PRESS RELEASE (109/10)
27th October 2010
Alofi, Niue, 27th October 2010 -
Expanding the economic base can double growth and help cushion the impact of the global economic crisis in Forum island countries (FICs).
This is feasible with a combination of enabling climate, sound decision making and better implementation with support from development partners.
This was the key message of the keynote address at the 14th Forum Economic Ministers’ Meeting (FEMM) which got underway in Alofi, Niue today. The address was delivered by Mr Siosiua Utoikamanu, Team Leader for the Pacific Economic Management Technical Assistant (PEMTA) of the Asian Development Bank (ADB) and Mr Saveneca Narube, Lead Adviser for PEMTA. Mr Utoikamanu is the former Minister of Finance for Tonga and Governor of the National Reserve Bank of Tonga and Mr Narube is the former Governor of the Reserve Bank of Fiji and a former Permanent Secretary of Finance in Fiji. Their presentation addressed the overarching theme of the FEMM which is “Broadening the Economic Base of FICs”
“Despite underperformance as a region and growth prospects still fragile with downside risks from global uncertainty, FICs must aspire to double growth regionally and at the national level. It can be done. FICs have success stories of their own to show the way,” the keynote address stated.
The keynote address stipulated that policies that have been endorsed by FEMM over the years are sound and FICs know their handicaps and what needs to be done. Reports and studies have been made on the Region and individual countries.
But the keynote address argued that FICs have not expanded their economic base because of a poor implementation which is mostly the result of lack of political will and inadequate capacity.
“Political will is often complicated by cultural demands which have become inflexible and limits capacity to innovate and adapt to changing environment. Leadership is essential to motivate change and to change mentalities.”
Other hindering issues to economic growth includes election cycles, lack of capacity at most levels of government, lack of appropriate technical skills in policy design, managerial capacity and the disconnect between technical capacity and political demands. While there seems to be broad support at build capacity at the technical level, there is also a need to build capacity at the decision making level.
The keynote address stated that broadening the economic base in FICs is not readily apparent in some FICs with limited land area and few resource endowments.
”However, changing the policy approach can create opportunities to overcome such limitations. The key focus is to change mind sets to focus on service delivery outcomes rather than persisting with central government and State Owned Enterprises (SOEs) as the sole provider. We need to think more innovatively on how we can provide better services.”
The keynote address argued that better delivery of key public services and improving SOE performances will expand the economic base.
“Implementing SOE reforms to reduce the relatively large losses in the sector should improve budget positions and create cushions for the government to redirect resources to key social areas. The private sector with SOE should lead integration which should be based on commercial principles. Opening up competition in sectors including tourism, telecommunications and the airline industry should expand FIC’s economic base.”
As part of what could be considered as short term actions, the keynote address proposes that FICs develop clear plans to deliver better public services and improve SOE performance; fast track policy implementation, deepen high level consultations with the private sector and community and redesign coordination structures.
In the medium term, the keynote address proposes that FICs develop clear visions and leadership to change current mentalities, remove barriers to policy implementation and set up the enabling regional/sub-regional framework for innovative private sector/SOE synergies
Forum Economic Ministers will consider the recommendations along with those of other papers delivered to address the overarching theme of “Broadening the Economic Base” and make their decisions to be included in the outcomes of the Meeting which ends on 28th October..
ENDS.
For media enquiries on the Forum Ministers’ Meeting contact Mr Johnson Honimae, the Forum Secretariat’s Public Affairs Officer on phone 683 4679 or email: johnsonh@forumsec.org.fj
