Financing Development and Fiscal Volatility - The Cowrie

Financing Development and Fiscal Volatility - The Cowrie

Date: 
Tuesday, December 31, 2019
Type: 
Public information and advocacy materials
Abstract

SIDS face significant challenges in mobilizing domestic resources and in accessing capital markets. They tend to have small and erratic domestic revenues, which combined with high costs for providing public services and the fiscal impacts of natural disasters, often result in limited fiscal space for development investments. Foreign direct investments and other private finance flows are highly volatile and on average contribute little to SIDS’ external financing. Concessional finance (i.e. grants and concessional loans from bilateral and multilateral providers) remains a vital source of financing for development in many SIDS, accounting for the largest flow of external finance. Although more sources of financing have become available, many SIDS struggle to access these, owing to low absorption capacity and the complex array of accreditation and application processes to access the global funds. Access to finance is further constrained by a complex web of eligibilities and that includes ad hoc exceptions, resulting at times in inconsistent treatment across SIDS. Innovations and good practices for better co-operation with International financing plays a key role in increasing the capacity of SIDS to mitigate and effectively respond to multiple crisis as well as to support the implementation of the sustainable development in SIDS. Paragraph 102 to paragraph 106 of the SAMOA Pathway covers these issues.

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