STUDY ON OPERATIONAL

MODALITIES OF THE COMESA

FUND (Preliminary Report)

INTRODUCTORY NOTE

1

The preliminary report has been prepared at the request of the COMESA Secretariat to facilitate discussions at an urgent meeting to be held on the 7 July 2006. It should be pointed out that I am still going through the documents I collected from the study visit and some of the documents are being translated. This report will, therefore be sketchy but, will give a rough picture of what will be contained in the report I am working on based on the terms of reference indicated below.

CHAPTER ONE

BACKGROUND

2

1.1. Introduction

The Seventh Summit of COMESA Heads of State and Government held in Addis Ababa, Ethiopia on 23 May 2002 adopted and signed the COMMESA Protocol on the Fund for Cooperation, Compensation and Development (hereinafter referred to as the COMESA FUND) pursuant to article 150 of the COMESA Treaty. The COMESA Fund is a holistic instrument for tackling the special problems of underdeveloped areas and the other challenges that arise from implementation of the COMESA regional integration process. The COMESA Fund is composed of the Base Fund and the General Fund. The member states constitute the membership of the Base Fund. The Cooperating partners admitted by the Committee of the Fund constitute the membership of the General Fund, which will be leveraged by the Base Fund.

The COMESA Fund is divided into two windows. One window is for infrastructural development, which is central to the entire development process. Although there is wide spread consensus that infrastructure is the key to economic growth and poverty reduction, financing it has proved rather difficult because projects are long-term and capital intensive. The COMESA Fund is expected to play a pivotal role in financing basic infrastructure, such as transport, telecommunications, and energy which will promote regional integration and reduce production costs, thereby making the member countries competitive. The second window of the COMESA Fund will be for budget support or compensation for those member states that suffer budgetary problems as a result of implementing the trade liberalization program. While in the long-run, governments might increase revenue through restructuring their fiscal program, this does not solve the immediate problem faced by governments of reducing tariffs as part of their on-going economic reform program without placing a further burden on the already strained social sectors. The budget support will, therefore, encourage countries to continue the implementation of the trade liberalization program.

The Protocol on the COMESA Fund is in the process of being ratified by member states. A total number of seven (7) ratification’s are required for the Protocol to come into force. To date, five countries have ratified the Protocol. These are Ethiopia, Kenya, Mauritius, Rwanda and Sudan. Kenya has paid its contributions to the Fund. Some member states have indicated that they prefer to have operational modalities of the

3

Fund worked out before they sign and ratify the Protocol. It was, therefore, decided by the Nineteenth Meeting of the Council of Ministers that the COMESA Secretariat should work out the operational modalities of the Fund. The terms of reference for the study are as follows ;

1. To suggest innovative ways of mobilizing other resources for the Fund.

2. To propose the organizational and management structure of the fund.

3. Review the operational modalities of similar funds.4. To define the terms and conditions under which the Fund will

operate its lending and resource mobilization. 5. Describe the general lending eligibility criteria for both budget

support and infrastructure Fund. 6. Elaborate on the procedures to be followed by member

countries for accessing resource of the Fund. 7. To indicate the linkages and cooperation of the Fund with

other regional and inter-regional financial and monetary institutions and organizations.

8. Elaborate on the procedures to be followed for the disbursement of the resources of the Fund.

9. To propose the repayment terms.10. To define performance targets and set out rules that

should be met by borrowing member countries and how they will routinely be monitored.

11. To identify an array of instruments that will be used to achieve the targets.

12. To make proposals for ensuring that the Fund will revolve, and

13. To make any other appropriate recommendations on all aspects of the Fund.

1.2. Studies Done for REGIONAL INTEGRATION BUDGET SUPPORT (RIBS) Operational Modalities and Disbursement.

Proposals have been made for RIBS operational modalities based on studies by two consultants. E. Ronsholt and M. Davenport. The studies propose eligibility criteria based on stringent conventional conditionalities that are applied by development institutions that provide funds for economic structural

4

adjustment program. It is worthy noting that the concept of targeted budgetary support or compensation for encouraging trade liberalization differs from development budget support for structural adjustment. For the latter, the ideas is to apply stringent measures that will be monitored to ensure that funds provided to promote country-driven economic development are used according to the agreed program and that targets are met so that the borrowing country can generate enough income to pay off its debts and be able to sustain its development. The major weakness of the proposals of the two studies is that the eligibility criteria will exclude many countries. This could mean that countries experiencing significant revenue losses may be excluded from support or compensation. This will defeat the purpose for the Fund, that is, to get all member states on board so that the Customs Union can be achieved within the agreed time frame. There is need, therefore, for the eligibility criteria to be flexible without compromising on the financial credibility of the Fund. The two studies also propose allocation of resources based on estimated loss of revenue. A better method could be the one that base the allocation system of resources for compensation on actual loss of revenue, which can be verified.

CHAPTER TWO EXPERIENCES OF SIMILAR FUNDS

Before recommendations are made, it would be important to look at the experiences of similar funds in order to draw lessons that can be useful in making proposal for the operational modalities of the COMESA Fund.

2.1. ECOWAS Fund / ECOWAS Regional Development Fund

5

The Treaty of 1975 establishing the Economic Community of West African States (ECOWAS) created the Fund for Cooperation, Compensation and Development of the Economic Community of West African States (ECOWAS Fund). The founding member states of the Fund are Benin, Burkina Faso, Cote d’lvoire, Mali, Guinea Bissau, , Mali, Niger, Nigeria, Senegal, Gambia, Ghana, Guinea, Liberia, Sierra Leone and Togo. Cape-Verde joined in 1999 and Mauritania withdrew from the Community in 2000. The ECOWAS Fund was then created to be the community’s development financial institution with focus on financing infrastructure development and providing compensation to member states experiencing loss as a result of the integration process.

ECOWAS Fund has an authorized capital of US$500 million, of which US$100 million was called up and fully subscribed in two equal tranches of US$50 million each in 1977 and 1988 respectively. The paid up amount stands at US$85 million. As at 31 December 2002, commitments of the Fund to the member states stood at US$125 million. As at the same date, disbursements stood at about US$95 million being 76% of total commitments. The breakdown of the ECOWAS Fund’s intervention as at 31 December 2002 was as follows, UA45 million was for roads, UA36,25 million was for telecommunications, UA16,65 million was for rural development and UA27.50 million was for industry and lines of credit.

2.2.1.Institutional and Strategic Reform of ECOWAS Fund

As shown by its performance above, the ECOWAS Fund’s major weakness was its inability to mobilize funds from the international financial institutions and donor agencies, resulting in limited project financing capacity. Having observed that the ECOWAS Fund was no longer in a position to meet the major challenges of socio-economic development and private sector promotion, it was transformed on 10 December 1999 into a regional Holding Company with two subsidiaries. The Holding Company is called ECOWAS Bank for Investment and Development (IBID) with authorized share capital of US$750 million of which US$139 million (79,45%) of the called up capital of US$167 million was subscribed by member states as at June, 2005.

IBID’s two subsidiaries are:

6

The ECOWAS Regional Development Fund (ERDF) for public sector financing with authorized share capital of US$500 million of which US$50 million of the called up capital has been paid by IBID.

The ECOWAS Regional Investment Bank (ERIB) for private sector financing with authorized share capital of US$500 million of which US$50 million of the called up capital has been paid by IBID.

The essential purpose of ECOWAS Fund’s strategic institutional reform is to provide the community with a strong financial institution capable of mobilizing both internal and external financial resources with a view to financing investment and development and an administrative structure that insulated the institution from political pressure on day to day operations.

2.2.2.The objectives of the ERDF are:

Granting direct medium and long-term concessionary loans for the financing of infrastructure and economic and social development projects in ECOWAS member states.

Granting loans for financing of special Community Programs. Managing the community levy reserves meant for financing

the community’s development activities.

The community levy is charged on imports from outside the community at a rate of 0.5% C.I.F value. It is managed by the Executive Secretariat and it is used to finance budgets of ECOWAS institutions which include the Executive Secretariat, Parliament and the Court of Justice. Funds from commodity levy is also channeled towards development projects. A decision was made by the Authority to commit 60% of the community levy to finance development projects. The community levy is the major source of finance for financing projects and budgets for Community institutions. The ERDF has approached a number of donor agencies to mobilize funds for financing development projects. Efforts are also being made to raise funds from the regional stock exchange market. The decision making and control bodies of ERDF are the General meeting and the Board of Directors. The General meeting represents all the shareholders and it meets at least once a year. The Managing Director is an ex-officio member. The Board is made up of eight (8) Directors of which six represent IBID.

2.2.3.Procedure for project financing

A request is submitted to ERDF for the financing of a project.

7

If the project is likely to receive the financial support it will be included in the Fund’s pipeline.

Preparation and processing of documents follows receipt of a request for financing. This include project appraisal.

Technical Committee examines appraisal report. Fund submits to its Board of Directors the project for

approval. Disbursement of funds takes place when the borrower meets

terms and conditions for disbursement. Project monitoring and supervision follows the disbursement

of funds. Project evaluation takes place on completion of the project.

2.3 The Compensation Fund

The compensation fund is managed by the ECOWAS Executive Secretariat located in Abuja Nigeria. I am still waiting for information to be sent from the Secretariat since I did not visit Abuja.

2.4 The West African Economic and Monetary Union (UEMOA)

The UEMOA common monetary zone has been in place since 26 December 1945. The member countries are Benin, Burkina Faso, Cote d’ivoire, Guinea Bissau,Mali, Niger, Senegal,and Togo. Most countries in the zone are poor with Cote d’ivoire’s GDP accounting for 40% of total GDP for the region, Senegal (20%) and 40% is shared by six countries. In such a situation, it was necessary to mobilize resources to finance the less developed nations in order to achieve balanced development in the region. In this regard, the UEMOA set up a Regional Integration Support Fund in 1998. This institution is managed by the Commission and its objectives are:

To finance infrastructure. To finance social infrastructure such as education and health. To assist the sectors adversely affected by the integration

process such as closed industries.

UEMOA identified seventy five (75) least developed regions in all the eight member countries on the basis of United Nations Human development indicators, state of the roads and state of health facilities. The source of funds for financing projects is community levy charged on imports from outside UEMOA at the rate of 1% C.I.F. value. From 1998 to 2002 UEMOA collected revenue of 29 billion CFA francs. Efforts are being made to mobilize resources from the donor agencies

8

and borrowing concessionary loans from the international financial institutions and donor agencies. The UEMOA Commission work in conjunction with the West African Development Bank (BOAD) in financing projects. Since 2002 BOAD financed 80% of the project and the Commission 20%. The 20% from the Commission is a grant and BOAD’s loans have a maturity period of 25 years with a grace period of 7 years. Interest rate is 2.5% p.a of which 0.5% p.a is paid by the Commission. The Commission began financing projects in 2005 with a budget of 8.3 billion C.F.A. francs. Of the projects submitted, the commission has started financing projects in Togo and Burkina Faso.

2.4.1.Operational Modalities of the Fund

Eligibility Criteria.

Each project must come from the selected underdeveloped regions. Projects financed should be for economic and social infrastructure

and sectors adversely affected by the integration process.

Procedure for financing projects.

Member states submit projects to the Commission from the 75 less developed regions.

One project per country is selected for financing during the agreed plan.

Monitoring and supervision of the projects. Evaluation of the project on completion. 2.4.2.The Compensation Fund

The Fund was established in 1996 to give compensation to countries that suffered revenue loss as a result of implementation of trade liberalisation measures. Within three and half years from July 1996-2000 the UEMOA countries eliminated customs duties and established a Customs Union. From 2000 all goods with certificates of origin were imported duty free within UEMOA.

UEMOA progressively reduced tariffs and paid compensation on actual loss of revenue. It is important to note that compensation was only paid on loss of revenue on industrial goods. In the first period (1996-1997) UEMOA tariffs rate was reduced from 20% to 14% so the compensation of 6% was given to those states that experienced loss of revenue.

For example if a country imported cement from another member state of US$1000 000 C.I.F. value, the compensation

9

was 6% of US$1 000 000 which is US$ 60 000 in the second period (1997-1999) the tariff rate was reduced to 8% and the compensation was 12%. In the third period (1999-2000), the UEMOA tariff rate was reduced to 4% and compensation was 16% of the C.I.F value of imports. In 2000 the Customs Union was achieved. The system of compensation charged from 2000. During the period 2000-2002, the total revenue loss was compensated. For instance if a country imported cement from another member state for $1000 000 with a common external tariff of 20%, the compensation would amount to US$200 000. In 2003 the compensation was reduced to 80% of the actual loss and in 2004 compensation was further reduced to 60% of the actual loss and in 2005 compensation was only 30% of the actual loss. From 1 January 2006, the compensation system was phased out having been in place for 9 ½ years from 1 July 1996 to 31 December 2005.

Procedure for Accessing Compensation Fund

The member state representative personally submits a claim to the Commission on the basis of declaration forms. This was supposed to be done twice a year.

The Commission and the country representative verify the claims.

Calculate the amount of the claim and agree with the representative of the member state .

Request the President of the Commission to authorize settlement of the claim.

From 1996 to 2005 compensation of 126 billion CFA francs was paid to member states. This compensation paid to member states played a pivotal role in the attainment of the UMEOA Customs Union.

2.5. AFRICAN DEVELOPMENT FUND (ADF)

Since its establishment in 1973, the African Development Fund has become an important source of financing and technical assistance to 40 low-income African countries to which it provided resources of about UA16 billion during its nine (9) replenishment cycles. In recent yeas, the Fund has been focussing on providing support for poverty reduction and economic growth efforts in regional member countries, in line with its Strategic Plan for the period 2003-2007. The ADF’s focus is on project financing and budget support for development. The ADF is part of the AFRICAN DEVELOPMENT BANK (ADB) Group.

10

Fifty percent of the shareholding of the ADF is for the ADB (representing member states) and the remainder (50%) is for non-regional members. Replenishments are made by non-regional members in every three years. For every replenishment negotiations are held with Deputies (representatives of non-regional members) on how the funds will be used. Funds are used for infrastructure financing and development budget support. ADF is a soft window and forty (40) low income African countries can access ADF funds only and the other African States can borrow from ADB. ADF loans have a maturity period of forty two (42) years with a grace period of ten (10) years and zero interest. Allocation of the resources is based on a country performance. The introduction of the performance based resource allocation system based on Country Performance Assessment (CPA) under the last two ADF cycles, has resulted in the bulk of the Fund resources being channeled to countries where the policy and institutional environment is most conductive for sustainable and broad-based growth. The introduction of the CPA also enabled the fund to stress the importance of the poverty reduction and other critical issues such as governance and regional integration and public expenditure management during policy and program dialogue with countries. Adjustments recently brought to the CPA formula have led to an enhanced allocation system, whereby the governance as well as the post-conflict status of countries has been given a significant weight, thus allowing those countries with better governance systems or emerging from conflict to have access to increased allocations.

Eligibility Criteria

The poorest countries are the major beneficiaries of ADF resources.

Country creditworthiness and performance remain fundamental criteria of eligibility to receive the Funds’ resources.

2.6 P.T.A. BANK

The Eastern and Southern African Trade and Development Bank commonly referred to as the P.T.A. Bank was established in 1985 under the auspices of Treaty establishing the Preferential Trade Area, which was subsequently superceded in 1993 by the Common Market for Eastern and Southern Africa (COMESA)

Project Finance

11

The P.T.A. Bank provides financial resources to both public and private sectors projects in Manufacturing, Agro-Industry, Service, Mining, Infrastructure and Tourism. The modes of financing applied include direct loans (minimum of US$500 000 and maximum of US$20 million), co-financing, lines of credit to local financial institutions for on-lending to small enterprises, equity participation and loan guarantees.

Project Processing

Receipt of application Preparation of a brief on the project. Project appraisal. Submit project to the Board of Directors for approval.

The bank also provides trade finance and trade related-facilities that are tailored to meet the client’s needs.

CHAPTER THREE

PROPOSAL FOR THE OPERATIONAL MODALITIES OF THE COMESA FUND.

Resource Mobilization

The success of the COMESA Fund in achieving its set objectives will, to a great extent, depend on its ability to raise resources both within and outside the COMESA region. In this regard, COMESA should work out a resource mobilization strategy that will be the guide for all the efforts that will be focussed on mobilizing the much needed resources.

3.1.1. Contributions

The resources of the COMESA Fund will come from contributions to be made by member states. A decision has been made for the member states to contribute an initial capital of US$10 million. In view of the financial constraints of the Fund, several types of financing within and outside COMESA would be required to finance operations of the Fund. The strategies for resource mobilization will focus on enhancement of the level of own resources and mobilization of concessional resources within and outside COMESA for the

12

financing of basic infrastructure and compensation for revenue losses as a result of implementing trade liberalization measures.

3.1.2 Other Sources of Finance

To accomplish its objectives, the Fund will augment the contributions of the member states by tapping resources from other sources of funding. Several possibilities are open to the Fund, but there is need to come up with resource mobilization strategy that will guide the activities of the Fund on this front. Ways of tapping resources from other sources recommended include the following:

Inviting donor agencies and international financial institutions such as the European Union, World, Bank, and African Development Bank to become members of the Fund. Donor agencies will be invited to contribute to the General Fund which will be leveraged by the Base Fund.

Borrowing from donor agencies, (both multilateral and bilateral) concessional loans.

Soliciting for grants and donations from both developed and developing countries.

Encouraging member states to donate funds over and above their contributions to the Fund.

Floating in international markets bonds which may be taken up by governments and institutions. However, experience of other financial institutions indicates that this might not be possible in the initial years of the operation of the Fund. The market prefers to deal with institutions with a track record.

Floating bonds in the national stock exchange markets and use the funds raised to finance projects in those member states. In an inflationary environment, unless these bonds are indexed to inflation, investors will not be keen to take them up.

Managing special funds funded by donor agencies for various activities such as technical support.

Co-financing with other donor agencies and institutions. This will not place funds at the disposal of the Fund but it would assist it in financing certain large projects.

Introducing a community levy by charging say 0.5% on imports from outside the COMESA region. This will raise huge amounts for financing both administrative expenses of COMESA institutions and development projects.

Introducing contribution commitments assumed by each member state and contributions will only be made at a time that the funds are needed to support one of the member

13

states that might suffer losses from the integration process. The problem of this method of raising funds is that countries might fail to meet their commitments when called upon to do so because of their own domestic problems.

3.2. Budget Support Compensation Fund

3.2.1. Eligibility Criteria

For a country to access budget support/compensation Fund it is recommended that it should fulfil the following conditions.

The applying member state must have acceded to the Protocol on the Fund.

The country must have paid in full its contributions to the fund.

A country must be implementing the COMESA trade liberalization program

Undertaking tax reform so that a country will be able to sustain its development program when compensation is phased out.

3.2.2. Procedure for Accessing Compensation

It is recommended that:

A member state will submit its request for compensation to the Fund. The application will also state the measures being taken to improve revenue collection.

A representative of the member state will submit customs declaration forms and original certificates of origin. This can be done once or twice a year.

The Fund and the representative of the member state will check, verify and agree on the claims being made.

The claim for compensation will be arrived at by subtracting the COMESA rate from the one that applies to non-COMESA countries and the difference will be the percentage rate for compensation. For example if the tariff rate that applies to non COMESA imports is 20% and the COMESA rate is 14% compensation rate will be 6%. If a country imports goods for US$1 million, its compensation will be: 6/100 x 1000 000 = US$60 000.

A decision will be made depending on the availability of resources whether to compensate the whole revenue loss or part of the loss and the type of products to be compensated.

14

Once the Fund and the country representative agree on the claims, authorization will be sought from the Manager of the Fund to settle the claim.

3.2.3. Performance Monitoring

The Fund will monitor the performance of the countries that received compensation. This will include ensuring that the countries actually implement tax reform measures outlined in the application.

3.3 Infrastructure Development Fund

It is recommended that COMESA should identify priority infrastructural projects in the region that should be funded and compile a COMESA project priority list since the resources of the Fund will not be adequate to meet all the requirements for infrastructural financing. Proposals made with regard to operational modalities of the Fund take into consideration the experiences of similar funds discussed under section two. A decision will have to be made whether this fund will operate in conjunction with the P.T.A. Bank as the case with UEMOA or be a stand alone institution as the case with the ERDF.

3.3.1. Eligibility Criteria

The applying country must have acceded to the Protocol on the Fund.

The country must have paid its contributions in full to the Fund.

The project to be financed should benefit more than once country and will be on the proposed COMESA project priority list.

Project financed should be viable economically, financial and technically.

Project should contribute towards balanced development in the COMESA region.

3.3.2. Lending Policies and Procedures

It is recommended that the following procedure be followed for project financing. A request of feasibility study must be submitted to the

Fund and the project, if accepted will be put in the Fund’s pipeline.

15

The preparation and processing of project documents begins as soon as the financing request is received together with the supporting documents (feasibility studies, engineering study, guarantee etc). This exercise includes appraisal of the project. For projects with no feasibility and engineering studies, the Fund will undertake the studies and prepare tender documents.

To this end there will be need for a special fund for technical support to make it possible for these studies to be undertaken. The appraisal report prepared by the multidisciplinary

team will be submitted to an internal Committee which can be called the Technical Committee.

The finalized report and the Committee’s recommendations will be forwarded to Management which decides whether the Fund should participate in the financing of the project or not.

Fund submits the project to the Fund Committee for approval. If approved, a loan agreement will be signed between the Manager of the Fund and the borrower.

3.3.3. Disbursement

The borrowing country submits request for disbursement with all the necessary documents and information and the disbursement will made accordingly.

3.3.4. Repayment Terms

It is proposed that loans will be for 25 years with a grace period of 5 years. Interest will not be paid on the loans but commitment fees and service fees.

Repayments will be made according to the repayment schedule. If a country defaults, sanctions will be applied. This includes suspension of funding projects in the country that would have defaulted.

3.3.5. Revolving nature of the Fund

The Fund must ensure that the revolving character of its resources would be maintained since it would be the custodian of member’s contributions and other available funds. Stipulation of compliance with a set of rules would serve to ration credit among competing needs. Replenishment of resources on a regular basis by the

16

cooperating partners and the continuous inflow of the funds from the proposed community levy would contribute towards making the Fund revolve.

3.3.6. Performance Targets and Monitoring

Borrowing countries will agree with the Fund regarding performance targets they will meet. These targets are important for assessing progress and differ from project to project. Such targets might include an agreed length of road construction, a given level of bridge construction etc. To achieve these targets an array of possible financial instruments would have to be mapped out to include loans and grants.

The Fund will monitor physical and financial aspects of the execution of the project.

3.3.7. Project Evaluation

Project evaluation will take place at the end of the project and will be undertaken by a multidisciplinary team.

3.3.8. Post Evaluation

About five years after end of the project, post evaluation will be undertaken to ascertain the impact of the project. Through critical analysis lessons can be drawn for future projects.

3.4. ORGANIZATIONAL AND MANAGEMENT STRUCTURE

The Fund shall be administered by a Committee and a Manager. The Committee shall consist of Ministers who are members of the Council and whose states would have paid contributions into the Base Fund. Each member of the Fund will appoint one Minister to the Committee and each of the cooperating partners will appoint one representative. Each member and cooperating partner shall appoint an alternative to its representative on the Committee who shall be a person possessing high competence and wide experience in economic, financial and banking affairs.

3.5. Cooperation of the Fund with other Financial Institutions and Organizations

17

Present day global interdependence makes it highly desirable for the Fund to cooperate with institutions within and outside COMESA that are pursuing similar objectives or engaged in like activities. The nature of cooperation will vary from one organization to another. The areas of cooperation will include the following:

Cooperation with similar Funds to exchange information and ideas.

Cooperation with other institutions to get technical assistance, training, research and advisory services for COMESA countries.

Cooperate with bilateral and multilateral donors to obtain additional funds in the form of grants, donations and concessionary loans.

Cooperate with other institutions in co-financing projects. Cooperate with other institutions in joint financing of

research activities, training and feasibility studies.

18

CHAPTER FOUR

CONCLUDING REMARKS

The proposed operational modalities form a foundation on which detailed preparatory work for the operationalisation of the Fund can be based. It is, therefore, recommended that the momentum gained in preparation of the commencement of the operations of the Fund should be maintained. To this end, I recommend that detailed work should continue in the areas of preparation of operational polices, procedures manuals and guidelines, developing strategy for resource mobilization and sensitizing member states and the donor agencies regarding the operations of the Fund. For effectiveness there is need to have someone dedicated full-time to carryout the preparatory work, coordinate and follow up issues related to the Fund.

Experiences of similar institutions indicate that compensation for revenue loss plays an important role in encouraging countries to implement trade liberalization measures, thereby making it possible to achieve a Custom Union within the time frame agreed. To be able to raise funds needed for financing the activities of the Fund it is recommended that community levy should be introduced as a matter of dire necessity and urgency. Efforts should also be made to raise funds for paying compensation to countries experiencing revenue loss as a result of implementing trade liberalization measures and to finance projects. Further it will also be necessary to design a resource allocation system which is objective and equitable.

19