Maldivian Ambassador Aliny Mohamed has highlighted the urgency of addressing the debt crisis facing Small Island Developing States (SIDS) during a panel discussion titled ‘Debt Crisis in SIDS: A Call for Rapid Concerted Action as we look towards #SIDS4‘. The panel took place as part of the upcoming fourth International Conference on Small Island Developing States (SIDS4) in May 2024.
Ambassador Aliny emphasized the need for swift measures to mitigate the financial strain on SIDS. He proposed reducing borrowing costs, attracting increased foreign investment, and strengthening the capacity of these nations to manage debt sustainably.
Debt Crisis in the Maldives and Beyond
The Maldives, like many other SIDS, faces a significant debt burden. The nation’s external debt has risen sharply in recent years, driven by infrastructure investments and the economic fallout from the COVID-19 pandemic.
SIDS across the globe share similar vulnerabilities. Their limited economic diversification, susceptibility to natural disasters, and the escalating impacts of climate change heighten their reliance on borrowing. This often comes with high-interest rates and unfavorable terms, further deepening the debt trap.
Calls for International Action
Ambassador Aliny’s call illustrates the need for a more comprehensive international response. This will ensure the sustainability of SIDS economies and their ability to address pressing issues such as development and climate adaptation. Organizations like the OECD have highlighted the need for debt relief, innovative financing mechanisms, and increased support for building resilience in SIDS.
