President: SIDS need to diversify economies for survival; it requires access to finance

Small Island Developing States (SIDS) need to diversify its economies to survive, and this requires access to finance, says President Dr. Mohamed Muizzu.

He made the remarks on Saturday evening while speaking as co-chair of the Strategic Advisory Group for the SIDS Debt Sustainability Support Service, at the side event titled ‘Building Resilient Futures: The Global SIDS Debt Sustainability Support Service’.

In his remarks, President Muizzu described a growing external debt as the most critical issue facing SIDS in many parts of the world.

“Yet, the challenges of debt sustainability are not new to us. They are deeply rooted, intertwined with economic vulnerabilities that have plagued our nations for years,” he said.

“Over 40 percent of SIDS are already in, or nearing debt distress. The Maldives, like many of our fellow island nations, faces a debt-to-GDP ratio exceeding 100 percent.”

President Muizzu said that these stark figures demand urgent action.

President Muizzu described the SIDS Debt Sustainability Support Service (DSSS) at the SIDS4 conference launched in May as “a vital and timely initiative” that is designed to address the debt crisis.

He reiterated Maldives’ commitment to the urgent implementation of the initiative.

But he also said that sustainable debt management is crucial, yet insufficient, to secure our future.

He said that leaders of SIDS must also spearhead efforts to diversify their economies beyond narrow economic bases, often dominated by tourism or fisheries.

He said that the dependence on a single or few economic bases make SIDS highly vulnerable to external shocks, as was seen during the Covid-19 pandemic.

He noted that during the pandemic, the Maldives suffered one of the world’s sharpest declines in GDP.

“Diversification is not merely a goal—it is a necessity for our survival in an increasingly volatile global economy. To achieve this, SIDS must strengthen their productive capacities,” he said.

“To diversify economies, we need access to finance.”

President Muizzu noted that debt servicing consumes a large portion of the national revenues of SIDS, keeping its economies in constant fiscal stress.

He highlighted on the need to strengthen the link between debt relief and climate finance.

“We must strengthen the link between debt relief and climate finance. A key focus for the DSSS should be advocating for meaningful debt relief through lower interest rates, and extended repayment terms, or restructuring to ease the burden,” he said.

But he acknowledged that external solutions will not suffice.

“We, the SIDS, must take full ownership of our development journey. We must build robust institutions, enhance our productive capacities, and empower our communities to lead this transformation,” he said.

“Our future depends on our own ability to harness our human capital, promote entrepreneurship, and implement homegrown solutions that reflect the unique strengths of our island nations.”

He urged everyone - governments, the private sector, and the international community – to work together to ensure that the DSSS becomes a catalyst for transformational change.

“By creating the fiscal space needed for sustainable growth, fostering innovation, and building a future where SIDS are not merely surviving but thriving, we can turn this vision into reality,” he said.

President Muizzu arrived in New York, United States, to attend the 79th United Nations General Assembly. He is scheduled to address the UNGA on Tuesday.

President Muizzu’s visit to the UN coincides with the 59th anniversary to Maldives membership at the world body.