At a Glance:
- The World Bank has stepped up its support for small states – countries with populations less than 1.5 million.
- Small states make up one fourth of the World Bank’s member countries.
- Lending increased more than sevenfold during fiscal years 2008-2010 to help small states deal with the impact of the global crisis. Small states, which frequently rely on foreign markets for growth, often have more open economies which leaves them vulnerable to global shocks.
- The Bank’s 2012 (FY) commitments exceed $600 million, more than tripling pre-crisis financial support to small states.
- Three out of four developing small states are islands or widely dispersed multi-island states, making them more susceptible to natural disasters and climate change. Others are land-locked, and some are located far from major markets. Their remoteness and isolation make it difficult and costly for these states to access world markets to compensate for small domestic markets.
Bank Engagement: The World Bank tailors its assistance to the unique challenges of small states. Tailored country and regional programs help countries assess the social and structural sources of vulnerability, address underlying policy and institutional weaknesses, and respond to and manage shocks. In addition, this form of engagement helps the Bank work closely with member countries to generate and share in-depth analysis on specific local challenges. The Bank also supports small states in making their case in international fora on global issues.
Which countries are considered small states?
Antigua & Barbuda, Barbados, Belize, Bhutan, Botswana, Cape Verde, Comoros, Djibouti, Dominica, Equatorial Guinea, Fiji, Gabon, Gambia (The), Grenada, Guinea-Bissau, Guyana, Jamaica, Kiribati, Lesotho, Maldives, Marshall Islands, Mauritius, Micronesia (Fed. States), Montenegro, Namibia, Palau, Samoa, Sao Tome & Principe, Seychelles, Solomon Islands, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines, Suriname, Swaziland, Timor-Leste, Tonga, Trinidad & Tobago, Tuvalu and Vanuatu have access to IBRD and/or IDA financing. (All but five of these countries have populations below 1.5 million.) In addition, World Bank small state members include the high-income countries of the Bahamas, Bahrain, Brunei Darussalam, Cyprus, Estonia, Iceland, Malta, Qatar, and San Marino.
Small States Website
Finance: A number of small states continue to benefit from resources from the International Development Association (IDA), the World Bank’s fund for the poorest, even though their per capita incomes exceed the IDA threshold. These countries have unique challenges including exceptional susceptibility to natural disasters and external shocks, very limited creditworthiness, limited capital market access and excessive debt.
At the last replenishment of IDA (IDA16), two measures were adopted to substantially increase IDA resources for small states. First, the maximum per capita allocation ceiling, which constrained the allocations of several small states, was eliminated. Second, the base allocation was doubled to SDR3 million (The World Bank uses SDR —Special Drawing Rights—, not the dollar, as it’s unit of account for all Bank lending) per year, which resulted in a substantial increase in IDA resources for small states with small populations. The World Bank also has the ability to step in quickly in the event of a natural disaster, a particular concern for small island states.
The Bank has a track record in pioneering innovative approaches to leverage no-interest (concessional) funds to help small states adapt to climate change and mitigate the impact of natural disasters, such as the Catastrophe Risk Insurance Facility; the Program for Climate Resilience; Agriculture Risk Insurance, and SIDS DOCK support.
Knowledge and Technical Assistance: To promote inclusive and sustainable growth in small states, the World Bank partners with countries on a broad range of efforts, including expanding and improving service delivery for health and education, enhancing the effectiveness and efficiency of public spending, removing bottlenecks in infrastructure, improving the investment climate, and enhancing government capacity and governance. The Bank also works with governments to build resilience to external shocks and climate change. Technical and advisory services represent an important component of the Bank’s work with small states on issues such as debt, macro-financial vulnerability, resilience, and options for scaling-up renewable energy and energy efficiency measures. To highlight the challenges as well as data gaps, the Bank regularly produces a “Small States Supplement” to the World Development Indicators.
Partnerships and South-South Knowledge exchange: The Bank works in partnership as a global connector of practitioner knowledge, a broker of development, and facilitator of capacity development and client learning, promoting greater coordination and collaboration among the different actors to produce tailored solutions to generate lasting impact. The Bank organizes the Small States Forum (SSF), an annual gathering of Finance Ministers and Central Bank Governors from small states in conjunction with its Annual Meetings. The Forum provides a platform for small states to forge partnerships, highlight common challenges, learn from each other, and interact with development partners.
Since the first meeting in 2000, a number of successful projects and initiatives have emerged as a result of the SSF discussions and have been actively supported by the Bank, including the Small States Network for Economic Development (www.ssned.org) —a South-South mechanism with peer exchanges on institution building in the public and private sectors— and the Small Country Financial Management Centre ( www.scfmc.im) that provides executive education program for government officials to improve skills and promote deeper understanding and sharing of best practice on financial management.
Results: The World Bank has strengthened its assistance to small states in recent years. World Bank lending increased more than sevenfold during the crisis (FY08-FY10). The Bank’s commitments in FY2012 exceed $600 million, more than tripling pre-crisis financial support to small states. The World Bank has become more agile and flexible in responding to small states’ evolving needs and has contributed to the considerable success achieved by small states:
- Samoa Post Tsunami Reconstruction Project . The project has made substantial progress in restoring and improving the road network that provides access to areas affected by the 2009 tsunami, key coastal corridors, and relocation sites.
- Reducing Financial Vulnerability to Natural Disasters – The Caribbean Experience . A series of World Bank projects helped create the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and also fund the initial membership of several countries from the region.
- Mauritius Programmatic DPL . Drawing upon IBRD funding and technical assistance since 2006, Mauritius has consolidated its fiscal performance, improved trade competitiveness, enhanced its investment climate and empowered and assisted vulnerable people.
- Making Patient Care Healthier in Montenegro . Montenegro's health care reform has improved the regulation and quality of pharmaceuticals, allowing doctors to have more control over their patients' medicines. It also introduces new clinical protocols and has cut down on waiting times.
- Enhancing Private Sector Competitiveness in Cape Verde . The Growth and Competitiveness Project in Cape Verde has helped enhance private sector competitiveness and further develop the financial sector. The corporate tax rate was reduced from 35 to 30 percent; import fees and taxes significantly modified and lowered; customs taxes streamlined; and various import taxes eliminated.
Media Contact: Melissa Fossberg, 1-202-458-4145, email@example.com.
Updated September 2012