Ladies and Gentlemen,

I should like to thank the World Bank and the European Commission for inviting me and my colleague Mehmet Hajrizi to speak to you today about reconstruction and recovery. Since the Department of Reconstruction was established just under a year ago, we have worked closely with you and your representatives here in Prishtina to try to ensure that donor money being spent here was directed wisely in support of Kosovo's priorities. It is not my intention to dwell too much on the achievements of the past 20 months. We would rather spend this time looking to the future. But, of course, we are grateful for your past support: together, the people of Kosovo and the international community have undoubtedly changed peoples' lives for the better - and together we continue to do so. So it's worth looking back, particularly to see what lessons we can learn.

First, I should like to draw your attention to our brochures From Reconstruction to Growth, and Partnership for Kosovo. These may be particularly useful for those of you who lack the stamina to read the three hundred pages of the Budget. These publications set out both our ambitions for the next three years and the support we require from donors, as well as a short description of what has been achieved since June 1999. These expand on much of what we will say here today.

Turning first to the global picture of achievements: you have before you the figures on donor performance which you reported to the EC-WB Joint Office. These are very impressive. 80% commitment of the amount pledged is extremely encouraging -although, of course, we shall continue to seek 100% commitment as soon as possible. The pace of contracting, at nearly 85% of the amount committed, has been very healthy. And payments have come along well: nearly 74% of contracts have been paid out. So the global picture is very encouraging. We need to guard against complacency, however: the programme will undoubtedly become somewhat slower as the nature of projects changes and we look more to the long-term, but we should aim to keep up the pace as much as possible. Our Department will be producing quarterly reports on commitment and disbursement in each sector starting at the end of the first quarter and we hope that these will prove useful to you as well as to us.

Despite the positive overall picture we have two worries. First, when we look at the sectoral breakdown. Here we show the amounts which we requested in the PRIP 2000 for commitment to different sectors. We can see clearly that there was significant underfunding of certain key programmes: agriculture, education, post and telecommunications. These are all central to Kosovo's path to growth and this lack of funds is something we must address together. We also notice notable overfunding of other sectors, particularly media and democratisation. I shall come back to this when I talk about donor co-ordination.

Second, I should also like to look at our own records of commitment. These represent what is known to our us and our colleagues in the different departments. I'm not suggesting that our records are more reliable than yours. But the differences would seem to indicate some evident failures of information flow, even allowing for different definitions of what belongs in certain sectors. We seem to have little record of your contributions to the Kosovo Police Service, to the KPC and fire service, to the justice sector and to the media and democratisation fields. Certainly this is largely our shortcoming in the sense that our data collection is inadequate. But it may also indicate problems of transparency. We are also concerned about the large amount which is reported by donors under the "other" category.

So what are the lessons which we can learn from this? First, that whilst generous, donors have not always managed to avoid overlap. Each donor programme in itself may well have been admirably coherent. But it must fit into a broader programme which takes account of what other donors are doing. In media, for example: we have a radio station for every 20.000 people - many of them entirely redundant. Donor-funded newspapers have sometimes failed as soon as donor support has been withdrawn. We have far too many TV channels for such a small population - and yet the key public service broadcaster, RTK, is underfunded. Similarly, democratisation is of course vital. But to have had so much money poured into civil society initiatives, whilst the keystones of a democratic society - education, police, justice, public service training - seem to have been underfunded seems - well, strange. And within sectors - capacitybuilding, credit and vocational training, in particular - we already perceive that there is clearly a risk of generosity combining with lack of co-ordination to reduce overall effectiveness.

Second, and related, donors together have not funded certain programmes adequately. Again a problem of co-ordination. There has been enough cash -there is no doubt about that. But it has not always been directed wisely. Agriculture, education, transport could all have benefited from funds which were used elsewhere. We therefore urge greater co-ordination not only in exchanging information about ongoing activities, but more importantly at the stage when programmes are being designed. If you believe our priorities and programmes, as set out in the Budget, to be wrong, then please say so: we welcome constructive criticism and debate. And if you are encountering difficulties in implementing programmes or in dealing with our colleagues, please tell us: we are here precisely to help on these things. But if you agree with our priorities, then we think it is reasonable to expect you collectively to support them. We shall therefore be talking to you intensively in the coming months about the design of your 2002 programmes.

But these concerns should not distract us from very real achievements. I have just five brief points. The first thing to say is that much has been achieved by Kosovars themselves. Their courage, energy and resilience is remarkable: half of housing reconstruction has been paid for by Kosovars themselves. Enterprises, particularly small ones, are flourishing with almost wholly domestic investment.

Second, an excellent start has been made on rehabilitation of basic infrastructure. Housing was generously funded and our target of 20.000 houses rebuilt for Kosovo's most vulnerable people surpassed. All Kosovars benefit from a greatly improved road system. Electricity and water supply is more reliable. The telephone network remains a challenge, though, and lack of investment an obstacle to growth.

Third, in the social sectors, education and health, there has been a promising start: but we now need a shift in emphasis. There is little benefit in having hundreds of smart new schools unless we're also prepared to invest in the quality of education. Similarly in health - we need considerable support to improve quality, management and sustainability.

Fourth, in the fields of public administration, justice, law enforcement there is a more mixed record. Investment in the capacity of Kosovars to take on increasing responsibility for their own affairs is absolutely vital. Whilst there have been useful individual interventions, there are still considerable needs, both in physical reconstruction and in human resource investment.

Fifth, we have to draw attention to the slow start which has been made on the key area of private sector development. A combination of different factors mean that relatively little progress has been made. We write about this in more detail in Partnership in Kosovo. But the slow start means that encouraging enterprise is an even higher priority now than it was last year - and we look for your support in a number of areas.