The preparation of an economic recovery program and the organization of donor support for the Federal Republic of Yugoslavia, together with safeguarding the needs of the people during this difficult period, are of immense concern to the Government and to those countries and organizations that want to support Yugoslavia. Already we have heard from the UN and other agencies on the ground of the serious difficulties being faced by the people of Yugoslavia this winter and the new Government and IMF has informed us of the sorry state of the economy after so many years of mismanagement and neglect. Yugoslavia , once the example to follow among developing nations, is in sore need of support to help it break with the recent past and join the future. Now that the government is led by reformers, the time seems to have come for the donor community to step forward and help. The World Bank and EC, charged as we are by the HLSG for mobilizing donor support for Yugoslavia, are now working hard to design programs that can help this country recover from the misery of the last decade and move into the mainstream of the European family of nations.

This conference is a first step in beginning to address urgent needs and launches a process of consultation and coordination among donors and the government which will start the road to recovery. The next step is to design a program that will start the transformation to economic independence and integration with the region and with Europe. But the design of such a program is no easy task given the decrepit state of the economy, the debts that have built up between FRY and others, between companies, banks and people. Nevertheless the program is already conceptualized and is on the drawing board, and the diverse expertise of government, bilaterals, ngo’s, IFI’s and the private sector is being tapped to find the best way forward. For example last week and this week 8 separate sectoral missions were in Yugoslavia, discussing with the authorities a broad range of the issues to be tackled under an economic recovery and transition program The EC and the World Bank are coordinating this work but many are contributing and will make an essential contribution to this collective exercise.

After this series of reconnaissance missions in December we plan full-scale sectoral missions in January and February immediately after the Orthodox Christmas and new year 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 of Yugoslavia. This economic program is planned to be completed around April 2001 and it will provide a coherent investment package for consideration by the donor community at a subsequent donor conference to be held as soon as feasible thereafter.

Let me say a word about the scope of the work that is underway. The Economic Recovery and Transition program will actually take shape 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. We see these as products that will be prepared in close consultation with the government. 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. It will be essential to start immediately on institutional reform and training so as to start routing out corruption, to help and not hinder the proposed private sector led growth, and to safeguard the economic wellbeing of the people of FRY many of whom currently live in conditions of poverty. Early signals from the new leaders in FRY in this respect are most encouraging.

The second report will go into detail in the different sectors, proposing near and medium term investment needs to upgrade and protect existing assets in the nearterm 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 a possible Stabilization and Association Agreement with the EU. Regional development opportunities that can draw on the momentum offered by the Stability Pact will also be traced.

While the World Bank and the European Commission will take primary responsibility for producing these reports and programs and the government will be consulted at every step, we cannot succeed in our work without the support and advice of the whole of the donor community particularly in those areas where there is a comparative advantage for this or that sector. We are already working closely with our colleagues in EIB, EBRD, UNDP and the other agencies with this in mind. We hope that a real partnership can be established between the authorities and people of Yugoslavia and the donor community to work together to help Yugoslavia solve its problems and bring back a vibrant private sector.

The perception and reality of widespread corruption in the use of public funds and influence in FRY is a warning beacon for many potential donors and businessmen There is nothing more likely to cause this promising endeavor to fail than lack of action by government on this issue. The donors just will not stand for it. And they will vote by closing their checkbooks if convincing action is not taken by the authorities. Let us assure you that we stand ready with others to help the Yugoslav authorities in this fight for the rule of law and for the protection of the public good.

Finally a word about donor coordination both inside and outside Yugoslavia. While the EC/WB joint office will play its role in keeping donors informed on the aggregate commitment and expenditure of funds, it is coordination of the efforts on the ground that will become increasingly important as the investment program builds up. We intend to set up a small logistics office early in 2001. Already excellent initiatives have been taken in setting up selected sector working groups combining local and foreign expertise. The new group on energy was one of the first, and the transport group followed soon afterwards. We expect that lead agencies will organize similar groups in the other key sectors such as Education, Health and social security. Private sector development and the financial sector will attract other donors …..and so on. We hope that the Federal and Republic Authorities will in time be able to provide advice and coordination to these groups so that a coherent effort in support of Yugoslavia’s recovery can be sustained. The Republican Government has already put into place the start of a credible donor data base and we believe that these donor coordination efforts should be pursued with vigor by the FRY authorities.

In Summary we can conclude that the stage is now set for a period of intense activity in support of the Federal Republic of Yugoslavia. The European Commission has already moved rapidly with a generous urgent support programs; their Agency for Reconstruction is mobilizing in Belgrade to implement new programs; the World Bank and the Commission are, together with other donors, in detailed discussions with the FRY authorities on the design of an Economic Recovery and Reform program for FRY. Membership discussions with the IFI’s are moving forward. And the Stability Pact is bringing a valued regional dimension to all these activities. The people of FRY at last have the opportunity to break with the past and move forward with the rest of the region. And the countries and organization represented here today are ready to help them.