Ms Farzana Zahir, Deputy Permanent Representative
On Macroeconomic Policy Questions (AOSIS)
5 October 2017
I have the honour to deliver this statement on behalf of the Alliance of Small Island States (aosis). We align ourselves with the statement delivered by the distinguished representative of Ecuador on behalf of the Group of 77 and China. We wish to place on record our appreciation for the reports that the Secretary General has prepared to inform our deliberations on this agenda item. We welcome the opportunity to engage on several issues within this agenda item that are of critical importance to Small Island Developing States (sids).
The discussion on this topic is shaped by the realities of recent environmental disasters, and their impacts on our already challenging financial and economic landscape, particularly among the sids. The sids continue to feel the impacts of slow recovery from the global economic and financial crisis, decline in trade flows, excessive price volatility, increasing debt distress, continued low commodity prices, and inability to access concessional financing. In a global economic environment characterized by persistent financial and political uncertainty, the need for a fair, transparent and inclusive global economic governance framework cannot be overstated.
As commodity dependent countries, sids are particularly concerned about the continued trend in the decline in commodity prices, especially in the fishing and agriculture sector. Island states are often heavily dependent on fishing and agricultural exports, and this downturn has implications for our small economies. Declining performance of our export sector, reduction in tourism revenues due to global economic downturn, impacts of climate change on fish stocks and crop yields further negatively impact our economies.
While we understand the importance of diversifying our economies to shield against such impacts of price volatility, the structural constraints faced by island states make diversification difficult. As the Secretary General’s report notes, excessive price volatility requires globally coordinated action, especially in order to assist fragile and vulnerable countries like the sids.
The disastrous economic and humanitarian effects of Hurricanes Maria and Irma are there for all to see. However, we must remember that environmental disasters are not just one-off events: they only signal the beginning of what are even more challenging recovery processes. Island States affected by natural disasters not only have to rebuild from scratch, but have to contend with many systemic factors that make recovery and rebuilding that much more difficult. Especially in the event of devastating natural disasters, recovery is made possible through additional borrowing and debt issuances, thus compounding existing debt problems.
The Small Island Developing States are the most highly indebted group of countries in the world. At the same time, many sids are also middle-income countries. Therefore, concessional financing and assistance remain increasingly elusive. Indeed, the sg’s report notes that ratios of debt to exports and to government revenue, and debt-to-gdp ratios are on a problematic rising trend in sids. aosis therefore reiterates its call for a gdp plus criteria to gauge eligibility for concessionary financing to better reflect the inherent and structural vulnerabilities that small island States face.
Our remoteness from markets, geographical dispersion and isolation means that for sids, trade is the primary engine for growth and development. The recent trends of protectionism, policies and strategies that effectively penalize export activities, and changing international market conditions, directly impact the sids. As island States, we are heavily dependent on imported goods and services – from basic food item to fuel, to heavy equipment. At the same time, our exports are a vital source of foreign exchange earnings and cash income generation. Therefore, we reiterate our call for a fair multilateral trading system that not only rejuvenates global trade and growth, but also addresses the shortcomings of international financial and monetary institutions through serious reforms.
The Addis Ababa Action Agenda is the key to the means of implementation of the 2030 Agenda. This is why we have always been deeply engaged in the negotiations of Addis, and remain so in the functioning of the ecosoc ffd Forum. It is with great interest and optimism that we have been participating in the Forum and remain committed to its transformative potential as a follow-up mechanism to track the implementation of the Addis Agenda. In this regard, we would like to commend the work of the inter agency task force and its report on the ffd process which we have found useful.
At the same time, we believe that there is a need to depoliticize the activities of the Forum with a view to providing concrete and actionable policy tools for the full and effective implementation of the Agenda.
In this context we were disappointed at the lack of engagement on issues that are critically important to aosis, including those on climate change and trade issues. These issues I hope will be taken up in our work here at the Second Committee, thus proving again, that macro economic and development questions are such complex topics that require consideration in a multitude of forums, including those in the ffd Forum and at the Second Committee.