15 August 2007: Dhaka

Finance ministers of the South Asian nations are scheduled to meet in New Delhi on September 14 for operationalising the SAARC Development Fund (SDF) of $300 million, finance ministry officials told New Age.

The fund was created because the members of the South Asian Association for Regional Cooperation had pledged in 2005 to support projects to alleviate poverty and improve the status of the peoples of the region.

The Delhi meeting, to be preceded by a meeting of the finance secretaries of member nations on September 13, will mainly focus on finalising the recommendations on the charter and by-laws of the fund, financial issues related to the roadmap to the SAARC economic union and development of the regional capital market, the officials added.

The SDF, the first-ever umbrella fund under the regional grouping, did not come into effect due to the reservations of a member country, which argued that it should not allow actors outside the region to be associated with the funding process.

‘Such a stance taken by a powerful member-country has created problems in developing mechanisms to involve bilateral or multilateral donors in the funding projects,’ an official observed.

Experts comprising officials of finance and foreign ministries as well as the central government are scheduled to meet in Kathmandu on August 21-22 to finalise their recommendations on the SDF’s charter and by-laws.

A separate experts’ group is also scheduled to meet in the Nepalese capital on August 24-25 for making their recommendations on greater economic integration, leading to the SAARC economic union.

A finance ministry official said that the August 24-25 meeting would come up with their recommendations on investment promotion, service sector development and formation of a regional customs union.

An official said that Dhaka strongly favoured the process of developing a capital market, arguing that the linkage of capital markets mobilises funds for the domestic markets.

‘If we have such a mechanism, an aspirant Bangladeshi company can easily register itself in any of the regional stock markets and try to get operational funds,’ added the official.

The proposed SAARC development fund will have three windows, namely social, infrastructural and economic.

The social window, with an initial amount of $300 million, is expected to fund poverty alleviation programmes and projects among others. Through the infrastructure window, funds will be mobilised from within and beyond the region to finance infrastructure projects, while the economic window will fund other non-infrastructure commercial projects.

In 2005 the SAARC countries decided to reconstitute the existing South Asian Development Fund (SADF) and establish a SAARC Development Fund, an umbrella organisation for all SAARC development funding.

Source: New Age ( Dhaka)