ISLAMABAD: Monitoring Desk – President of the Republic of Maldives, Dr Mohamed Muizzu has outlined his vision about how to be free from debt trap. He has said that As leaders of SIDS, we must also spearhead efforts to diversify our economies. Our countries rely on narrow economic bases, often dominated by tourism or fisheries.To diversify economies, we need access to finance. Debt servicing consumes a large portion of our national revenues, keeping our economies in constant fiscal stress.
He delivered his remarks at the meeting of Strategic Advisory Group of the SIDS Debt Sustainability Support Service on “Building Resilient Futures: The SIDS Debt Sustainability Support Service” On the sidelines of the 79th Session of the United Nations General Assembly. H.E. Dr. Mohamed Muizzu, President of the Republic of Maldives is Co-Chair of the Initiative.Prime Minister of Antigua and Barbuda, Gaston Browne, was also present.
Dr Mohamed Muizzu noted that the growing external debt, which is the most critical issue facing SIDS in many parts of the world.Yet, the challenges of debt sustainability are not new to us.They are deeply rooted, intertwined with economic vulnerabilities that have plagued our nations for years. Over 40 percent of SIDS are already in, or nearing debt distress. The Maldives, like many of our fellow island nations, faces a debt-to-GDP ratio exceeding 100 percent.These stark figures demand urgent action.
“The SIDS Debt Sustainability Support Service (DSSS) is a vital and timely initiative / designed to address this debt crisis.The DSSS provides a holistic, sustainable approach to managing our debt. By creating fiscal space, we can redirect resources where they are needed the most—to climate adaptation and sustainable development—rather than re-paying external creditors, President continued.
He highlighted, “In May, we launched the SIDS DSSS at the SIDS4 conference. I fully share, my friend, Prime Minister Browne’s vision and commitment to the urgent implementation of this transformative initiative. But the question remains: how do we break free from the debt trap? Who will stand with us? How do we encourage our partners to act in solidarity with our ambitions for self-sustained development?
Sustainable debt management is crucial, yet insufficient, to secure our future.The dependence makes us highly vulnerable to external shocks, as the COVID-19 pandemic demonstrated. The Maldives, for instance, suffered one of the world’s sharpest declines in GDP.Diversification is not merely a goal—it is a necessity for our survival in an increasingly volatile global economy. To achieve this, SIDS must strengthen their productive capacities.
President shared , “Tomorrow, I will host a Side Event on advancing the Antigua and Barbuda Agenda for SIDS, or ABAS. I invite all of you to attend the event.Our discussion will focus on economic diversification, sustainable infrastructure, and resilient growth in SIDS economies.”
For many SIDS, resource outflows to external creditors outweigh inflows, worsening the balance of payments and stalling development.
We must strengthen the link between debt relief and climate finance. A key focus for the DSSS should be advocating for meaningful debt relief through lower interest rates, and extended repayment terms, or restructuring to ease the burden. I’ve been calling for the alignment of climate adaption finance with debt relief. Discussions such as this event, can help explore mechanisms that link these two imperatives.
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