Since 2000, the Small States Forum (SSF) has brought together Finance Ministers and Central Bank Governors from 50 small states to discuss the most pressing challenges they face and share examples of success and best practices in an effort to raise the profiles of small states issues and bring them to the attention of the international community.
The 2013 Small States Forum during the World Bank's Annual Meetings focused on the challenges, best practices, and policy actions to build resilience, address vulnerability and ensure fiscal sustainability. Discussion touched upon potential areas of international support, including the World Bank’s work on the Comprehensive Debt Framework (CDF) and Debt Management Performance Assessment (DeMPA).
Fiscal Sustainability and Fiscal Rules in Small States. Fiscal rules may help guide fiscal policy and promote fiscal responsibility and debt sustainability. However, only a relatively limited number of small states have in the past used fiscal rules compared to larger peers. Similarly, Sovereign Wealth Funds have long been advocated as an important rules-based fiscal policy instrument to manage the use of government revenues in small states. In practice, only few Funds in small states have been able to achieve their stated objectives.
Promoting Effective Debt Management and Sustainable Growth. Strengthening institutions and policies by implementing reforms, particularly in economic and debt management areas, is critical to mitigating the broader risks to which small states’ economies are exposed: limited economic opportunities, lack of diversification, disproportionately high infrastructure and transaction costs, and high vulnerability to natural disasters. It is necessary to look at debt issues in a holistic manner, taking into account country specific circumstances and vulnerabilities, including to natural disasters and climate change, depth of the private sector, and health of the macroeconomic situation. Debt sustainability can only be achieved if accompanied by sustainable growth.
For more information, please visit www.worldbank.org/smallstates