Statement by Mr. Donald Kudu -Head of Solomon Islands Delegation

To the Third UNITED NATIONS CONFERENCE OF THE LEAST

DEVELOPED COUNTRIES, 14 - 20 May 2001, Brussels - Belgium

(check against delivery)

Mr. Chairman/ Madam Chair

I am grateful for the opportunity to participate at this important Conference. My delegation is confident that what transpires during the week long conference will turn into a practical and meaningful Programme of Action for us - the Least Developed Countries (LDCs). It is my hope and sincere wish that we will go home with appreciation that the programme of action that will effectively address poverty has been adopted by all of us the LDC, donor community, Civil society and financial institutions. It is a well known fact that for us to graduate from the class of LDC we need to improve and develop human resources and institutional capacity, social and economic infrastructure; advances in transport, communications and information technology, and pursue trade and integration in the global economy. Above all, a programme of action that both the LDCs and their Development Partners can faithfully implement in order to fight poverty and improve the lives of the worlds' poor.

Mr. Chairman,

Allow me to share with you the development challenges that Solomon Islands has been facing during the last decade in particular the past two years when ethnic unrest challenged the unity and solidarity of our young island state, bringing us to near economic collapse. I would also like to briefly outline the main aspects of the `Action Programme for the Development of Solomon Islands, 2001 - 2010'. The details of this Action Programme are contained in document distributed to you.

As a small island least developing state we share the economic features and challenges that are very much common in the Pacific. These include: remoteness to major markets; high transportation and communication costs; limited human and institutional capacity including poor physical and social infrastructure; diseconomies resulting from small population size; and heavy dependence on few basic commodities which are subject to the volatility of world commodity prices.

Mr. Chairman,

In the 1980s our economy experienced a steady but modest economic growth of 4.1% per annum. This was facilitated by high levels of both public and private sector investment, totaling between 25% and 30% of GDP. In the first half of the 1900s, the annual increase in real GDP rose to 7% caused by stronger growth in logging, fisheries, construction, transport and communications. Economic growth during this period however, proved unsustainable as it was largely based on an excessive rate of logging. Hence in the second half of the last decade economic growth declined as log exports fell due largely to the Asian financial crisis during 1997 and 1998.

Over the years Solomon Islands has also attempted several programmes of economic policy reform. The latest of such reforms was launched in September 1997 by the former government. This economic reform programme was adopted in the midst of severe economic crisis and adverse external conditions such as the Asian Crisis. The reforms were aimed at resolving the ensuing fiscal and balance of payments crisis by strengthening the country's deteriorating external financial position and by creating a more favourable environment for private sector - led growth through structural reforms. We went for a devaluation of the Solomon Islands dollar; tightening of fiscal and monetary policies; normalization of relations with creditors; and pursued a reform of the public service. These efforts paid off, as the fiscal deficit was substantially reduced in 1998, the stock of financial arrears in relation to GDP was cut by half, and inflation began to fall to single digit levels. Meanwhile, good progress was achieved with structural reforms, including the privatization and down-sizing of the public service.

However, Mr. Chairman/Madam, the ethnic unrest in 1999 and 2000, became a major setback to the further implementation of the Government's economic reform programme. The resulting severe economic desolation as well as human displacement triggered a sharp fall in GDP, investment and exports. The crisis also led to a cessation of work export-oriented production and an exodus of entrepreneurs. Furthermore the country's external financial position deteriorated sharply as the revenue base eroded.

This further resulted in severe cutback in government operations, affecting health, education and other social services.

Mr. Chairman,

In this context, it has been a difficult task to compile a national programme of action in preparation for this important Conference. Nevertheless, we have managed to put together a draft Programme of Action, 2001 - 2010, which will be finalized and re-submitted to UNCTAD following a review of our Mid Term Development Strategy. The draft Action Programme for the Development of Solomon Islands, 2001 - 2010, consists of the following aspects: Post Conflict Agenda to Overcome the Current Crisis; Need for Raising Government Revenue; Need for Restoring Foreign Earnings from Exports; and Need for Adjusting our Medium-Term Development Strategy. Also included in the Programme of Action, is a section on `Moving Beyond the Crisis to Sustainable Human Development - The Solomon Islands Vision 2010'. This outlines my Government's visions and targets to be achieved by the year 2010, in various areas including economic development, human development, health, political and economic infrastructure, governance, and international relations. It is our belief that if we target our resources and efforts along this line we will be addressing the root causes of poverty.

Mr. Chairman,

On the post conflict agenda to overcome our current crisis, immediate challenges include; maintaining peace and security by restoring law and order; rebuilding the country's destroyed social and economic infrastructure, restoring the country's productive base; resettling displaced families and bringing the country's internal and external finances back in balance. The current peace process has to be sustained and consolidated if we are to witness brighter long term development prospects. In other words, success in achieving economic recovery and growth in my country will depend on a number of factors including : implementation of the Peace Agreements; strong political leadership conducive to a stable macroeconomic environment; resumption of private sector activities and investment; and effective implementation of all development programmes and projects. On the other hand and as stressed by previous speakers, equally important for sustained economic growth is an enabling international environment, in particular a stable international financial system and a fair trading regime.

Mr. Chairman,

While I acknowledge that national governments are primarily responsible for the development of their countries, the support of the international community to complement national efforts is important. For Solomon Islands such support and cooperation is critical today. New and additional resources are necessary to consolidate our peace process, especially as we strive to increase investment in infrastructure rehabilitation and reconstruction, education and training. At this juncture, may I acknowledge the assistance of both our multilateral and bilateral development partners, during the past decade in particular the last two years. Our gratitude in particular to the European Union, Australia, Republic of China and all UN Agencies. We are committed to consolidating these partnerships as we begin a new decade for the development of the LDCs. Because of our island physical nature, we are so vulnerable to external shocks, we strive extra harder to keep up with the forces of globalization.

Finally, Mr. Chairman, rebuilding Solomon Islands fractured economy is an immense task. It is a challenge that demands a national vision; a willingness to make difficult choices in an open political context; and certainly a challenge that requires the restoration of accountability and transparency in Government; and close collaboration between the Government and its development partners. My Government is firmly committed to this critical task and to the above principles. The road a head will be rough but the fact that the peace process is holding means there is a light at the end of the tunnel. Solomon Islands hopes the outcome of this Conference will add value to our current efforts towards national peace and security, reconstruction and rehabilitation, economic recovery, and above all sustainable development.

Thank you, Mr. Chairman.