‘Developed’ status a challenge: Cook Islands Finance Minister

The graduation of Cook Islands from a “developing” to “developed” nation status next year is not fully viable given current challenges and lack of resources, says finance minister Mark Brown.

However, he says there are still options to efficiently run the country without the support of the large grants which will cease when the Cook Islands is declared a developed nation.

Based on the Cook Islands’ gross national income, the Organisation for Economic Co-operation and Development (OECD), will officially declare the Cook Islands a developed nation in 2018.

The Cook Islands will become the first country in the Pacific, behind New Zealand and Australia, to gain this status.

But while the change is a major milestone, it involves considerable challenges, says Brown.

The Cook Islands received about $70 million in ODA (Overseas Development Assistance) grants in the 2017/18 financial year, and the change in the country’s status will mean that particular funding will no longer be available.

“The criteria the OECD uses is purely based on income (gross national income), but it doesn’t take into account the economies of scale that small island countries like us have to deal with in delivering services to remote islands,” Brown said.

“With the small numbers we have, the cost for us on a per capita basis is much, much higher. So there is still vulnerability in our country in terms of the scale of cost of doing business, but also (our) vulnerability to the effects of climate change.”

Brown says funding such as climate finance which is now becoming increasingly more important, will play a vital role in the country’s development agenda.

He said rather than being a recipient of grants, as it has been over the past 50 years, the Cook Islands will have to start looking at “real partnership” approach, where there are mutual benefits for both sides from doing business.

This means the government will have to model its development agenda in a way that will attract investors to the Cook Islands.

The need for foreign investors, he says, will play an important role when the country graduates to developed status. The private sector and businesses will have to play a bigger role in terms of their engagement with other countries, Brown adds.

“It will be a challenging time. It is also a unique and new thing for us.

“This is new for the development partners as well, as to how they do business with the Cook Islands. We have to learn to quickly come to grips with this situation and again, this is where we have been innovative in terms of our financial management in the last seven years I have been minister.

“We have to continue that innovation and we have to continue working along the collaborative way of doing business.

“For us, it’s vital that we develop good partnership and relationship in order to foster some of our development agendas.”

Brown says the Manatua Polynesian Cable project to improve internet connectivity is one example of four countries working together to put forward a better business case.  

“It (the graduation to developed status) is good news for our country. It’s something for us to celebrate.

“But it also means we have to consider a new way of doing business with our existing partners.”.

SOURCE: COOK ISLANDS NEWS/PACNEWS