Tourist-rich islands choose not to use GDP as a measure to qualify for aid access

Several wealthier Caribbean nations are striving to reform the global finance system to reduce reliance on China and enhance their access to funding.

Antigua and Barbuda’s Prime Minister, Gaston Browne, is spearheading an initiative urging the United Nations to adopt a metric for measuring economic fragility.

This move could potentially pave the way for these nations to access new funding sources.

Traditionally, such countries have faced challenges accessing global bond markets due to their size, while not qualifying for substantial international aid.

Consequently, they have frequently sought financial support from China for crucial infrastructure projects.

This push for change has garnered support from countries like Barbados, Jamaica, and the Bahamas, and has also received backing from Norway’s former Prime Minister, Erna Solberg.

“Many of our countries have been precluded from concessional funding because we’re deemed to be too wealthy,” Mr Browne told Bloomerge, adding, “but when you’re struck by a climate event and you have no income and you have no savings, looking at the per capita income metric in terms of eligibility for funding is vulgar.”

Mr. Browne’s proposed “Multidimensional Vulnerability Index” has gained the support of 39 small island developing states and is expected to be approved at the UN General Assembly in September.

The MVI is intended to assess a country’s susceptibility to external shocks, such as storms, climate change, and financial instability. Its proponents argue that it should be used in combination with existing benchmarks to determine funding requirements.

The proposal is being made in light of the Caribbean’s reliance on high-interest loans, as well as the frequent occurrence of natural disasters, which have resulted in some of the highest debt levels in the hemisphere.

For instance, Hurricane Irma in 2017 devastated the island of Barbuda, rendering more than 90% of homes destroyed or damaged.

Despite a gross domestic product of approximately $19,000 (€17,700) per capita, Antigua and Barbuda is wealthier than most Spanish-speaking Latin American countries and some East European nations.

The islands’ primary source of foreign currency is tourism. Over the past few decades, China has become a significant source of funding, investing over $13 billion in the Caribbean since 2010 and developing ports, airports, roads, and schools.

In recent months, Chinese companies have announced plans to construct a 20,000-seat stadium in Barbados, provided Dominica with $10 million to support various government initiatives, and offered grants to Antigua for social housing.