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EPIC meeting produces economic resolutions

POHNPEI, Palikir (FSM Information Service): June 2000 - The first Economic Policy Implementation Council meeting, held in Palikir June 19-20, ended today producing four resolutions aimed at promoting economic policy coordination and improving economic management in the FSM.

The Council is made up of FSM President, the FSM Congress Speaker, the four state governors and the presiding officers of the state legislatures.

In opening this landmark meeting, President Leo A. Falcam noted that the participants of the Second FSM Economic Summit recommended that an Economic Policy Implementation Council be created.

He said, "We have our brothers and sisters from the State of Kosrae to thank for the idea, as they had, in their wisdom, created such an entity at the State level in their Second Kosrae State Economic Summit last August."

The President also said that though the concept of EPIC was not such a vast change from previous attempts to promote economic policy coordination and improved economic management, "EPIC is an attempt to 'focus and concentrate' on the key economic policy issues that will affect the immediate and future economic growth prospects of the FSM.

With the President chairing the meeting, EPIC adopted four resolutions.

In the first resolution, EPIC endorsed the policy and project components of the proposed Private Sector Development Program, including the Program's proposed financing methods, subject to clarification of the total amount to be borrowed by the national and state governments.

Under this program the Asian Development Bank would work with the national and state governments to put together a loan package of about $9.6 million.

The purpose of this loan is to implement Private Sector Development policies developed at the Second FSM Economic Summit, including the recommendations of the FSM Banking Symposium. The focus would be on removing key impediments to private sector development.

Among those impediments to be addressed are improving the legal and regulatory environment influencing access to economic resources by the private sector, increasing access to and security of land for economic use, accessing finances for start-up and small businesses, and improving business and entrepreneurial skills in small and medium size enterprises in the informal sector.

In the second resolution, EPIC endorsed the project components of the Basic Social Services Program, including its financing, subject to further clarification of the total amount to be borrowed by the national and state governments.

EPIC also invited the Asian Development Bank to work with the FSM national government and the state governments to put together a package containing all legal documentation required to advance to the next stage of loan development for both programs.

The objectives and scope of the BSS program is to help the FSM meet the costs of a comprehensive reform program that will greatly improve the cost effectiveness of the education and health systems in the nation.

Key areas to be addressed in the educational component include strengthening accountability and community participation, improving quality of education staff, and developing a sustainable funding base for education.

Key areas to be addressed in the health component are improving quality and efficiency of primary, preventive and public health services and developing sustainable financing methods to support delivery of quality health services.

For both loans from the ADB, a special financing mechanism will be followed to use the savings from the completed ADB-financed Public Sector Reform Program. These savings will be set aside in a sinking fund to secure repayment of the two new loans.

In the third resolution, EPIC endorsed in principle the FSM planning framework as a suitable framework for the national and state governments to promote sustainable economic development. The planning framework for 1999-2002 is a compilation of the economic and sector policies that emerged from the Second FSM Economic Summit.

In the fourth resolution, EPIC requested the FSM Department of Transportation, Communications and Infrastructure and the FSM Department of Economic Affairs to work in consultation with the four FSM states to develop an improved Public Sector Investment Program process. Furthermore, it requests the FSM Congress to favorably consider during the October session an appropriation of $250,000 to match a $250,000 U.S. Department of Interior grant to co-finance the development of an Infrastructure Development Plan for the FSM.

EPIC also heard reports on the current FSM economic situation, land reform issues, and the private sector.

Department of Economic Affairs Secretary Sebastian Anefal delivered opening remarks concerning land issues and was followed by Francis X. Hezel, SJ, director of the Micronesian Seminar, a local think tank that has produced several papers and a video on the subject of land use in Micronesia.

The private sector report was an update of Continental Micronesia operations in the region delivered by Art Day, Pohnpei station manager of Continental Micronesia.

More than 50 people attended the meeting including President Leo A. Falcam; Vice President Redley Killion; Pohnpei State Governor Johnny David; Yap State Governor Vincent Figir; Chuuk State Governor Ansito Walter; Chuuk State Speaker Bonciano Nethon; Pohnpei State Legislature Speaker Feliciano Perman; Kosrae State Legislature Speaker Hiteo Shrew; and Chuuk State House Floor Leader Ruphin Mickey, who stood in for Chuuk State Senate President Detor Santos.