1. Members of the Small States Forum met virtually on April 10, 2021.
2. The COVID-19 pandemic continues to have a huge economic and social impact on small economies. In 2020, small states’ output contracted by 6.1 percent, compared to 1.8 percent in all EMDEs. International arrivals in tourism-reliant small states collapsed between 35 to 84 percent, resulting in an average 17 percent contraction of output. Natural disasters and calamities compounded the shock from the pandemic in some small states, with cyclones hitting Fiji, Tonga and other islands in the Pacific over the last year, and a volcanic eruption occurring in St. Vincent and the Grenadines a few days before our meeting. The rebound in activity from 2021 onward is expected to be slower in small economies as compared to all EMDEs. Poverty in small states is expected to increase in 2021 for the first time since 2009.
3. As we noted when we last met in October 2020, small economies have responded to the crisis with all the resources, capacities, and international support available to them. Yet the pandemic has significantly diverted resources towards immediate health and economic relief, away from meeting our countries’ daunting longer-term development challenges. It has also exposed and exacerbated pre-existing vulnerabilities. We are committed to get back on track, rebuild fiscal buffers, and strengthen resilience, and therefore call for a continued inflow of external financing at high levels and on affordable terms. Recovery to pre-pandemic levels and getting on track to sustained green resilient and inclusive growth should involve international support for responding to escalating longer-term risks and vulnerabilities from natural disasters as well as ocean pollution in small islands.
4. Recovery will also critically depend on the availability of vaccines, which are necessary to safely re-open economies and rekindle international travel. Equitable access and a strong roll-out of vaccines requires an unprecedented effort. We renew our call, articulated in the communiqué adopted in October, for worldwide equitable, expeditious, and transparent access to safe and effective vaccines. We appreciate the World Bank Group’s support to countries for vaccine purchase and deployment, including addressing the gap between COVAX supply and the supply needed to ensure vaccination coverage in small states. We ourselves remain committed to implementing, to our full capacity, efficient and equitable vaccination programs in our countries. We call on the international community to take a more forward-leaning and transformative approach to helping small states to access vaccines expeditiously on a fair and equitable basis, given that the pandemic does not recognize international boundaries and that a global economic recovery is in every country’s interest.
5. Debt vulnerabilities in many small economies continue to grow, severely constraining the capacity to invest in recovery and in urgently-needed climate action. The relief provided under the Debt Service Suspension Initiative (DSSI) has helped many small states by freeing up resources to increase social, health, and economic spending in response to the crisis. We appreciate the G-20’s call on private creditors to participate in the DSSI on terms comparable to those offered by official creditors as well as ongoing efforts to implement the Common Framework for Debt Treatments beyond the DSSI, and we encourage the Bank and the IMF to work with all small states to help them to address debt vulnerabilities on a case-by-case basis. In addition, we underscore the need for consideration of other debt relief measures such as nature for debt swaps.
6. We acknowledge and appreciate the push being made by IFIs and other international bodies to renew global climate ambitions. As a group, we are the countries that are the most affected by climate change. We encourage all development partners to recognize the multiple channels of risk and vulnerabilities facing small states, including from climate change, which is causing rising sea levels and an increased frequency and intensity of natural disasters. These vulnerabilities, combined with structural economic factors related to smallness and the disproportionate impact of the COVID pandemic, compromise the recovery and growth prospects of small economies. We call on our partners to incorporate these risk considerations into the provision of enhanced, flexible, and tailored approaches to concessional financing for our countries.
7. Our strong belief is that mobilizing more resources for IDA remains a critical priority. Committing IDA19 resources within a shorter two-year period will significantly scale-up resource availability in 2020 and 2021 to all IDA countries, including the 24 IDA-eligible members of this Forum. We are pleased that the deliberations on advancing IDA20 have progressed well since the 2020 Annual Meetings. We are hopeful that the on-going discussions on IDA20 will conclude successfully with the international community committing to a strong IDA20 replenishment to ensure appropriate levels of support to countries for immediate crisis response as well as getting back on track to their long-term development trajectories.