The Solomon Islands are one of four nations that could be removed from the United Nation’s least developed country (LDC) category due to improved healthcare, education and earning power.
The UN’s Committee for Development Policy (CDP) has recommended graduation and chairman Jose Antonio Ocampo, said: “This is an historic occasion. In the 47 years since the start of the Least Developed Countries category, only five countries have previously left the list.”
Fellow Commonwealth islanders Kiribati were mentioned too as one of the four, however their graduation could be reliant on the creation of a special category for countries facing extreme vulnerability to climate change and other environmental shocks.
Even with this caveat, the benefits of graduation from LDC status are questionable. Countries lose international support measures such as tariff preferences, that may lead to a reduction in competitiveness compared to other countries, because of an increased cost of trade.
Barrett Salato, Chargé de Affairs, Permanent Mission of Solomon Islands to the United Nations Office, the World Trade Organization and Other International Organizations in Geneva, said: “Some will see this announcement as a positive sign that Solomon Islands has made considerable strides in meeting its development aspirations in recent years, while others would be perplexed as to how graduation indicators actually made a difference in their individual struggle they face daily.
“Whatever the different views Solomon Islanders may have on the graduation, there is no doubt its implications will present new and greater challenges for the country ahead.
“When the safety net that we have enjoyed as an LDC is removed, when the preferential rules are withdrawn, when the favourable aid or development assistance are reduced or gone, when we are treated just like any large and powerful developing economies in the world, only then will Solomon Islands realize the veracity of this announcement.
“It is therefore critical that Solomon Islands’ policy makers fully understand its implications and work with our development partners to map out the smooth transition toward and after graduation. Our vulnerability as a small islands state is real regardless of what progress we made in our development endeavours.
“Solomon Islands will still need the support of international community to ensure we don’t slip back into where we were.”
In view of this, the trade division of the Commonwealth Secretariat has provided a guide to assist in trade post-graduation, that helps policy makers adapt to the loss of tariff rents. It does this through the integration of global value chain analysis with conventional approaches towards tariff preference erosion.
At the core of the Commonwealth Secretariat’s LDC project, in addition to robust trade impact assessments, is effective debt management as part of the transition from public to private funding. UN CDP has also recommended that specific measures address economic vulnerabilities which are compounded by natural resource shocks and extreme vulnerability to climate change.
Commonwealth LDCs include Bangladesh, Kiribati, Lesotho, Malawi, Mozambique, Rwanda, Sierra Leone, Solomon Islands, Tuvalu, Uganda, Tanzania, Vanuatu and Zambia. Vanuatu is also looking to achieve graduation by 2020. The process has been delayed because of recent climatic shocks.
The two other non-Commonwealth countries recommended for graduation are Bhutan and Sao Tome and Principe.