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Lecture by Minister of Economic Affairs and Finance, Islamic Republic of Iran on the Occasion of 31st Annual Ministerial Council of Opec Fund 17 June, 2010

Public Relation  6/27/2010

H.E.Ilyas Jaoa, Vice President, Bolivarian Republic of Venezuela,
Esteemed Members of Ministerial Council,
Excellencies,
Ladies and Gentlemen,

At the outset I express my gratitude to the Government of Venezuela, Honorable Minister of Planning and Finance of Venezuela and His Excellency’s colleagues who hosted the 31st Annual Session of Opec Fund for International Development (OFID) Ministerial Council and made excellent arrangement for organizing the meeting. I was honored by having the opportunity to attend the meeting and highlighting my observations on various important issues addressed in the agenda, which will with no doubt affect the future performance of the Fund in the financing operations and development activities at global level.

Esteemed Participants,
Ladies and Gentlemen, 

The global economic perspective is not expected to be promising in the short run. The global financial and economic crisis which started in the late 2007, has not yet faded away despite forecasts of returning of the world to a stable and balanced economic situation in late 2009. The negative economic growth rate of minus 3.2 percent in the developed economies, has caused the world average economic growth rate be set at minus 0.6 percent in 2009. As forecasted by the financial international organizations the average world economic growth rate stand at 4.2 percent in 2010 mostly due to economic growth in the Asian countries and emerging economies, which seems to be doubtful since witnessing the recent economic developments in developed economies especially in EU States. 
Given the volatility in the world returning to a stable economic situation, the unemployment and low economic growth rate in the developed countries and at the same time the difficult access of the developing countries to international financial resources and foreign investment are some of future challenges. The poor and least developed countries are facing problems in managing the crisis and its aftermath impacts. These countries and most of developed countries play key role in the demand stimulation process and accelerating the global economic recovery which itself requires providing sustainable financial resources. The role of international financial organizations, multilateral Banks and development Funds and institutions is crucial in filling this gap and addressing the needs and observations of least developed, developing as well as developed countries in this process. In addition to paying attention to this key mission, combating poverty, providing food security, moving toward the achieving the other eighth Millennium Development Goals, attending to the global warming issue and focusing on financing the green projects and producing non fossil energies are still on the top of these organizations and institutions priority list.

Esteemed Colleagues,
Excellencies,
OFID as a multinational development institution, actively and effectively contributing to assisting the countries development and their financing needs for more than 30 years, is experiencing a critical and unique situation while the expectations from these institutions increases. Playing the deserved role by the Fund is only possible if the sustainability of the available resources, the Fund financial structure and its programs and strategies are designed to face these challenges and the Fund is prepared to encounter the new era and address the numerous and various available needs while maintaining its capacity and efficiency after the crisis. Although the Fund immunity and not being affected by the crisis was not expected, but we have to ensure that the required lessons have been learned and experience gained for designing an operational vision and  appropriate strategic planning, while supervising and monitoring the implementation of programs and strategies in order to achieve the sustainable financial resources and its efficient utilization.
Thus, measures should be taken for enabling us to face the new challenges. Taking actions for receiving a credit rating assessment for the Fund and utilizing new models and approaches for mobilizing funds from international market based on the OFID rating along with introducing more effective internal supervision policies, Fund asset management, maintaining and protecting the capital resources, attending to capital adequacy proportionate to the volume of lending operation, more monitoring and supervision on financing operations and portfolio risk management, reducing the non operational costs and strengthening and increasing the specialized and professional staffs could be considered as internal measures and organizational policies which results in sustainable operation of the Fund.
Assessment and identification of investment opportunities for investment of the Fund resources and capital investment operations with the priority given to the available opportunities in the member countries, could assist and contribute to  the sustainability of the Fund resources and financial capacity as well as promoting the opportunities and strengthening the markets in the member states. 
Since OFID three year strategic plan based on the Fund 18th lending program is   being reviewed in the context of the agenda of the 31st Ministerial Council meeting, attending and considering the afore mentioned issues are of great importance.

Esteemed Colleagues,
Ladies and Gentlemen,
I strongly believe that though designing the appropriate framework for the visions, objectives, programs and approaches of the Fund are undeniably important, the models, mechanisms and operational policies which are introduced to fulfill and achieve them are of the same importance. The implementation of the Energy for the Poor Incentive ,which is also included in the agenda, based on the OFID capital resources and the member countries capital contribution, may be the most accessible and at hand option, but is not the only and most appropriate option given the impacts of the recent financial and economic crisis on the member states and the budget deficit problems encountered by them. In these circumstances, the Fund management should assess different ways and means such as mobilizing funds from international financial market, and evaluate and analyze the results at the level of the OFID Governing Board, in order to enable the member countries make the optimum and most appropriate decision which could be implemented by all members.
Excellencies,
Ladies and Gentlemen,
Given the current circumstances and considering the increasing and numerous demand in the world and while there is an ongoing dispute over the need for redefining and reengineering the global financial and economic management structure and system, the international financial organizations and development institutions are of no exception and should ,along with providing the conventional packages and traditional modes of financing, design and offer variety of products, instruments and services meeting the requirements and needs of their clients and borrowing countries.  
The implementation of short term modes of financing as we approved in Jeddah in 2006, is and effective tool to meet the needs of borrowing countries and provides more sustainability in the Fund resources and we should benefit from this window to promote the south-south trade cooperation and developing countries intra trade. In Portshach- Austria in 2007, the council also approved that OFID take necessary measures to mobilize funds from international market which with no doubt ,if materialized, is the prerequisite for enabling the Fund to address the increasing demands of borrowing countries and effectively implement the lending programs. These objectives and approaches were reiterated in Isfahan-Iran in 2008.
In addition, introducing the various medium and long term modes of project financing, focusing on strengthening the eligible and reputable member countries’ contractors and suppliers and offering flexible and attractive financing packages with appropriate terms and conditions should be considered by the OFID,   in order to ensure the sustainability and stable performance of the Fund. In this course the necessity of promoting the capacity and capability of the private sector as the enforcing engine and the key player in the developing countries development process and ensuring the direct or indirect input of the OFID lending programs in this promotion should not be ignored.          
Today, the governments and governmental executing agencies encourage the foreign investors and transnational companies as well as the local private sector to participate in implementing the infrastructure projects through designing and employing various methods and modes of public private partnership in their infrastructure and development projects. Currently and by the vast changes that have taken effect in the rules of the game, the effective and efficient presence and contribution is provided for the institutions and organizations which are able to adapt and synergize their products and services with the new principles, and play their deserved role when the flow of investment to the infrastructure projects resumes after the crisis. These projects not only provide a good platform for mobilizing local and international funds and thus coalition and leverage of local and foreign resources, but also respond to one of requirements and objectives of the Millennium development Goals which is the development of infrastructures in developing and least developed countries.
Although there is a huge gap between the needed and actual investments required for infrastructure development in the developing countries, we are witnessing an increasing engagement of large transnational companies and foreign investors in these types of projects starting from early 90’s. This contribution has resulted in stock of investments amounting to US$ 200 billion in infrastructure projects in water, electricity, gas, transportation and communication by the end of 2006.
Employing the structured financing operations, defining methods and mechanisms to identify and prioritize projects which are in line with the Fund macro and strategic programs and fall into these categories, introducing external fund mobilization programs for these projects, collaboration and concluding cooperation protocols with reputable international financial organizations for syndicate and joint financing tailored for these projects are only few of the products and models which could be offered in this area of activity and should be considered by the OFID.
Designing and preparing investment insurance coverage packages to be offered to the foreign investors independently by the Fund or jointly with the cooperation of international or regional investment insurance companies and also collaboration with the these institutions and organizations in the area of export credit could also introduce a new window and appropriate capacity for efficiency and attractiveness of the Fund long and short term operations and packages. 

Excellencies,
Esteemed Colleagues,
Before concluding my speech, I avail the opportunity to strongly condemn the Zionist regime for their actions to continue the three year siege of Gaza and attacking the humanitarian aid cargo and peace ships. This siege has resulted in suffering and living, economic and social difficulties for 1.5 million Palestinians in the region and has explicitly violated international human right law and international conventions by the Zionist regime. Lack of medical and hospital equipments, long time blackouts, lack of clean drinkable water, poverty and unemployment are just part of hardships and difficulties of the innocent people of Gaza. The estimates show that the siege has caused for US$ 30 million loss in agriculture activity in the region, losing 40,000 job opportunities, stoppage in the operation of 98 percent of factories and industrial activities in the region and dependency of 80 percent of the people of Gaza on the humanitarian aids of international organizations. The double standards and the approaches of some countries and international bodies in respect to the siege of Gaza and Zionist regime violation of international conventions in attacking to the humanitarian aid cargoes, has resulted in discredit of this regime in the world public opinion. In this course the role of OFID as international financial development institutions is even greater than before and the Fund should comply with its institutional, moral and humanitarian obligation for extending grants and financial assistance in the context of the special grant account for emergency relief operations and special grant account for Palestine. 
H.E.Ilyas Jaoa, Vice President, Bolivarian Republic of Venezuela,
Esteemed Members of Ministerial Council,
Excellencies,
Ladies and Gentlemen,
 I once again express my appreciation to the revolutionary authorities of the government of Venezuela, and especially to H.E. Minister of Planning and Finance of Venezuela and His Excellency’s colleagues for the excellent arrangements extended for organizing this Meeting, and avail the opportunity to wish for health and pray for immediate recovery of Mr. Gorge Glordani, Minister of Planning and Finance of Venezuela.
At the conclusion I wish to extend my regards to the chairman of the board of governors and his colleagues in the board for their relentless efforts for achieving the objectives and goals of the OFID. I also express my appreciation to the secretary general, assistants secretary general and hard working staff of the Fund for their efforts and endeavors for maintaining the financial stability, sustainability of resources and efficiency and directorship of this international institution and wish all success for the Meeting and hope that the 31st  Ministerial Council could achieve all its objectives.         

Wa salam-o-Alaikum wa Rahmatulah wa barakatu 
 Jun 21, 2010 08:53
 
 


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