Government is considering revoking the country’s developed status in a bid to tap into the much needed donor funds.
Cook Islands graduated to “developed” nation status earlier in the year following a strong economic performance led by the tourism sector.
However the Covid-19 crisis has brought the industry to its knees, hugely impacting the country’s economy.
Government responded with an economic response package but now it needs more funding to implement phase two of the stimulus.
Fletcher Melvin, Chamber of Commerce chairman, said the government needs to look at every possible way to get funding to help the country with the recovery.
Melvin agreed revoking the developed status would be necessary in order to access the much needed overseas aid.
“It has taken a while for us to get on that (developed) list and it will take a little while for us to get off that list. But the sooner we start working on it, the better it will be for us,” Melvin said.
“We were put there because of our strong economy and now tourism, the industry that took us to developed status, has taken a big hit so it makes sense we will require aid money to get back to where we were. It will take some years before we can return to that status.”
Deputy Prime Minister Mark Brown confirmed they were dealing with the Organisation for Economic Co-operation and Development (OECD) on the country’s status.
Brown said he expected Covid-19 may affect the status of more small island states like the Cook Islands.
“It is glaringly obvious to the likes of OECD, World Bank and others that the world is going into a massive recession,” he said.
“New rules around access to funds will be needed to deal with this unprecedented event and its impact on the global economy.”
Leader of Opposition Tina Browne said given the circumstances, any attempt from the government to revoke the developed status was understandable.
“If we want to get any aid we have no choice but to take steps to revoke our developed status. I understand the circumstances that we are in and we have no choice but to try and ask for that status to be revoked so we can get funding to assist our stimulus package,” Browne said.
Cook Islands received millions of dollars in overseas aid which were used to boost the country’s infrastructure over the past years.
According to the Lowy Institute’s Pacific Aid Map, in 2018 alone, international donors committed about $52 million to the Cook Islands. About $26 million was used on 53 projects.
Following the country’s graduation to developed status, major donors such as New Zealand committed to continued support.
Government projected the impact of the graduation would be “minimal” until now when need for more funding had become apparent.