|
|
"reconstruction must not be at the expense of transformation" Summary Report of
Proceedings As agreed at the Consultative Group Meeting hold at IDB headquarters in December 1998, the IDB organized a Consultative Group Meeting for the Reconstruction and Transformation of Central America in Stockholm, Sweden, on May 25-28,1999. The meeting was chaired by IDB President, Mr. Enrique V. Iglesias, and co-hosted with the Swedish Government. The inauguration of the meeting included: Mr. Arnoldo Aleman, President of Nicaragua; Mr. Carlos Roberto Flores, President of Honduras; Mr. Luis Flores Asturias, Vice-President of Guatemala; Mr. Enrique Borgo Bustamante, Vice-President of El Salvador; Mrs. Astrid Fischel, First Vice-President of Costa Rica; Mr. Goran Persson, Primer Minister of Sweden, Mr. Kofi Annan, Secretary General of the United Nations; Mr. Cesar Gaviria, Secretary General of the Organization of American States; and Mr. Manuel Marin, Vice-President of the Commission of European Communities. High level delegations from over 50 donor nations and international organizations participated in the meeting with about 400 delegates in attendance. The Central American leaders once again emphasized that the tragedy of Hurricane Mitch provided a unique opportunity to rebuild, not the same, but a better Central America. They also said they were committed to upholding their hard-won peace, macroeconomic stability, rule of law and good governance. They also noted that notwithstanding the international community's strong support, the responsibility of their recovery and transformation rests with their own nations. President Iglesias in his opening remarks emphasized that the top priority is rapid recovery and reconstruction of the devastation caused by Hurricane Mitch, the worst disaster in Central American history. Equally important is the continuation of the democratic and economic transformation process. President Iglesias reminded the participants of the watchword at the CG meeting last December in Washington at the IDB headquarters - Reconstruction must not be at the expense of transformation. The transformation process, which began in the 1990's with the Central American countries experiencing peace, freely elected Governments, rule of law, poverty alleviation, modernization of the state, and steadily improving economic growth, as well as regional integration needs to be deepened and accelerated. President Iglesias also emphasized that Hurricane Mitch provided important lessons and that we should avoid repeating the same mistakes. The vicious cycle of poverty and ecological degradation needs to be broken. Hurricane Mitch clearly demonstrated the extreme vulnerability of the poorest segments of the population who suffered the most from Mitch's devastation. At the same time, the poor, in cultivating steep hillsides and living in flood plains, contributed to the severity of flooding and mudslides. As governments go forward with reconstruction, action needs to be taken in several important areas to strengthen sustainable environmental practices, particularly conservation measures in agriculture, forestry and land use. Early warning systems and community organizations for disaster response are required to mitigate the impact of future disasters, with special attention to the needs of women and children, often the most seriously affected. President Iglesias also called for further strengthening of Central American integration in order to meet the challenges of the 21"1 century. Internal barriers to intra-regional trade and investment need to be reduced, as well as negotiating greater market access for Central American exports. It is through expanding trade and investment that sustainable development and higher living standards can be achieved in the Region. Existing obstacles to the integration process need to be studied and removed through joint agreements. The heart of the agenda was the presentation and review of the National Plans for Reconstruction and Transformation for each of the Central American countries. There were also three simultaneous workshops on key region-wide issues for the effective implementation of National Plans, including: reducing ecological and social vulnerability, transparency in the use of resources and decentralization and participation of the civil society. In addition, there were two technical working groups on trade and migration. Honduras President Flores addressed the meeting and explained the needs of his country, which suffered the worst damage from Hurricane Mitch with total losses exceeding the country's GDP and affecting 1.5 million people. The Government's five-year, $4.0 billion Master Plan consists of programs and projects to repair and improve the infrastructure, rebuild the industries and revive the farming sector, reform social programs such as health and education, establish risk management policies to prevent disasters and manage public resources transparently and efficiently. Donors expressed concern regarding the country's absorptive capacity given that the Master Plan was very ambitious and therefore it is necessary to establish clear cut priorities. Donors urged the Honduran authorities to continue decentralization and to engage the participation of civil society in the implementation of the reconstruction efforts, particularly local government entities. Donors emphasized the need for transparency in the use of donor and public funds. Donors pointed out that land use and land tenure needed more attention because they are important factors in helping to reduce rural poverty and environmental degradation. Mitch's impact on Honduras' export crops and other productive sectors coupled with the high costs of reconstruction, is widening its fiscal and trade balance deficits. In view of the shortfalls foreseen for 1999-2000, the success of the Honduran economic program will rest largely on the availability of sufficient external resources, including new grants and concessional loans, as well as significant debt relief. Nicaragua Nicaragua put forward a five-year plan identifying requirements of $2.5 billion, of which $1.3 billion have been prioritized. The plan included important steps of consultation and involvement of civil society in its formulation. The plan focuses on four areas: social sectors, infrastructure, rural development and governance. President Arnoldo Aleman highlighted Nicaragua's need for concessional assistance and accelerated debt alleviation under the initiative for Highly Indebted Poor Countries (HIPC), and called for greater access to world markets for Nicaraguan exports. Donors concurred that debt reduction is essential to Nicaragua's future sustainability and development prospects. They also referred to the need for Nicaragua to increase its capacity to absorb aid, establish transparency mechanisms and recommended that the Government establish specific targets and deadlines for implementing programs. Donors also stressed the importance of strengthening Nicaragua's Comptroller's office, and were encouraged that a law establishing a Professional Civil Service was currently before the Congress. Donors also noted progress in the decentralization process and urged the Government to continue its efforts to involve local authorities in the implementation of the National Plans. Donors noted the progress in land titling and called for the continuation and acceleration of this process. Guatemala Guatemala's reconstruction plan included programs with an estimated cost of $830 million and was incorporated as a complementary part of the program to implement the 1997 Peace Accords. The Guatemalan Government officials presented a frank and full update on their country's current macroeconomic situation and the status of the Peace Accords that put an end to more than three decades of civil war. The results of the recent referendum on constitutional reforms were discussed by Guatemalan authorities and representatives of the civil society, who reaffirmed their commitment to the peace process. Donors welcomed this statement and encouraged the Government to continue with every possible effort to keep the peace process on track. The Government summarized recent improvements in the fiscal area, including the Superintendency of Taxes' success in improving tax collections and work going forward on the Fiscal Pact which calls for expanding the tax base and further improving tax collections. Donors' comments focused on three areas. The top priority is keeping the Peace Accords on track. They also recommended that judicial reforms be strengthened and called for further increases in tax revenues to finance the implementation of the Peace Accords. El Salvador El Salvador presented a comprehensive 10-year plan for $1.81 billion that seeks to address natural hazards by improving watershed management and proposes to use rural development programs as a means to target better assistance for the poor and avoid environmental risks. Donors recognized that El Salvador had prepared its Plan in close consultation with its civil society and with the incoming administration of President-elect Francisco Flores, who endorsed the plan put forward in Stockholm. Donors emphasized the importance of a continued commitment to the Peace Process. Donors recommended further deepening of the decentralization process with revenue sharing with the municipalities and also strengthening their managerial capacity. Donors encouraged the use of local communities in executing and monitoring the Plan. They also recommended regional cooperation to manage shared river basins. Costa Rica The international community explicitly recognized Costa Rica for the broad amnesty granted to a large number of Central American immigrants who represent a substantial social and economic burden, which merits international support. Donors also encouraged the use of Costa Rican experience in environmental protection, disaster prevention, early warning systems as a model for the rest of the region. President Rodriguez, in a video presentation to the meeting focused on the need to improve trade opportunities for Central America, and improving access to developed countries' markets in order to complement assistance with trade opportunities. He also drew attention to the need to focus on general indebtedness situation of the countries in the region, in particular relief of the intra-regional debt, including debt with CABEI. Summary of Donors' Comments Donors expressed strong support for the comprehensive reconstruction and transformation plans the Central American countries presented at the meeting. These national plans seek to rekindle economic activity and productive employment, while safeguarding macroeconomic stability; fighting poverty and promoting human development; fostering the sustainable use of natural resources and protecting the environment; strengthening democratic institutions at the national and local levels and instituting adequate prevention and mitigation measures against natural hazards. Donors also commended Central American countries for involving civil society organizations in the preparation of their plans, and encouraged governments to deepen that process in the implementation phase, as citizens' participation is a valuable instrument in forging equitable democracies. They urged beneficiary countries to strengthen good governance practices to ensure that the assistance provided by the international community is used transparently, especially in light of the large amount of funding involved in the program. Implementation of specific control mechanisms needs to be addressed in the short term to ensure efficient use of funds committed by donors and of funds provided through national budgets. Decentralization was viewed as an effective tool for improving the delivery of government services. Donors recommended the transfer of responsibilities from the national to the local level which should be matched with the availability of financial resources to ensure the sustainability and autonomy of municipal governments and measures to expand the management capacity of local entities. Much emphasis was placed on investing in measures to reduce the impact of natural disasters by reducing environmental and social vulnerability. Central America's tragedy was magnified by man made decisions due to widespread poverty that led to chaotic urbanization, massive deforestation and soil degradation. The effects of natural hazards can be reduced by establishing early warning systems and response plans, strengthening social programs for the most vulnerable groups, improving farming methods, reforesting high risk areas and cooperating in the management of shared watersheds and coastal areas. Regional Cooperation It was clear from our deliberations at this meeting that regional cooperation and integration, which continue to be basic pillars for the development of the Region, now have now fundamental opportunities and challenges for implementation, in light of the reconstruction and transformation taking place in the Region. Workshops and Working Groups During the Stockholm meeting a series of workshops were hold to discuss key issues such as transparency and governance, social and environmental vulnerability and decentralization and local development. Working groups on other issues of regional interest, such as trade and migration, were also held. Government officials from beneficiary and donor countries, representatives from international organizations and leaders of non-governmental organizations and civil society groups took part in those workshops, which generated a useful framework and practical recommendations for countries to fight corruption, abate natural hazards and build stronger, more accountable democracies. International Community Indications of Support The international donor community's indications of support announced at this meeting amounted to approximately US$9 billion over the next four to five years. Of this amount, the Inter-American Development Bank plans to commit US$3.5 billion and the World Bank plans to commit US$1.8 billion for a total of up to US$5.3 billion for the five Central American countries from November 1998 through the year 2002. A substantial part of this amount is concessional financing and it includes debt relief, redirection of existing projects and new projects with priorities for the task of transformation of the countries affected by Hurricane Mitch. Bilateral donors and other international organizations indicated support amounting to approximately US$3.7 billion including grants, loans and debt relief. The international community's support will help finance plans to rebuild damaged infrastructure, launch social programs and implement important reforms in Honduras, Nicaragua, Guatemala and El Salvador, which suffered massive human and economic losses from Mitch. Assistance will also be directed to Costa Rica in recognition of the indirect effects of the hurricane, namely, massive emigration from neighboring countries. Follow-up to the Stockholm Consultative Group Meeting The proposed follow-up includes individual country CG meetings for Honduras and Nicaragua to be organized early in 2000 in Tegucigalpa and in Managua. A CG meeting is proposed for Guatemala in the middle of next year after the new Government takes office. Regional issues will be discussed at a Regional Consultative Group meeting that will be organized late in 2000 in Madrid, thanks to the generous offer of the Spanish Government. In this connection, consultations will be undertaken with the Central American countries on how best to transform and expand the objectives of the existing Regional Consultative Group, which has been operating for the last six years between the Central American countries and the donors. Regional cooperation and integration, which are basic pillars for development of the Region, now have new opportunities in order to effectively implement the tasks of reconstruction and transformation in the Central American countries. Stockholm Declaration The Stockholm Declaration which was presented at the meeting calls for a long-term partnership between the international community and the Central American countries for achieving the reconstruction and transformation of these countries, guided by the priorities defined by the beneficiary countries and based on the goals and principles for which there was a strong consensus at this CG meeting. Conclusion President Iglesias expressed appreciation to the Prime Minister of Sweden, the Secretary General of the U.N., the Secretary General of the OAS, the Vice-President of the Commission of the European Communities, to the distinguished Presidents and Vice-Presidents from the Central American countries for their meaningful contributions to the meeting. He also thanked the Central American delegations for their comprehensive and informative presentations of their respective National Plans for Reconstruction and Transformation, and all the donor delegations for their constructive participation in the meeting. Special thanks should be given to the Government of Sweden for their generous and efficient cooperation in helping to make this meeting a success. President Iglesias concluded by saying that this meeting reflects the best example of solidarity and cooperation between the international community and the Central American governments, working together to help their people rebuild their lives and communities within a framework of democracy, social justice and economic growth. |
|
Nicaragua, May 2000 - Honduras, February 2000 - Stockholm, May 1999
|
|
