President Dr. Mohamed Muizzu has addressed the critical issue of debt sustainability facing Small Island Developing States (SIDS). Speaking at a side event on "Building Resilient Futures: The SIDS Debt Sustainability Support Service," he highlighted the urgent need for comprehensive solutions to ease the growing external debt burden that threatens the financial sustainability of SIDS.
President Muizzu pointed out that over 40% of SIDS are currently in or nearing debt distress, with the Maldives’ debt-to-GDP ratio exceeding 100 percent. "These stark figures demand urgent action," he said, emphasizing the importance of the SIDS Debt Sustainability Support Service (DSSS), a strategic initiative aimed at alleviating this financial crisis.
"The DSSS offers a holistic approach to managing our debt by creating fiscal space that can be redirected toward critical areas like climate adaptation and sustainable development," Muizzu noted. He stressed the need for international solidarity, calling on partners to support self-sustained development in SIDS and to explore mechanisms that integrate debt relief with climate finance.
President Muizzu also called for economic diversification, noting that many SIDS, including the Maldives, are overly dependent on tourism and fisheries, leaving them vulnerable to external shocks like the COVID-19 pandemic. He emphasized that diversification is not merely a goal but a necessity for survival, urging SIDS to strengthen their productive capacities and tap into innovative financing tools such as blue and green bonds, debt-for-nature swaps, and concessional financing.
"Our future depends on our ability to harness human capital, promote entrepreneurship, and implement homegrown solutions," he concluded, calling on governments, the private sector, and the international community to collaborate in ensuring the success of the DSSS and the long-term financial sustainability of SIDS economies.