Statement by His Excellency, Mr. Eugene Rhuggenaath, Prime Minister of Curaçao

Thursday 24 September 2020

[COVID-19: Vulnerability and Urgent Need for Access to Finance in Small States]

Excellencies, distinguished participants, ladies and gentlemen, Good morning, good afternoon, good evening to all.

I would like to thank the organizers of this event, the Commonwealth Secretariat and AOSIS, for this opportunity to speak on this vital topic not just for the island of Curaçao, but also all the islands in the Caribbean as well.

The Caribbean is known world-wide for being a paradise on earth. And we are –the white sand, blue beaches, warm sunny days and rich cultural diversity make our countries wonderful places to live in.

However, there is a different side. Our location, climate, openness and size makes us highly dependent on others and prone to shocks. They can be natural ones, such as earthquakes and hurricanes. They can also be economically, such as the current decline of tourism as a source of income. It can also be the collapse of a neighboring country in the region, such as Venezuela. And now, COVID-19 as a dramatic addition.

No country in the world is excluded from its impact. Most of the larger countries see negative single digit number. In contrast, the countries in the Caribbean who are highly dependent on tourism, see contractions in the double digits up to minus 25% according to the IMF.

As a result of these external shocks, there is something else that most of these islands share. It’s the topic of today’s meeting: a high debt vulnerability. This does not solely include public debt that relates to the government. It would be prudent to include semi-government entities (which at times provide for basic services) as well, as their rating and survival is dependent on the government risk.

Over the years, I have come to notice that this is a problem which is regional and has negative impact on our regional trade, ability to attract foreign investment as well as the collaboration between nations. The existing debt puts undue pressure on domestic and regional efforts to build resilience for attaining (self-) sustainability and to achieving the Sustainable Development Goals.

Let me be clear, we do not wish to keep begging for help. We are asking for help, because we need time. Time to adjust to the enormous shock of COVID-19; to smoothen the cost of this historic pandemic over several generations.

If we do not, we will end up in a vicious cycle in which higher debt levels give rise to increased country risks and raising risk premiums. This then leads to higher borrowing cost, which again increases debt levels and reduces economic growth. We need time to cushion the impact of the collapse of tourism and the need to increase spending to protect lives and livelihoods of our people.

We are well aware of the fact that our governance structures are not perfect. We have structural weaknesses and we are vulnerable. However, these shocks mentioned, not only magnify these issues, they exponentially make them worse if we are not allowed time to adjust.

How will we need to move forward? As the recently departed Ruth Bader Ginsburg stated: “Real Change, enduring change, happens one step at a time.”

I am pleased that steps have been taken on this matter already. AOSIS for instance, has an extensive paper written on the topics that have an immediate impact. We need to push the pause button on our debt service.

There is also the Initiative on Financing for Development in the Era of COVID-19 and beyond. I am pleased that this initiative is giving attention to debt vulnerability, as there is a discussion group dealing with this topic. And I am particularly thrilled that the Netherlands is co-chairing this discussion group, which has drafted various excellent solutions.

For instance, the discussion group speaks of debt swaps that would channel debt service payments into the SDGs and climate investments of build-back-better programs. They also elaborate on debt instruments that would include relevant state contingent elements such as trade shocks and disasters, to help countries better manage future shocks.

These are all great ideas, and I hope to be part of these ongoing discussions in the future. However, these ideas need to become more than just ideas. They need to become a reality and it is a reality that must come fast! We must start making concrete agreements on debt relief with the international community.

Because at the end of the day, we are not just helping out a country or the region. We are helping humanity. To ensure everyone’s sustainable development and resilience.

Thank you for your attention. -ER

 




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