Thursday 25th Jul 2024
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President Dr.Muizzu

President Dr. Muizzu Calls for Urgent Financial Reforms to Support Small Island Developing States

Antigua and Barbuda – In a compelling keynote address at the High-Level Meeting on Resource Mobilization for Small Island Developing States (SIDS), President Dr. Mohamed Muizzu of the Maldives highlighted the urgent need for significant financial reforms to aid SIDS in achieving sustainable development. Speaking at the 4th International Conference on SIDS, organized by the UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS), Dr. Muizzu outlined a stark reality and proposed actionable solutions to address the financial challenges faced by these nations.

Declining External Resource Inflows

President Muizzu began his speech by acknowledging the declining trend in net external resource inflows to SIDS over the past two decades. Despite international promises made in Samoa (2014), Paris (2015), and now in Antigua, the anticipated increase in development and climate financing has not materialized. Dr. Muizzu emphasized that escaping the middle-income trap, advancing development, and achieving the Sustainable Development Goals (SDGs) require an extraordinary level of financing at concessional terms.

The High Cost of Graduation

Reflecting on the Maldives' graduation from the Least Developed Country (LDC) category, President Muizzu noted the hefty price tag that came with it. Increased borrowing costs, shortened maturities, and worsened fiscal situations have forced many SIDS into high levels of indebtedness, deviating from a sustainable debt path and lowering credit ratings. Since graduation, the Maldives has experienced a slowdown in economic growth and restricted access to affordable finance, exacerbated by the ongoing climate crisis.

Impossible Choices and the Need for Concessional Financing

Dr. Muizzu highlighted the impossible choices SIDS are forced to make due to limited resources, such as choosing between funding new schools or constructing seawalls, and investing in clean water or sanitation versus coastal protection. He stressed that these are choices SIDS should not be forced to make. Concessional financing is crucial for constructing public infrastructure that attracts foreign direct investments and is sustainable, smart, and climate-resilient.

Proposed Solutions for Easier Access to Finance

President Muizzu proposed three solutions to enable easier access to finance for SIDS and accelerate progress towards the SDGs:
  • Reform the International Financial Architecture: Dr. Muizzu called for reforms in multilateral development banks (MDBs) and international financial institutions (IFIs) to lend to SIDS at highly concessional rates without adversely impacting their credit ratings. He urged the shareholders of these institutions to fulfill the promises made to SIDS over the last three decades.
  • Scale Up Private Finance Flows: He encouraged developed country partners, MDBs, and the private sector to scale up private finance flows to SIDS. By sharing the burden of risks associated with investments in SIDS, partners can create a corridor of confidence for private investors, propelling SIDS towards achieving the SDGs and national development goals.
  • Think Big and Expand Horizons: President Muizzu urged SIDS to think big and expand their horizons, aiming higher and reaching further than ever imagined. He emphasized the importance of building state and productive capacities, identifying goals, seeking support from partners, and leading the process themselves.

A Call for Genuine Partnerships

In conclusion, Dr. Muizzu questioned whether there is enough commitment and will to direct finance to those who need it the most. He called on development partners to see SIDS not just as aid recipients but as partners in sustainable development who protect a significant part of the ocean and its biodiversity. Genuine partnerships with mutual respect and trust are essential to ensuring finance is mobilized where it is most needed.
President Muizzu's address resonated with the audience, highlighting the critical financial challenges faced by SIDS and the urgent need for international support and reforms to enable sustainable development and climate resilience.