A fairer money lending scheme, which considers that some countries are more vulnerable to major disasters, is sorely needed in the wake of the impact of the COVID-19 pandemic and the Ukraine/ Russia crisis on small countries.
This was the fervent call made by Guyana’s Senior Minister within the Office of the President with responsibility for Finance Dr. Singh on Tuesday, during the United Nations (UN) Economic and Social Council (ECOSOC) Forum on financing for development.
Dr. Singh explained that many countries have incurred significant debt through varied attempts at saving human lives and preventing further harm to their economies during the COVID-19 pandemic.
And even as countries prepared for a gradual return to a semblance of normalcy, the Finance Minister said that the ongoing crisis has again brought “tragic human consequences” and “severe economic dislocation.”
Because of the new crisis, the International Monetary Fund (IMF) stated in a recent report that global economic growth is projected to slow from an estimated 6.1 per cent in 2021 to 3.6 per cent in 2022.
And Dr. Singh said that the ramifications of these global crises are “felt most sharply” by the most vulnerable- like small island developing states (SIDS).
Guyana, specifically, is expected to record a nearly 50 per cent rate of economic growth- due to its nascent oil industry. But the country, according to the Finance Minister, is diligently focusing on “resilient economic growth” through diversification and improved competitiveness.
Despite Guyana’s apparent economic fortune and efforts at strengthening the local economy, Dr. Singh emphasised that small, vulnerable countries- like Guyana- should have access to more just lending schemes.
“This is critical for Small Island developing states which suffer the illusion of middle-income status but which are, in reality, disproportionately and acutely vulnerable and face difficulties accessing financing consistent with their needs,” the Finance Minister emphasised.
A similar call was made last year by Guyana’s President Dr. Irfaan Ali. Because of Guyana’s and other countries’ vulnerability to the more effects of climate change, like increased flooding, President Ali emphasised that financing is necessary to help these countries pursue sustainable development as they contend with their inherent vulnerabilities.
And Dr. Singh, just as the President did, contended that countries’ vulnerabilities should be used as a measure to determine access to concessional financing.
For context, concessional finance simply refers to money lent on more generous terms be it a lower interest rate, deferred repayments or otherwise.
And with this type of finance, Dr. Singh said that the most vulnerable countries of the world can recover and rebuild their economies better.