President Tommy Remengesau Jr. said that international financing agencies need to step up and reframe country classifications to reflect the capacity of countries to respond to shock events like COVID-19.
Palau is classified as a “developed” nation or high-income country which limits access to funds from multilateral banks.
Remengesau brought up this issue with other Pacific Island leaders during a May 8 Zoom conference meeting with Pacific Leaders and experts on “Post COVID; Creating a Blue Pacific Bubble – Opportunities and Challenges to delivering Resilient Island Economies”.
“There is recognition that international financing will be needed as part of an economic recovery plan. However, concern remains that Palau’s classification as a high-income country, would limit access to much needed concessional financing facilities,” he said.
He urged leaders in the Pacific in that meeting to have a unified voice on the issue.
The United Nations earlier said small nations could face high external debt burdens which require complementary external debt suspension or relief programs.
The United Nations in its report, titled “Debt and COVID-19: A Global Response in Solidarity,” said debt relief and debt moratorium should be provided to developing and small nations.
The United Nations has also established a dedicated COVID-19 Response and Recovery Fund to complement efforts in low and middle-income countries to address the socio-economic impact of the COVID-19 crisis.
The president said considerable effort is being invested to stimulate the economy in Palau. He highlighted that while the economic impact on the economy is huge, it was also an opportunity for people to shift in “recognizing the value of basic life skills and returning to a reliance on agriculture for sustenance and livelihood.”
He said that women were returning to their taro patches to cultivate; more time was being spent wisely especially among family and community.
But Palau still rely heavily on canned produce and other imported foods but stressed that the closure of borders is critical to remaining COVID free.