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Tuvalu calls for changes to Least Developed Country eligibility

31 July 2014

The Tuvalu government has reaffirmed its call for the United Nations and multilateral agencies to review the classification of Least Developed Countries (LDCs), to reflect the reality facing small island nations.

Attending the Pacific Islands Forum in Palau this week, Tuvalu Prime Minister Enele Sopoaga said: “If we were to graduate from LDC status without proper transition, that will have serious impacts on sustainable development in Tuvalu.”
Tuvalu – a nation of just 11,000 people - is one of the Least Developed Countries in the Pacific region, together with other vulnerable states like Kiribati, Solomon Islands and Vanuatu. But Tuvalu faces loss of this status after review by a committee of the United Nations Economic and Social Council (ECOSOC).
Speaking to Islands Business in Palau, Prime Minister Sopoaga stated: “The main thing is the scare and the worry of graduating when countries like Tuvalu still have a lot of capacity issues and a lot of need for technology, development, training and education for the people.”
Countries are classified as “least developed” by analysing three criteria: per capita gross national income (GNI); human assets (such as literacy, health and education rates) and economic vulnerability to external shocks. To be included in the list of LDCs, a country must satisfy all three criteria.
The ECOSOC includes a Committee for Development Policy (CDP), which is responsible for reviewing the LDCs’ status every three years.
Retaining LDC classification allows countries to obtain benefits in trade agreements, concessional loans and special development assistance. For example, the Least Developed Countries Fund for Climate Change (LDCF) provides resources for the poorest countries that are especially vulnerable to the impact of climate change. In its initial phase, the LCDF resourced the preparation and implementation of National Adaptation Programmes of Action (NAPAs).
Prime Minister Sopoaga noted: “Once Tuvalu graduates to a developed country, it will not be considered for funding assistance for climate change adaptation programmes like the NAPA, which only goes to LDCs.”
“We have used the LDCF for our adaptation activities,” he said. “We are very grateful for the resources of the international community, but we cannot be graduated simply because of our per capita income.”
Countries should graduate out of LDC classification – losing the development assistance that this status provides – if a number of measures are met: improvements for two of the three criteria, or an increase in GNI per capita that exceeds at least twice the threshold level.
Pacific Small Island States have long argued that the third category of vulnerability, measured by an Economic Vulnerability Index, must be included in the criteria for graduation. They argue that per capita income and other economic indicators alone cannot reflect the reality of their small size and isolation.
In a 2013 briefing paper prepared for the UN Economic and Social Council, Tuvalu’s UN mission noted: “There is a need for new statistical measures which are more appropriate for analysing the LDCs and SIDs realities, vulnerabilities and resilience. Numbers and statistics are always important, but they do not tell the whole story. High figures of GDP/GNI (per capita) do not necessarily show welfare and resilience or natural impediments to growth.”
Sopoaga stated: “We are pleading to the United Nations ECOSOC to reconsider the eligibility criteria – not the criteria themselves but the application of them. At the moment, if you satisfy two of the three thresholds, automatically you are down for a graduation. What we are asking is that one of those two criteria could be – must be – economic vulnerability. That reflects better the situation on the ground. That’s why we continue to work on this proposition to the ECOSOC.”
Recent LDC graduates like Samoa and the Maldives are island states with small populations, but still vulnerable to extreme weather events and slow onset damage from climate change. In contrast, few larger African LDCs have graduated, and new nations like South Sudan are being added to the list.
To be recommended for graduation, a country must be found eligible at two successive CDP reviews. At the last triennial review in 2012, the CDP identified Vanuatu and Tuvalu as eligible for graduation for the third consecutive time and recommended graduation from the list.
The Committee also found Kiribati eligible for graduation for the first time, because it meets two of the three criteria (the GNI per capita and human assets criteria).
In December, the UN General Assembly accepted the ECOSOC CDP recommendation for Vanuatu, but gave it four years for the transition to the new status.
Last year, Tuvalu successfully deferred its graduation from LDC status to a developing country until the next review in 2015. It is looking to the global summit of Small Island Developing States, to be held in Samoa in September, to continue to press this issue with the UN system.
The Commonwealth Secretariat’s representative to this week’s Pacific Island Forum has supported island concerns over LDC graduation. Deodat Maharaj, from the Caribbean nation of Trinidad and Tobago, is the newly appointed Deputy Secretary General for Economic Affairs and Development at the Commonwealth in London.
“We would like the international financial institutions to use vulnerability and resilience as a criterion when they look at small island developing states,” Maharaj told Islands Business.
“We are using all the platforms that are available to us – whether it’s the Commonwealth Finance Ministers meeting or the G20 or this meeting – to make sure that countries speak with one voice,” he added. “With a new classification regime, you would be able to tap into concessional and grant access that many countries can’t access. For us this is a really big issue.”

By Nic Maclellan


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