The Emerging Debt Problems of Small States
In recent years there has been a significant rise in the indebtedness of small states. However, unlike major debtors and the Heavily Indebted Poor Countries (HIPCs), the emerging debt problems of small, mainly middle income, states have received little international recognition and attention.
Thirteen small middle-income Caribbean economies are amongst the most indebted thirty emerging market economies in the world. Similar conditions apply in a number of other small economies in Africa, the Indian Ocean and the Pacific.
Dinesh Dodhia examines the history of this indebtedness, its likely causes in different economies, and prospects for dealing with the debt problem in the future. He argues that there is a need for a comprehensive international framework to deal with it, covering:
• fiscal discipline in small states themselves
• improved debt recording and debt management
• insurance and grant financing mechanisms that respond to the challenges posed by natural disasters
• continued grant and concessional financing for small states
• adequate compensation for preference erosion, and
• support for the efforts of small states to promote private investment for diversification and growth.
This is the first substantial investigation of a newly-recognised international problem.
Acronyms and abbreviations
Part I. The Emerging Debt Problems of Small States: Causes and Prospects
2. Rising Debt Burdens in Small Economies: Some Stylised Facts
3. Factors Responsible For Rising Debt Indicators in Small States
4. Future Debt Prospects
Part II. An International Framework to Address the Debt Problems of Small States
5. The Need for a Comprehensive Framework
6. Fiscal Discipline and Benchmarks
7. Debt Recording, Management and Restructuring
8. Insurance, Contingency and Grant Financing Mechanisms to Respond to Shocks
9. The Crucial Importance of Concessional Finance
10. Compensating for Preference Erosion and Promoting Private Investment by Mitigating Endowed Handicaps
Appendix 1. Final Statement of Workshop on Addressing the Debt Problems of Non-HIPC Small States, 23–25 July 2007
Dinesh Dodhia (Author)Dinesh Dodhia is a former senior staff member of the Commonwealth Secretariat. Since 1995 he has been managing director of Rappidd Consultancy Ltd, which provides specialist advice on economic and development issues to international organisations such as UNCTAD, the World Bank, African Development Bank, Commonwealth Business Council and Crown Agents.
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