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Small States Forum 2015: Opportunities and Challenges for Small States to Finance Sustainable Development in the Post 2015 Development Landscape
October 10, 2015Lima, Peru

The changing development landscape to support the Sustainable Development Goals (SDGs) offers new opportunities to small states but also poses some challenges. In the past, small states’ institutional capacity, income level and fiscal situation limited their ability to take full advantage of some of new financing opportunities, such as expansion of climate finance or development assistance.

Given the openness of small states’ economy and vulnerability to external shocks, the current global economic context presents an additional challenge for small states, which are striving with the long-term efforts of building resilience against the increased frequency and intensity of natural disasters and climate change.

The Forum therefore provides an opportunity to discuss the implications for small states of the emerging development architecture just after the Addis conference on Financing for Development and ahead of the COP21 in Paris.

The Forum is also an opportunity to share views and perspective on how the World Bank, and other bilateral and multilateral organizations can help small states leverage and make effective use of various financing streams to help accelerate progress towards the SDGs while building resilience against and mitigating the impact of natural disasters and climate change. 

9:00 - 9:30  Welcome

Hon. Jean-Paul Adam, Minister of Finance, Trade & Blue Economy, Seychelles

Jim Yong Kim, President, The World Bank Group

Ban Ki-moon, Secretary General, United Nations

9:30 - 10:10  The Evolving Financing for Development Agenda and Small States

Presenter: Joachim von Amsberg, Vice President, The World Bank Group

Discussant: Hon. Tuilaepa Aiono Sailele Malielegaoi, Prime Minister and Minister of Finance, Samoa

10:10 - 11:30  Opportunities and Challenges for Small States to Finance Sustainable Development

Presenters:

Helen Clark, Administrator, UNDP

Min Zhu, Deputy Managing Director, IMF

Erik Solheim, Chair, OECD-DAC

Jorge Familiar, Vice President, The World Bank Group

Discussant: Hon. Peter Phillips, Minister of Finance Planning and the Public Service, Jamaica

11:30 - 12:10  The Emerging Climate Change Financing Agenda and Small States

Presenter: Rachel Kyte, Special Envoy for Climate Change, The World Bank Group

Discussant: Hon. ‘Aisake Valu Eke Minister of Finance and National Planning, Tonga

12:10 - 12.30  Conclusions

Hartwig Schafer, Vice President, The World Bank Group

Hon. Jean-Paul Adam, Minister of Finance, Trade & Blue Economy, Seychelles

We, the representatives of small states, met at the Small States Forum on October 10, 2015. We welcomed the presence of the World Bank Group’s President Dr. Jim Yong Kim and the United Nations’ Secretary General Ban Ki-moon as a sign of continued commitment and support to the small states. 

We considered the impact of the current global economic situation and discussed prospects for the future. We noted that the economic performance of our countries in the recent past is a reflection of the more limited availability of policy tools and resources and also the challenge that small states face in diversifying economic structures and re-orienting economic activities in new markets and sectors.

We emphasized the need for extraordinary efforts individually and collectively to ensure that development gains in our countries are sustained and to support progress towards the Sustainable Development Goals. Many small states are still confronting a number of common reform challenges in the medium term, on which each has made different degrees of progress. We recognized that strong economic governance, efficient domestic resource mobilization, and private sector development are essential to help our people improve their lives.

We also noted that investment in infrastructure and human capital remains key to promote growth and achieve shared prosperity. But, we recognized that growing fiscal pressures and international conditions could present challenges to mobilizing resources. In this context, we benefited from an extensive exchange of views on the recent conference on Financing for Development in Addis and the upcoming COP21 in Paris. 

While we emphasized the need for stronger fiscal positions to enable faster restoration of policy space, we underscored the effect of external shocks and natural disasters in exacerbating fiscal and macroeconomic challenges. Also important, augmented donor support to help our countries build resilience, address inherent vulnerabilities, and break the low growth, high debt, limited fiscal space spiral, which will continue to have important and long-lasting impacts on our development prospects. With regard to this, we are grateful for the considerable financial support that the World Bank and other partners have provided in recent years, and look forward to renewed targeted support to benefit small states. We also called for scaled-up global assistance to build resilience and ensure that there are no impediments to the Green Climate Fund financing reach small island states.

We expressed concern that a large number of bilateral and multilateral financing sources continue to rely on income measures based on GDP per capita to determine eligibility to concessional resources, without taking natural disasters and other vulnerabilities to external factors into account. We appreciate the World Bank’s efforts to address this issue through the ‘small island exception’ access to IDA funding, but look forward to the development of more systematic criteria for determining access to appropriate resources.  We called for a coordinated effort by development partners to review the rules governing access to concessional finance and welcomed proposals to establish a high level working group among the development banks and its partners to achieve this.

We identified seven priority actions for our development partners and called on the World Bank Group to take the lead in coordinating this joint effort in order to  ensure these priorities are achieved and small states have appropriate access to resources:

1)     The inclusion of vulnerability aspects in the criteria to better define the access of small states to appropriate resources, including for climate finance

2)     Enhanced access to predictable and systematic development financing to small states, including through revisions to multilateral and bilateral allocations

3)     A coordinated approach, through multilateral and bilateral support, to facilitate debt sustainability for small states as a means to free fiscal space, including with the use of innovations such as debt swaps.

4)     Clear and simplified criteria for access to climate finance that acknowledges small states limited capacity and higher vulnerability

5)     Continued focus on capacity building and technical assistance for small states

6)     A focus on potential growth areas for small economies such as through strategies to develop a Blue Economy

7)     Develop mechanisms that help small states access financial markets in a cost effective manner, including through the provision of partial guarantees.

Lastly, we were happy to share some examples of success in small states and thank the World Bank Group for its continued support of the Forum at which we learn from each other and tap into useful global expertise.

 

Jean-Paul Adam

Minister of Finance, Trade & Blue Economy, Republic of Seychelles

Chair of the Small States Forum

Photos
  • From the Small States Forum: 2015