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Les thèmes du financement du développement

Small Island Developing States - SIDS

 

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Small Island Developing States (SIDS) include some of the world’s smallest and most remote states in the world. Though they differ in population size, geographical spread and development progress, they share challenges and vulnerabilities: high exposure to natural disasters, climate change, and global economic shocks, as well as small or unstable domestic revenues and limited borrowing opportunities. These prevent them from investing in resilient development and seriously hinder their growth prospects.

The OECD provides statistical data and policy analysis on external finance to Small Island Developing States (SIDS) to enhance access to and quality of development co-operation, and to support the development of tailored financial instruments and approaches.

In view of the challenges facing SIDS, a Technical Advisory Group of SIDS, donors, and international organisations set up a virtual Secretariat (composed of OECD and UN) in 2021 to develop guidance on improving the effectiveness and impact of international co-operation in the specific context of SIDS.

Financing for SIDS

SIDS are highly vulnerable developing countries that suffer from low economic diversification, often characterised by high dependence on tourism and remittances, volatility due to fluctuations in private income flows and the prices of raw materials, and debt stress situations. Furthermore, SIDS make up two thirds of the countries that suffer the highest relative losses – between 1% and 9% of their GDP each year – from natural disasters and are acutely vulnerable to the impacts of climate change.

Key facts

  • Remittances represent the largest source of external financing to SIDS. In 2019-20 they reached USD 16.7 billion on average per year, more than half (54%) of total external financing.
  • Official development finance (ODF) shows a moderate but steady growth over 2013-19. In 2020, total ODF commitments to SIDS reached USD 11.7 billion, a 46% from 2019; ODA flows mainly targeted the health sector.
  • The top three providers of ODF to SIDS in 2013-20 were, in descending order: the Inter-American Development Bank (mainly through OOF projects to LAC SIDS in infrastructure and social sectors), followed by Australia (mainly through ODA contributions to Pacific SIDS in governance and civil society projects), and the United States (mainly through ODA interventions in social sectors in Haiti).
  • In 2013-20, transport/storage, and governance and civil society led ODF (concessional and non-concessional flows) commitments in SIDS, with 18,8 billion (or 27% of the total) . Private financing mobilised to SIDS, on the other hand, mainly targets the industry sector (USD 554 million or 22% of the total).
  • In 2018-20, SIDS received USD 1 billion of ODA allocated for the ocean economy. Of this amount, 69% contributed to conserve the ocean or develop ocean economy sectors more sustainably (‘sustainable ocean economy’). This means that only 4% of ODA to SIDS contributed to more sustainable ocean economies.

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When do SIDS ‘graduate’ from official development assistance?

Most SIDS that are ODA-eligible are currently upper middle income countries. ODA rules stipulate that when a country surpasses the high income threshold for three consecutive years (at the time of the triennial review), it can graduate from the list, i.e. flows to them from DAC members can no longer be counted as ODA.

Since the beginning of the DAC (1961), the following SIDS have graduated from the DAC recipients list: Guadeloupe, Martinique, Réunion and Saint Pierre and Miquelon (1992); Bahamas and Singapore (1996); Bermuda, Cayman Islands, Cyprus and Falkland Islands (Malvinas), (1997); Aruba, the British Virgin Islands, French Polynesia, Netherlands Antilles, New Caledonia and the Northern Marianas Islands (2000); Malta (2003); Turks and Caicos Islands (2008), Barbados, Mayotte and Trinidad and Tobago (2011); Anguilla and Saint Kitts and Nevis (2014); Seychelles (2018); Cook Islands (2020); and Antigua and Barbuda and Palau (2022).

SIDS which are preparing to graduate from the DAC list of ODA recipients can use the following three scenarios on the evolution of their GNI per capita until 2030.

> Scenario 1
SIDS GNI per capita between 2021-30 grows, per year, at a similar average rate as that observed between 2015 and 2019. Under such a scenario, those SIDS who would be able to graduate are: Nauru in 2023, Mauritius in 2028, Grenada in 2029 and St. Lucia in 2030.

> Scenario 2
SIDS GNI per capita between 2021-30 grows at +5% per year. Under such a scenario Nauru would graduate in 2023, Mauritius in 2028, and Grenada in 2030.

> Scenario 3
SIDS GNI per capita between 2021-30 grows, per year, at double the rate observed in 2015-19. Under this scenario, the SIDS that would be able to graduate are: Nauru in 2023, Grenada and Mauritius in 2028, St. Lucia in 2027, Dominican Republic and Maldives in 2029, and Dominica and Guyana in 2030.

Note: the above scenarios are hypothetical projections and do not reflect an OECD position.

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