateral mechanisms to address debt. The Common Framework for Debt Treatment beyond the Debt Service Suspension Initiative has, unfortunately, not succeeded in addressing the widespread debt crisis in developing countries. It has failed to reduce external debt to a sustainable level. Although we have seen some progress in the actual application of this framework, more needs to be done to make such mechanisms inclusive, transparent, and efficient. The Framework must also allow for countries to continue to access capital markets.
Excellencies,
SIDS need tailored solutions for a just recovery plan. One that addresses debt relief. Together, we can forge a more sustainable future for all.
I Thank you
