Small states: tackling the pandemic, focusing on solutions – Gambia

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More than a fifth of the members of the World Bank are from countries with less than 1.5 million inhabitants. These countries, referred to as small states as defined by the World Bank, vary widely in terms of income levels, geography and other characteristics. But small states face common development challenges. Their domestic markets are small and remote from large international markets. Economic growth is volatile. The financial pressures are massive, resulting in a heavy debt burden. Some small states are located on hundreds of small archipelagos in an open ocean, while others are landlocked. They are particularly prone to natural disasters, such as sea level rise and extreme weather events, which have devastating effects. A single cyclone or hurricane can wipe out the annual GDP of a small island, with the poor often suffering disproportionately. Tourism, the lifeline of many small states, is particularly vulnerable to the effects of natural disasters, which hurts foreign exchange earnings.

Since the COVID-19 pandemic, international tourism has collapsed and vital spending continues to rise. Governments struggle to protect people, inject money into their economies, preserve jobs and provide unemployment benefits. The year 2020 brought about a sharp decline in GDP and a sharp increase in the number of poor people in small states. The World Bank estimates that small states contracted by 7.1% compared to 1.7% for all emerging markets and developing economies. The recovery is expected to be prolonged and extensive.

The Bank’s response to the COVID-19 crisis – the largest crisis response in its history – is designed to save lives, strengthen health systems, protect the poor and vulnerable, support businesses, create jobs and launch a green, resilient and inclusive recovery. The Bank provides funds for the deployment of the COVID-19 vaccine and for the strengthening of national public health preparedness systems in many countries, including ** Cabo Verde, Comoros, São Tomé and Príncipe and Guinea Bissau **. We help the Gambia expand access to vaccines through direct purchases from manufacturers as well as through the African Vaccine Acquisition Trust. In St. LUCIA World Bank funding aims to provide short-term assistance to the poor, small businesses and workers most affected. It also aims to support reforms related to financial resilience to disasters and education sector policies. In Fiji, the COVID-19 Social Protection System Response and Development Project aims to mitigate the impact of the COVID-19 crisis on the unemployed and improve gender outcomes.

Strong political commitments to small states

The World Bank has well-established operational policies which can be adapted to specific conditions. The timely and targeted use of these policies and some innovative approaches has enabled the Bank to rapidly deliver increased financial resources to small states.

To meet unprecedented demand from the pandemic, for the first time in IDA history, the IDA19 financing program was launched. This means that all of the funding for this replenishment cycle was made available in the first year and that many IDA countries have already received up to half, if not all, of their allocated resources.

Twenty-three small middle-income states are eligible for BIRD resources and benefit from enhanced support from the Bank. Thanks to the capital increase policy approved by IBRD shareholders in 2018, IBRD allocations have doubled and exemptions have been introduced for premium increases at maturity. These small states have access to the most advantageous tariffs of the IBRD.

Extraordinary measures to help small states

Since the onset of the pandemic, the World Bank has responded swiftly and broadly, increasing its resources to help small states cope with the economic downturn.

  • ** IDA19 made additional resources ** available from the crisis response window for health operations, strengthening health systems and combating social and economic impacts.

  • Small states eligible for IDA can participate in the Debt Service Suspension Initiative (DSSI) defer bilateral debt service payments and free up resources for the pandemic response.

  • The Bank recognizes that the immediate crisis response and long-term recovery will require additional IDA resources to ensure appropriate levels of support for small states. This is why the World Bank has called on the international community to commit to a strong replenishment of IDA20.

  • The COVID-19 Fast Track Mechanism as part of the COVID-19 Global Multiphase Programmatic Approach has enabled the rapid redeployment of IDA and IBRD resources. Some small IBRD states have resumed borrowing and others have expanded their IBRD programs for fiscal years 2020 and 2021.

  • High-level discussions at the biennial Small States Forum focus on knowledge exchange among member states and how the World Bank Group can continue to help small states meet their unique development challenges, including the economic recovery from the COVID-19 pandemic.

In numbers :

  • To date, the Bank’s COVID emergency response has benefited ** 29 ** SSF countries.

  • Over ** $ 1.4 billion financial support was provided by IDA to approximately 30 ** SSF countries since the start of the pandemic: About ** $ 900 million ** of this amount has been deployed for the COVID-19 response.

  • Since the start of the pandemic, IBRD funding for SSF members has totaled approximately $ 0.8 billion.

  • In September 2021, ** 15 ** members of the SSF participate in the DSSI with potential savings estimated at $ 0.6 billion during the period May 2020-December 2021 (representing 0.2 to 5.7% of GDP at the country level).

In addition to politics, the impact on the ground

The World Bank’s COVID-19 operations are already showing encouraging results in helping small states save lives, protect the poor and vulnerable, and promote equity and inclusion in recovery.

Bhutan

**The World Bank accelerated support to help Bhutan establish contact tracing and early warning systems, and purchase medical and testing supplies. ** All hospitals and 78 primary health centers received test kits, and personal protective equipment was distributed to 20 district health authorities. Key personnel have received training in infection prevention and control protocols and disease management. Isolation facilities have been established in 4 national COVID-19 centers, and all hospitals have prepared units to isolate suspected cases pending test results. With the support of the World Health Organization (WHO), the United Nations Children’s Fund (UNICEF), the Gavi Vaccine Alliance and the World Bank, Bhutan implemented one of the most effective vaccines in the world. Since May 2021, 88 percent of the eligible population (53% men, 47% women) have been vaccinated with the first of two doses.

Tonga

The World Bank has supported an economic and social stimulus to help Tonga cope with two economic shocks: COVID-19 and Category 4 Tropical Cyclone Harold. Support pack included social assistance benefits to 4,400 elderly Tongans and over 1,000 people living with disabilities, and financial support for secondary school students to stay in school (over 5,800 women and 6,300 men). The operation helped companies retain workers with ** wage subsidies for 5,300 workers ** in more than 670 companies hit hard by the double crisis. This is the first such program implemented in Tonga and one of the few such instruments in the Pacific region. The government has also provided financial support to over 2,100 businesses (600 formal and 1,500 informal), including emergency assistance to the tourism industry.


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