The President of The World Bank Group, Dr. Jim Yong Kim, on Friday, committed to help Small Island Developing States (SIDS) create a policy for concessional financing.
He told world leaders, who were gathered for the World Bank Group-International Monetary Fund (WBG-IMF) Annual Meetings, that the organisation would “create a window” for some of the countries that have “graduated from receiving concessionary financing”.
His intention is in line with what Prime Minister of Antigua and Barbuda, Gaston Browne has been advocating for months.
No decision has been made he told Caribbean leaders, “but we have to think as creatively as we possibly can about how to help you build back better; how to help you build back so that your infrastructure is more resilient.”
“We are open to suggestions. Of course, at the end of the day it’s the governors who have to make the final decision about the steps we take, but I urge you to put every single creative idea on the table so that we can respond,” he stressed.
The President, on behalf of the World Bank, therefore made commitments to stretch its resources; to review its policy on concessional finance for small states affected by natural storms, to rethink its insurance model, so that it is linked with prevention measures; and to build a community practice to strengthen storm resilience.
He admitted, that the decision to provide concessionary financing to high/middle income states had been due to countries like Jordan and Lebanon, becoming deeply indebted in their efforts to take care of Syrian refugees.
“We made a leap in an area, we had just not been involved in before, providing concessional finance to high/middle income countries, but we did it for a very specific reason…. We were able to put an instrument together to provide concessional financing for high/middle income countries because of the burden, and in this [Caribbean’s] case, we will do everything we can to find a path forward, “he explained.
The President also invited Caribbean leaders to formulate a financial plan for adaptation resilience, that would be presented at a meeting on climate change in Paris on December 12, 2017.
Deputy Secretary General for the United Nations, Amina Mohammed, who was a point person in developing the Sustainable Development Goals (SDGs), said the global community needed to work together to advance innovative approaches to debt relief for the Caribbean.
“We need international consensus that finance needs to be better aligned in a changing world,” she said.
Included in this, Mohammed explained, should be “consideration of changes in the eligibility criteria for concessionary finance, proposal to address high indebtedness in the Caribbean, the use of state contingent debt instruments, [and] accelerating a reduction in the cost of remittance transfers in support for new strategies that can support diaspora communities to invest back home.”
According to the U.N. Deputy Secretary General, estimates indicate that simply reducing these costs by 50 percent, could lead up to over “$US 500 million additional finance that flows into the region each year.”
“We need to overcome the restrictions which limit small island states eligibility for concessionary financing, by drawing on the experiences of Jordan and Lebanon in extending the application of the global concessionary financing facility,” she continued, adding that debt, which should be an important development financing vehicle is currently “insensitive to the impact of external shocks on the capacity of countries to pay and so becomes a burden that seeks privilege above humanitarian needs.”