SPECIAL FEATURE
• Remoteness: Several FSDS, particularly islands, are among the most remote in terms of distance from international markets (e.g. the Pacific islands). At the same time, some larger states have internal areas that are remote and difficult to reach (for example Mali and Niger). • Land area: A number of island states have a very small land area (e.g., Nauru is just 20 km 2 ), while non- island states such as Tajikistan and DR Congo have vast, empty areas that are difficult to traverse. • Fragmentation and dispersion: Some FSDS are archipelagos dispersed over a broad ocean area. Kiribati, with an area of 810 km 2 , is spread over 35 atolls/islands covering around 3.6 million km 2 of ocean; while the Maldives has an area of nearly 300 km 2 comprising a chain of 26 atolls spanning almost 90,000 km 2 . • Vulnerability to natural disasters and climate change: Almost all FSDS are disproportionately vulnerable to a range of natural disasters, particularly those located in disaster- prone areas (such as the Caribbean with volcanic eruptions, hurricanes and rising sea levels). About one- third of FSDS are highly vulnerable to climate change, including rising sea levels, flooding and droughts. Moreover, only a small portion of climate finance is deployed in FSDS countries, hence MDBs’ call for greater climate financing for these countries. • Shallow economies: Many FSDS do not have deep, broad economies with multiple sub-sectors each producing employment, tax revenues and export earnings. Instead, there are often just one or a few key sectors that generate revenues, such as hydrocarbons (Chad), minerals (Guinea), or tourism (most Caribbean islands). This lack of diversification creates strong interdependence with
• Debt burden: Significant growth volatility often associated with the impact of conflict, natural disasters, and other external shocks and weak fiscal management have contributed to substantial debt accumulation in many FSDS. Debt levels for these countries are on average higher than for other developing countries, although there is considerable diversity across individual countries. It is also important to recognize that, given their high and increasing debt levels, many FSDS are in urgent need of debt relief (the 2020-21 Debt Service Suspension Initiative provided an initial albeit temporary start 3 ), which has repercussions on new lending. The above criteria aim primarily to be a starting point to help the OPEC Fund identify how to approach and strengthen its engagement in difficult and complex SCR partner country environments. Given the challenges faced by most of these countries, the OPEC Fund is
“Many FSDS have large, extensive and distinct geographical features that inhibit transport, communications and connectivity.”
shifts in global commodity prices, which in turn leads to booms in fiscal and export revenues that are often not well-invested, and busts leading to slowing growth and rising poverty.
3 https://www.worldbank.org/en/topic/debt/brief/covid-19-debt-service-suspension-initiative#:~:text=From%20May%202020%20to%20December,the%20initiative%20on%20 comparable%20terms
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