Opening Statement by Mr. Johannes Linn, Vice President for Europe and Central Asia, World Bank

This statement is also available as audio recording (Real Audio format)

I am very pleased to be able to join Catherine Day in welcoming you all here to Brussels for this first full-fledged Donors Pledging Conference for the Federal Republic of Yugoslavia (FRY).  I am particularly pleased to see such a full house….and the inclusive participation that we had all hoped for.

I would like to start by saying that while many of us here in the room have met over the years in a variety of venues related to developments in Southeast Europe, clearly today’s meeting is different.  Previously, FRY’s circumstances made the country a constraint on growth in the region.  While strategically central to Southeast Europe’s development and stability, FRY remained isolated and on the fringes.  It was the missing link – in many ways an obstacle to stability and prosperity in the region.  This is no longer the case.  Following the remarkable events of last autumn, and the rapid changes that have been introduced since then, today we will be talking about a Yugoslavia that is an integral part of the formula for economic recovery in the region.  A Yugoslavia that has a firm and decisive program of economic reforms in place, and is increasingly integrated into the wider international community.  As a result we now have perhaps the best opportunity in recent times to work successfully toward stability and economic growth – not only in Yugoslavia, but in the region as a whole.

As Catherine has already mentioned, in December we met here in Brussels to pledge financial resources towards Yugoslavia’s urgent needs.  Over $500 million was pledged towards the urgent needs program, and it is clear that these funds were instrumental in addressing real needs.  The rapid response of the international community has been key.

Turning to the next challenge, real economic recovery requires a medium term focus. Yugoslavia, with the help of the international community, now needs to tackle the broader objective of returning to a path of sustainable growth.  Together with the governments of Serbia and Montenegro, the Federal government, and the European Commission we have worked to plot the course towards this objective, and the roadmap we have outlined is presented to you today in the Economic Recovery and Transition Program (ERTP).

The Economic Recovery and Transition Program report is titled ‘Breaking with the Past’, and there is much in this title.  Those of you who were here in December will remember the stirring statement given by Deputy Prime Minister Labus.  The Deputy Prime Minister referred at that time to the government’s overriding goal to break with the past of isolation, poverty and poor economic management.  That goal seems a true and fitting theme for the economic recovery and transition effort.  You will have now had the chance to read the report, and will have noted that the challenges it outlines are daunting.  There is no quick fix in FRY: the last ten years and previous decades have left a weighty legacy.  Building a new future will not be easy.  As much as I would like to, I cannot say that we will be out of troubled waters in one year, or even in two.   It is important to manage expectations, where we combine speed, determination and patience on all on all sides.

The message of the ERTP – and a key theme I would like to leave with you – is that for FRY to successfully follow a path toward sustainable growth a number of elements will need to come together simultaneously.  The government will need to stay focused and committed to implementation of its reform agenda.  The international community will need to provide generous and sustained support, including for debt relief.  But the level of support alone is not sufficient.  This support must come in the right form:  it must have a substantial component of quick-disbursing support.  It must come on the right terms: given its economic situation, FRY will need concessional assistance for some time to come.  It must come in time:  no matter how generous pledges are, they will not make a difference unless quickly converted into real disbursements on the ground.  And, finally, it must address the financial needs of both republics.  The report before you outlines substantial needs, both for this year and for the medium term.  We estimate external financing of around $1.25 billion is needed this year, and nearly US$4 billion in total over the coming three to four years.  These numbers assume, however, that “everything falls into place”.  If not, we can expect these requirements to be even larger.  Commitment on all sides to ensuring these pieces come together is essential.

While external financing on the scale outlined by the ERTP represents a substantial undertaking, the costs of failing to support FRY as it struggles to break with the past would surely be higher still.  The possibility of a democratic and stable Yugoslavia, moving towards integration with Europe, is something which we would almost have dared not hope for only eight months ago.  I urge everyone here to do all they can to make this possibility a reality.

I look forward to hearing your views, particularly those of the governments of FRY.  I welcome to the floor Deputy Prime Minister Miroljub Labus of the Federal Government.

Thank you.

This statement is also available as audio recording (Real Audio format)