WASHINGTON, DC – AS small states across the Caribbean continue to call on international lending institutions to place greater emphasis on their vulnerabilities rather than national income when assessing access to financing, the International Monetary Fund (IMF) says discussions on the issue are still ongoing.
Several Caribbean leaders used the recently concluded United Nations General Assembly to renew calls for international financial institutions to move away from using Gross National Income (GNI) as the primary measure when determining a country's eligibility for concessional financing.
Instead, they are advocating for greater consideration of the Multidimensional Vulnerability Index (MVI), which is intended to take into account the economic, environmental and social vulnerabilities faced by small island developing states.
Leaders from St Kitts and Nevis, Grenada, St Lucia and Barbados were among those who highlighted the challenges facing their countries, particularly the impact of climate change and natural disasters on their economies and ability to repay loans.
The issue was also raised with the IMF by SKNVibes News during a media briefing ahead of the Fund's Fall Meetings in Thailand.
IMF Director of Communications Julie Kozack said work is continuing on the development of the MVI, but there is not yet broad agreement on how the index should be structured or how it should ultimately be used.
“A few years ago, I think in August 2024, the UN General Assembly adopted a resolution establishing governance arrangements for moving to a multidimensional vulnerability index,” Kozack said.
“Some work has started, but there has not been a broad consensus on what the index would look like, what would be the components of the index. And so those discussions are underway. And so far, no development finance has been tied to this particular index.”
The MVI debate is particularly important for small Caribbean economies, which remain highly vulnerable to hurricanes, flooding, rising sea levels and other climate-related events.
For many of these countries, a major natural disaster can significantly affect government revenues and economic activity, while existing loans and other financial obligations continue to have to be repaid.
Caribbean governments have therefore argued that income alone does not provide a complete picture of the challenges facing small island states.
Responding to the concerns raised by the region, Kozack said the IMF already takes the vulnerabilities of small and developing states into consideration when determining access to some of its financing.
“When it comes to the way the IMF thinks about vulnerability, we take vulnerability of small and developing states into account already in our core functions,” she said.
Kozack pointed specifically to the Fund's concessional financing arrangements, noting that some small states can qualify for such financing even when their per-capita income is above the threshold applied to larger countries.
“So, for example, at the IMF, small and developing states can qualify for concessional financing even though their per-capita income is at a higher threshold than other larger members,” she explained.
She said the IMF has therefore already adjusted some of its policies to reflect the circumstances of small and developing states.
However, she acknowledged that the Fund will continue to monitor the international discussion surrounding the MVI.
“But we'll of course follow the discussion of the multidimensional vulnerability index carefully,” she added.
The push for greater use of the MVI comes as Caribbean countries continue to argue that their economic circumstances cannot be fully captured by traditional income-based measures.
For the region's small island states, the ongoing debate is therefore not only about how countries are classified, but also about whether existing international financing mechanisms adequately reflect the risks and vulnerabilities they face.
