On 19 April 2013, Finance Ministers and international financial institutions of the Deauville Partnership with Arab Countries in Transition met in Washington, to advance our shared objective of supporting the development of open economies and inclusive growth in Arab transition countries.
Ministers re-affirmed their support for economic transition in Egypt, Jordan, Libya, Morocco, Tunisia and Yemen, and emphasised the importance of a co-ordinated response from the international community to support the financial stabilisation and home grown reforms that advance economic growth and employment creation.
Economic pressures remain significant for a number of countries in the region with fiscal and external buffers having diminished sharply, underscoring the urgent need to focus on maintaining macroeconomic stability in an environment of sluggish global growth, commodity price volatility, and still impaired domestic confidence. The implementation of structural reforms was identified as a key priority for supporting sustainable and inclusive growth that expands opportunities, especially for young men and women, and creates an environment to foster private sector growth.
Ministers welcomed the progress made by Jordan and Morocco under the financing agreements made with the IMF in 2012 and the announcement of staff-level agreement for a programme for Tunisia, supported Libya’s engagement with the IMF, and encouraged further progress towards the conclusion of discussions between the IMF and Egypt and Yemen. Ministers noted the key role played by bilateral donors and multilateral institutions in providing budget support to enable financial stabilization and underpin governance and structural reforms.
Ministers thanked the Islamic Development Bank (IDB) for its contribution as chair of the IFI co-ordination platform, in coordinating assistance to the transition countries, including activities under the Transition Fund and SME development. The IDB also announced it intends to undertake Deauville Partnership regional investment conferences in all transition countries in 2013, starting with Egypt and Tunisia in June 2013.
Ministers welcomed four priorities set out to support the development of open economies and inclusive growth under UK chairmanship of the Partnership in 2013:
Deliver a successful Transition Fund to enable economic reform: The Transition Fund is making an important contribution to support critical institutional and economic reform in Deauville transition countries, alongside other support from Partners. Following its launch in Tokyo in October 2012, the Fund’s Steering Committee met in Amman in December 2012 and Rabat in February 2013, approving $50m worth of projects of strategic relevance across transition countries. Ministers welcomed the World Bank’s role in hosting the Fund and the partnership between the wide range of participating IFIs, and encouraged co-ordination between the Fund and other institutions operating in the region. Ministers called on Partners to ensure the initial capitalisation target of $250m over several years was met as soon as possible, and encouraged the prompt disbursement of pledges. Ministers also endorsed the proposal to welcome new donors from outside the Partnership to participate in the Fund.
Secure the successful expansion of the EBRD’s geographic mandate into the Southern and Eastern Mediterranean: The European Bank for Reconstruction and Development (EBRD) has a key role to play in providing project-based support for countries in transition. Following a decision by the EBRD’s membership to expand its region of operation, investment activities began in Egypt, Jordan, Morocco and Tunisia from September 2012 through a ring-fenced Special Fund of €1bn and several smaller funds dedicated to technical assistance. €260.9 million has been invested so far. Ministers welcomed the EBRD’s swift and effective engagement in the region and encouraged all remaining shareholders to conclude ratification of the EBRD extension as soon as possible. The next step is for countries of Southern and Eastern Mediterranean to become fully-fledged members of the Bank to enable full access to the EBRD’s investing resources with potential investments into this region of up to €2.5bn annually.
Support capital market access: Ministers welcomed support for sovereign debt issuance by transition countries including a Japanese-backed 25 billion yen issuance by Tunisia in December 2012; and the establishment of a sukuk guarantee product by the IDB. The US announced that it is working to develop a sovereign loan guarantee for Jordan to support its economic development and reform goals and is also seeking authority to provide additional loan guarantees for the Middle East and North Africa region in 2014. Ministers urged Partners to consider providing further credit enhancements where possible to help transition countries meet their financing needs. Ministers also welcomed the conclusion of local capital markets needs assessments for Morocco, Tunisia and Jordan and looked forward to the completion of the assessment in Egypt. Ministers asked the IFIs to provide support for the development of government debt market, equity market and market infrastructure, building on the priorities identified by transition countries. The EBRD and Arab Monetary Fund will report back to Finance Ministers on progress in the autumn.
Enable increased trade and economic integration: Ministers endorsed the Partnership’s focus on developing a better enabling environment for trade, investment, and integration. Ministers welcomed Tunisia and Jordan’s adherence to the OECD Declaration on Investment and encouraged further strengthening of investment frameworks in transition countries. Since Finance Ministers met in Tokyo, negotiations on a Deep and Comprehensive Free Trade Agreement between the EU and Morocco have been launched in March 2013, and the United States has concluded a trade facilitation agreement with Morocco, and agreements on common principles for international investment and ICT services trade with Morocco and Jordan. Ministers encouraged Partners to take further steps to enable increased trade, building on the 2012 Deauville Partnership Trade and FDI report where appropriate. Ministers pledged support for World Trade Organisation accession for Libya and Yemen, and welcomed the technical assistance being provided through the Transition Fund to facilitate improved trade logistics across Egypt, Tunisia and Morocco, to be implemented through the European Investment Bank and co-financed by the European Commission.
Under the governance track of the Partnership, led by Foreign Ministries, a series of events would take place under the UK’s Presidency of the Deauville Partnership in 2013, including:
- An Investment Conference in London on 16 September, to be hosted by the UK Government working in partnership with the EBRD and Islamic Development Bank, which will address barriers to trade and investment and stimulate greater investment in transition countries;
- A mentoring initiative for around 250 SMEs in transition countries which will provide a platform for sharing expertise from across the Gulf, Turkey, G8 and transition countries;
- A Women’s Economic Participation event, to be held in partnership with private sector organisations in June 2013 that aims to promote women’s involvement in business; and
- A second Arab Forum on Asset Recovery to be held in October 2013, with support from the World Bank/UN StAR Initiative.
Finance Ministers agreed to meet again in the margins of the IMF and World Bank Annual meeting in Washington in October 2013.