BANGKOK, Thailand, December 10th (IPS) – The Pacific island developing state of Vanuatu has emerged as one of the region’s great success stories. Vanuatu has joined the ranks of Samoa and the Maldives as one of only six countries to graduate as Least Developed Countries since the category was introduced by the United Nations in 1971.
Armida Salsiah AlisjahbanaThis historic achievement is the result of great development gains and strategic planning. It shows that the country has successfully raised income levels and improved indicators of social development, with death rates falling significantly and significant advances in education. All of these are among the factors that the United Nations considers to be critical in determining whether or not a country is considered a least developed country.
Despite these development achievements, accelerated action is urgently needed to ensure Vanuatu can achieve the Sustainable Development Goals by 2030.
After graduation, Vanuatu will no longer be entitled to international assistance given to the least developed countries. Unilateral and non-reciprocal trade preferences within the framework of duty-free quota-free systems by various developed and developing trading partners will be off the table.
Fortunately, based on current trade patterns, the overall impact of losing preferential market access will be minimal, as more than half of Vanuatu’s main exports are traded under negotiated duty-free market access agreements rather than under concession measures from the least developed countries. Vanuatu can continue to be financed on preferential terms through the International Development Association (IDA) of the World Bank, as it has a special status as a “small island economy”.
Importantly, after graduation, Vanuatu will benefit from an improved country image that can attract greater flows of foreign direct investment, as several other graduate countries have seen.
However, the deal comes at a time when there are considerable risks to the global economic situation. Unexpected shocks like the unprecedented COVID-19 pandemic pose major challenges for development.
Although swift action was taken in the face of the rapid spread of COVID-19, measures such as banning inter-island travel, closing international borders and imposing corporate curfews, the impact on Vanuatu has been severe. The resulting collapse in tourism had far-reaching effects on the economy. By July, arrivals were 65 percent down on the previous year. This contributed to an estimated 70 percent loss of jobs or income in the first six weeks after the borders were closed, and is a key contributor to the 8.3 percent decline in production expected in Vanuatu this year. The country also recorded its first official case of COVID-19 in November after successfully fighting off the virus for many months.
As a developing country, Vanuatu remains vulnerable to other external shocks. The threats from climate change are very real. The first Category 5 tropical cyclone of 2020, Tropical Cyclone Harold, demonstrated this as it passed over Espiritu Santo, Pentecostal Island and Ambrym earlier this year, displacing an estimated 80,000 Ni-Vanuatu people, over 27 percent of the country’s population corresponds. After tropical cyclone Pam in 2015, this was the second strongest cyclone to hit Vanuatu. This suggests that such storms are becoming more common with climate change.
The UN family has supported Vanuatu in its independence since 1980. Its regional development arm, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), has been providing development aid to Vanuatu since its membership in 1984. More recently, this support has included identifying ways to mobilize funding domestically to recognize that significant resources are required to achieve the Sustainable Development Goals, especially in such a vulnerable environment.
Special technical assistance has been provided since 2017 to assist Vanuatu in developing its Smooth Transition Strategy (STS), which builds on Vanuatu 2030 The Peoples Plan – the National Sustainable Development Plan for 2016-2030 – and the unique identity of the Ni-Vanuatu reflects. At the same time, ESCAP offered advisory services to the National Coordinating Committee for the Least Developed Countries, which oversaw the formulation of the STS and decided on the related follow-up.
As we focus on rebuilding better after the COVID-19 pandemic, ESCAP, together with the UN family, stands ready to continue to support Vanuatu in its development efforts and the implementation of the STS. This includes helping to link the STS to households, providing specific technical assistance to strengthen trade negotiation capacities and developing manufacturing capacities in Vanuatu, which will enable better structural change and diversification of the economy.
This year Vanuatu is celebrating 40 years of independence. By working together, we can build resilience to external shocks in the Pacific to ensure that the next stage on Vanuatu’s development journey remains a success story for decades to come.
Armida Salsiah Alisjahbana is Under-Secretary-General of the United Nations and Executive Secretary of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
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