Ladies and Gentlemen,

Good afternoon and welcome to the Kosovo Donors Meeting This meeting follows on two previous Donors' Conferences both held in Brussels in 1999. The very fact that we are having this meeting here in Pristina is a strong sign of the progress that has been made in the last 20 months by the Kosovar people, UNMIK, KFOR and the international donor community, in rebuilding this region.

In my opening remarks I want to convey to you three messages that I feel are important in the context of our two half days of work.

• The meeting comes at an important moment for Kosovo. As it is making its transition from emergency to development, some fundamental questions on how to support the long-term development of Kosovo have to be discussed. In our view, a vibrant private sector, institutional capacity building and human development are the three key factors for the future of Kosovo. Progress in these areas will have to be made along with increased local participation. And it will need to be complemented by a sound fiscal policy, knowing that donors cannot continue to support Kosovo indefinitely.

• Our meeting will also discuss the progress made in Kosovo in the last year and a half, and will assess the situation and major future needs. A very useful guide in this exercise will be the 2001 budget and the Public Reconstruction and Investment Program for 2001-2003. 1 wish to compliment UNMIK for these impressive documents. The 2001 budget presented today shows needs of about DM 150 million in recurrent expenditures (fit addition to funding for energy imports) and over DM 1.3 billion in the capital budget to be financed by donor grants. These are significant amounts. However, they reflect the substantial investment needs identified at the end of tile conflict and they are consistent with the original estimates prepared by the European Commission and the World Bank. We hope that donor contributions, including those already announced as well as new ones. will be sufficient to fully meet these financing requirements. Furthermore. we also need to think beyond 2001. There is a clear need for donors to stay engaged in Kosovo over the medium term to help achieve the objectives set out by UNMIK in its policy statement.

• Finally, the meeting comes at a crucial moment in the political life of Kosovo, and in a context of important political changes in the region. We feel that it is essential that the generous contributions made in the last 20 months bear their fruits in terms of stability, ethnic tolerance, political participation and civic development.

Let me now briefly review what we hope to achieve this afternoon and tomorrow.

Today, we wish to discuss the status of the Kosovo economy and the progress made in economic reforms. On these subjects, Andy Bearpark, Deputy Special Representative for Reconstruction and Economic Development will address the meeting. The Co-Heads of the Central Fiscal Authority will then give us their views on the implementation of the 2000 budget and plans for 2001. Statements by the IMF, the World Bank and donor delegations will then follow. The significant achievements in economic management during the last year are setting the stage for this year's reforms, which will range from the introduction of the VAT, through further improvements in the business environment- to strengthening social protection.

The day will end with a reception hosted by UNMIK.

Tomorrow, we will review the progress made in reconstruction and economic recovery. We will start with a report by the Joint World Bank/EC Office on the status of the pledges made at the last two donors' conferences. We will then discuss the priorities laid out in the Public Reconstruction and Investment Program as well as donors' plans. This program, the PRIP 2001-2003. has been prepared by the Department of Reconstruction, and the two co-heads will provide us with their views: again an important stocktaking and forward-looking exercise. The European Commission will then give a statement oft the subject of reconstruction and economic recovery. Most of tomorrow morning will then be available for open discussion. The meeting will end with a press conference.

In order to support the discussion today and tomorrow, six documents have been made available: "The Kosovo Budget for the year 2001", and the "Public Reconstruction Investment Proposals for the years 2001-2003" prepared by UNMIK; the report "Economic and Social Reforms for Peace and Reconciliation" prepared by the World Bank; the paper "Macroeconomic Issues and Financial Sustainability" prepared by the IMF; an assessment of physical reconstruction, "Partnership in Kosovo: Reconstruction 1999-2000" prepared by UNMIK, and a status report on past donor pledges compiled by the Joint Office for Southeast Europe.

Finally, as you recall, we sent out pledge forms together with the invitations a few weeks ago. I would like to ask those who have not done so, please return the completed pledge forms to the Secretariat.