SAARCFINANCE CO-ORDINATORS’ SAARCFINANCE CO-ORDINATORS’ CONFERENCE:CONFERENCE:

ISSUES AND DECISIONSISSUES AND DECISIONS

A Presentation ByA Presentation By

AYUB UL HASANAYUB UL HASANEconomist Economist

Economic Policy DepartmentEconomic Policy Department

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SAARCFINANCE:SAARCFINANCE:A BIRD’S EYE VIEWA BIRD’S EYE VIEW

Decision regarding setting up SAARCFINANCE Decision regarding setting up SAARCFINANCE was taken at the was taken at the Tenth Summit of Heads of State Tenth Summit of Heads of State of the region, held in Colombo, Sri Lanka, on 29of the region, held in Colombo, Sri Lanka, on 29 thth July 1998. July 1998.

The Inaugural Meeting of the Network took place The Inaugural Meeting of the Network took place at Washington, D.C. on 5at Washington, D.C. on 5thth October 1998. October 1998.

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SAARCFINANCE: WHAT IS IT ALL SAARCFINANCE: WHAT IS IT ALL ABOUTABOUT

SAARCFINANCE  is a permanent body at the SAARCFINANCE  is a permanent body at the level of Governors of Central Banks and level of Governors of Central Banks and Secretaries of Finance of SAARC Member States.Secretaries of Finance of SAARC Member States.

The primary function of the Network is to conduct The primary function of the Network is to conduct a dialogue on macro-economic policies of the a dialogue on macro-economic policies of the region and share experiences and ideas.region and share experiences and ideas.

It is expected to make recommendations, which It is expected to make recommendations, which would be of practical benefit to the region.would be of practical benefit to the region.

Closer co-operation among the Central Banks and Closer co-operation among the Central Banks and Finance Ministries is expected to be mutually Finance Ministries is expected to be mutually beneficial.beneficial.

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SAARCFINANCE: MANDATE AND SAARCFINANCE: MANDATE AND FUNCTIONSFUNCTIONS

Originally, the following specific matters were to be considered by Originally, the following specific matters were to be considered by the Network:the Network:

1.1. Global developments and their impact on the regionGlobal developments and their impact on the region

2.2. Reforms for the international financial and monetary system and Reforms for the international financial and monetary system and the evolution of a consensus of the position of SAARC the evolution of a consensus of the position of SAARC countries. countries.

3.3. Surveillance of international currency and capital flows and the Surveillance of international currency and capital flows and the evolution of a common SAARC position. evolution of a common SAARC position.

4.4. The impact of the Euro on South Asia.The impact of the Euro on South Asia.

5.5. Improvement of the Asian Clearing Union to enable countries to Improvement of the Asian Clearing Union to enable countries to settle payments without recourse to the US Dollar.settle payments without recourse to the US Dollar.

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SAARCFINANCE: MANDATE AND SAARCFINANCE: MANDATE AND FUNCTIONS – Cont’d.FUNCTIONS – Cont’d.

Subsequently, the Network’s scope was widened to include, Subsequently, the Network’s scope was widened to include, among others, the following:among others, the following:1.1.To promote cooperation among Central Banks and Finance Ministries in To promote cooperation among Central Banks and Finance Ministries in SAARC Member Countries by staff visits and regular exchange of SAARC Member Countries by staff visits and regular exchange of information.  information.  2.2. To consider and propose harmonization of banking legislations and To consider and propose harmonization of banking legislations and practices within the region, etc.practices within the region, etc.3.3. To work towards a more efficient payment mechanism within the SAARC To work towards a more efficient payment mechanism within the SAARC Region and strive for higher monetary and exchange cooperation.  Region and strive for higher monetary and exchange cooperation.  4.4. To forge closer cooperation on macro-economic policies of SAARC To forge closer cooperation on macro-economic policies of SAARC Member States and to share experiences and ideas. Member States and to share experiences and ideas. 5.5. To study global financial developments and their impact on the region To study global financial developments and their impact on the region including discussions relating to emerging issues in the financial architecture, including discussions relating to emerging issues in the financial architecture, IMF and World Bank and other international lending agencies.IMF and World Bank and other international lending agencies.

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SAARCFINANCE: MANDATE AND SAARCFINANCE: MANDATE AND

FUNCTIONS – Cont’d.FUNCTIONS – Cont’d. 6.6. To monitor reforms of the international financial and To monitor reforms of the international financial and

monetary system and to evolve a consensus among SAARC monetary system and to evolve a consensus among SAARC countries in respect of the reforms. countries in respect of the reforms.

7.7. To monitor international currency and capital flows and to To monitor international currency and capital flows and to work towards a common SAARC position. work towards a common SAARC position.

8.8. To evolve wherever feasible joint strategies, plan and To evolve wherever feasible joint strategies, plan and common approaches in international fora for mutual benefit common approaches in international fora for mutual benefit particularly in the context of liberalization of financial particularly in the context of liberalization of financial services. services.

9.9. To undertake training of staff of the Ministries of Finance, To undertake training of staff of the Ministries of Finance, Central Banks and other financial institutions of the Central Banks and other financial institutions of the SAARC member countries in subjects relating to SAARC member countries in subjects relating to economics and finance. economics and finance.

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SAARCFINANCE: ADMINISTRATIVE SAARCFINANCE: ADMINISTRATIVE ARRANGEMENTSARRANGEMENTS

The Secretariat of the Network is established in the The Secretariat of the Network is established in the Central Bank of the country that holds the Central Bank of the country that holds the Chairpersonship of SAARC Organization.Chairpersonship of SAARC Organization.

The Secretariat moves in rotation with the change in The Secretariat moves in rotation with the change in the SAARC Chair. the SAARC Chair.

Each Central Bank has established a Cell to Each Central Bank has established a Cell to coordinate the activities of SAARCFINANCE.coordinate the activities of SAARCFINANCE.

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CHAIRMANSHIPCHAIRMANSHIP& COORDINATORS& COORDINATORS

Governor of the Central Bank, holding the Governor of the Central Bank, holding the Network’s Secretariat, serves as the Network’s Secretariat, serves as the Chairperson of SAARCFINANCE. Chairperson of SAARCFINANCE.

Each member country has a Each member country has a SAARCFINANCE Co-ordinator to serve as SAARCFINANCE Co-ordinator to serve as a focal point of the Country towards a focal point of the Country towards Network’s affairs. Network’s affairs.

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SAARCFINANCE MEETINGSSAARCFINANCE MEETINGS

Regular Meetings of the SAARCFINANCE Regular Meetings of the SAARCFINANCE Network are held at least twice a year at the time Network are held at least twice a year at the time of the Spring and Annual Meetings of the IMF of the Spring and Annual Meetings of the IMF and the World Bank. and the World Bank.

Coordinators’ Meeting takes place once in a Coordinators’ Meeting takes place once in a year, generally one month before the Annual year, generally one month before the Annual Meeting of BWIs, in the country holding the Meeting of BWIs, in the country holding the Network’s Secretariat.Network’s Secretariat.

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SAARCFINANCE ACTIVITIESSAARCFINANCE ACTIVITIES

Information SharingInformation Sharing Studies/SeminarsStudies/Seminars Staff Exchange ProgramStaff Exchange Program

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STAFF EXCHANGE PROGRAMSTAFF EXCHANGE PROGRAM

Since inception of the Network, Since inception of the Network, 135 officers135 officers visited various institutions of member countries visited various institutions of member countries under under SAARCFINANCE Staff Exchange SAARCFINANCE Staff Exchange ProgramProgram. The matters of the . The matters of the Staff Exchange Staff Exchange covered a broad range of issues, ranging from covered a broad range of issues, ranging from risk-based supervision to human resource risk-based supervision to human resource management and forward marketing arrangements management and forward marketing arrangements for agricultural produce, etc. for agricultural produce, etc.

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44THTH SAARCFINANCE SAARCFINANCE COORDINATORS’ MEETING COORDINATORS’ MEETING

HELD IN ISLAMABAD, PAKISTANHELD IN ISLAMABAD, PAKISTAN

23RD SEPTEMBER, 200423RD SEPTEMBER, 2004

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AGENDA FOR AGENDA FOR THE MEETINGTHE MEETING

1.1. Presentation of SAARCFINANCE Progress ReportPresentation of SAARCFINANCE Progress Report

2.2. Enhancing effectiveness of Staff Exchange Program Enhancing effectiveness of Staff Exchange Program

3.3. Issues relating to formation of South Asian Development Issues relating to formation of South Asian Development Bank (SADB) and South Asian Economic Union (SAEU)Bank (SADB) and South Asian Economic Union (SAEU)

4.4. Preparation of Next year’s programme of trainings, Preparation of Next year’s programme of trainings, seminars and research activities, to be conducted under seminars and research activities, to be conducted under SAARCFINANCE.SAARCFINANCE.

5.5. Finalizing agenda for the meeting of SAARCFINANCE Finalizing agenda for the meeting of SAARCFINANCE Network, scheduled for 4Network, scheduled for 4thth October 2004 at Washington October 2004 at Washington D.C, USA.D.C, USA.

6.6. OthersOthers

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THETHE MEETING’S DECISIONS MEETING’S DECISIONS

Information SharingInformation Sharing

1.1. So far, the process is demand-driven; needs So far, the process is demand-driven; needs enhancement.enhancement.

2.2. List of material to be distributed by each Coordinator; List of material to be distributed by each Coordinator; then others to  request for the requisite material.then others to  request for the requisite material.

3.3. Each member Central Bank to create a Each member Central Bank to create a SAARCFINANCE link at their websites, containing SAARCFINANCE link at their websites, containing SAARC-related and other macro-economic SAARC-related and other macro-economic information. information.

4.4. A copy of all the information sharing should be passed A copy of all the information sharing should be passed on to the Chair Coordinators for record.on to the Chair Coordinators for record.

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THETHE MEETING’S DECISIONS – MEETING’S DECISIONS – Cont’d.Cont’d.

Staff Exchange ProgramStaff Exchange Program

1.1. Discussion took place with respect to the Discussion took place with respect to the effectiveness of staff exchange programs. effectiveness of staff exchange programs.

2.2. There was a concern that Pakistan and There was a concern that Pakistan and India, two major countries, could not send India, two major countries, could not send their staff to other member countries to their staff to other member countries to have hands-on experience.have hands-on experience.

3.3. The following table presents details about The following table presents details about the program.the program.

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STAFF EXCHANGE PROGRAMSTAFF EXCHANGE PROGRAM

Country RBI CBSL SBP NRB BB Total

Bangladesh 6 - 4 - - 10

Bhutan 31 5 - 3 - 39

India - 1 - - 1 2

Maldives 2 2 - - - 4

Nepal 5 15 3 - 4 27

Sri Lanka 46 - 4 2 1 53

Total 90 23 11 5 6 135

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THETHE MEETING’S DECISIONS – MEETING’S DECISIONS – Cont’d.Cont’d.

Staff Exchange ProgramStaff Exchange Program

1.1. There is a need to have more staff exchange There is a need to have more staff exchange programs primarily between India and Pakistan .programs primarily between India and Pakistan .

2.2. Scale of staff exchange programs would be Scale of staff exchange programs would be enhanced. In particular, SBP and RBI would arrange enhanced. In particular, SBP and RBI would arrange attachment programs for Senior Officers from India attachment programs for Senior Officers from India and Pakistan, respectively. . and Pakistan, respectively. .

3.3. Senior Officers should visit the other Central Banks Senior Officers should visit the other Central Banks to explore areas of relatively advanced development to explore areas of relatively advanced development for possible staff exchange programs .for possible staff exchange programs .

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THETHE MEETING’S DECISIONS – MEETING’S DECISIONS – Cont’d.Cont’d.

Seminars and StudiesSeminars and Studies

1.1. It was noted with concern that so far only one It was noted with concern that so far only one Seminar was held under the banner of Seminar was held under the banner of SAARCFINANCE during 2004.SAARCFINANCE during 2004.

2.2. It was emphasized with consensus to organize It was emphasized with consensus to organize Seminars frequently particularly in leading SAARC Seminars frequently particularly in leading SAARC countries . countries .

3.3. Pakistan would hold a Seminar before the close of Pakistan would hold a Seminar before the close of 2004 or early 2005.2004 or early 2005.

4.4. RBI would hold 1-2 Seminar(s) in 2005. CBSL also RBI would hold 1-2 Seminar(s) in 2005. CBSL also to hold a Seminar next year. to hold a Seminar next year.

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THETHE MEETING’S DECISIONS – MEETING’S DECISIONS – Cont’d.Cont’d.

Formation of SADBFormation of SADB

SAARCFINANCE was asked by the SAARC Council SAARCFINANCE was asked by the SAARC Council of Ministers to look into the issues of formation of of Ministers to look into the issues of formation of SADB and SAEU. SADB and SAEU.

State Bank of Pakistan initiated the process of hiring State Bank of Pakistan initiated the process of hiring a Consultant from World Bank to carry out the a Consultant from World Bank to carry out the feasibility of setting-up SADB.feasibility of setting-up SADB.Coordinators were requested to brief their Coordinators were requested to brief their Governors about the feasibility of setting-up the Governors about the feasibility of setting-up the SADB which was to be discussed during 11SADB which was to be discussed during 11 thth meeting of the Networkmeeting of the Network

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THETHE MEETING’S DECISIONS – MEETING’S DECISIONS – Cont’d.Cont’d.

Formation of SAEUFormation of SAEU

It was felt that realization of the goal appeared to be It was felt that realization of the goal appeared to be somewhat immature, at this point in time. It was, somewhat immature, at this point in time. It was, therefore, decided to undertake further studies on therefore, decided to undertake further studies on the subject so as to move towards the eventual the subject so as to move towards the eventual realization of the SAEU in future.realization of the SAEU in future.

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THETHE MEETING’S DECISIONS – MEETING’S DECISIONS – Cont’d.Cont’d.

Other IssuesOther Issues

The SAARCFINANCE Chair would be formally handed The SAARCFINANCE Chair would be formally handed over to Bangladesh (subject to holding of SAARC over to Bangladesh (subject to holding of SAARC Summit in January 2005) during 12Summit in January 2005) during 12 thth meeting of the meeting of the Network .Network .

India and Bangladesh were still without Coordinators at India and Bangladesh were still without Coordinators at the Ministry of Finance. It was decided that it was up to 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 the country in question to decide as to the need to have a Coordinator at the Ministry of Finance. Coordinator at the Ministry of Finance.

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AGENDA FOR AGENDA FOR 1111THTH MEETING OF MEETING OF SAARCFINANCE GROUPSAARCFINANCE GROUP

1.1. Scaling up of information sharing among SAARC Scaling up of information sharing among SAARC countriescountries

2.2. Scaling up of SAARCFINANCE Staff Exchange Scaling up of SAARCFINANCE Staff Exchange ProgramProgram

3.3. Review and discussion on training programs and Review and discussion on training programs and seminars to be organized in 2004-05 under seminars to be organized in 2004-05 under SAARCFINANCESAARCFINANCE

4.4. Issues relating to formation of South Asian Issues relating to formation of South Asian Development Bank (SADB) and South Asian Development Bank (SADB) and South Asian Economic Union (SAEU)Economic Union (SAEU)

5.5. OthersOthers

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SAARCFINANCE: PERFORMANCE SAARCFINANCE: PERFORMANCE HIGHLIGHTSHIGHLIGHTS

Useful dialogue on the regional issues among Useful dialogue on the regional issues among Central Bank Governors and Finance Secretaries Central Bank Governors and Finance Secretaries during regular meetings of the Networkduring regular meetings of the Network

Meetings/workshops/seminars have taken place in Meetings/workshops/seminars have taken place in various member countries on issues of topical various member countries on issues of topical interest interest

Considerable exchange of information/publications Considerable exchange of information/publications have been made among member countries 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 Exchange of visits by officials under

SAARCFINANCE Staff Exchange Programme. SAARCFINANCE Staff Exchange Programme.

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SAARCFINANCE: END NOTESAARCFINANCE: END NOTE

SAARCFINANCE may be considered as an SAARCFINANCE may be considered as an important development towards regional important development towards regional cooperationcooperation

Since its inception, the Network has shown Since its inception, the Network has shown progress towards achievement of goals for which progress towards achievement of goals for which it was established, thereby making its presence felt it was established, thereby making its presence felt at the international organizations/foraat the international organizations/fora

It is supposed to play a more important role in It is supposed to play a more important role in enhancing collaboration among the member enhancing collaboration among the member economies in future.economies in future.

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ITS ALLITS ALLFROM MY SIDEFROM MY SIDE

BUT BUT

THE STORY THE STORY CONTINUESCONTINUES