Tommy E. Remengesau, Jr. Building
Palau International Coral Reef Centre, Koror, Palau
26-27 April, 2018
FEMM ACTION PLAN
The 21st meeting of the Forum Economic Ministers was held at the Palau International Coral Reef Centre, Koror, Palau. The Forum Economic Ministers Meeting (FEMM) was chaired by the Minister for Finance of Palau, the Honourable Elbuchel Sadang, and supported by the Secretary General of the Pacific Islands Forum, Dame Meg Taylor.
- The following Forum Member Countries were represented: Australia, Cook Islands, the Federated States of Micronesia, French Polynesia, Kiribati, Republic of the Marshall Islands, Nauru, New Caledonia, New Zealand, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu. Representatives from the Council of Regional Organisations in the Pacific included: The Pacific Power Association, the Pacific Community and the University of the South Pacific. FEMM Observer representatives included: the Asian Development Bank, Asian Infrastructure Investment Bank (on special invitation), the Delegation of the European Union to the Pacific (including the European Investment Bank), the International Monetary Fund Resident Representative Office, Pacific Association of Supreme Audit Institutions, the Pacific Financial Technical Assistance Centre, the Pacific Islands Private Sector Organisation, the Pacific Provident Funds and Social Security Forum (on special invitation), the United Nations Resident Coordinator for the Pacific (including the Economic and Social Commission for Asia and the Pacific and the United Nations Development Programme), the University of the South Pacific and the World Bank Group. Private Sector representatives and Civil Society Organisations also held a dialogue with Forum Economic Ministers on Friday, 27 April 2018.
- The theme of the 21st FEMM was “Building Economic Resilience of the Pacific Island Countries through Sustainable Financing Flows”.
SETTING THE SCENE: REGIONAL ECONOMIC AND SDGS & STATISTICS UPDATE
- The World Bank Group provided an update on the global economy and regional economic update, with respect to the challenges and opportunities for Forum Island Countries (FICs), identified in their Pacific Possible Report. Ministers considered an update on regional efforts to prepare the first quadrennial Pacific Sustainable Development Report in 2018, and the state of statistics and related issues in the region. Ministers also considered a summary of the readiness of the region to provide up-to-date and accurate statistics to meet national, regional and international planning and reporting requirements including for the 2030 Agenda for Sustainable Development, SIDS Accelerated Modalities of Action Pathway (SAMOA Pathway) and the Framework for Pacific Regionalism (FPR). Discussions also considered the resources required in the region for building statistical capacity and reporting for evidence-based economic policy and analyses, as well as the need for better collaboration by key stakeholders in the region.
Update on the Pacific Roadmap for Sustainable Development & State of Statistics in the Region
- Agreed to take leadership of the national implementation of the Pacific Roadmap for Sustainable Development as approved by Forum Leaders in September 2017 by:
- ensuring country validation and completion of the Country Data sheets for the 132 Pacific Sustainable Development Indicators to inform the 2018 Pacific Sustainable Development Report to be considered by the Forum Officials Committee Meeting in August 2018 and Pacific Islands Forum Leaders Meeting in September 2018;
- supporting engagement of Ministries of Finance and Planning in south-south cooperation and peer-to-peer learning for Voluntary National Reporting on the SDGs and prioritise where appropriate the use of national and regional Pacific expertise in development efforts prior to considering international expertise; and
- ensuring ‘no one is left behind’ by considering more targeted resource allocation including appropriate social protection measures to reduce inequality, especially for vulnerable groups such as including women, youth, elderly and persons living with disabilities, and those in rural and remote areas and islands.
- Considered and endorsed the priorities for implementing the Pacific Roadmap for Sustainable Development;
- Agreed to receive and consider future reporting by the Pacific Steering Committee for Sustainable Development on challenges and actions required for the implementation of the Pacific Roadmap for Sustainable Development;
- Noted and endorsed the progress made in statistical developments since the commencement of the Ten Year Pacific Statistics Strategy (TYPSS) and the increasing demand for statistics in the region, especially for reporting on the SDGs and national priorities;
- Supported the call for additional and sufficient funding commitments by governments and development partners:
- to strengthen national statistical systems across all of the public sector to improve quality of data and analysis (disaggregated by sex, location and disability) for informed national and regional policy making, monitoring and accountability including for the 2030 Agenda, SDGs, SAMOA Pathway, the Framework for Pacific Regionalism (FPR) and the Pacific Leaders’ Gender Equality Declaration (PLGED); and,
- for the conduct of the core statistical collections presented to Economic Ministers and ensure greater coordination between development partners and governments in scheduling core statistical collections to minimise disruptions by unplanned surveys.
- Agreed that governance and financing of regional statistics will be a standing agenda item at Forum Economic Officials Meeting and will be tabled at the Forum Economic Ministers Meeting, if decisions are required.
FINANCING ECONOMIC RESILIENCE IN THE PACIFIC
- The core paper for the 2018 FEMM – the proposal for a Pacific Resilience Facility, was discussed thoroughly by the Economic Ministers. After consideration of a regional finance facility at the 2017 FEMM, the FEMM Troika, comprising Cook Islands, Samoa, Palau discussed the need for a Pacific Resilience Facility. Economic Ministers agreed on the establishment of a Technical Working Group comprised of Cook Islands, Palau, Samoa, Fiji, New Zealand and supported by the Forum Secretariat provided oversight to the development and technical feasibility of the proposal. The Forum Secretariat carried out extensive consultations across the PIF membership, supported by the Technical Working Group, to inform and guide the development of the proposal tabled at the 2018 FEMM.
- The Pacific Resilience Facility proposal was guided by the principles of: (1) Building regional ownership; (2) Affordable and contextualised financing; (3) Additionality and complementarity of funds to build resilience; and (4) Investment in preparedness to minimise loss of lives and significant economic losses. In addition, the strategic objectives of the PRF are to:
- Strengthen the collective financial resilience of FICs;
- Provide cost-efficient and contextualised financing options for resilient development;
- Strengthen strategic and genuine partnership with key development partners; and
- Encourage capacity development in national disaster risk budgeting and financing.
- Ministers acknowledged the extensive work carried out since the 2017 FEMM in refining the Pacific Resilience Facility, including additional technical details, financial analyses and consultation with PIF Members and key development partners. While endorsing the Pacific Resilience Facility and proposed next steps, Ministers agreed to progress to the technical design phase, to refine and address relevant operational aspects of the Pacific Resilience Facility.
- As directed by 2017 Forum Leaders, Economic Ministers also considered a concept note on the development of a Pacific Islands Climate Change Insurance Facility (PICCIF). The concept note outlined the recent work undertaken to develop a mechanism to manage financial vulnerability and risks to the impacts of climate change and improve resilience in the region. The Ministers considered the progress made to-date on the PICCIF and agreed that significant further work is required by the recently established Taskforce, led by Tuvalu. Ministers emphasised that the roadmap should be a living document to incorporate their feedback and ongoing discussions.
- To improve accessibility and management of climate change and disaster risk finance, Ministers considered a paper on the region’s opportunities for strengthening private sector investment in low-carbon, climate resilient development. Discussions included: the scale of financing required by FICs; the status of the region’s accessibility to international climate change and disaster funds; ensuring the effectiveness of funds being accessed by FICs; the status of private sector engagement and key barriers to private sector engagement; and, options for strengthening private sector engagement.
- The Pacific Investment Forum [composed of Sovereign Wealth Funds, Social Security and Pension Funds, and Provident Funds] presented their proposal for co-investment opportunities in infrastructure in Forum Island Countries. Ministers appreciated the interest from the Pacific Investment Forum for co-investment in the region, and recognised that support of Forum Economic Ministers was essential in further advancing and exploring the opportunities for collaboration and co-investment in the region between governments and members of the Pacific Investment Forum, through the establishment of a Working Group. Australia encouraged Economic Ministers and the Pacific Investment Forum to closely coordinate and dialogue with the Global Infrastructure Hub, noting that the Global Infrastructure Hub has done significant amount of work in this area since its establishment.
The Pacific Resilience Facility
- Commended the FEMM Troika and Technical Working Group, Forum Island Countries (FICs) that supported the in-country consultations, and Pacific Islands Forum Secretariat (PIFS) for their effort in developing the proposal for a Pacific Resilience Facility;
- Endorsed the proposal for a Pacific Resilience Facility and commended it for Forum Leaders consideration at the 2018 Forum Leaders meeting in Nauru, noting that the technical work to establish the Facility will be needed;
- Formalised the Technical Working Group on the Pacific Resilience Facility to comprise the existing members (Cook Islands, Samoa, Palau, Fiji and New Zealand) and agreed that the Technical Working Group work under the close guidance of the FEMM Troika;
- Supported the next phase of technical analyses and assessments for establishing and operationalising the Pacific Resilience Facility with close oversight and guidance from the FEMM Troika and Technical Working Group, and provide relevant, regular feedback to the FICs; and
- Tasked the Technical Working Group, with support from PIFS to develop a funding strategy for the capitalisation of the Pacific Resilience Facility.
Pacific Islands Climate Change Insurance Facility (PICCIF) Proposal
- Noted the establishment of the PICCIF Taskforce;
- Acknowledged and agreed to the proposed Roadmap to progress the PICCIF Taskforce’s work plan in 2018-2019 and requested that the Taskforce update the Roadmap to reflect the feedback provided by Ministers at the FEMM; and
- Recognised the substantial amount of analytical work needed to develop the PICCIF concept further, before Ministerial consideration can be facilitated in 2019.
Climate Change and Disaster Risk Finance
- Welcomed the recent GCF Board’s adoption of the Simplified Approval Procedure, and urged the GCF to fast-track the disbursement of approved funds to FICs and promote a programmatic approach;
- Invited donors to provide resources to support the consolidation of public financial management systems matrix for the remaining FICs, and requested the Secretariat to report on this as well as the national climate finance tracking tool in the next FEMM;
- Requested partners to support additional private sector workshops in Micronesia and Polynesia, and tasked the PIFS to develop an options paper for private sector access to climate finance, including a donor database, for consideration in the next FEMM; and
- Agreed to provide a status report in the next FEMM on how respective governments are addressing the specific barriers to private sector engagement.
Co-Investment: Attracting Investment in Long-Term Infrastructure Investment in the Pacific
- Supported the establishment of a Working Group to develop a Pacific Infrastructure Investment Framework and to report back to the next FEMM. The Working Group to consist of representatives from the Pacific Investment Forum, PIFS and relevant technical agencies, as required; and
- Encouraged PIFS to monitor and leverage off the leading edge work of the G20 (and other forums), and in particular of the Infrastructure Working Group, so as to inform future consideration of infrastructure issues by Economic Ministers at the FEMM.
FEMM STANDING AGENDA ITEMS & OTHER FEMM ISSUES
- Economic Ministers noted and supported the rationalisation of the FEMM Standing Agenda Items for an out-of-session update on these issues. They considered FEMM Observer applications by the Asian Infrastructure Investment Bank (AIIB) and Global Green Growth Institute (GGGI), and the release of FEMM substantive issues papers. Ministers warmly welcomed Vanuatu’s offer to host the 2021 FEMM.
Options to Rationalise the FEMM Standing Agenda Items
- Considered and endorsed FEMM Standing Agenda items to be included in the FEMM Agenda on demand, as a means to rationalise the FEMM standing agenda items. The FEMM standing agenda items will be shared under PIFS Circular to Member countries out-of-session.
Update on Remittances
- Noted the importance of remittance flows in the Pacific and reaffirm the importance of the Pacific attaining the United Nations’ SDG target of 3% average remittance costs;
- Noted that remittance costs remain under pressure in the Pacific, and that de-risking continues to be a driver of remittance market challenges in the region;
- Welcomed the report from the Financial Stability Board to G20 ministers on practical actions to address de-risking;
- Reiterated their commitment to maintaining domestic and regional momentum on this issue in order to drive remittance costs lower; and
- Encouraged New Zealand, Australia and other development partners to continue seeking domestic, regional and international solutions.
Application by AIIB and GGGI: FEMM Special Technical Observer
- Endorsed AIIB’s application to be a Special Technical Observer at FEMM; and
- Endorsed GGGI’s application to be a Special Technical Observer at FEMM, conditional upon its full recognition of all PIF members.
Confirmation of Host of Next FEMM and Release of FEMM Papers
- Noted that the 2019 and 2020 FEMM will be held at PIFS in Suva, in accordance with the FEMM Charter and confirmed the offer by Vanuatu to host FEMM in 2021; and
- Supported the release of the substantive FEMM issues papers.
Out of Session Papers
- Noted the out-of-session papers.
- Palau emphasised the importance of contextualised multilateral and development partners to take into account the unique characteristics of the Forum Island Countries (FICs), including the vulnerabilities of our small island economies in particular to the mounting impacts of climate change and disasters. The criteria used for country classification, and the associated access to official development assistance through multilateral and global sources, must be re-examined particularly for FICs. To that end, Palau sought timely support through the FEMM, for the establishment of a working group that would be tasked to develop a strategy aimed to address these issues.
- Agreed to the establishment of a working group, comprising select representatives, to develop the strategy on improving access to financing for Forum island countries;
- Agreed that a substantive report be tabled for the consideration of Ministers at the 2019 Forum Economic Ministers Meeting; and
- Agreed that exploratory discussions, including with regional donors, on this proposal be progressed by the Secretariat to inform its work on this issue
DEVELOPMENT PARTNERS ROUNDTABLE WITH FORUM ECONOMIC MINISTERS
- The inaugural Development Partners Roundtable with Forum Economic Ministers was held on 27 April, 2018 in Koror, Palau.
- Ministers acknowledged that the purpose of the dialogue with development partners is to realise alignment of their resources to implement the Forum agenda, as called for by Leaders in 2017. Further, to support opportunities to strengthen engagement with development partners to deliver regional impact for the Pacific, including building resilience to climate change and disasters at national and regional levels.
- In the spirit of the Framework for Pacific Regionalism, Ministers encouraged development partners to embrace a renewed way of working together with PIF members to hold more robust and meaningful dialogue on the key priorities of the Blue Pacific and what can be done collectively to take forward Leaders priorities.
- The Economic Ministers highlighted a number of key integrated national and regional issues:
- reiterated the increasing need for additional financing to build resilience to climate change and disaster risk management, while ensuring continued support for social programmes. Noting that there is significant financing gap for FICs;
- maximising government revenues (such as from upper air space management and fisheries) through ongoing capacity building support from development partners, as part of FICs’ domestic resource mobilisation to finance their development initiatives;
- blending domestic and international public finance, and the need for better alignment, coordination and integration among development partners on their reporting requirements when co-financing projects in FICs, to increase efficiencies, reduce the turnaround time on project approvals and delays in disbursements;
- improving access to pre-project financing approved by the Multilateral Development Banks (MDBs) and encouraged the use of the existing national Central Banks systems as the focal point for release of project finance from MDBs.
- Development Partners:
- Noted the efforts to align their work programmes in the Pacific region with national development strategies/plans and regional priorities as highlighted under the Framework for Pacific Regionalism;
- Recognised the need for investment in capacity building and reaffirmed the availability of technical assistance to member states, particularly in the areas of domestic resource mobilisation;
- Acknowledged the strength of regional solidarity in progressing the regional priorities and commended the strong political will shown for the Pacific Resilience Facility that was observed at the 2018 Forum Economic Ministers Meeting. Further urged the FICs to actively engage in the Post-Cotonou Negotiations;
- Acknowledged the opportunity to meet with Forum Economic Ministers as a collective and noted the opportunity for the region at the ADB Annual Meeting to be hosted by Fiji in 2019, to put forward a regional position on key Development partners engagement in the region, including the possibility of reviewing the base allocations of MDBs for concessional financing for all FICs ; and
- Noted the role of private sector in supporting regional economies and reaffirmed their support for private sector development in the region, including support towards building capacity for a pipeline of economically investable programmes in the region.
FEMM MINISTERIAL RETREAT
- Reaffirmed the value of a regional private sector organisation, such as PIPSO, in the Pacific region noting the importance of the private sector as a vehicle for economic development and recognising the ongoing need to build the capacity of private sector in the region; and
- Directed the Forum Secretariat to develop a term of reference for the out-of-session consideration and approval of Ministers, for a comprehensive review of the governance of PIPSO and its strategic focus, going forward.
Accessing Development Finance
- Ministers discussed country classification by income levels and its implication on Members’ access to development financing. Ministers discussed the value for a coordinated advocacy approach on the recognition of vulnerability and fragility as a criteria to access development financing.
- Agreed on the need for stronger, coordinated and consistent advocacy for the recognition of the unique vulnerabilities faced by Pacific Island States; and
- Directed the Secretariat to work with other regional groupings, such as the Caribbean Community, to progress the technical and advocacy work in this area.
Pacific Resilience Facility
- Strongly reaffirmed their political support for the proposal on the Pacific Resilience Facility;
- Directed the Secretariat to develop a work programme to progress the development of the Pacific Resilience Facility for the consideration of Ministers, out-of-session;
- Agreed to advise Forum Leaders on the progress of the proposal for a Pacific Resilience Facility, through the development of an Information Paper for Leaders consideration at their meeting in September, 2018; and
- Agreed on the need for consistent and coordinated advocacy on the Pacific Resilience Facility and noted, the valuable opportunity of the ADB Annual Meeting to be held in Suva, Fiji in 2019 as an important advocacy platform.
JOINT DIALOGUE BETWEEN THE PRIVATE SECTOR AND THE CIVIL SOCIETY ORGANISATIONS
- Economic Ministers, Private Sector representatives and CSOs held a joint dialogue on Friday, 27 April 2018. The outcomes of the joint dialogue is attached as ANNEX 1.
OUTCOMES OF THE JOINT DIALOGUE OF ECONOMIC MINISTERS, PRIVATE SECTOR AND CIVIL SOCIETY ORGANISATIONS
Friday, 27 April 2018
PRIVATE SECTOR DIALOGUE OUTCOMES:
- Economic Ministers acknowledged the issues raised by the Private Sector and discussed the regional repository for government procurement for regional private sector, support for disaster risk management, focus on renewable energy and financing, and private sector representation.
Disaster Risk for Business and Households
- Supported building on existing regional initiatives on the economic risk assessment and recovery model for the business sector to better inform, plan and prepare the business communities on loss and damage; and
- Encouraged agencies working in the Insurance and Climate impact spheres to work with the Private Sector to create affordable insurance products for micro and small businesses and households.
- Recognised that the Private Sector will be an important vehicle for supporting investment in renewable energy, in particular, local investments; and
- Shared a vision with the Private Sector for the region becoming 100% reliable on self-generated renewable energies.
Business Harmonisation and a Regional Tendering Process
- Recommended the development and management of a single regional tender portal for the advertisement of all Government tenders across the region; and
- Recommended that PIPSO facilitate consultations to identify priority business environment issues, based on consultations with governments, business and civil society in the region, and submit a progress report to the next FEMM in collaboration with relevant partners.
Sustainable Financing for Private Sector Representation
- Strengthen existing and create new partnerships with the Private Sector on matters of regional and national policy development, including Private Sector endorsed representation on relevant Government Boards;
- Partner with the Private Sector to deliver Government outputs on MSME development and capacity building.
CIVIL SOCIETY ORGANISATIONS DIALOGUE OUTCOMES:
- Economic Ministers and representatives of Civil Society Organisations welcomed the opportunity for open and constructive dialogue. Economic Ministers strongly supported the focus of sports as a means for engaging youth, tackling NCDs, embracing inclusivity through including people with disabilities, and improving overall economic activity propelled by sporting activities and remittances.
- Endorsed the preliminary findings of the CSOs partnered research on ‘the contribution of sports to the SDGs Roadmap and return on investment for sport in Pacific island countries with preliminary Case studies of economic and social impact of sports in Fiji and Samoa’;
- Welcomed an expansion of regional efforts for data collection and statistical analyses to include physical education and sport for evidence-based policy making;
- Endorsed establishing a joint Pacific Sport Physical Education, and Physical Activity Action Plan; and a regional coordination mechanism to implement it through: (i) providing support and technical assistance to Forum Island countries and territories; and (ii) developing integrated systems for data collection, analyses, policy development and implementation partnership with University of the South Pacific (USP), Oceania National Olympic Committee (ONOC), and the governments of Fiji and Samoa;
- Supported initiatives to scale-up investment in Pacific youth through adequately funding the regional and national youth councils, networks and entities to support the Pacific Youth Development Framework as a regional enabler for building resilience of youth necessary for vibrant economies;
- Endorsed partnerships with CSOs to access global climate finance, as well as strengthen implementation and monitoring at the community level;
- Recognised the cost of climate-induced migration and displacement. Furthermore, called for the refinement of understanding of economic and non-economic losses arising from loss and damage applicable to the Pacific context in partnership with CSOs and their communities;
- Recognised that financial inclusion work has progressed in some PIF members, however, called for a regional financial inclusion framework in PIF members with targeted support for vulnerable groups, including women, youth, elderly, and persons with disabilities;
- Supported the implementation of the Pacific Regional Framework on the Rights of People with Disabilities; and
- Recognised the importance of allocating requisite resources to implement the Convention on the Rights of Persons with Disabilities at the national level.