Ladies and Gentlemen,

It is an honour for me to have the pleasure to be able to welcome you here today, the representatives of Kosova's generous donors, and at the same time to express the deep gratitude of its people for all the support that we have enjoyed at the time of the most important and difficult turning point in our history.

The heritage of along period of discrimination and brutal rule, and particularly of the consequences of war in Kosova, was damage of such a dimension that it was unimaginable that rehabilitation and economic and social reconstruction could be achieved without international support. Because of the international community's political, human and financial investment and through its partnership with the people of Kosova, the terrible situation in which the country found itself immediately after the war has now completely changed.

The achievements of these twenty post-war months provide an excellent foundation on which to build a clear and achievable vision for progress towards Kosova's growth in the future.

Our immediate and strategic goal it is not solely to mitigate the consequences of the war and still less to return Kosova to its pre-war state or any previous state, but it is the successful completion of a phase of transition toward building a new democratic society and a free market economy which will ensure improvement in the lives, work and welfare of our citizens. In the achievement of these major objectives, a traumatised Kosova still has the need for comprehensive support from its friends. From amongst Kosova's broad range of needs, we have tried systematically to identify the highest priorities, the achievement of which would represent the most important links in the chain which will assure our future development. As a result of this prioritisation, and alongside the process of reconstruction of basic infrastructure, which we hope to be completed in the near future, we aim to ensure continuing economic growth and development that will enable Kosova to stand on its own feet.

Our priorities are set out clearly in the publication From Reconstruction to Growth and in more detail in the Budget 2001. We seek DM 1.35 billion in capital expenditure this year, and a similar amount for the two year following. Whilst we aim to pay for a proportion of this ourselves, we recognise that most of this investment will have to come from donors.

This process presupposes not only providing housing for every unsheltered family, not only physical reconstruction of educational, medical, and administrative buildings and infrastructure, but also improving the quality of the activities which go on within restructured and modernised social and economic institutions.

The will of the Kosovars for radical changes in their social and economic way of life is indisputable and unanimous, but the challenges of this process of change are not few and not easy. Despite Kosova not suffering from the ideological barriers which are found in certain countries in transition, it is faced with its own specific problems, which slowly but surely are being overcome.

We have identified the private sector as the highest priority and the motor of the future economic development of Kosova. We anticipate that the necessary legal framework will quickly and decisively take shape in order to resolve property issues so that productive enterprises can start working again. The most effective way of getting them going again will be through their transfer into the private sector.

About 40% of our people rely on agriculture for their livelihoods. It is therefore vital, both for poverty alleviation and to restart the rural economy, to continue to invest in the agricultural sector and to build up its potential.

All of our enterprises require the creation of conditions for free competition, the provision of credit, encouragement of domestic and foreign investment, building up of the broad range of the financial services and protection of the capital which has been invested. Apart from the reactivation of existing economic potential and regaining access to our traditional markets, we must create new possibilities for development and growth, through determined implementation of a number of different reforms, in order to be truly competitive in other markets.

The role of the donor community in this important undertaking will not only be through direct support such as the provision of credit, technical assistance and comprehensive training schemes, but also in the form of political support which will enable us to overcome difficulties and to face these challenges.

Kosova's biggest and most valuable asset for its economic and social progress is its youth, which account for a very high proportion of its population. When we talk about youth there is an immediate association with education: here there is a demonstrable link between this important field of our social life and the economic development of Kosova. The welldeveloped spirit of entrepreneurship in Kosova and the experience that a lot of youth have gained abroad, are encouraging factors, but a lot has still to be done in reforming all levels of our education system, and in the provision of technical and financial means and staff training so that these reforms can be achieved. Reformed in line with modern standards, our educational system will improve the quality of education and will enable our youth to participate actively in building up a high technology European economic environment. In this context, we consider that investments in education are not only of social importance, but are also economically vital, because without a highly educated labour force we cannot speak of real economic growth.

In health, as in education, we have identified similar types of investment as high priorities for the future: physical reconstruction and the provision of equipment but also restructuring and staff training, in order to provide a high quality medical service for all citizens.

Economic and social restructuring can sometimes be processes with painful effects for some people, because they often involve reduction in staff numbers: we therefore believe that the quality of social services needs to be improved in order to protect the people from increased poverty, but this needs to be done in a way which is affordable not only now but in the future.

But to achieve economic growth, sound basic infrastructure is indispensable, especially in transport and telecommunications: this would create the possibility of free circulation with Kosova and open up closer links with the region and the rest of Europe. Problems in these areas will probably have to be addressed in an integrated way, and in a manner which brings together donor assistance and domestic resources as well as the private and public sectors. Investment in telecommunications is vital, but there will also need to be further investment in the power and water sectors. In all of these, we need also to ensure that the companies concerned reduce their dependence on public subsidies and, in time, become profitable.

Encouraged by the visible results of donors' assistance, we ask for its continuation, in order to build peace in this long-suffering and destroyed country, in order to continue its spiritual and physical reconstruction, in order to build a stable society and a new democratic order and in order to continue recovery and economic development. The people of Kosova and their political institutions, aware of their historical role and obligation, are struggling constantly and with increasing success, to heal its wounds and to build democratic institutions which will ensure a peaceful life and equal rights for all citizens without any discrimination.

Even though we haven't got there yet, the day is not too far away when Kosova, with donor assistance, will have a well-trained and technically well equipped Police Service capable of protecting all citizens and their property from all kinds of criminal acts and of maintaining public order and peace, an independent and highly professional judiciary which will enforce the rule of law and order, and a professional and effective public administration at service of the citizens. All these sectors, as well as many others such as culture, sport, youth activities etc., will require additional funding, which will make possible the meeting of conditions for gradual transfer of responsibility from the international to the local administration.

Kosovars, however, are aware that assuming political and administrative responsibility means also taking on increasing financial responsibility: we can say that the first steps forward have been already been taken in this regard, particularly in the increased share of domestic funding of the Kosovo Consolidated Budget and in the private sector. In the future we believe that conditions will be created, step by step, to provide capital investment from domestic resources and, on the other hand, to have access to the credit and loan market of the international institutions for this purpose.