06 March 2007

06 March 2007 Minutes

Private Sector Working Group, Minutes of Meeting of March 6, 2007


The agenda was:

1. Trade Working Group – conclusions of our discussion – Andrea Cilloni
2. PSWG Aide – Friedrich Kaufmann
3. Joint review schedule and actions – Carlos Mate
4. Follow-up, if any, from meeting with Minister
5. Reducing of import-export times -- Doing Business visit – Tim Born

In addition, there was a review of Avisos 5 and 2, and a continuation of the discussion of how to improve the process of making policy that has an impact on the business environment.


1. Trade Working Group

A couple of months ago, the Economists’ Working Group (EWG) raised the question whether a trade working group is needed, on the grounds that trade policy issues are not getting the attention they deserve.

A subgroup (Tim Born, Andrea Cilloni, Ramon Ynaraja, Carlos Mate) considered three options; (a) a new G18 working group; (b) using the existing Integrated Framework steering committee (a group coordinated by the IF facilitator); and (c) using the PSWG. The final recommendation is a hybrid, where the donor sub-committee of the IF, which coordinates donor positions and programs related to trade for the IF, would assume an additional role as a sub-group on trade for the PSWG. A proposal to rotate the chair from USAID (current holder) to the EU has recently been made to the GRM chair (the IF Focal Point) and is expected to be effective soon.

Ramón Ynaraja will prepare TOR for review by the working group (the above plus Eneida Monteiro), and presentation at the next PSWG.

2. PSWG Aide

Fritz summarized the proposed TOR in the attached presentation. The idea is to hire a person or firm to achieve the following outcomes:

a. PSWG annual work plan adopted
b. Minutes
c. Ongoing identification and discussion of important topics
d. PSWG provided with follow-up tool for monitoring progress and effectively up-dated
e. Annual and semi-annual G18 obligations are covered
f. Good communication and information flow secured between relevant sector working groups
g. PARPA-II matrix and PAF matrix revised and improved
h. Mapping of donor activities
i. Development of common donor positions on major PSD issues, where and when possible

There were two main discussion points: whether a firm or individual was best placed to carry out the TOR, and whether it would be possible to use the position to, especially, attain other goals, such as consistently following up on all policy issues, achieving harmony among all working groups, and improving the sensitivity of policy makers across government to private sector concerns.

It was agreed that: (1) the scope will remain as is for a test period of six months to a year – more ambitious plans will be considered if the position is continued beyond the test period; (2) a firm is more likely to be able to provide the range of services and continuity required than an individual; (3) Friedrich Kaufmann will circulate the final TOR to the PSWG in the next couple of days, incorporate any comments, and proceed to tender.

3. Joint Review Schedule and Actions

Carlos Mate, our pillar leader, explained the PSWG obligations for the G-18 JR process. By March 19th, we are to produce a one page review of performance and a one-paragraph summary for the joint review Memorandum.

An initial meeting is scheduled for Thursday between 2:30 and 3 pm, second floor of MIC to discuss the draft. This follows directly the discussion of MIC’s competitiveness strategy starting at 2 pm.

4. Follow-up on Meeting with Minister (summary of that meeting attached)

The chair asked for follow-up remarks on the meeting, and Carlos Mate praised the Minister’s initiative and suggested a follow-up letter. This was agreed.

A couple of people expressed regret that more time had not been given to a discussion of MIC’s strategy. This led into the next topic – how to respond to the strategy document.

Jaime Nicols provided an update on Aviso 2 and 5; Aviso 2 (an amendment to Aviso 6 specifying how cross-border transactions can take place) is being revisited and rewritten. An initial meeting was held on January 5th (MIC, BM, CTA, commercial banks) to announce the postponement. The next meeting was only last Friday, but both CTA and MIC were confident that there would be a new Aviso fairly soon – perhaps by June. The recent Bruce Bolnick financial sector study for CTA recommended that Aviso 6 be allowed to stand with a minor modification to make advance payments a normal, rather than exceptional, way of funding transactions. Paulo Fumane said that he disagreed – Aviso 6 also has unacceptable provisions related to the exchange rate.

Aviso 5 also may be taken up by the group. In response to the question whether BM appeared likely to make amendments along the lines recommended by MPD and Bolnick – to eliminate provisioning for all hedged borrowers, and to reduce the provisioning requirement for everybody – Fumane said no, but Nicols thought maybe.

This led to another round of discussion of the problem of how to improve the policy creation process, with ideas varying from a law requiring all ministries to consult with MIC, to an empowered champion. We agreed that the USAID/MIC would proceed with a desktop study of international experience on how to get effective policy making related to the private sector – and provide a summary to MIC before a planned mid-April trip to Brazil. The chair concluded by noting that the problem could only be solved with a combination of good consultation, effective leadership and effective collaboration within the Government and with elements outside of government.

The group agreed to provide detailed comments on MIC’s competitiveness strategy document. A first meeting is scheduled for MIC at 2 pm, Thursday, March 8th. The volunteers will be decided by who shows up to this meeting.

5. Reducing of import-export times -- Doing Business visit – Tim Born

Rita Ramalho of the Doing Business group will be here the first week of April to help us understand the import/export component. The visit is supposed to lead to an action plan (with customs, MIC, CTA, Finance) to reduce the time it takes to effect imports and exports by half, from 40 (about) to 20 days. We will schedule a presentation to the PSWG during her time here.


Notes for Meeting with Minister Fernando

Minutes of Meeting with Minister Fernando

Jay Knott Presentation to Minister Fernando

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