Opinion

A-G Briefs House On Success In International Meetings, Economy Good News

Madam Speaker, 1. As Minister for Finance, I rise to give a report on the range of meetings that I had attended in Washington D.C. and New York, from 12
02 May 2016 15:05
A-G Briefs House On  Success In International Meetings, Economy Good News
Attorney-General-and-Minister-for-Finance-Mr.-Aiyaz-Sayed-Khaiyum-speaks-at-a-semina-including-adaptation-to-climate-change

Madam Speaker,

1. As Minister for Finance, I rise to give a report on the range of meetings that I had attended in Washington D.C. and New York, from 12 to 18 April, alongside the 2016 Spring Meeting of the World Bank Group and the International Monetary Fund (IMF).

2. Madam Speaker, given that climate change now falls within the Ministry of Finance, I was invited to speak at the Vulnerable Twenty (V20) Group Second Ministerial Dialogue in Washington, D.C.

Fiji confirmed V20 member in Ministerial Dialogue

3. Madam  Speaker, the  V20  Group  was  established  at  the inaugural  meeting  of  the  V20  Ministers  for  Finance  of  the Climate Vulnerable Forum on 8 October 2015 in Lima, Peru in conjunction with the 2015 Annual Meetings of the World Bank Group and IMF.

4. The V20 comprises of member states of the Climate Vulnerable Forum, and is chaired by Ethiopia (H.E. Cesar V. Purisima, Secretary of Finance) with members from Africa, Asia, the Caribbean, Latin America and the Pacific. They include Afghanistan, Bangladesh, Barbados, Bhutan, Costa Rica, Ethiopia, Ghana, Kenya, Kiribati, Madagascar, Maldives, Nepal, Philippines, Rwanda, Saint Lucia, Tanzania, Timor-Leste, Tuvalu, Vanuatu and Vietnam.

5. Madam Speaker, the V20 Ministerial Dialogue brought together representatives of government, bilateral and multilateral institutions and the private sector to discuss and strengthen policy dialogue and co-operation to advance national priorities through an improved climate change finance environment. The meeting recognised the important role that Ministers for Finance play in addressing this agenda through the mainstreaming of climate change into national planning and budgets.

6. Madam Speaker, given that Fiji acceded to the membership of the Climate Vulnerable Forum in late 2015, Fiji was confirmed as a  V20 Member  at  the  V20  Ministerial  Dialogue. This membership allows Fiji to highlight shared interests and contribute substantively to discussions on finance and other means of implementation, particularly to foster a significant increase in investment in climate resilience and low emissions development.

Ministerial Dialogue discussed

climate funding for

vulnerable countries

7. Madam Speaker, at the Ministerial Dialogue, the need for new global arrangements to make it easier for vulnerable countries like Fiji to obtain funding to adapt to extreme weather events (such as Tropical Cyclone Winston), which are being caused by climate change, was emphasised. I highlighted how Cyclone Winston, was a clear demonstration of the vulnerability of small and island developing states to extreme climatic conditions and natural disasters, which are now occurring with increased frequency and intensity. I also called on the need for the international   community   to   take   urgent   action   to   enable countries like Fiji to gain proper access to adequate levels of funding to enable them to build their resilience to climate change.

8. Madam Speaker, there are anomalies that exist in the present arrangements for concessional financing in these multilateral institutions that preclude Fiji from accessing concessional financing as a middle-income country even though Fiji is highly vulnerable, particularly given that the impact of a single natural disaster could significantly set back Fiji’s economy, and involve years of rebuilding and recovery.

SIDS must focus on strengthening

infrastructure

9. Madam Speaker, I emphasised the need for this to change, highlighting the importance of enabling Small Island Developing States to focus on adapting to climate change, by strengthening infrastructure  to  survive,  as  opposed  to  adopting  mitigation measures such as reducing carbon emissions, which in Fiji’s case is negligible.

10. Madam Speaker, while recognising the important role that the private sector can play, I highlighted the difficulty for Small Island Developing States to put together bankable projects because of diseconomies of scale and further emphasised that this could be addressed through the exploration of a regional approach towards bankable projects.

11. Madam Speaker, the importance of how climate finance should now be mainstreamed into development finance for small and island   developing   states   was   also raised and is what Government is currently doing in Fiji.

12. Madame Speaker, the V20 gathering ended with everybody agreeing to translate their commitment into action and to continue to pursue transformative solutions to build climate change resilience for all affected nations. They recognised the important role that Ministers for Finance play in addressing this agenda by mainstreaming climate change adaptation into national planning and budgets.

13. Madam Speaker, at the Joint Governors’ meeting of the IMF and World Bank for the Southeast Asia Constituency, we were informed that Fiji is one of the seven countries in the Asia Pacific region  where  income  inequality  is  on  the  decline  since  the

1990s as measured by the Gini coefficient. The Gini index, Madam Speaker, is a measurement of the income distribution of a country’s residents. This number, which ranges between zero and one, is based on residents’ net income and helps define the gap between the rich and the poor, with zero representing perfect equality and one representing perfect inequality. In 1990 Madam Speaker, Fiji’s Gini index was 0.43 and in 2013 it reduced to 0.38.

Fiji compared with larger Asian

nations in income disparity

14. In fact Madam Speaker, Fiji, joined by Nepal, Thailand and Malaysia is amongst the top 4 countries in the race towards reducing income disparity amongst its population. To be compared with larger Asian economies Madam Speaker is a radical achievement for a small Pacific island nation.

This is also remarkable when compared to resource rich regional economies like Papua New Guinea, which has witnessed increasing income inequality over the same period. Even countries like China, India, Singapore, Bangladesh, New Zealand, Japan, Australia, Vietnam and Indonesia where, notwithstanding the fact that these economies are growing, inequalities in fact are growing at the same time.

Fiji stats show poverty on the decline in Fiji

15. These comparisons at regional and global levels Madam Speaker, further authenticates the work of the Fiji Bureau of Statistics in carrying out sound statistical surveys. Madam Speaker, you will recall that in January this year the Bureau of Statistics released the first results of the 2013/14 Household Income and Expenditure Survey (HIES) which revealed that the overall incidence of poverty in Fiji is in a state of steady decline.

16. Madam Speaker, to verify the observation of the IMF and World Bank, we calculated another statistic. The Palma ratio which is another statistic that measures income inequality. It is increasingly used by the United Nations and is recommended for countries to adopt as it is a more intuitive way of understanding income inequality. It measures the ratio of the income share of the top 10 per cent to the bottom 40 per cent of a country’s population.  In more equal societies, Madam Speaker this ratio will be one or below.

17. For Fiji Madam Speaker, the latest Palma ratio based on the 2013/14 Household Income and Expenditure Survey is 1.62. This is a significant improvement from 2.28 which was recorded in the 2008/09 HIES indicating that the richest 10 per cent that used to make twice as much income as the poorest 40 per cent, now the gap is becoming less, and those at the bottom are now catching up.

Declining income inequality

shows real progress

18. It shows income inequality is on a declining path.  Lower inequality, Madam Speaker drives growth and enables societies to enjoy longer periods of economic expansion. Our declining income inequality, Madam Speaker means the sustained economic growth we are experiencing over the last few years is quality growth because we are growing and in doing so, are reducing income disparities amongst Fijians. This is real progress Madam Speaker. It demonstrates, very glaringly, Madam Speaker that the enabling environment created by the FijiFirst Government through fiscal measures, and social and economic   policies   is   indeed   translating   into   improved livelihoods   and   income   opportunities   for   the   poor   and vulnerable. Madam Speaker this also shows that Government’s policies are inclusive, pro-poor and equitable.

Fiji challenges highlighted

to World Bank, IMF

19. Madam Speaker, whilst attending the 2016 World Bank and IMF Spring Meeting, I was also invited to speak at a seminar organised by the World Bank Group and the IMF on development challenges in Africa, including adaptation to climate change. In this Forum I was able to share the many challenges that Fiji had dealt with effectively, ranging from our climate change policies and Green Growth Framework, to the reforms that had

ensured the success of Fiji’s national airline, Fiji Airways.

20. Madam Speaker, I took the opportunity to highlight the many ways in which Fiji had made the most of its potential and that African nations could learn from. These included our civil service reforms, our partnerships with the private sector, the effective development of service industries like tourism, the proper management of a small national airline like Fiji Airways and even the changes we have made to our tax system and our fiscal year, to maximise our revenue opportunities and the efficient running of our economy.

21. Madam Speaker, it was an honour for Fiji to be invited to address the gathering of Small to Middle Income countries in Africa, who share many of our challenges but who are sometimes struggling to deal with them. The seminar was a platform for these nations to be able to swap experiences and learn from the experiences of outsiders. Our invitation was a great vote of confidence in Fiji, which is seen as a progressive Small Developing State that is dealing effectively with its challenges and at the same time, making a disproportionate contribution to the global community.

22. In  comparison  to  some  of  the  large,  resource  rich  African countries  Madam  Speaker,  Fiji  is  punching  well  above  its weight in terms of our approach to development.

A-G signed 2014 USD$50 million loan approved by the World Bank

23. Madam Speaker, at the 2016 Spring Meeting, I also signed the USD$50 million loan facility approved by the World Bank in December 2014, for improvements to the nation’s transport and infrastructure.

24. Madam Speaker, this is Fiji’s first loan from the World Bank in 23 years and it demonstrates the level of confidence that the World Bank and IMF have in Fiji. We now have more than $102 million Fijian dollars at the current exchange rate to dedicate to improving Fiji’s infrastructure and the performance of our economy as a whole.

25. Madam Speaker, the new World Bank Vice President for the East Asia Pacific Region, Ms Victoria Kwakwa praised the innovative rehabilitation measures being implemented by Government in the wake of Tropical Cyclone Winston. The Vice President emphasised the importance of Fiji strengthening its resilience against climate change as part of its long term growth strategy, as well as pursuing appropriate macroeconomic and social policies. Our reengagement was welcomed by the World Bank, which expressed its willingness to support our efforts to strengthen  our  position  as  a  Pacific  Hub  for  the  economic benefit of the region as a whole.

26. Madam   Speaker,   while   acknowledging   its   support   and assistance to the Fiji Government, the World Bank was also briefed on areas of potential engagement, including disaster rehabilitation, strengthening climate change adaptation measures, improving the effectiveness of social protection programs, assistance in the divestment of state owned enterprises and developing the fibre optic capability in Vanua Levu. In addition, the need for changes to the present arrangements for funding climate change adaptation, which are impeding the ability of small and island states to gain access to concessional financing was emphasised.

27. Madam Speaker, the delegation also met with the Multilateral Investment Guarantee Agency (referred to as MIGA), an arm of the World Bank that provides risk insurance and credit enhancements on foreign direct investments in developing countries.

Major financial arrangements

signed with MIGA

28. Madam Speaker, I am pleased to inform this House that Fiji was able to sign two major financial arrangements with MIGA. These financial arrangements are to encourage and facilitate foreign direct investment into the country. Importantly, it will enable MIGA to provide insurance facilities and security solutions for investments in large-scale Fijian projects and are designed to attract private sector investment by giving investors a range of options to protect their investments into the country. It will boost investor confidence in Fiji, bringing more money, opportunity and benefits into our growing economy in a wide range of   sectors,   such   as   energy,   housing,   healthcare, agriculture, infrastructure development and mineral extraction, to name a few. 29. Madam Speaker, I also had bilateral meetings with the United States State Department where the key messages regarding Fiji’s economic policies following Tropical Cyclone Winston and the challenges faced by Small Island Developing States in adapting to the effects of climate change were highlighted. The US State Department thanked and acknowledged Fiji’s contribution towards the conclusion of the Paris Agreement and in particular, the Prime Minister for the lead international role he has taken in conjuring  up  and  highlighting  this programme, not just in the Pacific region, not just in the developing world, but internationally. That obviously was cemented by the fact that, and we must thank everyone in this Parliament, we were the first country to ratify the Paris Agreement   and   that   is   an   accolade   that   we   should acknowledge. The Department also acknowledged the progress achieved by the Fijian Government through the conclusion of the   International   Labour   Organisation   (ILO)   Article   26 Complaint, and noted that the successful implementation would have a positive impact on the GSP review.

30. Madam Speaker, I was also invited to participate in a side event organised jointly by the Economic and Social Commission for Asia  and  the  Pacific  Region  (ESCAP)  and  the  Ministry  of Foreign Affairs of the Republic of Korea during the inaugural United Nations Economic and Social Council Financing for Development Forum in New York. The objective of the event was to continue the momentum of discussion on the issues surrounding ‘financing  for  development”  from  the  first  High Level Follow-Up Dialogue which I had attended in Korea in late March.

Fiji chaired Climate Finance

meeting in Korea

31. At the meeting that was held in Korea, Fiji was given the honour of chairing the panel session on Climate Finance. It was during discussions at this session that we called for the establishment of a Regional Training Centre for SIDS’ which would be tasked with the specific goal of assisting SIDS access to more climate funding. This proposal eventually formed part of the Outcomes Document of the meeting and was further discussed in New York.

32. Madam Speaker, during the panel discussions in Korea, the general consensus from the various interventions by the distinguished panel, which included the heads of the Green Climate Fund and Climate Policy Initiative, was that there was an abundance of capital in the global market. The challenge however was finding bankable projects that matched the risk and return expectations of investors.

There are geographical risks

of investment in Pacific

33. Madam Speaker, we need to recognise that there are inherent risks associated with investment in the Pacific. These risks are associated  with  geography which  impacts  the  cost  of  doing business, lack of economies of scale, state of development of regulatory  business  environment  and  size  of  the  financial sector. These risks impact our ability to directly attract foreign investment.

Regional Training Centre for SIDS

34. Madam  Speaker,  in  our  view,  the  proposal  for  a  Regional Training Centre for SIDS is a pragmatic way to address this challenge. The idea is that this Training Centre will provide tailored programmes for public sector officials to improve their knowledge   of   the   requirements   of   various   international financing sources and build their capacity to put together bankable project proposals which meet the rigorous requirements of these financial institutions.

35. Such a Training Centre can be the impetus to increase international private investment into the Pacific. It is also a practical way to build national and regional capacity and encourage knowledge transfer.

36. Madam Speaker, while there has been capacity building initiatives undertaken both regionally and globally the diversity of participants has the unfortunate consequence of very generalised approach to these sessions. Through this Training Centre, the objective is to conduct trainings that are customised to the regional and national context which can therefore be useful for public officials in progressing with developing bankable project proposals.

37. Madam Speaker, there is a lot of support from other SIDS for this initiative, likewise from various international organisations and UN bodies.

Focus on more climate change

funding for Fiji

38. Madam Speaker, our focus is to leverage more climate change funding to support Fiji’s development priorities. To do this, we need to develop a pipeline of bankable projects. In this regard, at the meeting in Korea and again reiterated at the ESCAP side event in New York last week, the Fijian Government has offered to set aside seed money to demonstrate its commitment to progress with this initiative.

39. Madam  Speaker,  whilst  in  New  York,  I  also  had  bilateral meetings with the UN Office of the High Representative for Least Developed Countries, Landlocked Developing Countries and Small Island Developing Countries; as well as the U.N. Department of Economic and Social Affairs. At these meetings, I touched on the various rebuilding initiatives post Tropical Cyclone Winston, such as the Help for Homes initiative and the Adopt a School programme,   emphasising on the Fijian Government’s “Build Back Better” approach.

I addressed the need for a holistic review of the building sector such as the regulatory   requirements   for   construction   companies   and national building standards. I also pushed for their support and partnership on the development of a Regional Training Centre in Fiji for Small Island Developing States, which I mentioned earlier.

40.    Madam  Speaker,  I  can  see  that  my  time  is  running  short. Overall, I am excited about the year ahead in terms of Fiji’s climate agenda as there is much to look forward to in the near future.   I am also pleased to reiterate that the Standard and Poor’s Rating Services pronounced that the outlook for Fiji remains stable and affirmed its long-term foreign and local currency rating at ‘’B+’ and the short-term rating of Fiji at ‘B’.

41. Madam Speaker, thank you for your time in allowing me to speak to this House.

 

Feedback:  jyotip@fijisun.com.fj

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