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World Bank Group Support to Small States

Small States face unique development challenges. Due to their small population and economic base, these countries are particularly vulnerable to exogenous shocks such as economic shocks, natural disasters, and climate change. With limited economic opportunities and significant migration, they often face capacity constraints.

The Small States Forum (SSF) is an important platform for high-level dialogue on how the Bank Group is helping to address Small States’ special development needs. The SSF comprises 50 members, including 40 countries classified as Small States according to the Bank Group definition (i.e., those with a population of 1.5 million or less) and ten other Small States Forum members with a population greater than 1.5 million that share similar challenges.

While sharing common challenges associated with the small size of their economies and vulnerability to exogenous shocks, the SSF is in fact a very diverse group. There is high variation among members in terms of population size, income levels, geography and other features that result in a wide spectrum of development outcomes:

Population: Population size ranges from 12 thousand people in Tuvalu to 2.99 million people in Jamaica. Many SSF members are micro states (i.e., with a population of less than 200,000 people).

Geography: SSF countries are distributed across all regions and about two-thirds are island states. The remaining one-third includes five land-locked countries (Bhutan, Botswana, Eswatini, Lesotho, and San Marino).

Remoteness: Several SSF countries, particularly islands, are among the most remote in terms of distance to the nearest international markets (e.g., Pacific islands).

Land Area: A number of island states have a very small land area (e.g., Nauru has 20 square kilometers), while non-island states such as Namibia and Botswana have 4.5 and 3.1 times the area of all small island states combined, respectively.

Fragmentation and Dispersion: Some countries are archipelagos dispersed over a broad ocean area (e.g., Kiribati has an area of 810 square kilometers distributed in 35 atolls/islands spread over 3.6 million square kilometers of ocean).

Vulnerability to Natural Disasters and Climate Change: Many SSF countries are disproportionately vulnerable to a range of natural disasters, particularly those located in disaster-prone areas. About one-third of Small States are highly vulnerable to climate change, including rising sea-levels and droughts, while others are less vulnerable.

Debt Burden:  High debt burdens and weak fiscal management, worsened by the COVID-19 pandemic and increased food and fuel prices following Russian invasion of Ukraine. Public debt to GDP ratios for Small States are on average higher than for other developing countries, but they vary significantly across countries from single digits (Tuvalu and Timor-Leste) to over 100 percent (Antigua and Barbuda, The Bahamas, Barbados, Belize, Bhutan, Cabo Verde, Dominica, Mauritius, and Suriname).  

Small States Diagram

Vulnerability to Global Crises: The economic fallout from the COVID-19 pandemic has been more severe in Small States than in other developing countries.  The pandemic exacerbated already high fiscal imbalances and debt vulnerabilities in many Small States, although outcomes vary across countries. Relative to 2019, debt to GDP ratios increased by 10 percentage points or more in around one-third of Small States.  In addition, higher fuel and food prices in the wake of the Russian invasion of Ukraine have further undermined the sluggish post-COVID-19 recovery of Small States’ economies. High Inflation has also resulted in higher international borrowing costs disproportionately affecting highly indebted Small States.