Ms Farzana Zahir, Deputy Permanent Representative
On Macroeconomic Policy Questions
(Maldives national statement)
5 October 2017
Thank you Madam Chair,
Thank you for giving me the floor and for the opportunity to address the Committee on this important agenda item. My delegation aligns these remarks with the statement delivered by Ecuador on behalf of the Group of 77 and China and the statement of the Alliance of Small Island States. I would like to express my Government’s appreciation to the Secretary-General for the comprehensive reports that have been prepared to inform our deliberations on this agenda item. We welcome the opportunity to engage on several key issues under this agenda item, and in particular, those issues, identified in the sg’s reports.
First, the sg’s reports point to a growing concern, which my Government has voiced on many different instances here at the un. That is that the international financial institutions need to align their policies, in particular, their lending decision, more closely to the efforts towards achieving the sdgs.
In the case of the Maldives, for example, investments in infrastructure is crucial for achieving the sdgs; building adequate hospitals, more roads, more harbours, more airports and sea-ports, and above all, building more houses. Infrastructure projects in the Maldives are directly linked to almost all sdgs, especially, Goals, 3,4,7,8,9,11, and 13. Yet, the narrow financial sector in the country does not have the capacity to provide adequate financing for these investment programmes. Moreover, we in fact need investments in such programmes in external hard currency because we in the Maldives have to import almost every material used in such programmes, and therefore the impact on the country’s balance of payment tends to be quite high. The only option, therefore, is to go for external financing. The ifis do not fund many of the types of investment needs I highlighted earlier. The ifis, do not, for example, consider housing as a development need in upper middle income countries such as the Maldives. Yet, housing remains among the most crucial development and is directly linked to the realisation of many sdgs in the Maldives. The ifis and the un development agencies, therefore need to be on the same page, pursuing the same policy objectives in the pursuit of sdgs. The IFIs, in particular, need to catch up with development policy frameworks agreed and adopted by the world leaders here in this building.
Second, the sg’s report makes a crucial point on the issuance of gdp-linked bonds. My Government believes that debt instruments, such as gdp-linked bonds would be highly useful in managing external and internal debts for small economies, especially those in the middle income category. Such instruments can become credible and acceptable only if the ifis work with the private investors in promoting them. The un, again, can facilitate the ifis to make such encouraging moves.
Third, one important issue highlighted in the report was the opportunity cost of building reserves and investing in low-yielding international instruments, instead of using the reserve for much needed domestic investments, with higher returns. A country, such as the Maldives can draw-down the reserves to finance such domestic investments if the country has access to liquidity support or swap facilities in the event of an external shock. In this context, it would also be useful to have a reserve adequacy yardsticks more relevant to sids, instead of a global set of standards, which do not take the special characteristics of the sids economies.
Fourth, there is a strong case for the un development agencies to step up their efforts in creating a conducive environment where the middle income country sids can have easier access to international sources of financing. In the case of the Maldives, the Government of President Abdulla Yameen Abdul Gayoom has pursued a pro-growth economic development policy, and that has enabled the Maldives to cope with structural vulnerabilities and country specific challenges. Because of the unavailability of concessional financing, the Maldives, for the first time in its history, went to the international capital market, to borrow funds to finance critically required health sector infrastructure projects. The bond we issued was over-subscribed within a few hours, showing the high level of confidence that international investors have on the Government’s policies. And just last month a leading international credit rating agency issued a highly favourable report on the Maldives economy, and its ability to attract more foreign investment. At the same time, however, the cost of funding will always remain high, when a country turns to the international financial markets for financing development projects.
My Government is convinced that building resilience of small States requires a collaborative effort between the States themselves and the larger international community, particularly, the un system and the ifis. The small states need opportunities, equal opportunities, and they will do just as well as anyone else would.
Thank you, Mr Chair.