Transcript pacific-regionalism-and-stronger-regional-institutions-ray21

Pacific Regionalism and Stronger
Regional Institutions :
Paving Opportunities for ADFIP
Dr. Raymond N. Prasad
Economic Adviser
Economic Policy & Development Finance
Pacific Islands Forum Secretariat
Outline
Change Global
Landscape
Pacific
Regionalism
Regionalism &
Development
Finance
Opportunties for
ADFIP
Changing Global Landscape
►Global Economy
• Increased uncertainty in the short-to-medium term
►BREXIT & US Elections
• Focus will be on more inward looking economic policies
• Progress in global market  slow or future not clear
►Asia-Pacific – Biggest Concern is the Chinese Economy
►Ramifications of the Chinese economic volatility:
• Asian exporters to China
• In the region  Australia & New Zealand  Implicitly to Pacific Island Economies
►Q: What does this have to do with Regionalism?
Changing Global Landscape
►Q: What does this have to do with Regionalism?
• Global Economy is “Nature” while Regionalism is “Nurture”
• Regionalism is our key “Adaptation strategy” on our terms
• PICs too small to impact alone but as a group represent a significant
force in the global economy
• Some Examples:
Global Recognition of “SIDS Group” and its challenges
Paris Agreement on Climate Change
Framework for Resilient Development in the Pacific (Forum Leaders’ Priority)
Parties to the Nauru Agreement – Fishing Revenues in PNA countries (Forum Leaders’
Priority)
• Disaster Risk Insurance – PCRAFI Foundation + Multi-donor trust fund (Germany, US,
Japan, UK)
•
•
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Pacific Regionalism
►Regionalism is essential and ultimate strategy in navigating the global
economy and geo-politics
• its’ not a smooth path either!
►Pacific Regionalism has undergone is own fair share of criticism, costs
and reforms
►These are essential in mechanism design for regionalism
• fit for purpose, dynamic, sensitive to a number of innate and external factors
►No system is perfect you have to make it perfect and fit for purpose
►Pacific Plan  Framework for Pacific Regionalism represents
• the commitment and process to make it much more inclusive, transparent and
accountable public policy process
Regionalism & Dev. Finance
►Regionalism
essential for PICs:
• Solution to deliver Regional
Public Goods
• Alternative to an
unachievable global solution
►Regionalism 
Sustainable Dev.
Finance?
• Cross-border investments
and technology transfers
• Potential for new regional
financial mechanisms
◎ South-South investments
(PNG and Fiji)
◎ Creating a regional market
 ↓ diseconomies
◎ Regionalism  functional
cooperation/integration
◎ Regional value chains
and/or production sharing
◎ Harmonisation of financial
regulation
◎ Elimination of nontariff
barriers and dysfunctional
regulatory asymmetries
◎ Cooperation and
coordination in the area of
macroeconomic policy
New regional financial
mechanisms:
◎ regional finance facility
◎ mobilise domestic savings
across region
◎ develop regional capital
markets
◎ Reduce risk  Risk
pooling (Macro/Micro)
◎ Financing basic services
infrastructure, energy,
transport and ICT sectors
◎ warrant strong regional
frameworks for improved
outcomes
Pacific Regionalism
►Regionalism is essential and ultimate strategy in navigating the global
economy and geo-politics
• its’ not a smooth path either!
►Pacific Regionalism has undergone is own fair share of criticism, costs
and reforms
►These are essential in mechanism design for regionalism
• fit for purpose, dynamic, sensitive to a number of innate and external factors
►No system is perfect you have to make it perfect and fit for purpose
►Pacific Plan  Framework for Pacific Regionalism represents
• the commitment and process to make it much more inclusive, transparent and
accountable public policy process
Opportunities for ADFIP
► Opportunities
within the Economy
►Core role: financing development
►Extended Core Role
► Economic Stabilisation
►Policy Intervention and time consistency – Impact on Credit Cycles 
“Minsky Effect”
►Policy Coordination – Central Banks and/or Government
► Core ”node” in the Domestic Financing Network
►Most countries started with the Development Bank “Node” (Commercial
Banks followed)
►Sectoral Intelligence – focus on what works
Economic Growth & Resilience
.20
Kernel Density of Real GDP Rate (%) 2004-2015
Level of Economic Growth
.16
Density
.12
Minimising Dispersion
is Resilience
.08
Dispersion
.04
.00
-16
-12
-8
-4
0
COOK_IS Kernel
FSM Kernel
PALAU Kernel
RMI Kernel
SOL_IS_ Kernel
TUVALU Kernel
4
8
12
FIJI Kernel
KIRIBATI Kernel
PNG Kernel
SAMOA Kernel
TONGA Kernel
VAN_ Kernel
16
20
Economic Growth & Resilience
Box Plot of Real GDP Rate (%) 2004-2015
Cook Is
Min.
Fiji
Max.
FSM
3 Qtl
Kiribati
1 Qtl
Palau
PNG
median
Outliers
RMI
Samoa
Sol Is.
mean
Tonga
Tuvalu
Van.
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
Opportunities for ADFIP
► Opportunities within the Economy
►Alleviating Financial stress + Counterparty risk
►Look at and support Regional Options:
►Why domestic taxpayers should finance regional projects?
►Why not?
►Bottom line  Profit - Increase the shareholder (Gov’t) value
► Diversifies portfolio
►All economic shocks are not same & how it impacts each PICs
varies!
► Ability to cross subsidise domestic “high cost” operations
Opportunities for ADFIP
Vision
► Opportunities in the Region
► Climate Change Finance
Objectives
► Blending Mechanisms
►Sectoral Finance
Implementation
Plan
Development Finance
“transforms
Role
of Vision into Implementation”
+ Banks (+DFIs)
• Development
Can be a binding Constraint
• MDBs + Donors
► Regional Economic Intelligence
► Mitigating Risk and Uncertainty
► Collaboration in other Regional
Initiatives
► CC Fragility & Grant Allocations
► PIFS & WBG IDA Allocations
► Financial Inclusion + Remittances
► Private Sector Development
(PS Dialogue + Proposal ACP Dev. Bank)
► Economic Empowerment of Women
Financing Opportunities - ADFIP
• Increasing investment in Economic resilience
# Disaster Insurance - PCRAFI
# Contingent Credit/Savings
# Community Insurance
# BoP Support (MSG)
# Regional Finance Facility (FEMM))
Economic
Growth
Resilience
(Financial + Risk Mitigation)
Sustainability
Thank You.