SAARCFINANCE CO-ORDINATORS’ CONFERENCE: ISSUES AND DECISIONS A Presentation By AYUB UL HASAN Economist Economic Policy Department

2 SAARCFINANCE: A BIRD’S EYE VIEW Decision regarding setting up SAARCFINANCE was taken at the Tenth Summit of Heads of State of the region, held in Colombo, Sri Lanka, on 29 th July Decision regarding setting up SAARCFINANCE was taken at the Tenth Summit of Heads of State of the region, held in Colombo, Sri Lanka, on 29 th July The Inaugural Meeting of the Network took place at Washington, D.C. on 5 th October The Inaugural Meeting of the Network took place at Washington, D.C. on 5 th October 1998.

3 SAARCFINANCE: WHAT IS IT ALL ABOUT SAARCFINANCE is a permanent body at the level of Governors of Central Banks and Secretaries of Finance of SAARC Member States. SAARCFINANCE is a permanent body at the level of Governors of Central Banks and Secretaries of Finance of SAARC Member States. The primary function of the Network is to conduct a dialogue on macro-economic policies of the region and share experiences and ideas. The primary function of the Network is to conduct a dialogue on macro-economic policies of the region and share experiences and ideas. It is expected to make recommendations, which would be of practical benefit to the region. It is expected to make recommendations, which would be of practical benefit to the region. Closer co-operation among the Central Banks and Finance Ministries is expected to be mutually beneficial. Closer co-operation among the Central Banks and Finance Ministries is expected to be mutually beneficial.

4 SAARCFINANCE: MANDATE AND FUNCTIONS Originally, the following specific matters were to be considered by the Network: 1. Global developments and their impact on the region 2. Reforms for the international financial and monetary system and the evolution of a consensus of the position of SAARC countries. 3. Surveillance of international currency and capital flows and the evolution of a common SAARC position. 4. The impact of the Euro on South Asia. 5. Improvement of the Asian Clearing Union to enable countries to settle payments without recourse to the US Dollar.

5 SAARCFINANCE: MANDATE AND FUNCTIONS – Cont’d. Subsequently, the Network’s scope was widened to include, among others, the following: Subsequently, the Network’s scope was widened to include, among others, the following: 1. To promote cooperation among Central Banks and Finance Ministries in SAARC Member Countries by staff visits and regular exchange of information. 1. To promote cooperation among Central Banks and Finance Ministries in SAARC Member Countries by staff visits and regular exchange of information. 2. To consider and propose harmonization of banking legislations and practices within the region, etc. 3. To work towards a more efficient payment mechanism within the SAARC Region and strive for higher monetary and exchange cooperation. 3. To work towards a more efficient payment mechanism within the SAARC Region and strive for higher monetary and exchange cooperation. 4. To forge closer cooperation on macro-economic policies of SAARC Member States and to share experiences and ideas. 5. To study global financial developments and their impact on the region including discussions relating to emerging issues in the financial architecture, IMF and World Bank and other international lending agencies.

6 SAARCFINANCE: MANDATE AND FUNCTIONS – Cont’d. SAARCFINANCE: MANDATE AND FUNCTIONS – Cont’d. 6. To monitor reforms of the international financial and monetary system and to evolve a consensus among SAARC countries in respect of the reforms. 7. To monitor international currency and capital flows and to work towards a common SAARC position. 8. To evolve wherever feasible joint strategies, plan and common approaches in international fora for mutual benefit particularly in the context of liberalization of financial services. 9. To undertake training of staff of the Ministries of Finance, Central Banks and other financial institutions of the SAARC member countries in subjects relating to economics and finance.

7 SAARCFINANCE: ADMINISTRATIVE ARRANGEMENTS The Secretariat of the Network is established in the Central Bank of the country that holds the Chairpersonship of SAARC Organization. The Secretariat of the Network is established in the Central Bank of the country that holds the Chairpersonship of SAARC Organization. The Secretariat moves in rotation with the change in the SAARC Chair. The Secretariat moves in rotation with the change in the SAARC Chair. Each Central Bank has established a Cell to coordinate the activities of SAARCFINANCE. Each Central Bank has established a Cell to coordinate the activities of SAARCFINANCE.

8 CHAIRMANSHIP & COORDINATORS Governor of the Central Bank, holding the Network’s Secretariat, serves as the Chairperson of SAARCFINANCE. Each member country has a SAARCFINANCE Co-ordinator to serve as a focal point of the Country towards Network’s affairs.

9 SAARCFINANCE MEETINGS Regular Meetings of the SAARCFINANCE Network are held at least twice a year at the time of the Spring and Annual Meetings of the IMF and the World Bank. Coordinators’ Meeting takes place once in a year, generally one month before the Annual Meeting of BWIs, in the country holding the Network’s Secretariat.

10 SAARCFINANCE ACTIVITIES Information Sharing Information Sharing Studies/Seminars Studies/Seminars Staff Exchange Program Staff Exchange Program

11 STAFF EXCHANGE PROGRAM Since inception of the Network, 135 officers visited various institutions of member countries under SAARCFINANCE Staff Exchange Program. The matters of the Staff Exchange covered a broad range of issues, ranging from risk-based supervision to human resource management and forward marketing arrangements for agricultural produce, etc. Since inception of the Network, 135 officers visited various institutions of member countries under SAARCFINANCE Staff Exchange Program. The matters of the Staff Exchange covered a broad range of issues, ranging from risk-based supervision to human resource management and forward marketing arrangements for agricultural produce, etc.

12 4 TH SAARCFINANCE COORDINATORS’ MEETING HELD IN ISLAMABAD, PAKISTAN 23RD SEPTEMBER, 2004

13 AGENDA FOR THE MEETING 1. Presentation of SAARCFINANCE Progress Report 2. Enhancing effectiveness of Staff Exchange Program 3. Issues relating to formation of South Asian Development Bank (SADB) and South Asian Economic Union (SAEU) 4. Preparation of Next year’s programme of trainings, seminars and research activities, to be conducted under SAARCFINANCE. 5. Finalizing agenda for the meeting of SAARCFINANCE Network, scheduled for 4 th October 2004 at Washington D.C, USA. 6. Others

14 THE MEETING’S DECISIONS Information Sharing 1. So far, the process is demand-driven; needs enhancement. 2. List of material to be distributed by each Coordinator; then others to request for the requisite material. 3. Each member Central Bank to create a SAARCFINANCE link at their websites, containing SAARC-related and other macro-economic information. 4. A copy of all the information sharing should be passed on to the Chair Coordinators for record.

15 THE MEETING’S DECISIONS – Cont’d. Staff Exchange Program 1. Discussion took place with respect to the effectiveness of staff exchange programs. 2. There was a concern that Pakistan and India, two major countries, could not send their staff to other member countries to have hands-on experience. 3. The following table presents details about the program.

16 STAFF EXCHANGE PROGRAM CountryRBICBSLSBPNRBBB Total Bangladesh Bhutan India Maldives Nepal Sri Lanka Total

17 THE MEETING’S DECISIONS – Cont’d. Staff Exchange Program 1. There is a need to have more staff exchange programs primarily between India and Pakistan. 2. Scale of staff exchange programs would be enhanced. In particular, SBP and RBI would arrange attachment programs for Senior Officers from India and Pakistan, respectively.. 3. Senior Officers should visit the other Central Banks to explore areas of relatively advanced development for possible staff exchange programs.

18 THE MEETING’S DECISIONS – Cont’d. Seminars and Studies 1. It was noted with concern that so far only one Seminar was held under the banner of SAARCFINANCE during It was emphasized with consensus to organize Seminars frequently particularly in leading SAARC countries. 3. Pakistan would hold a Seminar before the close of 2004 or early RBI would hold 1-2 Seminar(s) in CBSL also to hold a Seminar next year.

19 THE MEETING’S DECISIONS – Cont’d. Formation of SADB SAARCFINANCE was asked by the SAARC Council of Ministers to look into the issues of formation of SADB and SAEU. SAARCFINANCE was asked by the SAARC Council of Ministers to look into the issues of formation of SADB and SAEU. State Bank of Pakistan initiated the process of hiring a Consultant from World Bank to carry out the feasibility of setting-up SADB. Coordinators were requested to brief their Governors about the feasibility of setting-up the SADB which was to be discussed during 11 th meeting of the Network

20 THE MEETING’S DECISIONS – Cont’d. Formation of SAEU It was felt that realization of the goal appeared to be somewhat immature, at this point in time. It was, therefore, decided to undertake further studies on the subject so as to move towards the eventual realization of the SAEU in future.

21 THE MEETING’S DECISIONS – Cont’d. Other Issues The SAARCFINANCE Chair would be formally handed over to Bangladesh (subject to holding of SAARC Summit in January 2005) during 12 th meeting of the Network. India and Bangladesh were still without Coordinators at the Ministry of Finance. It was decided that it was up to the country in question to decide as to the need to have a Coordinator at the Ministry of Finance.

22 AGENDA FOR 11 TH MEETING OF SAARCFINANCE GROUP 1. Scaling up of information sharing among SAARC countries 2. Scaling up of SAARCFINANCE Staff Exchange Program 3. Review and discussion on training programs and seminars to be organized in under SAARCFINANCE 4. Issues relating to formation of South Asian Development Bank (SADB) and South Asian Economic Union (SAEU) 5. Others

23 SAARCFINANCE: PERFORMANCE HIGHLIGHTS Useful dialogue on the regional issues among Central Bank Governors and Finance Secretaries during regular meetings of the Network Useful dialogue on the regional issues among Central Bank Governors and Finance Secretaries during regular meetings of the Network Meetings/workshops/seminars have taken place in various member countries on issues of topical interest Meetings/workshops/seminars have taken place in various member countries on issues of topical interest Considerable exchange of information/publications have been made among member countries Considerable exchange of information/publications have been made among member countries A number of studies have been completed A number of studies have been completed Exchange of visits by officials under SAARCFINANCE Staff Exchange Programme. Exchange of visits by officials under SAARCFINANCE Staff Exchange Programme.

24 SAARCFINANCE: END NOTE SAARCFINANCE: END NOTE SAARCFINANCE may be considered as an important development towards regional cooperation SAARCFINANCE may be considered as an important development towards regional cooperation Since its inception, the Network has shown progress towards achievement of goals for which it was established, thereby making its presence felt at the international organizations/fora Since its inception, the Network has shown progress towards achievement of goals for which it was established, thereby making its presence felt at the international organizations/fora It is supposed to play a more important role in enhancing collaboration among the member economies in future. It is supposed to play a more important role in enhancing collaboration among the member economies in future.

25 ITS ALL FROM MY SIDE BUT THE STORY CONTINUES