OPENING ADDRESS TO SECOND COMBINED MEFMI FORUM FOR MINISTERS, PERMANENT SECRETARIES OF FINANCE AND GOVERNORS OF CENTRAL BANKS, VALLETTA, MALTA 16 SEPTEMBER 2000

Mr. Chairman

Honorable Ministers of Finance and/or Economic Planning or Development

Permanent Secretaries

Governors

Invited Guests

Ladies and Gentlemen

On behalf of the Government of Malta, and on my own behalf, I would like to extend a warm welcome to you all to Malta.

I trust that you will find your stay here in Malta an enjoyable and memorable one. Please try to squeeze in time in your busy schedule to sample the many historic and tourist attractions our island has to offer.

I also would like to invite you all to join me in congratulating the MEFMI machinery, for having worked tirelessly in ensuring that the idea of this Forum is translated into the reality that it has now become.

Mr. Chairman, it is indeed an honor to host, in Malta, this august gathering of the senior most economic and financial managers from one of Africa's distinguished sub-regions represented by the Macroeconomic and Financial Management Institute of Eastern and Southern Africa. Malta is privileged to be also hosting the Commonwealth Finance Ministers' Meetings, due to take place from 19-21 September 2000.

Mr. Chairman, this Forum is taking place at an historic and opportune moment. Here are some of my reasons:

Although the Combined Forum is the second such event to be organized by MEFMI, it is, in fact, the first one in this New Millennium, whose arrival it has been our privilege to witness;

The agenda of your Forum does, in many respects, mirror and echo some of the key issues raised by the world leaders, including many from Africa, at their just-ended historic United Nations Millennium Summit held in New York just a few days ago;

This Forum is also taking place on the eve of the Commonwealth Finance Ministers' Meeting, also to be held here in Malta. Again, it is no coincidence that the theme of the Meeting, which will deal with the "New Challenges for International Financial Institutions in Supporting Growth and Development", is related to that of this Forum;

Similarly, the 2000 IMF/World Bank Annual Meetings, to be held in Prague, The Czech Republic, from 26-28 September 2000, will address issues of Poverty Reduction, Growth, Stabilization and Reform.

Mr. Chairman, one could go on and on drawing analogies between the agendas of these pertinent meetings and the current Forum. For now, suffice it to say that all these agendas and themes reflect the sober fact that we are entering the 21^st Century with a lot of disappointment from the "unfinished business" of the previous Millennium. We, unfortunately, have just imported into the New Millennium the yet-to-be-addressed problems of persistently erratic and increasingly unbalanced economic growth; widespread abject poverty; life-threatening pandemics and sporadic destructive armed conflicts. The need to address these long overdue problems is now not only a matter of urgency, but, for many low-income developing countries, it is fast becoming a "do or die" situatioN.

It is also a sad fact, Mr. Chairman, that these developments have been mostly restricted to the poor developing countries, which can least afford them. These setbacks are eclipsing the many progressive strides humanity scored in the last Millennium in trying to shrink the world into a "global village", notably through improvements in human freedom, democracy, communication, science and technology.

Looking at the main theme of this Forum, Mr. Chairman, one is stricken by the familiarity of the phrases therein, particularly to this audience in this room. One cannot help but notice that most of the African countries represented here have, for some time now, been collaborating with IMF, World Bank, and other development partners, in trying to address the fundamental issues of "Economic Stabilization, Structural Reforms and Growth". The question to be asked therefore is "What's new?"

Well, the fact of the matter is that African economies have been at it for quite some time. They, however, still continue to be haunted and bogged down by the same old challenges of stabilization, reform and growth. This, in my opinion, seems to suggest at least two things:

One is that the past adjustment process did not yield the desired outcomes to the full, otherwise we would not still be talking about the same set of problems;

Another would be that, assuming that only sub-optimal outcomes were achieved, then something probably went wrong somewhere between designing economic programs and implementing them. Of course this only begs further questions about What Went Wrong? Where? How? What can be done to rectify the situation? Indeed what is the way forward?

A cursory glance at the performance of Africa between the 1970s and the early 1990s, Mr. Chairman, will partly provide an answer to the concerns about sub-optimal outcomes from economic reforms in Africa. Not only did non-oil exporting Africa (apart from South Africa) fare unfavorably, both economically and financially, the region's performance was greatly constrained by a host of exogenous shocks, hesitant policies and practices, and armed conflicts. This impacted negatively on productivity, investment, trade, creditworthiness, external resource flows and aid, and, ultimately, on Africa's economic growth, employment and human development.

Mr. Chairman, taken in converse, these are in fact the same old challenges still confronting the developing countries, including Africa. To these one would have to add the universal objectives of poverty reduction, good governance and globalization without marginalization.

Obviously, these challenges amount to a "toll order", when compared with the limited institutional and technical capacities of the developing countries concerned. This, therefore, calls for both strategization and prioritization in tackling these formidable challenges.

But in order to learn and avoid pitfalls from the past, it would be necessary to re-examine whether:

The limitations of past reform programs, notably SAF and ESAF, in terms of design, structure, content and sequencing have been addressed in the new Poverty Reduction and Growth Facility;

The new approach to Poverty Reduction Strategies will indeed foster greater and more genuine ownership of, and wider stakeholder participation in the entire process, right from the design stage, to implementation and monitoring. In this regard, the roles of international financial institutions will also need to be appropriately determined;

There has been shift of emphasis from narrowly focusing on stabilization, to a consistent incorporation of poverty reduction, cushioning of the vulnerable groups, and sustainable quality economic growth.

I would, Mr. Chairman, underscore the importance of poverty reduction and growth strategies that are people-centered and enjoy ownership by the authorities and the populace at large. This is more crucial for Africa, where the human resource element, alongside with natural resources, is one key determinant of economic growth and poverty reduction. Yet ignorance and disease are among the major threats to this key resource in Africa today.

Developing countries need to strengthen human and institutional capacities; increase and diversify efficient production and enhance quality and therefore competitive exports; and ensure policy credibility, consistency andcoordination. They also should strengthen and institutionalize the effective

use of, and accountability for aid and other resources put at their disposal. Also of equal importance would be the entrenchment of political commitment to sound macroeconomic policy and good governance.

But, like developing countries, the industrialized countries also need to play a constructive part.

For them, increasing market access for poor country exports, and ensuring additionality of concessional resource transfers, meaningful debt relief and technical support would complement developing countries' efforts in closing the development gap that exists between rich and poor nations. Included should be the amelioration of the devastating effects of pandemics such as HIV/AIDS and Malaria.

It is my anticipation, Mr. Chairman, that this Forum will address these and other "leading edge issues" designed to reduce the number of people who are left on the wrong side of the growing divide between the rich and poor.

Tackling these issues will not be easy. But there should not be a moment to lose. In this regard, I am quite encouraged and impressed by the big and distinguished turnout for this Forum. I am sure this symbolizes an appreciation of the regional economies of scale that only closer coordination and networking can help bring.

Let me caution that, Mr. Chairman, the answers to the many issues I have raised are not waiting to be revealed: they are for you to create through your deliberations. Poverty and growth are not an accident, but are largely a result of human factors that we must passionately and persistently seek to correct, through platforms such as this Forum.

In this regard, I would strongly urge you to take full advantage of this Forum, which, in my view, is full of promise and opportunities to influence the course of events in macroeconomic and financial management in your sub-region, and in the increasingly inter-dependent world of today.

I wish you fruitful and rewarding discussions on what we might be able to do together to, in our modest ways, address the modern day tragedies I have been alluding to.

It is now my singular honor and humble duty to declare this Forum officially open.

I thank you for your attention