PACIFIC ISLANDS FORUM – 09 September 2020
Funafuti, TUVALU (04 September 2020) -The COVID-19 pandemic is causing havoc around the world on three counts. First, it was totally unexpected until reality hit home in the early weeks of March, triggering hard and fast border closures and lockdowns across the region. Second, the scale of its impact on human life, livelihoods, and the entire social and economic system is far beyond any other crisis; and third, it is still unfolding, with the full magnitude and an endpoint yet to be discerned.
The 2020 Forum Economic Ministers Meeting (FEMM) held on 11 – 12 August 2020 was held virtually. It discussed this crisis, that has unleashed socio-economic damage of an unimaginable scale in most Forum member countries. The focused agenda centered around the impact of COVID-19, the devastating effects of climate change induced natural disasters and the fragile economic health of the region because of our inherent vulnerabilities. The pandemic has exacerbated these challenges and the region’s ability to deal with them.
Forum Economic Ministers understand this too well, given the importance of a country’s economic health to the government’s ability to sustain COVID-19 responses, let alone the normal demands and essential commitments on their budgets for education, health, infrastructure and public service delivery.
Pacific impacts from COVID-19
Ministers shared experiences on the unprecedented economic and development related impacts of the COVID-19 pandemic on their economies and communities, and their response measures. So far, the region has been spared the global trend of Covid19 fatalities due to quick and decisive border closures, but this has come at a huge cost to the movement of trade, services and people.
The size and scope of these response measures has been constrained by the level of available government financial resources in member countries. Forum Island countries require urgent support from our development partners to augment limited resources and avoid undermining the sustainability of government finances.
What has also become clearer over the past months is that the level of impact across the countries varies considerably. Economies that are tourism dependent and rely on a few sectors for development have faced the full brunt of the economic fallout, highlighting the importance of diversification, and identifying added pillars of growth. Vanuatu in fact is expecting to register marginally positive (0.6%) GDP growth in 2020, whilst at the other end of the spectrum Fiji and Palau have projected negative growth rates at 21.7% and 9.5% respectively.
Employment levels have declined substantially in affected sectors, and household incomes plummeted, aggravating the human cost of the pandemic. As a result, informal sector activity has increased as displaced and newly unemployed families seek other sources of income and livelihood. Furthermore, women’s economic security has also been significantly reduced and requires specific attention.
Economic Ministers also recognized that social challenges have increased vulnerabilities of women, girls and children. Gender based violence, already a major social and economic challenge in the region is again on the rise and needs urgent attention. Most Members’ education authorities have started extended breaks and have put in place alternative learning modes but maintaining the quality and sustainability of education systems is critical to safeguard the future of our youth and skilled workforce. The lack of timely and reliable social data to enable effective monitoring of COVID-19 responses was also considered an important issue that underlines the need to have better coordination and stronger collaboration amongst relevant stakeholders at national and regional levels.
In my opening remarks at the FEMM I emphasised the need to recognise the “new normal” during and after COVID-19. This will require a complete rethink of the region’s economic structures. It entails the diversification of economies to reduce reliance on limited sectors for growth and economic development as well as adoption of technologies and policies that capitalise on opportunities arising from the digital economy. It is my hope that within a few years we will see greater penetration of e-commerce in the Pacific with contactless and cashless transactions being the norm rather than the exception.
The health and well-being of our Pacific people through investments in health infrastructure and services were also deemed core priorities by Economic Ministers. This is all the more critical considering that health care expenditure (as a percentage of total government expenditure and GDP) for most Member countries falls far below what is required to rejuvenate our region’s health infrastructure and allow for the safe reopening of our economies. Ministers have agreed to act urgently to address this along with mobilising resources to tackle other health crises including Non-Communicable Diseases (NCDs). The 50+ age group remains at high risk in the event of any local COVID-19 transmission.
FEMM also deliberated on the 2020 Biennial Pacific Sustainable Development Report. This updated on the progress of Sustainable Development Goals (SDGs) and lessons from the region, and the potential impact of COVID-19 in a wider development context. The Pacific Resilience Facility (PRF), a regional financing facility for building disaster resilience at community level, was endorsed to advance its transitional arrangements within PIFS. The PRF Prospectus, the facility’s principal promotional document, was also endorsed and ministers were updated on work to improve access to and the effectiveness of climate change and disaster financing initiatives from global funding sources.
With limited ability of governments in most countries to raise additional financial resources and in some cases high debt distress levels, there was consensus at FEMM 2020 that more concessional financing and grants, and flexibility of development assistance will be urgently required from bilateral and multilateral development partners. The fundamental importance of our governments having prudent fiscal policies and strong public financial management systems was also underlined.
The social and economic impacts of the pandemic should be brought to the fore of the region’s policy agenda, as the economic downturn has resulted in significant unemployment. Government-led social protection and services have not expanded accordingly so external support will be required. Likewise, the seriously under-resourced health systems in the region need a boost of new investment, appropriate technical assistance and funding support from governments and partners.
Structural reform will support the diversification of the region’s economies as well as enhance competitiveness in a post-COVID-19 global economy. The “new normal” demands working innovatively to explore and support economic recovery opportunities. These include enhancing connectivity and strengthening the digital economy through investments in digital literacy, digital trade and innovation in the private sector, including through public private partnerships. In this vein, building an enabling business environment that supports private sector development and ensuring consistent access to markets through reliable and sustainable aviation and shipping services across the region, will be essential.
Stronger regional collaboration and solidarity is now more critical than ever at technical, policy and political levels. Better co-ordination of COVID-19 responses at the regional level can also generate efficiencies and cost savings. We have seen this demonstrated by the Pacific Humanitarian Pathway on COVID19 and we want to see that continue with the Pacific Resilience Facility.
The newly established COVID-19 Economic Recovery Taskforce commissioned by Economic Ministers, will do the same, and continue to reap the benefits to individual nations from working as one region. The COVID-19 Economic Recovery Taskforce members will be senior economic officials from the region, supported by CROP and international partners. With the leadership of Member governments, and support from regional organisations and development partner agencies, the regional coordination mechanism can effectively complement similar efforts at national level and ultimately protect the future of our people in the Blue Pacific.
We are in this fight for the long-haul and as a region we must remain steadfast and united in the face of the most challenging adversary we have ever encountered. The unity of our people, support from our partners and strong and decisive action by Forum members will ensure we are able to overcome the pandemic and get our regions’ economies back on track.