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“Debt swap”, “blended finance”, “green bonds” – the world of development finance is increasingly made up of small words, with big meanings, that few people fully understand. What is development finance and what does it mean for a small island developing state like Saint Lucia?
It is a necessary condition for our survival. For the global community, it is a mechanism to translate values and principles into action. Development finance is the fuel needed to power the engine that will create the future we want.
Like other Small Island Developing States (SIDS), Saint Lucia faces many serious development challenges due to its vulnerability to internal and external shocks. These vulnerabilities include the severe impact of natural disasters and the negative effects of climate change. In 2010 alone, Saint Lucia lost 43% of its GDP overnight due to the damage caused by Hurricane Tomas.
Devastation and rebuilding is our lived reality as we sit on the front lines of increasingly powerful storms. The cost of climate change in Saint Lucia is particularly striking. Torn bridges, flooded communities, the disruption of electrical and telecommunications services and the constant threat to human lives.
Added to this scenario is a scarcity of investment resources, limited fiscal capacity and flexibility to meet investment needs, reduced access to foreign direct investment and ODA, and high public debt to to GDP, due to constant borrowing to rebuild after natural disasters.
Debt servicing absorbs a large share of tax revenues, compounding the difficulties of financing long-term development and the delivery of social services such as public health and security.
Despite our difficulties, Saint Lucia remains committed to the global sustainable development agenda. We are a resilient people, we continue to excel in the face of insurmountable development pressures. We remain the country with the highest number of Nobel laureates per capita. We continue to innovate and turn challenges into opportunities.
A recent example is Johanan Dujo, the young founder of Algas Organics, who created a formula to turn harmful Sargassum seaweed, which in recent years has become a scourge on our beaches, into an environmentally friendly agricultural fertilizer.
One can only imagine how much greater our contributions to the world could be, how much faster we could grow in a fair and equitable international environment.
Our future is daunting. The cost of inaction on climate change in Saint Lucia has been calculated at 12.1% of GDP by 2025, rising to 24.5% by 2050 and 49.1% by 2100.
To avoid the catastrophic consequences of climate change and to ensure sustainable and inclusive growth that leaves no one behind, we must join our efforts in a very coordinated and effective way.
As Prime Minister of Saint Lucia, I do not have the luxury of waiting for the international system to adapt to the particular needs of countries like mine, as natural disasters continue to threaten and erode the gains of our sustainable development. I am of the view that financing for development is an imperative and not an option in the overall context of the 2030 Agenda for Sustainable Development, especially for small island states.
This is why Saint Lucia has partnered with the World Economic Forum to jointly implement a Country Financing Roadmap, a comprehensive financing plan to maximize capital mobilization. This new initiative will serve as a platform to engage the private sector, civil society, academia and government.
It builds on efforts already underway, harnesses collective intelligence and leverages global expertise to develop a common vision and action plan to unlock SDG funding for Saint Lucia, as a prototype for small island states.
Development finance is more than numbers, formulas and complicated words. It must reflect our values and our principles. It is the fuel that powers the engine needed to build the society, the present and the future we want.
In Saint Lucia, we invite all stakeholders to create with us a different engagement to address our global challenges. An additional contribution from small states is that we are the right size to pioneer systemic change. We hope you will join us on this journey.
This article is part of the World Economic Forum’s Sustainable Development Impact Summit taking place in New York on September 23-24.
