London, July 8 2022 (GLOBE NEWSWIRE) — Natural disasters are becoming more common around the world. These disasters come in different forms, as do their social, economic and geographic impacts.
Small Island Developing States (SIDS) experience the world’s highest frequency of natural disasters, including hurricanes, cyclones and other severe storms that cause severe flooding and, in the worst cases, loss of lives, homes and infrastructure.
The consequences of natural disasters involve reconstructions as well as repairs, all of which are very expensive. Investment injections from CBI programs are a necessity for small island nations like Dominica, St. Kitts and Nevis, and St. Lucia, as they help prepare for natural disasters.
For small countries, post-disaster reconstruction costs can be exorbitant. On average, natural disasters cause damage equivalent to 2.1% of GDP each year in SIDS. According to the Emergency Events Database (EM-DAT), the economic impact of a natural disaster is calculated per capita. The strongest storm ever, calculated on a per capita basis, hit Dominica in 2017, causing damage equivalent to 280% of the island’s GDP, according to EM-DAT.
Without access to funds, SIDS like Dominica face the challenge of not being able to build resilience in the face of threats of destruction.
SIDS have also been heavily affected by the Covid-19 pandemic which has left a trail of economic destruction around the world. Caribbean countries face a looming debt crisis in the aftermath of the pandemic as their fragile tourism-dependent economies have been hit by travel restrictions. It is in this context that the United Nations (UN) projected a 9% decline in gross domestic product (GDP) of SIDS in 2020, the year the pandemic hit. According to the same source, this 9% drop in GDP was 3% higher than that of other economies. In addition, severe shortfalls in tourism spending have led the International Monetary Fund (IMF) to anticipate a sharp increase in the current account deficit of SIDS to 12.1% of GDP in 2020. GDP and current account deficit dynamics adds an additional layer to funding difficulties. facing SIDS.
Although the IMF provides emergency financing tools such as the Catastrophe Containment and Relief Trust (CCRT) which are important for debt relief, other sources of financing are useful for effective disaster management. According to the UN, only 6% of COVID-19 funding by the international community for developing countries has been spent on SIDS.
Clearly, bailout packages provided by international agencies such as the IMF and World Bank are often insufficient to meet the financial needs of SIDS, thus making CBI program funds useful. Better access to financial support and better disaster debt management are essential elements of a SIDS resilience toolkit.
SIDS also face unique challenges that emanate from their small geographic size, remoteness from international trading partners and markets, lack of creditor confidence and weak economic diversification, which compound their ability to rebound. after disasters. Interestingly, the link between SIDS and the ocean is ambiguous: it is an asset of tourist attraction and at the same time, it puts these countries on the front line of climate change. These structural problems increase the vulnerability of SIDS to natural disasters, putting them in need of financing compared to other countries that offer CBI programs.
Dominica, Saint Kitts and Nevis, and Saint Lucia are among the SIDS that offer CBI options to investors. These three countries were also ranked highest in terms of the benefits of their CBI initiatives in the 2021 CBI report.
Dominica’s CBI program plays a major role in promoting social and environmental causes, especially sustainable development. The program offers two investment options: a one-time contribution to the government, commonly referred to as the Economic Diversification Fund (EDF) option, or investment in government-approved real estate. Funds transferred to the EDF have been instrumental in Dominica’s national development, particularly through the reconstruction of key infrastructure, sustainable housing and the agricultural sector.
As pioneers in the CBI industry, St. Kitts and Nevis is recognized as a Platinum Standard brand and attracts investors looking for the easiest application processes, allowing candidates who can pass the due diligence process stringent to obtain citizenship within three months.
Established in 1984, the Saint Kitts and Nevis CBI program is the oldest in the world in the field of investment migration. The program allows American families to call a safe country home in exchange for an investment in its sustainable growth fund. The fund uses the income generated to support different sectors of society, including tourism.
The St Lucia CBI program has the main option, the first and fastest is a contribution to the National Economic Fund (NEF) of Saint Lucia. Funds provided to the NEF are intended for progressive local development projects selected by the Minister of Finance.
In conclusion, the macroeconomic impact of citizenship through investment programs is significant, particularly in the areas of natural disaster management and economic development. CIB programs are best seen as an economic lifeline for SIDS.
From hurricanes to health emergencies, CBI programs have proven to be a reliable lifeline for countries in need. For SIDS looking to rebuild pandemic-stricken economies, CBIs are a viable option to secure revenue and investment. CBI agreements will continue to generate large capital inflows, which will therefore have a significant economic and fiscal impact.