core sector communique

International Partnership Supports Arab Nations in Transition

Washington - Finance ministers of some of the world's wealthiest countries reaffirmed their support for emerging democracies of the Middle East and North Africa in Washington on April 20.

U.S. Secretary of the Treasury Tim Geithner chaired a meeting of finance ministers and representatives of key international financial institutions to advance work under the Deauville Partnership with Arab Countries in Transition, a unique forum launched in 2011 in response to the historic changes in the Middle East and North Africa.

The partnership includes the five transitioning countries (Egypt, Jordan, Tunisia, Morocco and Libya), G8 countries, Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Turkey and 10 international financial institutions.

"The Middle East and North Africa region is undergoing one of the most important transitions of our time," the U.S. Treasury Department said in an April 20 press release. "In the face of numerous challenges, the five transitioning countries have taken steps to solidify their movement toward democracy and advance economic development," but still face economic challenges and, in some cases, delays in political transition.

The partnership provides a valuable platform through which the international community is helping these transitioning countries to achieve their objectives of inclusive, sustainable growth, according to the department.

NEXT STEPS

At the April 20 meeting, the partnership agreed to explore a new transition fund to provide grants, technical assistance and knowledge exchange to strengthen institutions and advance reforms.

It also agreed to establish a capital-markets-access initiative to help countries regain access to private capital to spur growth and encourage investments in the region. As part of this initiative, the United States is moving forward to extend a loan guarantee to Tunisia to support the issuance of a sovereign bond on international markets.

In addition, the partnership reviewed progress on two steps taken in 2011.

To date, 24 members of the European Bank for Reconstruction and Development (EBRD), including the United States, have taken steps to extend the bank's geographic mandate to the Middle East and North Africa. The EBRD eventually will have the capacity to invest as much as 3 billion euros a year in the region.

The Treasury Department also reported that the dedicated coordination platform established in 2011 to better leverage the resources of 10 international financial institutions is beginning to have positive effects on economic development. For example:

.. Development policy loans to Tunisia (African Development Bank and World Bank), Jordan (World Bank), and Morocco (World Bank) are underpinning governance, private-sector reforms and domestic markets.

.. The African Development Bank is supporting credit lines for small and medium-sized enterprises and rural infrastructure to support inclusive growth in Tunisia.

.. The World Bank and the Islamic Development Bank are supporting public-private partnerships through the Arab Financing Facility for Infrastructure.

.. The International Financial Corporation's "e4e Initiative for Arab Youth" is supporting development of relevant post-secondary education skills in the region.

U.S. LOAN GUARANTEE FOR TUNISIA

In a separate action April 20, Treasury Secretary Geithner and Tunisian Finance Minister Houcine Dimassi signed a declaration of intent to move forward as quickly as possible on a U.S. loan guarantee for Tunisia.

A U.S. guarantee would enable Tunisia to access significant market financing at affordable rates and favorable maturities with the backing of a U.S. guarantee of principal and interest (up to 100 percent).

"I'm pleased to sign this declaration of intent with Finance Minister Dimassi," Geithner said during a ceremony at the World Bank following the meeting of the finance ministers of the Deauville Partnership. "Last October, President Obama made clear the United States' commitment to supporting Tunisia's historic transformation. This loan guarantee will be a pillar of that support, helping Tunisia achieve key development goals and advancing its economic transition."

The support would consist of the U.S. guarantee of Tunisian government-issued debt and of bank loans made to the government of Tunisia.

The guarantee would reduce Tunisia's borrowing costs significantly at a time when market access has become more expensive for many emerging-market countries. In the weeks ahead, both governments intend to make progress on a loan-guarantee agreement that would allow Tunisia to move forward with a debt issuance, according to the U.S. Treasury Department.

(This is a product of the Bureau of International Information Programs, U.S. Department of State.)