Delivered by Dr Filimon Manoni – Acting Secretary General, Pacific Islands Forum
Policy Dialogues Seminar on “Towards Inclusive Economic Recovery in the Pacific”
Organised by the World Bank and the University of the South Pacific
1st April 2022
The Vice Chancellor of the University of the South Pacific
Distinguished Representative of the World Bank Group
Staff and Students of USP
Ladies and Gentlemen
Let me at the outset, and on behalf of the Secretary General of the Pacific Islands Forum, thank the University of the South Pacific (USP), and the World Bank for the invitation to this seminar. I would like to take the opportunity indeed to underscore the importance of this seminar especially at this juncture, as it will increase our awareness of the challenges, but also promote a regional dialogue on social and economic recovery strategies beyond the pandemic. Hopefully, these discussions will also contribute to public policy settings that will support Pacific countries’ COVID-19 recovery efforts.
Over the last two years, Pacific countries, their economies and communities, have been ravaged by the impacts of the pandemic in terms of the health and economic fallout. As countries recover, there is no doubt that there will continue to exist uncertainties on many fronts facing the global economy, including geopolitical tensions and the emergence of more deadly variants of the COVID-19 virus. These factors all pose significant challenges to the global economy and the livelihoods of peoples of all regions into the foreseeable future.
The Russia-Ukraine war is likely to cause a further downward revision to global growth forecasts for 2022. The OECD is estimating a reduction of global growth by 1 percent to pre-Russia-Ukraine conflict growth projections for 2022. Rising global commodity, energy and food prices as a direct consequence of the Russia-Ukraine war will weigh heavily on the health of the global economy as the conflict prolongs. This will erode purchasing power of incomes and elevate cost of living of people in our region, thereby perpetuating poverty, inequality, and hardship.
And in our region, the negative impacts of the pandemic have been further compounded by disasters such as tropical cyclones and the recent volcanic eruption and tsunami in Tonga. According to the Asian Development Bank, Pacific economies contracted by 0.6 percent in 2021. ADB forecasted that growth will expand by 4.7 percent in 2022. However, given our unique context, it will take many years for Pacific countries to make up for socio-economic losses due to the pandemic and climate induced disasters.
As of November 2021, Pacific governments have collectively spent over US$5 billion dollars to protect their economies and the livelihoods of their peoples. Given their limited fiscal space, much of this spending has been sourced abroad, including donor and development partner funding in the form of grants and concessional loans.
There is no doubt that loans have driven up the debt stock of the region. According to the World Bank, 13 Forum Island Countries have been assessed and classified as high risk of debt distress. This is a cause for concern going forward as high debt levels would mean less finance to deal with other pressing national needs that have been impacted by COVID-19, such as health care and education. This is why the upcoming Pacific Regional Debt Conference, organised by PIFS and UNESCAP from 5th-8th April 2022, will explore ways to address the challenges posed by the high sovereign debt profiles of Pacific nations. I encourage you all, if you are able, to participate in the conference.
What do these trends mean for building the resilience of the economies and societies that make up our region?
At the regional level, there is ongoing need for the development of sound, forward-looking and innovative economic policy that complements and supports our Members own national economic development aspirations. As you would be aware, regional approaches to economic development and trade, are vital for the Pacific, given the size of our economies and their distance from major economic centres.
Presently, there are a number of regional policy frameworks and initiatives that the Pacific Islands Forum is working on with our regional partners to build Members’ economic resilience. Key examples include the Pacific Resilience Facility and Regional Aid-for-Trade Strategy. Moving forward, we will work with Members to put in place other key regional policy strategies including a Blue Pacific Economic Strategy, as well as an E-Commerce and Digitalisation strategy.
Policymakers of our region will be required to craft innovative policy measures to revive and restore economic growth in the short-to-medium term. Among others, this would include innovative policies on social protection especially for the most vulnerable and marginalised people in our communities. It also means, supporting the private sector, building fiscal buffers, strengthening Public Financial Management Systems, and diversification of Pacific economies.
To this end, I welcome the initiative by USP and World Bank to organise this seminar. I believe that, like the upcoming Pacific Regional Debt Conference and other regional initiatives pursued by the Forum Secretariat and other development partners, this seminar plays an important role to support the COVID-19 economic recovery
I would like to close by saying that despite the uncertainties and challenges facing our region, I am optimistic that our economies and communities will emerge stronger and more resilient once this crisis passes. I have every confidence that we as a collective will find ways to manage and recover from the pandemic.
I wish you all fruitful discussions. Thank you.