SMALL ISLAND DEVELOPING STATES
vulnerable
and invasive species, according to the Intergovernmental Panel on Climate Change (IPCC). As a consequence, “climate change is affecting settlements and infrastructure, health and well-being, water and food security and economies,” the experts warned. The damage to the economy is hitting SIDS particularly hard as many are in a fragile position following the COVID-19 pandemic, which exacerbated structural weaknesses such as lack of resources and exposed vulnerabilities such as insufficient diversification. The high dependency on tourism proved to be costly: International arrivals in SIDS declined by 76 percent in 2020 and 72 percent in 2021, according to the World Tourism Organization. Approximately US$90 billion were lost in tourism revenues from 2020 to 2022, the UN agency reported. The combined GDP of all 29 SIDS was less than US$575 billion
before the pandemic. While tourism has bounced back globally following the end of the pandemic, the exposure to external shocks was again felt painfully in SIDS following Russia’s full-scale invasion of Ukraine in February 2022. The war led to a worldwide spike in energy and food prices, record inflation, weak growth and high uncertainty. Concerns about economic viability saw the share of private remittances to SIDS grow further in comparison to non-concessional finance such as foreign direct investment. The financing needs of SIDS are generally perceived as too small, yet also too risky and they are thought to lack capacity to manage large investments, the Organisation for Economic Co-operation and Development (OECD) warns. The attractiveness of SIDS among investors is further impacted by the
partly high level of debt, which – despite significant variation – is on average higher than for other developing countries. Many SIDS were already showing signs of increased debt distress prior to COVID-19 and the pandemic has only increased the pressure. High debt levels and servicing costs, combined with competing budgetary priorities and limited access to concessional finance are restricting the ability of SIDS to invest in climate resilience.
The OPEC Fund Island Resilience Facility will be launched globally in early May 2025 during a SIDS Summit in Vienna. It will be accompanied by a dedicated OPEC Fund SIDS Strategy.
23
Powered by FlippingBook