WTO AFT GLOBAL REVIEW Vishnu Bassant Deputy Director
WTO AFT GLOBAL REVIEW Vishnu Bassant Deputy Director General Ministry of Finance and Economic Development Mauritius 19 November 2007, Geneva
Liberalisation is a catalyst for increased trade, investment and growth BUT ØTrade liberalization has not made much progress in Africa because of the fear of the unknown ØThe associated economic and social costs of adjustment are high ØCosts are incurred immediately but benefits are reaped in the longer term ØTo make these adjustments economically and politically feasible adequate support is required during the transition phase AFT must therefore be viewed as a vehicle for overall economic development with the aid component supporting an overall programme where trade liberalisation is at the core.
Opening a preference-dependent economy requires ØA change of mind sets to believe that freer trade really brings greater prosperity ØA comprehensive strategy harnessing trade as an engine of growth and development ØEmbedding the national strategy in a regional context as a first step ( eg COMESA FTA , EPA negotiations as a stepping stone to an FTA with EU and with the US as a natural evolution of AGOA) ØTechnical support of the IFIs and RDBs needed to help develop the strategy, estimate the costs and benefits and provide viable options to decision makers ØEndorsement of the strategy by development partners that will eventually provide part of the financial resources The strategy can be in National Development Plans, PRSPs or any document approved by Government
What the Mauritius AFT strategy aims at To unlock growth to attain the goals set, including MDGs, employment creation, poverty reduction, economic diversification etc by ØOpening the economy to the rest of the world ØImplementing wider economic reforms simultaneously to §Maintain stable and predictable macro economic fundamentals §Improve public sector efficiency and service levels §Enhance industry global competitiveness and labour mobility §Improve the business environment to attract investment and FDI §Build productive capacity and diversify into new sectors to consolidate the resilience of the economy §Protect the welfare of citizens likely to be affected through social safety nets and workfare programmes– EMPOWERMENT PROGRAMME • Restructure sunset industries and support sunrise industries – ENTERPRISE PROGRAMME ØDevelop Trade Related Infrastructure (Port, airport, roads)
Cost of the programme Total cost Private sector/FDI External partners Government Financing Gap (Billion Euros) 4. 0 1. 8 1. 2 0. 5
External financing of the programme US $ Million WB Total GBS 90 PL 120 GBS 90 PL 140 GBS 30 PL 30 EDF 54 SAM* 190 China PL 162 BADEA PL AFD ADB EU SAM-Sugar Accompanying Measures 06/07 30 30 10 15 5 07/08 08/09 09/10 10/11 30 30 60 30 30 30 40 40 10 10 10 24 14 5 50 43 41 41 32 32 5 5 5 11/12 12/13 30 60 5 34 6
Selected components of the programme Sector (In Million of Euros) TRTA/CB TRPCB 14 TRIF TRAM TOTAL 63 11 88 24 97 121 43 24 67 215 35 250 41 57 120 220 1. Sugar Research , Derocking/irrigation Income Support Mechanization /VRS II Comp Centralization/ Cess restructuring Power Plant/ Blue Print Compensation Ethanol/ Debt Servicing 2. Enterprise Programme 16 100 3. New Sectors Knowledge Hub Empowerment Programme 145 45 190 Seafood Industry 160 100 260 Pharmaceutical/ Land-based oceanographic industry 85 Port & Airport/ ICT 190 Light Engineering 60 Total 114 743 85 660 850 60 918 473 2, 248
Donor alignment/harmonisation ØBring their experience to support nationally owned programmes ØAt the heart of AFT is TRTA/CB but it is not sufficient ØIt is also necessary to finance TRi. F and TRAM ØFocus existing ODA instruments to implement national and regional AFT strategies ØAvoid creating vertical silos by aligning their interventions on nationally owned strategies instead of focusing on their areas of interest ØBetter coordinate amongst themselves to ensure coherence and reduce the administrative burden on recipient countries ØAgree on the architecture of KPIs that puts in place a framework for success Regular meetings with development partners needed to monitor implementation and take corrective measures
Conclusion ØLiberalisation requires a vision and an integrated plan since reform is required across sectors ØIFIs to help in analytical and advisory work to design policies and programmes countries can own and implement with confidence ØDevelopment Partners to formally endorse the programme and align their intervention accordingly ØLDCs require AFT even more than MICs since they can only access IDA and ODA which are inadequate to fund such programmes. ØMICs can at the limit borrow from the market but to finance the economic and social costs this may not be viable ØReforms are painful and, if not explained, may lead to social resistance, reversal of policies, a slow down in the pace of reforms or regime change ØPrivate sector involvement in infrastructure financing and management necessary
- Slides: 9