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UN Secretary General makes case for concessionary loans for the Caribbean

Tuesday, October 10, 2017

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ST JOHN'S, Antigua (CMC) — United Nations Secretary General António Guterres has made a case for special consideration to be made for mid to high income vulnerable states that have been “deprived” of concessional loans.

Guterras, who paid a visit to hurricane battered countries in the Caribbean over the weekend, said most of those impacted are middle income countries.

Antigua and Barbuda and Dominica were among Caribbean countries hit by Hurricanes Irma and Maria when they passed through the Lesser Antilles last month.

The two Caribbean Community (CARICOM) countries, due to their high per capita incomes, have advanced or “graduated” from the low income Least Developed Country (LDC) designation to Upper Middle Income.

The Category 5 storms severely damaged both countries, leaving trails of death and destruction estimated at billions of dollars.

“Most of the countries impacted are middle-income countries and because of that, they are deprived of the form of assistance or concessional loans that low-income countries can have access to,” said Guterres said after touring the two hurricane-battered countries.

“The fact is that even though these countries have graduated as middle-income countries, they have a number of vulnerabilities that need to be taken into account if we want them to be sustainable as middle-income countries,” he added.

His comments came two weeks after Antigua & Barbuda Prime Minister Gaston Browne argued before the UN General Assembly (UNGA) that it was unfair for small, vulnerable states to be denied access to concessionary rates because of their per capita income.

Browne, a former banker, told the UN there was no justice in large, wealthy countries borrowing at a favourable three per cent per annum while “so called 'high income' small island states are forced to borrow commercially at 12 per cent per annum, to repeatedly rebuild.

He reiterated his position during a joint news conference with Guterres over the weekend, calling for the per capita income criteria to be reconsidered.

“I want to make the call again for the issue of per capita income, that nonsensical criterion, to be scrapped. It is an impediment to the growth and development of small island states.”

Guterres, who was once the UN's High Commissioner for Refugees, called for “innovative forms of funding” for countries that are facing external shocks like that experienced in Antigua and Barbuda and Dominica.

“When these countries are facing external shocks of the magnitude that we are witnessing, it is absolutely crucial that they benefit from innovative forms of funding, and from assistance, concessional loans, new bonds,” Guterres said.

The UN Chief pledged to do everything possible to ensure that the international community fully assumes its responsibilities in support of the islands impacted by such dramatic events. He also said that the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) is exploring the possibility of transforming the repayment of debt in investments made by the countries in resilience to storms. Affected countries would also be able to benefit from an upcoming donor's conference.

“There (are) a number of instruments that can be put in place. The World Bank will be launching soon a donors' conference. I would recall that the World Bank had the initiative several years ago to consider that countries like Jordan and Lebanon, because of the inflow of refugees, even if they were middle-income countries, should have access to concessional financing, because of the external shock that these refugees represented.”

Concerned about the impact of climate change on small vulnerable states, Guterres made a strong appeal for international solidarity with the Caribbean islands impacted by the storms. Not only should such solidarity translate to humanitarian aid, but into new mechanisms that would allow for effective reconstruction to build up resilience to future storms.

“I think we are now facing a similar situation and my appeal to the international community to have an engagement in developing mechanisms of financing allowing the Caribbean states to be able not only to face the enormous challenges they are facing, but to fully commit themselves to the Sustainable Development Goals and to the well-being of their population,” Guterres said.

 

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