The Debt Experience of SIDS in the Pacific

The Small Island Developing States (SIDS) in the Pacific region have experienced low economic growth and high volatility in the last few decades. The Pacific SIDS include the island countries of The Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea (PNG), Samoa, Solomon Islands, Timor-Leste, Tonga, Tuvalu, and Vanuatu. These countries are sometimes collectively referred to as Pacific Island Countries (PICs). Many of the PICs share some common and emerging issues despite the presence of significant diversity in land tenure and property rights, natural resources, and population. Growth and development are being hindered by similar constraints such as limited economies of scale, strong reliance on fluctuating tourism and remittances earnings, vulnerability to natural disasters of all kinds, the impact of external economic shocks, and a narrow production and export base. The Cook Islands, Fiji, Samoa, Palau, and Vanuatu in particular depend heavily on tourism earnings as a major foreign exchange earner while countries such as Kiribati, Samoa, Tonga, and Tuvalu depend heavily on remittances and foreign aid to support their incomes (see table 4.1). Mineral reserve deposits are the primary earners for Papua New Guinea (by far the largest island in the region) and Timor Leste.