President Muizzu added that SIDS should not be forced to make impossible choices, such as deciding between funding the establishment of a new school and constructing seawalls.
President Dr Mohamed Muizzu has proposed three solutions to facilitate easier access to finance and foster the development and growth of small island states like the Maldives.
He made the remarks in his keynote address at the High-Level Meeting on Resource Mobilization for SIDS at the Fourth International Conference on Small Island Developing States (SIDS) held in Antigua and Barbuda.
President Muizzu highlighted that external resource inflow to Small Island Developing States (SIDS) has been declining over the past two decades.
The President stated that several Small Island Developing States (SIDS), including the Maldives, which have graduated from the Least Developed Countries (LDC) category, face challenges due to the increased cost of borrowing from bilateral creditors and restrictions on accessing affordable finance. He added that this situation has made it difficult to manage debt sustainably, which hampers development. President Muizzu noted that climate change has further exacerbated the challenges faced by smaller nations.
President Muizzu added that SIDS should not be forced to make impossible choices, such as deciding between funding the establishment of a new school and constructing seawalls.
With that, the President proposed three solutions to obtain the necessary finance required by SIDS.
First, President Muizzu called for reforms to the international financial architecture.
President Muizzu highlighted that Multilateral Development Banks (MDBs) and international financial institutions (IFIs) have the capacity to channel funds through international capital markets, leveraging their positive credit ratings. Consequently, they can SIDS at highly concessional rates and fulfill the promises made to SIDS over the last three decades.
He then proposed that the development partners of SIDS collaborate with MDBs and the private sector to scale up private finance flows to SIDS. Elaborating on the proposal, President Muizzu stated that the biggest hurdle for smaller nations in attracting foreign investments is the small market size compared to the risks they face.
Therefore, if larger nations take a share of these risks, the existing barriers for smaller nations will disappear, he said.
For the third solution, President Muizzu called for small island states to broaden their vision.
"Our size does not diminish the opportunities available to us," he said.
The President also urged SIDS to broaden their vision and aim higher by identifying goals and seeking assistance and support from development partners.
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