Pacific Islands Forum Economic Ministers are asking development partners to provide debt relief, and increase general budget support as island nations struggle with the economic impacts of coronavirus pandemic.

At the end of this week’s virtual Forum Economic Ministers Meeting (FEMM), Ministers and officials also asked for more  flexibility in the financing and focus of existing and upcoming donor programs, increased support for social protection systems, and that International Financial Institutions reassess  grant and loan eligibility so Pacific island states can fully benefit from their support.

The Ministers say considerable additional investment and resourcing of public health systems will be needed and have committed to diversifying their economies and improving competitiveness, with a focus on the digital economy and investments in digital literacy, trade and innovation in the private sector, including through public private partnerships.

The Ministers have backed the establishment of a regional COVID-19 economic recovery taskforce to look at the socio-economic impacts of the pandemic over a longer period of time, and oversee implementation of regional priorities, including including health, digital economy and connectivity, food security and agriculture, and building resilient and sustainable economies. The taskforce will also engage with development partners on ‘innovative’ financing options.

Pacific Islands Forum Secretary General Dame Meg Taylor says the FEMM also discussed the need for “very strong public financial management systems”,  so that members can absorb resilience finance and “address the issues of health and climatic impacts and plan our economies.”

“I think one of the key issues here is that, to note that over the past several years about US$2 billion has come into the region for resilience finance. That's a lot of money .”

As Chair of the FEMM, Tuvalu’s Finance Minister Seve Paeniu said for him, “it all boils down to the resourcing of these response measures that we pursue and how we implement and resource these initiatives.

Paeniu would also like to see “a coordinated set of lessons learnt and experiences by similar countries” so that Tuvalu and other small island states can learn from and adapt to their own  circumstances for future crisis response situations.

FEMM has directed that a development partners roundtable be convened to help coordinate donor support for COVID-19 responses.

The Ministers did not discuss travel ‘bubbles’ or labour mobility in depth. Minister Paeniu says this is because in the case of travel bubbles, only a few countries have flagged such arrangements as a possibility. Dame Meg said labour mobility and seasonal worker discussions have largely been handled on a bilateral basis.

Papua New Guinea’s Treasurer, Ian Ling-Stuckey says his country has not had “an economic crisis of such complexity or magnitude since World War 2.” Samoa’s finance minister Sili Epa Tuioti calls it a “social and economic tsunami.” The language being employed by institutions and governments in responding to the economic impact of COVID-19 stresses the historic moment we are living through.

The response of international organisations and donor partners to assist Pacific island economies has been swift, although details are still to be ironed out given the pace with which the pandemic is developing and morphing, and the pervasiveness of its impacts across the globe.

Central to that detail will be the form of that assistance; and whether it’s concessional loans, grants, debt forgiveness or a complex combination of all three and more.

What does the crisis mean for tourism, remittances, digital transformation and more? Get your copy of Islands Business to find out more.

Growth forecasts

Source: ADB Outlook 2020, World Bank, national governments