Good morning,
Prime Minister Kovachevski, Finance Minister Besimi, Ministers of the Government of North Macedonia, colleagues from other international organizations, think-tanks and academia, ladies and gentlemen.
It is a great pleasure to join you for the Skopje Economic Finance Forum - and this time in person. I enjoyed being with you for the first time you held the event last year, and I am glad to see that you are making it an annual event.
It is also great to speak among such distinguished guests, including Paul Krugman.
Today, countries across the Europe and Central Asia region face a myriad of new economic headwinds and challenges, at a time when they should be making a resilient recovery from the pandemic. As such, this conference could not be more relevant and timelier.
Governments have the tough job of helping their countries buffer the socio-economic impacts of major crises – which today include the devastating war in Ukraine, the ongoing COVID-19 pandemic, weather extremes, high inflation, and rising energy and food prices.
This conference provides an excellent opportunity to learn from each other’s experiences and reflect on how best to design and implement effective and sustainable policies that not only respond to crises, but also support development goals in the medium- and long-term.
The Western Balkans have felt the full impact of the increasing frequency and magnitude of external shocks. Legacy development challenges are now closely intertwined with adjusting to the economic consequences of the war in Ukraine, responding to the longer-term impacts of the pandemic, and managing the impacts of climate change.
We have been taken aback by the speed with which inflation has returned in recent months, a result of disruptions in trade and supply chains, price surges in energy, food, and commodities, and a de-globalization of economic activities. Worldwide, we see an increase in socio-economic fragility and instability.
At the World Bank, we recently summarized the current socio-economic context and implications of these crises on the region in our Spring 2022 Economic Update for Europe and Central Asia and our Western Balkans Regular Economic Report. With many of you, we discussed the key messages, data, and policy recommendations in these reports during the Spring Meetings in Washington last month.
Our overall recommendation is that policy makers need to be better equipped to handle future crises as part of a comprehensive approach to bolstering resilient, inclusive, and greener development. This involves fortifying macroeconomic policy buffers and institutions to strengthen stability; promote greater inclusion; reinforce social protection systems to protect the most vulnerable; and keep focus on improving energy efficiency and a green transition to secure a more sustainable future.
I look forward to being part of this Conference and seeing how the World Bank can help governments employ the most impactful, inclusive, and sustainable approaches to economic policies during this tumultuous period.
Amidst these challenges, governments must balance a commitment to fiscal sustainability, while also protecting the most vulnerable from damaging, long-term impacts. As Finance Ministers in the audience, you are keenly aware of the extent to which fiscal space has been exhausted, public debt levels risen, and macro-fiscal consolidation challenged by unexpected and critical crisis responses not foreseen in the budget.
After several rounds of crisis response, increased focus will have to be placed on structural constraints that have hindered the creation of high-skill jobs. And the proper balance among macro-fiscal consolidation, environmental and economic sustainability, and social inclusion, requires a renewed focus on overcoming entrenched structural obstacles.
Better conditions are needed for firms to invest, create employment, and boost entrepreneurship, innovation, and activity, especially among high levels of unemployed youth.
Here in North Macedonia, for example, this means ensuring greater transparency and efficiency of the justice sector; state-aid reform to crowd in private sector investments; human capital development to align skills to the needs of a 21st century economy; and financial sector development, with a focus on green and innovative instruments and financing.
A green transition needs collaboration across existing divides, both nationally and regionally, with a shared view to encourage innovations in “climate smart” agriculture, digitalization and artificial intelligence, and the generation and trade of renewable energy. There are joint objectives among and within countries to provide clean energy and protect natural resources, including water, from contamination and exhaustion.
Never have the actions taken today been more important for the foundations for future prosperity.
I would like to reconfirm the World Bank’s commitment to supporting and reinforcing the structural foundations for a green, resilient, and inclusive development.
This is a complex challenge, requiring vision and courage to overcome economic obstacles and bring different perspectives around the same vision.
We often hear – never waste a crisis. The time period ahead has many uncertainties. But, it does also provide an important opportunity to change the direction of policy agendas and to accelerate the implementation of more innovative reforms that generate faster and higher growth.
I look forward to building on our already substantial work programs of investments and analytical work in the region. I have no doubt that this Conference will provide essential input to weathering the storms and to provide inspiration in support of economic growth models that bring poverty reduction and greater sustainability.
Thank you.
