Seychelles shares best practices at UN/World Bank event dealing with debt management at Samoa SIDS meeting
Minister for Foreign Affairs, Jean-Paul Adam was invited to sit on a high level panel in a World Bank sponsored a side event held in the margins of the UN Third International Conference on Small Island Developing States (SIDS) meeting in Samoa, with a view to explore the challenges that face SIDS in terms of their debt management difficulties and to highlight examples of long-term solutions by SIDS to mitigate these problems.
The World Bank highlighted that SIDS were not a homogenous gamut of nations reflected in varying degrees of socio-economic development. As such a comprehensive debt framework must be created to deal with the underlying issues.
SIDS face many challenges that include climate change adversely affecting their economies, limited access to international markets and financial systems, their inherent vulnerabilities to shocks and the inability to spread fixed costs across large populations.
Nonetheless, a majority of SIDS including Seychelles have been promoted from the status of Least Developed Countries (LDCs) and are now struggling with the so-called ‘middle income trap.’ Seychelles congratulated the World Bank’s initiative in recognising the problem as a majority of SIDS are middle income states.
Minister Adam highlighted the Seychelles experience noting that any debt alleviation must stem from strong and decisive leadership to deal with the problem based on home grown programmes supported by the multilateral agencies.
Seychelles has successfully decreased its debt to GDP ratio to manageable levels following the 2008 financial crisis, even if further debt reduction was required to give the country more policy space. The Minister noted that the success stemmed from Seychelles Government policies; encouraging foreign direct investment, privatisation, reducing the size of the public service whilst offering government loans to small and medium sized enterprises and successfully negotiating debt forgiveness programs with major creditors.
Minister Adam noted that the international community would have to stop viewing SIDS in terms GDP per capita as a measure of success.
“We must move from the paradigm of GDP per capita to a more valid measurement when considering eligibility for financing for SIDS, such as the vulnerability index” remarked Mr Adam
“One of the the fundamental outcomes of this conference must be that SIDS can overcome their challenges if their vulnerabilities are properly identified and factored in to development strategies. While ‘the small island exception’ is encouraging in terms of assistance from the World Bank, a more systematic and scientific approach based on a vulnerability index would better support SIDS development” said the Minister.