Speech

Remarks by Deputy Managing Director Bo Li at the 2022 PFTAC Steering Committee

May 24, 2022

As prepared for delivery.

Good morning ladies and gentlemen. Bula!

I would like first to thank the Fijian authorities for the warm welcome I have received in my first visit to Fiji -- and indeed my first visit to the Pacific.

Thank you to the Attorney-General and Minister for Economy, the Honorable Aiyaz Sayed-Khaiyum for joining us here this morning, as well as Governor Ariff Ali and his team from the Reserve Bank of Fiji.

And welcome to all of our participants this morning from across the region. I had the opportunity to interact with many of you virtually at the high-level Pacific conference during the IMF / World Bank Spring Meetings. And I am so pleased to engage with you again – and this time with the wonderful opportunity to meet some of you in person.

Since borders closed in early 2020, the IMF has been extremely active, responding to the pandemic through an unprecedented expansion of our emergency facilities and the 2021 SDR allocation.

Work on supporting our member countries has continued in the midst of other shocks – including natural disasters, which are all too common in the Pacific, and, more recently, the war in Ukraine.

Our engagement with member countries has been and will continue to be “all hands on deck” at this time of crisis – delivered through lending to many dozens of countries, maintaining an intensive dialogue to help policy makers respond to these unprecedented times, and continuing to deliver on a core mandate – namely, providing technical assistance and capacity development.

We have learned a lot in responding innovatively, but it is fair to say that everyone is keen to reengage in-person as borders reopen and travel resumes. We are taking some first steps here today in demonstrating that the IMF is physically back in the Pacific, and we are looking forward to a strong in-person reengagement as the year unfolds.

Tourism-dependent economies like Fiji were hit hard by border closures and the loss of that critical revenue and foreign exchange. But I am encouraged from my discussions in Suva yesterday of how the economy appears to be rebounding now that borders are open and tourism is returning. For the Pacific as a whole, there is still much to do across many fronts—including rebuilding fiscal and external buffers while facilitating inclusive growth, and ensuring debt is on a sustainable trajectory.

And I think, in particular, the ongoing effects of climate change and natural disasters, the large infrastructure needs in the region to adjust to these events, and access to higher levels of climate finance are key.

I am happy to see that PFTAC has been active by supporting efforts of the Pacific Island Forum Secretariat or PIFS as well as member countries to strengthen their public financial management systems, along with public investment management capacity. And in recognizing the criticality of climate change, PFTAC is stepping up its capacity by adding a third PFM advisor in this field from the start of the next phase of operations.

Our meetings today and tomorrow are important to the IMF’s engagement in the region. As you may know, PFTAC was the outcome of a homegrown Pacific initiative that arose almost 30 years ago. PFTAC was created as a modest experiment in 1993 at the urging of officials of several Pacific nations to ensure they were better served with technical assistance despite their small size and great distance from Washington DC.

This model of proximity to the client has been hugely successful. While it was another decade until the second such regional Capacity Development center opened in the Caribbean, this model for CD delivery has since expanded to a network of no fewer than 17 centers worldwide.

Not only does this model bring valued IMF services to the doorstep of the member countries, but all stakeholders also have a key role in the governance of these centers. That is demonstrated today in that the 16 member countries and seven donors who finance this phase of operations, along with the IMF, each have a voice on the Steering Committee.

We are now in the final year of the fifth phase of PFTAC, which has been extended by budget savings accrued during the COVID pandemic. Over the years, many evaluations have highlighted the important contributions PFTAC provides in responding to the needs of the member countries. And for the first time, starting in this phase, member countries voluntarily made financial contributions to PFTAC operations, which signals the value they place in PFTAC and the services it provides.

PFTAC has adapted over time. External evaluations mandated during each phase have provided suggestions to further strengthen the model, various improvements are being implemented, and several governance enhancements are being considered. Starting out with just 4 advisors and programs, over 25 years PFTAC has doubled in size to respond to regional demand with additional fiscal advisors in PFM and Revenue and a recently launched Debt Management program with Japanese government support.

Looking to the future, and subject to the ongoing support and contributions of the donor community, we hope to expand by three more advisors, including on climate change, as I mentioned, as well as on government finance and public debt statistics, and a new Macroeconomic Frameworks program to help strengthen country analytical and modeling capacity.

PFTAC’s well-appreciated support to the region on fiscal, financial, and statistical issues has only been possible with the generosity of donors, currently including the governments of Australia, Canada, Korea, New Zealand, and the United States, along with the Asian Development Bank and the European Union. The region and the IMF are deeply grateful.

We have enjoyed great synergies and complementarities with the donors and development community over the years that we hope will continue into Phase Six. Later today we will be having a discussion around these possibilities, not just from current donors, but also, I hope, from one or two new ones.

Although the Fiji Government has been a gracious and hospitable host of PFTAC for more than 28 years, we are finally getting around to formalizing and signing a Memorandum of Understanding for the ongoing hosting of PFTAC. To some extent this is a legacy of the ground-breaking role of PFTAC as the first such center when formalizing a hosting agreement was only contemplated when the third and subsequent centers were created. In his previous appointment as the director at our Caribbean center, David Kloeden the outgoing PFTAC director noted that formalizing a hosting agreement was similarly instituted there many years after establishment and successful operations.

Let me conclude by noting how pleased I am that the Pacific is my first destination abroad since joining the IMF management team last year. I look forward to this being the first of many future visits to the region.

Again, thank you to Minister Sayed-Khaiyum and Governor Ali and the Government of Fiji. Vinaka vakalevu!