World Bank accepts Malta proposal for small states network

Malta's proposal for a Small States Network for Economic Development has been accepted by the World Bank and the island will host its permanent secretariat, Tonio Fenech, Parliamentary Secretary in the Finance Ministry, said yesterday.

The run-up to the setting up of the network, which aims to aid the economic development of small countries that share common problems, dates back to the Small States Forum held at the World Bank in Washington DC in September 2005.

The World Bank has pledged to support and actively participate in the enterprise as part of its commitment to the development of small states, and the proposal was formally adopted at the World Bank Small States Forum in Singapore last September, Mr Fenech said.

Malta is now collaborating with the World Bank to draw up the statute of the network and to launch it formally.

The Small States Forum, an annual World Bank-sponsored meeting, allows small states to voice their concerns relating to the special characteristics that constrain their development options.

"The most important constraint stems from their small economic size, limiting their ability to reap economies of scale and to diversify their economies," Mr Fenech explained.

"Small size also leads to a high degree of economic openness, rendering these states vulnerable to external shocks - a reality exacerbated by the globalisation process. Those that are also islands face additional disadvantages, mostly associated with transportation costs," he continued.

The objective of the network is mainly to share expertise and technologies that are specific to small states and that would provide countries with services on specific policy and institutional development.

It will be led by a board of trustees, which includes six permanent, founding members, including Malta, as well as four rotating members and four representatives of donor institutions. These are still being determined, although a number of countries have already expressed interest, Mr Fenech said.

The network's permanent secretariat will be headed by a secretary general, who would be appointed by the board, while the World Bank is designating a full-time staff member, who would be responsible for maintaining relations with the secretariat, helping to formulate its initial work programme.

As its contribution to the network, Malta is providing the premises - probably the Foundation of International Studies, in Valletta - to host the secretariat.

The network is being supported by a multi-donor trust fund, with the main functions of providing grant resources for projects and for its administration. It is being established with the assistance of the World Bank, which is managing it initially.

Initial areas of focus for the SSNED would be determined by the board of trustees, and include projects aimed at assisting smalls states to develop taxation schemes, insurance scheme and disaster recovery support and mechanisms, and the institutional capacity needed to compete effectively in world trade.

Malta was among five small countries, including Cyprus, Singapore, Mauritius and Barbados, which were considered to be success stories and good models from the economic point of view, Lino Briguglio, who was involved in drafting the proposal, said.

He said Malta was the Trojan Horse for the interests of small countries and has played a major role in their particular issues over the years.