The organization of support for the Federal Republic of Yugoslavia is planned to be in two stages: (a) covering urgent needs for the 2000/2001 Winter and (b) dealing with medium term and longer term needs, including the introduction of a coherent and sustainable economic reform program that can be supported by the IMF and the World Bank and in line with the requirements of the Stabilization and Association process with the EU.

The December 12 Conference is about addressing urgent needs, and launches a process of consultation and coordination among donors and the government. The next step is to design a program that will start the transformation to economic sustainability and integration with the region and with Europe. The challenge of designing such a program, however, is substantial given the decrepit state of the economy. Nevertheless the program is already conceptualized, and the diverse expertise of government, bilaterals, NGOs, IFIs and the private sector is being tapped to find the best way forward. The European Commission and the World Bank are coordinating this work but many are contributing to this collective exercise.

After a series of reconnaissance missions in December full-scale sectoral missions are planned in January and February with the aim of finalizing the Economic Recovery and Transition program with the Government and identifying on a sector by sector basis the urgent needs for investment and underpinning policy reforms necessary to bring about a sharp about-turn in the economic situation. This economic program is planned to be completed around April 2001 and will provide a coherent investment package for consideration by the donor community at a subsequent donor conference to be held as soon as possible thereafter.

The work underway will be presented in two reports. The first will set out the economic and structural reform agenda while the second will focus on the details of sector investment needs and priorities. The economic report will outline a comprehensive economic recovery and transition program, setting out a viable macroeconomic framework, a structural reform agenda, a priority public investment program and needed sectoral policy reforms. The report will emphasize the early transition reforms needed to stimulate a healthy private sector to pave the way for sustainable growth and recovery. It will also focus on actions needed to reform public institutions to operate in a transparent, predictable and accountable manner.

The second report will go into detail in the different sectors, proposing near and medium term investment needs to upgrade and protect existing assets while moving towards key new investments later. The sectoral policy reform agenda needed to permit an efficient investment program will be identified and the early actions needed in the context of the Stabilization and Association Process with the EU. Regional development opportunities that can draw on the momentum offered by the Stability Pact will also be pursued.

While the World Bank and the European Commission, working in close consultation with the government, will take primary responsibility for producing these reports and programs, the support and advice of the whole of the donor community is necessary to help the Federal Republic of Yugoslavia face the challenges ahead and bring back a vibrant private sector. Donor coordination efforts will become increasingly important as the investment program builds up. Initiatives have been taken in setting up selected sector working groups such as energy and transport combining local and foreign expertise, and it is expected that lead agencies will organize similar groups in the other key sectors such as Education, Health and social security. In time, the Federal and Republic Authorities will be able to provide advice and coordination to these groups so that a coherent effort in support of Yugoslavia’s recovery can be sustained. To support this effort, the Republican Government has already put into place the start of a credible donor data base.