The debt and fiscal sustainability challenges of the Pacific Small Island Developing States (PSIDS) have been aggravated by the COVID-19 pandemic, severely reducing government revenues to finance increased government expenditures. This has increased fiscal deficits and led to increased debt stress for most PSIDS, constraining fiscal space and resulting in the need to de-risk government balance sheets and explore options for debt relief or debt restructuring.
The Conference is co-convened by Fiji, the Chair of the Pacific Islands Forum, and Tuvalu, the Chair of the Pacific Island Forum Economic Ministers Meeting (FEMM), and co-hosted by the Pacific Islands Forum Secretariat and the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). It will include presentations, panel discussions, and talanoa sessions between debtors, creditors, and development partners to discuss mutually agreeable solutions.
Debt and disaster and climate risks are closely related in the PSIDS, as these countries are highly exposed and vulnerable to climate-change induced disasters, the cost of which can represent a large proportion of the GDP and significantly raise public debts. The vulnerability of the PSIDS to natural disasters is a serious impediment to the attainment of the Sustainable Development Goals, making the strengthening of climate and disaster resilience an urgent priority for the PSIDS.
Enhancing access to climate finance is of critical importance and can be further improved by strengthening fiscal and debt management in the PSIDS, as fiscal risk-reducing measures can create fiscal space for both the COVID-19 recovery and investment in climate action.
The Conference also provides an opportunity to bring forward some of the recommendations of COP26 that are of critical importance to the PSIDS, particularly in the areas of adaptation financing and loss and damage.