Marshall Islands Minister of Finance Meets President of the Asian Development

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Minister of Finance

Press Release February 16, 1999

Bank

The Minister of Finance of the Republic of the Marshall Islands (RMI), Honorable Tony de Brum, met with the President of the Asian Development Bank (ADB), Mr. Tadao Chino, on the 10 February 1999 in Manila. The visit was the first to the ADB by Minister de Brum since his appointment as RMI Minister of Finance in August last year. The Minister also met with Vice President (East) Mr. Peter Sullivan, who visited the RMI last October, and the Director and Staff of the Office of Pacific Operations. Courtesy calls were also made by the Executive Director for the RMI, Mr. Rafiq Akhund, and the United States Alternate Director Ms. Cinnamon Dornsife.

Among the issues discussed during the visit were the progress of the Public Sector Reform Program (PSRP) in the Marshall Islands and the future ADB assistance program for the Marshall Islands.

The RMI Government commenced its reform program in 1996, which subsequently received support from the ADB in the form of a program loan of US $12.0 million with the aim of stabilizing Government finances and improving the environment for the private sector.

During meetings with officials of the Bank, the Minister expressed his support for the need for reform although expressing the importance that reform be undertaken with the full knowledge and support of the community, rather than imposing reforms for which the need was not fully understood.

It was agreed that while the reform program had largely achieved its goal of stabilizing Government finances more effort was needed to promote private sector development. As a result further assistance should be directed into this area.

Minister de Brum agreed that the Government would meet all the conditions for the release of the third tranche. This would be done through further attrition in the public service and implementation of the necessary legislation to satisfy conditions for the release of the third tranche of the program loan, with the funds expected to be released before the middle of 1999.

Both the Minister and the Bank agreed that the Ebeye Hospital Project was now the top priority. The Bank agreed to exert all efforts to secure Board approval by June 1999. It was understood that this approval would be facilitated by:

Given that both the Government and the Bank recognized that more should be done to encourage private sector development efforts will be stepped up to foster private business activity. The Private Sector Unit (PSU) within the Office of the President is already looking at privatization options in the Marshall Islands. The PSU consultants would focus on transacting the privatization of State-Owned Enterprises (SOEs). SOEs will be identified and a program for privatization will be developed.

In addition to this the Government will work with the business community to identify projects that would qualify for Bank's private sector lending assistance, specifically in the areas of industrial fisheries and tourism development. The Minister stressed the need to target the outer-islands for eco-tourism in order to complement the reorganization of Air Marshall Islands to concentrate on the improvement of domestic services.

Among the other assistance discussed it was agreed that the Bank would help strengthen the Ministry of Finance by developing capacity for accurate inventory, preparing of accounts and asset management as well as revenue and expenditure control.

Complementing the strengthening of the Ministry of Finance, the Bank will also provide assistance to codify and update the Government’s legislative code with special consideration of improving the accessibility of laws to enhance the legislative environment for the private sector.

The Bank would also prepare a Marshall Islands Country Economic Report and provide separate technical assistance to allow the Government to prepare an up-to-date economic assessment and a "business plan"-type development strategy. It is envisaged that the "business plan" will be a basis of the upcoming Compact renegotiations.

Among other assistance discussed during the visit was possible support for waste management in Majuro and Ebeye to complement the efforts of other donors. Possible future assistance that is still under consideration will be a transport infrastructure loan for the year 2000 and possibly further assistance to support the education sector.

Officials from the Bank will visit the Marshall Islands in March to discuss the details of the future program. The Minister will return to Manila in April to attend the Annual Governors Meeting of the Asian Development Bank.

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