The Organisation for Economic Co-Operation and Development graduated the country to “high income” in July after six years of strong economic growth driven by the tourism industry.
The Cook Islands is the first country in the region to graduate, meaning it will no longer appear in the organisation’s list of Overseas Development Assistance or foreign aid recipients.
This list is revised every three years by the organisation’s Development Advisory Committee, a forum of aid providers which has 30 members.
Mark Brown, Cook Islands’ Minister of Finance said meant the public and business sectors need to be smart about filling the gap left by departing donors.
“As a country that is 99.99 per cent ocean, it is inevitable that we will turn to our ocean to maintain our levels of sustainability in our economy.
“I can foresee our country leading the way in the sustainable and innovative use of ocean resources and ocean technology.”
The senior lecturer at the School of Economics of the University of the South Pacific, Dr Neelesh Gounder said the impact of graduation on foreign aid received by Cook Islands from DAC sources would be very small.
“More than half of Cook Islands foreign aid now comes from outside Development Advisory Committee sources such as China. New Zealand is the main donor within the committee. Nonetheless, it is expected that New Zealand will continue assisting Cook Islands through other strategies.
“Overall, this graduation should not have any negative impact on the economy, especially in terms of short to medium term economic growth"
Economic policy advisor for the Cook Islands, Natalie Cooke, told Cook Islands News last year that the country’s foreign aid spending was estimated to be equivalent to around five per cent of Gross Domestic Product in 2018/19, estimated at $515 million.
New Zealand aid made up around 67 per cent of foreign aid and the Green Climate Fund a further 7 per cent. The remaining foreign aid spending in 2018/19 was sourced from countries including Japan, China, India and Australia, and other multilateral organisations such as the United Nations Development Programme, Asian Development Bank, World Health Organisation and Food and Agriculture Organisation.
New Zealand economist Geoff Bertram said more than half of the economy’s development assistance was likely to increase with the rising donor profile of China and of international climate change agencies.
But local people Cook Islands News spoke to on the streets of Avarua on New Year’s Eve were less optimistic.
Ministry of Agriculture entomologist Maja Poeschko said: “It sounds good, but overall, considering the consequences, I think we would be better off to delay this for a couple more years.
“(The fact that) we’re probably not able to apply for more aid and agriculture aid money is a big factor in projects we are involved in.”
Martha Matapo of Nikao said: “We need to get our infrastructure into place and look at where we go from here and how we are going to tackle this.
“Forget the negativity, let’s look forward. How can we develop this place to be a better country for the next generation?”
Says Brown: “We will still need to invest on key infrastructure for transportation and for growing the economy.
“We will still need to look after the vulnerable in our society, and importantly we will need to protect our environment and our oceans.”
“I think the future is very bright for our country and particularly for our youth. The opportunities will continue to expand.”