Building Resilient Futures: The SIDS Debt Sustainability Support Service

Summary

Explore innovative approaches to SIDS’ debt sustainability and climate resilience, offering valuable insights to improve global financial architecture and support sustainable development for vulnerable nations.

Description

At the heart of the global climate conversation are the Small Island Developing States (SIDS), which are facing an existential threat due to the impacts of climate change. Despite contributing less than 1% to global greenhouse gas emissions, SIDS face disproportionate and devastating consequences.

This side event will explore how the approach under ‘SIDS Debt Sustainability Support Service (DSSS)– a new financial compact for resilient prosperity,’ launched at the SIDS4 conference and part of the Antigua and Barbuda Agenda for SIDS (ABAS), can be operationalised and scaled up. The purpose of this side event is to build a coalition of stakeholders, fostering a unified approach to reforming the international financial architecture, and achieving the SDGs. The discussions will also touch on additional financial issues such as credit rating and innovative sources of finance. The goal is to create a comprehensive strategy that can help SIDS respond to current and future economic and climate challenges, ensuring long-term sustainable and resilient growth.

Side Event organized by: Government of Antigua and Barbuda; Republic of Maldives; Government of New Zealand; United Nations Department of Economic and Social Affairs (UN DESA) and International Institute for environment and Development (IIED).

Hosted by

Co-Chairs of the Strategic Advisory Group, H.E. Gaston Alphonso Browne, Prime Minister of Antigua and Barbuda, and H.E. Dr. Mohamed Muizzu, President of the Maldives, in partnership with the Government of New Zealand, United Nations Department of Economic and Social Affairs (UN DESA) and International Institute for environment and Development (IIED).

The Strategic Advisory Group (SAG) is a coalition of diverse stakeholders convened to address the intertwined challenges of debt sustainability and climate resilience faced by Small Island Developing States (SIDS). Co-chaired by the Prime Minister of Antigua and Barbuda and the President of the Maldives, SAG includes prominent leaders and experts such as the Chair of Alliance of Small Island States (AOSIS) and finance and environment ministers. SAG also includes representatives of World Bank, Asian Development Bank, Caribbean Development Bank and United Nations Economic Commission for Latin America and the Caribbean along with international groups and local organisations, sustainable investment firms, finance experts, credit institutions, insurance and risk management and research institutions. These stakeholders are committed to designing and operationalising SIDS Debt Sustainability Support Service (DSSS) as mandated in the Antigua and Barbuda Agenda for SIDS (ABAS and launched at 4th International Conference on SIDS, which aims to provide comprehensive financial and legal support, fostering resilient and sustainable development in SIDS. IIED convenes the SAG, ensuring diverse inputs shape the DSSS framework effectively.

About the event

At the heart of the global climate conversation are SIDS, which are facing an existential threat due to the impacts of climate change. Despite contributing less than 1% to global greenhouse gas emissions, SIDS face disproportionate and devastating consequences.

IIED’s most recent research paper, Sinking islands, Rising debts and Redefining credit ratings for Small Island Developing States shows that the rising frequency and intensity of climate-induced disasters not only threaten their environmental integrity but have devastating economic consequences.

SIDS constitute two-thirds of countries experiencing the highest relative annual losses from such events, creating a ripple effect that manifests in escalating debt. More than 40% of SIDS are nearing or already in debt distress, and an alarming 70% surpass the debt-to-GDP sustainability threshold of 40%. Six SIDS have debt-to-GDP ratios exceeding 100%.

This debt crisis impacts more than just finances; it limits investment in social services, social protection and resilience-building, exacerbating poverty and inequality. Furthermore, it hampers progress towards the Sustainable Development Goals (SDGs) by diverting funds to debt servicing.For the SIDS, breaking free from this vicious cycle is not just an economic imperative but a question of survival. The interconnected challenges of climate change and debt require a concerted, multifaceted response.To address these urgent needs, a SAG was established, tasked with guiding the creation of the DSSS.

This side event will explore how the approach under ‘SIDS Debt Sustainability Support Service (DSSS)– a new financial compact for resilient prosperity,’ launched at the SIDS4 conference and part of the Antigua and Barbuda Agenda for SIDS (ABAS), can be operationalised and scaled up. The purpose of this side event is to build a coalition of diverse stakeholders, fostering a unified approach to reforming the international financial architecture to be more responsive, and enabling SIDS to achieve the SDGs and the full implementation of the ABAS. The discussions will also touch on additional financial issues such as credit rating and innovative sources of finance. The goal is to create a comprehensive strategy that can help SIDS respond to current and future economic and climate challenges and also new and emerging shocks, ensuring long-term sustainable and resilient growth and to define meaningful outcomes for SIDS which can be taken forward at next year’s Fourth International Conference on Financing for Development.

Thematic Focus:

• Debt sustainability:
  Introducing a layered approach to debt management that creates fiscal space for SIDS, enabling them to redirect resources towards sustainable development and climate resilience. This includes debt relief, concessional financing, and innovative financial instruments.
• Future protection measures:
  Developing and implementing insurance products and funding mechanisms that provide financial protection against climate-related losses, ensuring quick recovery from disasters without exacerbating debt situations.
• Resilience investment
  Promoting investments in resilience and green bonds to support sustainable infrastructure and environmental projects. Exploring new financial mechanisms and leveraging climate finance to enhance the resilience of SIDS.
• Advisory and legal support:
  Offering expert advisory services and legal support to enhance the capacities of SIDS in debt restructuring and financial negotiations. Building long-term legal and commercial skills within SIDS to navigate complex financial ecosystems.

By focusing on these key themes, the event aims to mobilise resources, build capacity, and foster collaborative efforts to support the sustainable development and resilience of SIDS in the face of ongoing climate and financial challenges.

Structure/format

• Welcome: Mr. Tumasie Blair, Deputy Permanent Representative of Antigua and Barbuda to the United Nations
• Opening remarks: Mr.Li Junhua, Under-Secretary-General for Economic and Social Affairs, Department of Economic and Social Affairs (DESA)
• Keynote addresses: Addressing the importance of the initiative for SIDS, focusing on climate change and debt sustainability.
  • H.E. Gaston Alphonso Browne, Prime Minister of Antigua and Barbuda
  • H.E. Dr. Mohamed Muizzu, President of the Maldives
• Presentation of the initiative: A detailed presentation on the design and objectives of the ‘Global SIDS Debt Sustainability and Investment Support Service: Ritu Bharadwaj, Director, Climate Resilience and Loss & Damage / ALL ACT, IIED
• Panel discussion: Moderated by Dr Tom Mitchell, Executive Director, IIED
  • Ms. Rabab Fatima, High Representative, Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS)
  • Ms. Carolyn Schwalger, Ambassador, Permanent Representative, Permanent Mission of New Zealand to the United Nations
  • Ms. Shari Spiegel, Chief, Department of Economic and Social Affairs, United Nations
  • Dr. Simona Anamaria Marinescu, Senior Advisor Small Island Developing States, UNOPS
  • Dr. Hyginus ‘Gene’ Leon, Expert in Financial and Macroeconomic Policy, Former President of the Caribbean Development Bank
• Closing remarks Summarising key points and next steps:
  • Ms. Rabab Fatima, High Representative, Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS)
  • Mr. Walton Webson, Ambassador, Permanent Representative, Permanent Mission of Antigua and Barbuda to the United Nations

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To generate additional opportunities for the engagement of all actors, the Secretary-General of the United Nations is convening the Summit of the Future Action Days on 20 and 21 September 2024 at United Nations Headquarters in New York.

Bringing together representatives from Member States, civil society, private sector, academia, local and regional authorities, youth, and many more, the Action Days will provide an opportunity for broad engagement and inclusion. These stakeholders have all played a key role in shaping the Pact for the Future and will be critical to its implementation.

Side events provide further insights and opportunities for multi-stakeholder collaboration.