A SEMINAR on establishing and managing trust funds was held at the 18th Forum Economic Ministers Meeting (FEMM) in Honiara on Thursday.
It was chaired and moderated by the Secretary General of the Pacific Islands Forum, Tuiloma Neroni Slade with presentations from the World Bank Group, Government of Tonga, Federated States of Micronesia (FSM) and Cook Islands.
During the session ministers highlighted important issues relating to experiences and challenges of establishing and managing trust funds in the region.
Mr Slade said trust funds are not new to the region as a number of Forum Island countries have had experience and continue to operate it.
He said that Northern Pacific Countries such as the FSM and the Republic of Marshall Islands (RMI) are operating it which is funded by United States of America.
“Melanesian countries, including Papua New Guinea (PNG) and Timor Leste have Trust Funds which are funded by new natural resources, while Kiribati and Nauru have property rights and exhausted natural resources trust funds,” said Mr Slade.
Meanwhile, Ekaterina Gratcheva from the World Bank presented on lessons in managing sovereign assets in the Pacific while Dr Aisake Eke, Tonga’s Minister for Finance and National Planning, shares his country’s experience with climate change trust fund, one of the special purposes of trust funds in the pacific.
The Director-office of Statistics Budget and Economic Management and Compact Management from FSM, Evelyn Adolph presented on the challenges in management of trust funds, from FSM’s country perspective with respect to compact funds management.
Richard Neves, Financial Secretary of Cook Islands shared his experience with trust funds in Timor Leste and Cook Islands fund.
Slade added that trust funds create both opportunities and challenges for a country to transform the resources which are held in trust, whether they be from abundance of natural resources or donor funds, into well-managed financial assets and ultimately to tangible development.
The seminar spawned great interest from Forum member countries on best practices and investment decisions especially with the case study of Kiribati, labelled as the largest of the trust fund in the pacific region and other country experiences presented during the panel discussion.
Based on the seminar discussion Slade stressed the importance of having well-functioning, well-managed trust funds with strong governance framework to translate the resources held in trust to fund sustainable socio-economic development both for current and future generations.
“For the trust fund to operate efficiently and to contribute optimally to a country’s development both in the short and long term, it is highly crucial for the trust fund to be established under strong and effective governance mechanism, based on internationally agreed principles and best practices,” he said.
“Without strong governance and accountability mechanisms, as well as prudential financial management practices, macroeconomic and governance risks are high.”
By STEPHEN DIISANGO