Tourism Minister Highlights Financing Challenges for Small Island States at UN Assembly

Minister of Tourism Ibrahim Faisal addressed concerns at the United Nations General Assembly’s Sustainability Week regarding the financing challenges confronting Small Island Developing States (SIDS), emphasising the inadequacy of the current international financial framework.

During a high-level thematic debate on debt sustainability and socio-economic equality, Minister Faisal highlighted the unique vulnerability of SIDS to climate change and external economic shocks, which significantly escalate infrastructure investment costs. The Minister noted that the Maldives, due to the absence of a suitable financial structure, encounters elevated borrowing costs from foreign sources, posing substantial obstacles to debt servicing and hampering crucial developmental projects.

Minister Faisal underscored that despite the necessity for external financial support for developing nations, such funding should be both affordable and sustainable. He stressed the disproportionate burden SIDS face in servicing debt amidst external shocks, leading to challenges in maintaining debt sustainability and impeding long-term economic stability.

Acknowledging the Maldives’ significant revenue growth, particularly attributed to its thriving tourism industry, Minister Faisal highlighted the transition to a middle-income status. However, he pointed out the limitations in accessing concessional finance crucial for sustainable infrastructural development, compelling the nation to resort to more expensive financing sources, thereby escalating national debt.

The Minister emphasised that the absence of concessional financial solutions exacerbates debt servicing challenges, hindering developmental progress and intensifying socio-economic inequality. 

He advocated urgently for reforms in the international financial structure to facilitate affordable borrowing for SIDS, stressing that the issue lies not in the magnitude of debt but in the lack of access to concessional financing resources.