Vanuatu is a small island developing State (SIDS) characterized by a high degree of economic vulnerability. This is due to the relatively small size of the economy and its narrow economic base that is heavily dependent on a few key sectors, such as agriculture, fishing and tourism. The vulnerability of Vanuatu to climate change and the often-devastating effects of natural disasters such as cyclones compounds its vulnerability and translates into high fiscal volatility.
Resource mobilization in such a vulnerable environment is a major hurdle. As most other SIDS in the Pacific, the country is overwhelmed in raising the financial resources needed to tackle the country’s significant social challenges and overcome its economic obstacles, manifested in geographic isolation and the lack of economies of scale. Considering the 2030 Agenda for Sustainable Development, the challenges for Vanuatu to mobilize sufficient financial resources on its own are likely to be even more unsurmountable.
Reaching the Sustainable Development Goals will require significant financial resources. According to ESCAP, the investment needed to reach the Sustainable Development Goals in Asia-Pacific by 2030 requires an additional $1.5 trillion per year. This would allow countries to end poverty and hunger, provide basic health care, ensure a quality education, enable infrastructure and clean energy for all, take effective action against climate change and live in harmony with nature. Resource requirements for least developed countries (LDCs) and SIDS are particularly daunting: while LDCs require an estimated 16 per cent of GDP, providing for the infrastructure requirements of the 2030 Agenda alone has been estimated at $2 billion per year in Asia-Pacific SIDS, equivalent to 6-7 per cent of their GDP.
Besides such resource mobilization difficulties, Vanuatu will face additional opportunities and challenges due to its graduation from the LDC status, which is scheduled for December 2020. This is because once Vanuatu graduates from the LDC category, LDC-specific international support measures (ISMs) such as preferential market access will be phased out. For example, Vanuatu may technically lose the LDC-preferential allocation of aid or face higher costs with concessional loans. Vanuatu will lose access to LDC-specific funding such as the Least Developed Countries Fund (LDCF) and will have to compete against other developing countries to access alternative funding. Doing so successfully will require stronger institutional and human capacity, especially in domestic public resource mobilization, cooperation and coordination with development partners and the international community more broadly.
It is therefore necessary for Vanuatu’s policymakers and civil servants to improve their capacity to identify, mobilize and use financial resources for sustainable development. To that end, this workshop will be an opportunity to develop and/or improve national policies and strategies that support resource mobilization, with a focus on the ISM that will be lost.
The workshop is a continuation of the collaboration between the Government of Vanuatu and ESCAP to support the country’s resource mobilization efforts in the context of the graduation from the LDC category. In 2018, the Government of Vanuatu and ESCAP jointly organized three workshops in Port Vila: Pacific Subregional Workshop on Preparing for a Smooth Graduation from the LDC Category; National Workshop on Resource Mobilization for Sustainable Development in Vanuatu; and Regional Workshop on Resource Mobilization for Sustainable Development in the Asia-Pacific SIDS. Among others, these workshops reviewed the current resource mobilization situation of Vanuatu and identified the following priority areas:
a. Enhancing public domestic resource mobilization (expenditure efficiency, tax administration, feasibility of an eventual transition to a system of income taxation);
b. Increasing access to external finance (technical capacity to undergo an accreditation process to access external sources of finance, green/blue bonds, resources from development partners and foreign direct investment).
- Session 1 - Introduction to the SDGs progress assessment and investment
- Session 1 - Enhancing Blue Economy Sectors' for Financing for Development in SIDS
- Session 2 - National Revenue and LDC Graduation_Vanuatu
- Session 2 - Overview of Resource Mobilization in Vanuatu
- Session 2 - Financial Inclusion/ MSMEs Financing
- Session 2 - Development Finance Assessment
- Session 3 - LDC Graduation and its Impact on Domestic Revenue in Vanuatu
- Session 4 - Enhancing access to external finance following graduation from the LDC category
- Session 5 - Implications of graduation and proposed actions to ensure a smooth transition
- Session 5 - Lessons from countries that have graduated from the LDC category