Debt and recovery from the economic impacts of COVID-19 dominate the agenda of the upcoming Pacific Islands Forum Economic Ministers Meeting (FEMM).
Denton Rarawa, Senior Economic Adviser at the Pacific Islands Forum Secretariat, told reporters on Tuesday, “Generally, the focus of this year’s FEMM meeting, as you may appreciate, is mainly on the Covid-19 pandemic, not so much on the impacts but we’re moving from the impacts to recovery efforts,” Mr. Rarawa said.
This will be the second year that the FEMM meeting will be held virtually. It will be held on July 13 and 14.
Rarawa also said that during the meeting a regional initiative paper will be presented to the Economic Ministers.
In 2020, the Forum Economic Ministers established a Covid-19 Economic Recovery Task Force to come up with strategies to address the pandemic. They will be presented at the meeting this year.
Another big issue that the forum will tackle is debt which in some countries have ballooned because of COVID-19, as nations dealt with falling revenues and the need to provide financial support for unprecedented numbers of people.
As a result, Rarawa said, Pacific Island countries have incurred a new additional debt of $1.6 billion,
“So the debt issue is a major issue for the region and also because of the vulnerability to climate change and natural disasters. You know when disasters happen, governments are forced to borrow to fund rehabilitation and reconstruction,” Mr. Rarawa said.
“So the Covid-19 and our continuing vulnerability to natural disasters has ensured that debt levels of the region are very high,” he added.
Maureen Penjueli, Coordinator of the Pacific Network on Globalisation, said the region should be focused on economic recovery, and how countries are forced to take on new debt to fund their recovery efforts.
“I think that there needs to be a lot of attention being paid to debt specifically and this big push for countries to take up more and more loans, particularly infrastructure-based loans,”
The debt crisis was already brewing in many countries in the Pacific before COVID-19, she said.
“There are some really critical situations for countries like Vanuatu, Tonga and Samoa and Fiji because of the maturity of loans specifically with China. There have been some grace periods but there is very little articulation, at least from our governments at this stage, on whether they will be asking for debt forgiveness or debt cancellation. And I think that this is quite critical.”
Palau, a tourism-dependent nation, had loans taken out from Asian Development Bank for economic recovery.
Ms. Penjureli said economic recovery cannot be based on more debts.
“We’ve got to position ourselves that any kind of economic recovery, its basis cannot be for more and more debt in our region because that would just bite all of our generations to come on the basis of recovery.”
“Is recovery going to be on more and more loans? And I think that’s quite critical as a regional agenda”, she added,