The 2017 Small States Forum marked the first time that private sector institutions participated at a large scale.
The Chair’s summary notes that small States face a “triple trap” of climate impacts, high fossil fuel prices and high levels of indebtedness.
7 December 2017: Small States face a “triple trap” of climate impacts, high fossil fuel prices and high levels of indebtedness, according to discussions at the Small States Forum. Forum Chair Keith Mitchell, Prime Minister of Grenada, released the summary of the 2017 Forum.
The annual high-level event took place on 14 October 2017, in Washington, DC, US, during the World Bank-International Monetary Fund (IMF) annual meetings. The Forum gathered heads of government, ministers and central bank governors from small States, as well as representatives of the World Bank, the Organisation for Economic Co-operation and Development (OECD), the Commonwealth Secretariat, the UN Development Programme (UNDP) and the IMF. The 2017 edition of the Forum marked the first time that private sector institutions participated at a large scale, including Swiss Re, World Economic Forum, Bitt.com and the World Ocean Council.
The four main issues raised during the 2017 Small States Forum, according to the summary, are: vulnerability; International Development Association (IDA18) implementation; de-risking; and partnerships. The summary also highlights the importance of mobilizing public and private sector financing for renewable energy, for green and blue economies, and for technology. Also, according to the summary, Forum Members welcomed the ‘Roadmap for World Bank Group Engagement with Small States,’ which was prepared by the World Bank in May 2017.
On vulnerability, participants underlined that small States’ susceptibility to natural disasters, such as hurricanes, frames the challenge of quickly mobilizing and disbursing considerable financial resources to countries that may not have easy access to concessional development finance. The World Bank can mobilize finance quickly in the aftermath of an emergency and provide additional resources for countries that otherwise would not be eligible for it, including by using the IDA Crisis Response Window and creative price buy-downs using trust fund resources. However, the Members noted, some vulnerable small States, such as Nauru and Palau, are unable to access either IDA or the International Bank for Reconstruction and Development (IBRD) resources, as they neither qualify for the IDA small States exception nor meet the credit standard for IBRD. They called on the World Bank to explore financing solutions for such vulnerable small States that “fall through the cracks.”
On the IDA18 implementation, participants welcomed the “massive increase” in IDA resources available for eligible small States (US$1.9 billion, which is more than double the previous allocation), noting that for some countries, the IDA allocation has quadrupled. The Forum observed that the challenge is to now find transformative projects that can absorb and make the most of these extra resources. The summary explains the need to focus efforts on preparation, front-loading and fast-tracking (available) development financing, and using innovative financial instruments and creating new partnerships to mobilize additional public and private sector resources.
On de-risking, the Forum noted that as financial institutions seek to “de-risk,” they are causing the withdrawal of correspondent banking relationships in small States. Prime Minister Gaston Browne of Antigua and Barbuda proposed the establishment of a working group to address the development challenges of de-risking for small States.
Participants agreed that the Small States Forum should become a platform for creative financial innovation and both traditional and nontraditional partnerships.
On partnerships, participants agreed that the Small States Forum should become a platform for creative financial innovation and both traditional and non-traditional partnerships. Development partners agreed to continue working together to improve opportunities for small States to access development finance that reduces their vulnerability to shocks.
Several private sector innovative mechanisms were also discussed, including: a new form of blockchain technology that builds direct financial connections to manage remittances and address the challenge of de-risking and loss of correspondent banking relations; private insurance that acts as a financial shock absorber, providing fiscal space during natural disasters; and technology to ensure the traceability of tuna so that small States can significantly increase their revenue. [World Bank Press Release] [Chairman’s Summary] [A Roadmap for World Bank Group Engagement with Small States] [World Bank Webpage on Small States][SDG Knowledge Hub summary of World Bank-IMF Annual Meetings 2017]