Prime Minister Mia Amor Mottley has told a high-level meeting that now is the time for vulnerability to be embraced as part of the criteria to determine access for small island developing states.
Ms. Mottley expressed this view on Monday while virtually addressing the UN High-Level Meeting on International Debt Architecture and Liquidity.
She said the impact of the crisis had been highly differentiated, explaining that it had overwhelmed existing resources for poor people and defied traditional conventions of need.
The Prime Minister suggested that officials must ask for an extension of the Debt Service Suspension Initiative (DSSI) for at least a further 12 months to cover low and upper-middle-income countries with above-average GDP declines due to COVID.
“These extensions would release at least a further $40 billion. We need to systematize a broader DSSI with the official sector agreeing, I ask, for a Barbados-style natural disaster clause in all their lending such that the servicing of debt can be suspended in future for natural disasters and pandemics,” she stated.
Ms. Mottley said while countries were grateful for the suspension of debt service with the DSSI, the 40 countries that had drawn thus far, had drawn only about $5 billion last year.
“That is welcomed, but my friends, truly insufficient. Not to mention that it excludes middle-income, small island states and middle-income countries whose access to the international capital markets is thwarted and who themselves in many instances have been the subject of downgrades,” she pointed out.
The Prime Minister said half of the additional and unused Special Drawing Rights (SDRs) should be recycled for debt reduction to reduce market debt distress, credit downgrades and worse.
“This reduction could be limited to those debts that have been built up from natural disasters and those debts that are unrooted in local policies, debts like pandemics, from hurricanes and from droughts….,” she explained.
Ms. Mottley pointed out that the other half of these new and unused SDRs should be used to recapitalise development banks so that they may lend more to the private sector, in order to drive green, sustainable and inclusive recovery, where sustainability is under most threat.