Chapter LXX: Section 3: , telephone 886 (2) 2709-2000, FAX 886 (2) 2702-7675, (5)

Mongolia:
Economic activity traditionally has been based on
agriculture and breeding of livestock. Mongolia also has extensive
mineral deposits: copper, coal, molybdenum, tin, tungsten, and gold
account for a large part of industrial production. Soviet
assistance, at its height one-third of GDP, disappeared almost
overnight in 1990-91, at the time of the dismantlement of the USSR.
Mongolia was driven into deep recession, which was prolonged by the
Mongolian People's Revolutionary Party's (MPRP) reluctance to
undertake serious economic reform. The Democratic Coalition (DC)
government has embraced free-market economics, easing price
controls, liberalizing domestic and international trade, and
attempting to restructure the banking system and the energy sector.
Major domestic privatization programs were undertaken, as well as
the fostering of foreign investment through international tender of
the oil distribution company, a leading cashmere company, and banks.
Reform was held back by the ex-communist MPRP opposition and by the
political instability brought about through four successive
governments under the DC. Economic growth picked up in 1997-99 after
stalling in 1996 due to a series of natural disasters and declines
in world prices of copper and cashmere. In August and September
1999, the economy suffered from a temporary Russian ban on exports
of oil and oil products, and Mongolia remains vulnerable in this
sector. Mongolia joined the World Trade Organization (WTrO) in 1997.
The international donor community pledged over $300 million per year
at the last Consultative Group Meeting, held in Ulaanbaatar in June
1999. The MPRP government, elected in July 2000, is anxious to
improve the investment climate; it must also deal with a heavy
burden of external debt.

Montserrat:
Severe volcanic activity, which began in July 1995, has
put a damper on this small, open economy. A catastrophic eruption in
June 1997 closed the airports and seaports, causing further economic
and social dislocation. Two-thirds of the 12,000 inhabitants fled
the island. Some began to return in 1998, but lack of housing
limited the number. The agriculture sector continued to be affected
by the lack of suitable land for farming and the destruction of
crops. Prospects for the economy depend largely on developments in
relation to the volcano and on public sector construction activity.
The UK committed to a three year $125 million aid program in 1999 to
help reconstruct the economy.

Morocco:
Morocco faces the problems typical of developing countries
- restraining government spending, reducing constraints on private
activity and foreign trade, and achieving sustainable economic
growth. Following structural adjustment programs supported by the
IMF, World Bank, and the Paris Club, the dirham is now fully
convertible for current account transactions, and reforms of the
financial sector have been implemented. Drought conditions depressed
activity in the key agricultural sector and contributed to a
stagnant economy in 1999 and 2000. During that time, however,
Morocco reported large foreign exchange inflows from the sale of a
mobile telephone license and partial privatization of the
state-owned telecommunications company. Favorable rainfalls have led
Morocco to predict a growth of 1% for 2001. Formidable long-term
challenges include: servicing the external debt; preparing the
economy for freer trade with the EU; and improving education and
attracting foreign investment to boost living standards and job
prospects for Morocco's youthful population.

Mozambique:
Before the peace accord of October 1992, Mozambique's
economy was devastated by a protracted civil war and socialist
mismanagement. In 1994, it ranked as one of the poorest countries in
the world. Since then, Mozambique has undertaken a series of
economic reforms. Almost all aspects of the economy have been
liberalized to some extent. More than 900 state enterprises have
been privatized. A value-added tax, introduced in 1999, launched the
government's comprehensive tax reform program. Pending are much
needed commercial code reform and greater private sector involvement
in the transportation, telecommunications, and energy sectors. Since
1996, inflation has been low and foreign exchange rates relatively
stable. Albeit from a small base, Mozambique's economy grew at an
annual 10% rate in 1997-99, one of the highest growth rates in the
world. Growth slowed and inflation rose in 2000 due to devastating
flooding in the early part of the year. Both indicators should
recover in 2001. The country depends on foreign assistance to
balance the budget and to pay for a trade imbalance in which imports
greatly outnumber exports. The trade situation should improve in the
medium term, however, as trade and transportation links to South
Africa and the rest of the region have been improved and sizeable
foreign investments are beginning to materialize. Among these
investments are metal production (aluminum, steel), natural gas,
power generation, agriculture, fishing, timber, and transportation
services. Mozambique has received a formal cancellation of a large
portion of its external debt through an IMF initiative and is
scheduled to receive additional relief.

Namibia:
The economy is heavily dependent on the extraction and
processing of minerals for export. Mining accounts for 20% of GDP.
Namibia is the fourth-largest exporter of nonfuel minerals in Africa
and the world's fifth-largest producer of uranium. Rich alluvial
diamond deposits make Namibia a primary source for gem-quality
diamonds. Namibia also produces large quantities of lead, zinc, tin,
silver, and tungsten. Half of the population depends on agriculture
(largely subsistence agriculture) for its livelihood. Namibia must
import some of its food. Although per capita GDP is four times the
per capita GDP of Africa's poorer countries, the majority of
Namibia's people live in pronounced poverty because of large-scale
unemployment, the great inequality of income distribution, and the
large amount of wealth going to foreigners. The Namibian economy has
close links to South Africa. GDP growth in 2000 was led by gains in
the diamond and fish sectors. Agreement has been reached on the
privatization of several more enterprises in coming years, which
should stimulate long-run foreign investment. Growth in 2001 could
be 5.5% provided the world economy remains stable.

Nauru:
Revenues of this tiny island have come from exports of
phosphates, but reserves are expected to be exhausted within five to
ten years. Phosphate production has declined since 1989, as demand
has fallen in traditional markets and as the marginal cost of
extracting the remaining phosphate increases, making it less
internationally competitive. While phosphates have given Nauruans
one of the highest per capita incomes in the Third World, few other
resources exist with most necessities being imported, including
fresh water from Australia. The rehabilitation of mined land and the
replacement of income from phosphates are serious long-term
problems. In anticipation of the exhaustion of Nauru's phosphate
deposits, substantial amounts of phosphate income have been invested
in trust funds to help cushion the transition and provide for
Nauru's economic future. The government has been borrowing heavily
from the trusts to finance fiscal deficits. To cut costs the
government has called for a freezing of wages, a reduction of
over-staffed public service departments, privatization of numerous
government agencies, and closure of some overseas consulates. In
recent years Nauru has encouraged the registration of offshore banks
and corporations. Tens of billions of dollars have been channeled
through their accounts. Few comprehensive statistics on the Nauru
economy exist, with estimates of Nauru's per capita GDP varying
widely.

Navassa Island:
no economic activity

Nepal:
Nepal is among the poorest and least developed countries in
the world with nearly half of its population living below the
poverty line. Agriculture is the mainstay of the economy, providing
a livelihood for over 80% of the population and accounting for 41%
of GDP. Industrial activity mainly involves the processing of
agricultural produce including jute, sugarcane, tobacco, and grain.
Production of textiles and carpets has expanded recently and
accounted for about 80% of foreign exchange earnings in the past
three years. Agricultural production is growing by about 5% on
average as compared with annual population growth of 2.3%. Since May
1991, the government has been moving forward with economic reforms,
particularly those that encourage trade and foreign investment,
e.g., by reducing business licenses and registration requirements in
order to simplify investment procedures. The government has also
been cutting expenditures by reducing subsidies, privatizing state
industries, and laying off civil servants. More recently, however,
political instability - five different governments over the past few
years - has hampered Kathmandu's ability to forge consensus to
implement key economic reforms. Nepal has considerable scope for
accelerating economic growth by exploiting its potential in
hydropower and tourism, areas of recent foreign investment interest.
Prospects for foreign trade or investment in other sectors will
remain poor, however, because of the small size of the economy, its
technological backwardness, its remoteness, its landlocked
geographic location, and its susceptibility to natural disaster. The
international community's role of funding more than 60% of Nepal's
development budget and more than 28% of total budgetary expenditures
will likely continue as a major ingredient of growth.

Netherlands:
The Netherlands is a prosperous and open economy
depending heavily on foreign trade. The economy is noted for stable
industrial relations, moderate inflation, a sizable current account
surplus, and an important role as a European transportation hub.
Industrial activity is predominantly in food processing, chemicals,
petroleum refining, and electrical machinery. A highly mechanized
agricultural sector employs no more than 4% of the labor force but
provides large surpluses for the food-processing industry and for
exports. The Dutch rank third worldwide in value of agricultural
exports, behind the US and France. The Dutch economy has expanded by
3% or more in each of the last four years and real GDP growth is
likely to be about 3.6% in 2001. The government in 2001 will
implement its most comprehensive tax reform since World War II,
designed to reduce high income tax levels and redirect the fiscal
burden onto consumption. The Dutch were among the first 11 EU
countries establishing the euro currency zone on 1 January 1999.

Netherlands Antilles:
Tourism, petroleum refining, and offshore
finance are the mainstays of this small economy, which is closely
tied to the outside world. Although GDP has declined slightly in
each of the past five years, the islands enjoy a high per capita
income and a well-developed infrastructure as compared with other
countries in the region. Almost all consumer and capital goods are
imported, with Venezuela, the US, and Mexico being the major
suppliers. Poor soils and inadequate water supplies hamper the
development of agriculture.

New Caledonia:
New Caledonia has more than 20% of the world's known
nickel resources. In recent years, the economy has suffered because
of depressed international demand for nickel, the principal source
of export earnings. Only a negligible amount of the land is suitable
for cultivation, and food accounts for about 20% of imports. In
addition to nickel, the substantial financial support from France
and tourism are keys to the health of the economy. The situation in
1998 was clouded by the spillover of financial problems in East Asia
and by lower prices for nickel. Nickel prices jumped in 1999-2000,
and large additions were made to capacity. French Government
interests in the New Caledonian nickel industry are being
transferred to local ownership.

New Zealand:
Since 1984 the government has accomplished major
economic restructuring, moving an agrarian economy dependent on
concessionary British market access toward a more industrialized,
free market economy that can compete globally. This dynamic growth
has boosted real incomes, broadened and deepened the technological
capabilities of the industrial sector, and contained inflationary
pressures. Inflation remains among the lowest in the industrial
world. Per capita GDP has been moving up toward the levels of the
big West European economies. New Zealand's heavy dependence on trade
leaves its growth prospects vulnerable to economic performance in
Asia, Europe, and the US. With the FY00/01 budget pushing up pension
and other public outlays, the government's ability to meet fiscal
targets will depend on sustained economic growth.

Nicaragua:
Nicaragua, one of the hemisphere's poorest countries,
faces low per capita income, flagging socio-economic indicators, and
huge external debt. While the country has made progress toward
macro-economic stabilization over the past few years, a banking
crisis and scandal has shaken the economy. Managua will continue to
be dependent on international aid and debt relief under the Heavily
Indebted Poor Countries (HIPC) initiative. Donors have made aid
conditional on improving governability, the openness of government
financial operation, poverty alleviation, and human rights.
Nicaragua met the conditions for additional debt service relief in
December 2000. Growth should remain moderate to high in 2001.

Niger:
Niger is a poor, landlocked Sub-Saharan nation, whose economy
centers on subsistence agriculture, animal husbandry, reexport
trade, and increasingly less on uranium, because of declining world
demand. The 50% devaluation of the West African franc in January
1994 boosted exports of livestock, cowpeas, onions, and the products
of Niger's small cotton industry. The government relies on bilateral
and multilateral aid - which was suspended following the April 1999
coup d'etat - for operating expenses and public investment. In 2000,
the World Bank approved a structural adjustment loan of $35 million
to help support fiscal reforms. However, reforms could prove
difficult given the government's bleak financial situation.

Nigeria:
The oil-rich Nigerian economy, long hobbled by political
instability, corruption, and poor macroeconomic management, is
undergoing substantial economic reform under the new civilian
administration. Nigeria's former military rulers failed to diversify
the economy away from overdependence on the capital-intensive oil
sector, which provides 20% of GDP, 95% of foreign exchange earnings,
and about 65% of budgetary revenues. The largely subsistence
agricultural sector has failed to keep up with rapid population
growth, and Nigeria, once a large net exporter of food, now must
import food. Following the signing of an IMF stand-by agreement in
August 2000, Nigeria received a debt-restructuring deal from the
Paris Club and a $1 billion loan from the IMF, both contingent on
economic reforms. Increases in foreign investment and oil production
combined with high world oil prices should push growth over 4% in
2001-02.

Niue:
Government expenditures regularly exceed revenues, and the
shortfall is made up by critically needed grants from New Zealand
that are used to pay wages to public employees. Niue has cut
government expenditures by reducing the public service by almost
half. The agricultural sector consists mainly of subsistence
gardening, although some cash crops are grown for export. Industry
consists primarily of small factories to process passion fruit, lime
oil, honey, and coconut cream. The sale of postage stamps to foreign
collectors is an important source of revenue. The island in recent
years has suffered a serious loss of population because of migration
of Niueans to New Zealand. Efforts to increase GDP include the
promotion of tourism and a financial services industry.

Norfolk Island:
Tourism, the primary economic activity, has steadily
increased over the years and has brought a level of prosperity
unusual among inhabitants of the Pacific islands. The agricultural
sector has become self-sufficient in the production of beef,
poultry, and eggs.

Northern Mariana Islands:
The economy benefits substantially from
financial assistance from the US. The rate of funding has declined
as locally generated government revenues have grown. The key tourist
industry employs about 50% of the work force and accounts for
roughly one-fourth of GDP. Japanese tourists predominate. Annual
tourist entries have exceeded one-half million in recent years, but
financial difficulties in Japan have caused a temporary slowdown.
The agricultural sector is made up of cattle ranches and small farms
producing coconuts, breadfruit, tomatoes, and melons. Garment
production is by far the most important industry with employment of
12,000 mostly Chinese workers and sizable shipments to the US under
duty and quota exemptions.

Norway:
The Norwegian economy is a prosperous bastion of welfare
capitalism, featuring a combination of free market activity and
government intervention. The government controls key areas, such as
the vital petroleum sector (through large-scale state enterprises).
The country is richly endowed with natural resources - petroleum,
hydropower, fish, forests, and minerals - and is highly dependent on
its oil production and international oil prices; in 1999, oil and
gas accounted for 35% of exports. Only Saudi Arabia exports more oil
than Norway. Oslo opted to stay out of the EU during a referendum in
November 1994. Growth picked up in 2000 to 2.7%, compared to the
meager 0.8% of 1999, but may fall back in 2001. The government moved
ahead with privatization in 2000, even proposing the sale of up to
one-third of the 100% state-owned oil company Statoil. Despite their
high per capita income and generous welfare benefits, Norwegians
worry about that time in the next two decades when the oil and gas
begin to run out. Accordingly, Norway has been saving its
oil-boosted budget surpluses in a Government Petroleum Fund, which
is invested abroad and now is valued at more than $43 billion.

Oman:
Oman's economic performance improved significantly in 2000 due
largely to the upturn in oil prices. The government is moving ahead
with privatization of its utilities, the development of a body of
commercial law to facilitate foreign investment, and increased
budgetary outlays. Oman continues to liberalize its markets and
joined the World Trade Organization (WTrO) in November 2000.

Pacific Ocean:
The Pacific Ocean is a major contributor to the world
economy and particularly to those nations its waters directly touch.
It provides low-cost sea transportation between East and West,
extensive fishing grounds, offshore oil and gas fields, minerals,
and sand and gravel for the construction industry. In 1996, over 60%
of the world's fish catch came from the Pacific Ocean. Exploitation
of offshore oil and gas reserves is playing an ever-increasing role
in the energy supplies of Australia, NZ, China, US, and Peru. The
high cost of recovering offshore oil and gas, combined with the wide
swings in world prices for oil since 1985, has slowed but not
stopped new drillings.

Pakistan:
Pakistan is a poor, heavily populated country, suffering
from internal political disputes, lack of foreign investment, and a
costly confrontation with neighboring India. Pakistan's economic
outlook continues to be marred by its weak foreign exchange
position, which relies on international creditors for hard currency
inflows. The MUSHARRAF government will face an estimated $21 billion
in foreign debt coming due in 2000-03, despite having rescheduled
nearly $2 billion in debt with Paris Club members. Foreign loans and
grants provide approximately 25% of government revenue, but debt
service obligations total nearly 50% of government expenditure.
Although Pakistan successfully negotiated a $600 million IMF
Stand-By Arrangement, future loan installments will be jeopardized
if Pakistan misses critical IMF benchmarks on revenue collection and
the fiscal deficit. MUSHARRAF has complied largely with IMF
recommendations to raise petroleum prices, widen the tax net,
privatize public sector assets, and improve the balance of trade.
However, Pakistan's economic prospects remain uncertain; too little
has changed despite the new administration's intentions. Foreign
exchange reserves hover at roughly $1 billion, GDP growth hinges on
crop performance, the import bill has been hammered by high oil
prices, and both foreign and domestic investors remain wary of
committing to projects in Pakistan.

Palau:
The economy consists primarily of subsistence agriculture and
fishing. The government is the major employer of the work force,
relying heavily on financial assistance from the US. The population
enjoys a per capita income of twice that of the Philippines and much
of Micronesia. Long-run prospects for the tourist sector have been
greatly bolstered by the expansion of air travel in the Pacific and
the rising prosperity of leading East Asian countries.

Palmyra Atoll:
no economic activity

Panama:
Panama's economy is based primarily on a well-developed
services sector that accounts for three-fourths of GDP. Services
include the Panama Canal, banking, the Colon Free Zone, insurance,
container ports, flagship registry, and tourism. A slump in Colon
Free Zone and agricultural exports, high oil prices, and the
withdrawal of US military forces held back economic growth in 2000.
The government plans public works programs, tax reforms, and new
regional trade agreements in order to stimulate growth in 2001.

Papua New Guinea:
Papua New Guinea is richly endowed with natural
resources, but exploitation has been hampered by the rugged terrain
and the high cost of developing infrastructure. Agriculture provides
a subsistence livelihood for 85% of the population. Mineral
deposits, including oil, copper, and gold, account for 72% of export
earnings. The 3.4% average annual growth rate of GDP during
1979-1998 conceals considerable year-to-year variation resulting
from external economic shocks, natural disasters, and economic
management problems. There has been little growth in the last half
of the 1990s, with real GDP in 1999 barely 3% higher than in 1994,
not enough to compensate for population growth. A new administration
under the leadership of Prime Minister Mekere MORAUTA in July 1999
has promised to restore integrity to state institutions, to
stabilize the kina, to restore stability to the national budget, to
privatize public enterprises where appropriate, and to ensure
ongoing peace on Bougainville. The government has had considerable
success in attracting international support, specifically gaining
the support of the IMF and the World Bank in securing development
assistance loans. Significant challenges remain for MORAUTA,
however, including gaining further investor confidence, specifically
for the proposed Papua New Guinea-Australia oil pipeline, continuing
efforts to privatize government assets, and in maintaining the
support from members of Parliament who after 15 July 2001 can
dismiss him with a vote of no-confidence.

Paracel Islands:
China announced plans in 1997 to open the islands
for tourism.

Paraguay:
Paraguay has a market economy marked by a large informal
sector. The informal sector features both reexport of imported
consumer goods to neighboring countries as well as the activities of
thousands of microenterprises and urban street vendors. Because of
the importance of the informal sector, accurate economic measures
are difficult to obtain. A large percentage of the population
derives their living from agricultural activity, often on a
subsistence basis. The formal economy grew by an average of about 3%
annually in 1995-97, but GDP declined slightly in 1998 and 1999. On
a per capita basis, real income has stagnated at 1980 levels. Most
observers attribute Paraguay's poor economic performance to
political uncertainty, corruption, lack of progress on structural
reform, substantial internal and external debt, and deficient
infrastructure. Growth rebounded slightly in 2000.

Peru:
The Peruvian economy has become increasingly market-oriented,
with major privatizations completed since 1990 in the mining,
electricity, and telecommunications industries. Thanks to strong
foreign investment and the cooperation between the FUJIMORI
government and the IMF and World Bank, growth was strong in 1994-97
and inflation was brought under control. In 1998, El Nino's impact
on agriculture, the financial crisis in Asia, and instability in
Brazilian markets undercut growth. And 1999 was another lean year
for Peru, with the aftermath of El Nino and the Asian financial
crisis working its way through the economy. Political instability
resulting from the presidential election and FUJIMORI's subsequent
departure from office limited economic growth in 2000.

Philippines:
In 1998 the Philippine economy - a mixture of
agriculture, light industry, and supporting services - deteriorated
as a result of spillover from the Asian financial crisis and poor
weather conditions. Growth fell to about -0.5% in 1998 from 5% in
1997, but recovered to about 3% in 1999 and 3.6% in 2000. The
government has promised to continue its economic reforms to help the
Philippines match the pace of development in the newly
industrialized countries of East Asia. The strategy includes
improving infrastructure, overhauling the tax system to bolster
government revenues, moving toward further deregulation and
privatization of the economy, and increasing trade integration with
the region.

Pitcairn Islands:
The inhabitants of this tiny economy exist on
fishing, subsistence farming, handicrafts, and postage stamps. The
fertile soil of the valleys produces a wide variety of fruits and
vegetables, including citrus, sugarcane, watermelons, bananas, yams,
and beans. Bartering is an important part of the economy. The major
sources of revenue are the sale of postage stamps to collectors and
the sale of handicrafts to passing ships.

Poland:
Poland has steadfastly pursued a policy of liberalizing the
economy and today stands out as one of the most successful and open
transition economies. GDP growth has been strong and steady since
1992 - the best performance in the region. The privatization of
small and medium state-owned companies and a liberal law on
establishing new firms has allowed for the rapid development of a
vibrant private sector. In contrast, Poland's large agricultural
sector remains handicapped by structural problems, surplus labor,
inefficient small farms, and lack of investment. Restructuring and
privatization of "sensitive sectors" (e.g., coal, steel, railroads,
and energy) has begun. Structural reforms in health care, education,
the pension system, and state administration have resulted in larger
than expected fiscal pressures. Further progress in public finance
depends mainly on privatization of Poland's remaining state sector.
The government's determination to enter the EU as soon as possible
affects most aspects of its economic policies. Improving Poland's
outsized current account deficit and reining in inflation are
priorities. Warsaw leads the region in foreign investment and needs
a continued large inflow.

Portugal:
Portugal is an upcoming capitalist economy with a per
capita GDP two-thirds that of the four big West European economies.
The country qualified for the European Monetary Union (EMU) in 1998
and joined with 10 other European countries in launching the euro on
1 January 1999. The year 2000 was marked by moderation in growth,
inflation, and unemployment. The country continues to run a sizable
trade deficit. The government is working to reform the tax system,
to modernize capital plant, and to increase the country's
competitiveness in the increasingly integrated world markets. Growth
is expected to fall off slightly in 2001. Improvement in the
education sector is critical to the long-run catch-up process.

Puerto Rico:
Puerto Rico has one of the most dynamic economies in
the Caribbean region. A diverse industrial sector has surpassed
agriculture as the primary locus of economic activity and income.
Encouraged by duty-free access to the US and by tax incentives, US
firms have invested heavily in Puerto Rico since the 1950s. US
minimum wage laws apply. Sugar production has lost out to dairy
production and other livestock products as the main source of income
in the agricultural sector. Tourism has traditionally been an
important source of income, with estimated arrivals of nearly 5
million tourists in 1999. Prospects for 2001 are clouded by a
probable slowing down in both the construction and tourist sectors
and by increasing inflation, particularly in energy and food prices;
estimated growth will be 2%.

Qatar:
Oil accounts for more than 30% of GDP, roughly 80% of export
earnings, and 66% of government revenues. Proved oil reserves of 3.7
billion barrels should ensure continued output at current levels for
23 years. Oil has given Qatar a per capita GDP comparable to that of
the leading West European industrial countries. Qatar's proved
reserves of natural gas exceed 7 trillion cubic meters, more than 5%
of the world total, third largest in the world. Production and
export of natural gas are becoming increasingly important. Long-term
goals feature the development of offshore petroleum and the
diversification of the economy. In 2000, Qatar posted its highest
ever trade surplus of $6 billion, due mainly to high oil prices and
increased natural gas exports.

Reunion:
The economy has traditionally been based on agriculture.
Sugarcane has been the primary crop for more than a century, and in
some years it accounts for 85% of exports. The government has been
pushing the development of a tourist industry to relieve high
unemployment, which amounts to more than 40% of the labor force. The
gap in Reunion between the well-off and the poor is extraordinary
and accounts for the persistent social tensions. The white and
Indian communities are substantially better off than other segments
of the population, often approaching European standards, whereas
minority groups suffer the poverty and unemployment typical of the
poorer nations of the African continent. The outbreak of severe
rioting in February 1991 illustrates the seriousness of
socioeconomic tensions. The economic well-being of Reunion depends
heavily on continued financial assistance from France.

Romania:
Romania, one of the poorest countries in Central and
Eastern Europe, began the transition from communism in 1989 with a
largely obsolete industrial base and a pattern of output unsuited to
the country's needs. Over the past decade economic restructuring has
lagged behind most other countries in the region. Consequently,
living standards have continued to fall - real wages are down over
40%. Corruption too has worsened. The EU ranks Romania last among
enlargement candidates, and the European Bank for Reconstruction and
Development (EBRD) rates Romania's transition progress the region's
worst. The country emerged in 2000 from a punishing three-year
recession thanks to strong demand in EU export markets. A new
government elected in November 2000 promises to promote economic
reform. Bucharest hopes to receive financial and technical
assistance from international financial institutions and Western
governments; negotiations over a new IMF standby agreement are to
begin early in 2001. If reform stalls, Romania's ability to borrow
from both public and private sources could quickly dry up, leading
to another financial crisis.

Russia:
A decade after the implosion of the Soviet Union in 1991,
Russia is still struggling to establish a modern market economy and
achieve strong economic growth. In contrast to its trading partners
in Central Europe - which were able to overcome the initial
production declines that accompanied the launch of market reforms
within three to five years - Russia saw its economy contract for
five years, as the executive and legislature dithered over the
implementation of many of the basic foundations of a market economy.
Russia achieved a slight recovery in 1997, but the government's
stubborn budget deficits and the country's poor business climate
made it vulnerable when the global financial crisis swept through in
1998. The crisis culminated in the August depreciation of the ruble,
a debt default by the government, and a sharp deterioration in
living standards for most of the population. The economy rebounded
in 1999 and 2000, buoyed by the competitive boost from the weak
ruble and a surging trade surplus fueled by rising world oil prices.
This recovery, along with a renewed government effort in 2000 to
advance lagging structural reforms, have raised business and
investor confidence over Russia's prospects in its second decade of
transition. Yet serious problems persist. Russia remains heavily
dependent on exports of commodities, particularly oil, natural gas,
metals, and timber, which account for over 80% of exports, leaving
the country vulnerable to swings in world prices. Russia's
agricultural sector remains beset by uncertainty over land ownership
rights, which has discouraged needed investment and restructuring.
Another threat is negative demographic trends, fueled by low birth
rates and a deteriorating health situation - including an alarming
rise in AIDS cases - that have contributed to a nearly 2% drop in
the population since 1992. Russia's industrial base is increasingly
dilapidated and must be replaced or modernized if the country is to
achieve sustainable economic growth. Other problems include
widespread corruption, capital flight, and brain drain.

Rwanda:
Rwanda is a rural country with about 90% of the population
engaged in (mainly subsistence) agriculture. It is the most densely
populated country in Africa; is landlocked; and has few natural
resources and minimal industry. Primary exports are coffee and tea.
The 1994 genocide decimated Rwanda's fragile economic base, severely
impoverished the population, particularly women, and eroded the
country's ability to attract private and external investment.
However, Rwanda has made significant progress in stabilizing and
rehabilitating its economy. GDP has rebounded, and inflation has
been curbed. In June 1998, Rwanda signed an Enhanced Structural
Adjustment Facility (ESAF) with the IMF. Rwanda has also embarked
upon an ambitious privatization program with the World Bank.
Continued growth in 2001 depends on the maintenance of international
aid levels and the strengthening of world prices of coffee and tea.

Saint Helena:
The economy depends largely on financial assistance
from the UK, which amounted to about $5 million in 1997 or almost
one-half of annual budgetary revenues. The local population earns
income from fishing, the raising of livestock, and sales of
handicrafts. Because there are few jobs, 25% of the work force has
left to seek employment on Ascension Island, on the Falklands, and
in the UK.

Saint Kitts and Nevis:
The economy has traditionally depended on the
growing and processing of sugarcane; decreasing world prices have
hurt the industry in recent years. Tourism, export-oriented
manufacturing, and offshore banking activity have assumed larger
roles. Most food is imported. The government has undertaken a
program designed to revitalize the faltering sugar sector. It is
also working to improve revenue collection in order to better fund
social programs. In 1997 some leaders in Nevis were urging
separation from Saint Kitts on the basis that Nevis was paying far
more in taxes than it was receiving in government services, but the
vote on cessation failed in August 1998. In late September 1998,
Hurricane Georges caused approximately $445 million in damages and
limited GDP growth for the year.

Saint Lucia:
The recent changes in the EU import preference regime
and the increased competition from Latin American bananas have made
economic diversification increasingly important in Saint Lucia.
Improvement in the construction sector and growth of the tourism
industry helped expand GDP in 1998-99. The agriculture sector
registered its fifth year of decline in 1997 primarily because of a
severe decline in banana production. The manufacturing sector is the
most diverse in the Eastern Caribbean, and the government is
beginning to develop regulations for the small offshore financial
sector.

Saint Pierre and Miquelon:
The inhabitants have traditionally earned
their livelihood by fishing and by servicing fishing fleets
operating off the coast of Newfoundland. The economy has been
declining, however, because of disputes with Canada over fishing
quotas and a steady decline in the number of ships stopping at Saint
Pierre. In 1992, an arbitration panel awarded the islands an
exclusive economic zone of 12,348 sq km to settle a longstanding
territorial dispute with Canada, although it represents only 25% of
what France had sought. The islands are heavily subsidized by France
to the great betterment of living standards. The government hopes an
expansion of tourism will boost economic prospects.

Saint Vincent and the Grenadines:
Agriculture, dominated by banana
production, is the most important sector of this lower-middle-income
economy. The services sector, based mostly on a growing tourist
industry, is also important. The government has been relatively
unsuccessful at introducing new industries, and a high unemployment
rate persists. The continuing dependence on a single crop represents
the biggest obstacle to the islands' development; tropical storms
wiped out substantial portions of crops in both 1994 and 1995. The
tourism sector has considerable potential for development over the
next decade. Recent growth has been stimulated by strong activity in
the construction sector and an improvement in tourism. There is a
small manufacturing sector and a small offshore financial sector
whose particularly restrictive secrecy laws have caused some
international concern.

Samoa:
The economy of Samoa has traditionally been dependent on
development aid, family remittances from overseas, and agricultural
exports. The country is vulnerable to devastating storms.
Agriculture employs two-thirds of the labor force, and furnishes 90%
of exports, featuring coconut cream, coconut oil, and copra. The
manufacturing sector mainly processes agricultural products. Tourism
is an expanding sector, accounting for 15% of GDP; about 85,000
tourists visited the islands in 2000. The Samoan Government has
called for deregulation of the financial sector, encouragement of
investment, and continued fiscal discipline. Observers point to the
flexibility of the labor market as a basic strength for future
economic advances. Foreign reserves are in a relatively healthy
state, the external debt is stable, and inflation is low.

San Marino:
The tourist sector contributes over 50% of GDP. In 1999
more than 3 million tourists visited San Marino. The key industries
are banking, wearing apparel, electronics, and ceramics. Main
agricultural products are wine and cheeses. The per capita level of
output and standard of living are comparable to those of the most
prosperous regions of Italy, which supplies much of its food.

Sao Tome and Principe:
This small poor island economy has become
increasingly dependent on cocoa since independence 25 years ago.
However, cocoa production has substantially declined because of
drought and mismanagement. The resulting shortage of cocoa for
export has created a persistent balance-of-payments problem. Sao
Tome has to import all fuels, most manufactured goods, consumer
goods, and a significant amount of food. Over the years, it has been
unable to service its external debt and has had to depend on
concessional aid and debt rescheduling. Sao Tome benefited from $200
million in debt relief in December 2000 under the Highly Indebted
Poor Countries (HIPC) program. Considerable potential exists for
development of a tourist industry, and the government has taken
steps to expand facilities in recent years. The government also has
attempted to reduce price controls and subsidies, but economic
growth has remained sluggish. Sao Tome is also optimistic that
significant petroleum discoveries are forthcoming in its territorial
waters in the oil-rich waters of the Gulf of Guinea. Corruption
scandals continue to weaken the economy. At the same time, progress
in the economic reform program has attracted international financial
institutions' support, and GDP growth will likely rise to at least
4% in 2001-02.

Saudi Arabia:
This is an oil-based economy with strong government
controls over major economic activities. Saudi Arabia has the
largest reserves of petroleum in the world (26% of the proved
reserves), ranks as the largest exporter of petroleum, and plays a
leading role in OPEC. The petroleum sector accounts for roughly 75%
of budget revenues, 40% of GDP, and 90% of export earnings. About
35% of GDP comes from the private sector. Roughly 5 million foreign
workers play an important role in the Saudi economy, for example, in
the oil and service sectors. Saudi Arabia was a key player in the
successful efforts of OPEC and other oil producing countries to
raise the price of oil in 1999-2000 to its highest level since the
Gulf war by reducing production. Riyadh expects to have a moderate
budget deficit in 2001, in part because of increased spending for
education and other social programs. The government in 1999
announced plans to begin privatizing the electricity companies,
which follows the ongoing privatization of the telecommunications
company. The government is expected to continue calling for private
sector growth to lessen the kingdom's dependence on oil and increase
employment opportunities for the swelling Saudi population.
Shortages of water and rapid population growth will constrain
government efforts to increase self-sufficiency in agricultural
products.

Senegal:
In January 1994, Senegal undertook a bold and ambitious
economic reform program with the support of the international donor
community. This reform began with a 50% devaluation of Senegal's
currency, the CFA franc, which is linked at a fixed rate to the
French franc. Government price controls and subsidies have been
steadily dismantled. After seeing its economy contract by 2.1% in
1993, Senegal made an important turnaround, thanks to the reform
program, with real growth in GDP averaging 5% annually in 1995-99.
Annual inflation has been pushed down to 2%, and the fiscal deficit
has been cut to less than 1.5% of GDP. Investment rose steadily from
13.8% of GDP in 1993 to 16.5% in 1997. As a member of the West
African Economic and Monetary Union (UEMOA), Senegal is working
toward greater regional integration with a unified external tariff.
Senegal also realized full Internet connectivity in 1996, creating a
miniboom in information technology-based services. Private activity
now accounts for 82% of GDP. On the negative side, Senegal faces
deep-seated urban problems of chronic unemployment, juvenile
delinquency, and drug addiction. Real GDP growth is expected to rise
above 6%, while inflation is likely to hold at 2% in 2001-02.

Seychelles:
Since independence in 1976, per capita output in this
Indian Ocean archipelago has expanded to roughly seven times the old
near-subsistence level. Growth has been led by the tourist sector,
which employs about 30% of the labor force and provides more than
70% of hard currency earnings, and by tuna fishing. In recent years
the government has encouraged foreign investment in order to upgrade
hotels and other services. At the same time, the government has
moved to reduce the dependence on tourism by promoting the
development of farming, fishing, and small-scale manufacturing. The
vulnerability of the tourist sector was illustrated by the sharp
drop in 1991-92 due largely to the Gulf war. Although the industry
has rebounded, the government recognizes the continuing need for
upgrading the sector in the face of stiff international competition.
Other issues facing the government are the curbing of the budget
deficit and further privatization of public enterprises. Growth
slowed in 1998-2000, due to sluggish tourist and tuna sectors. Tight
controls on exchange rates and the scarcity of foreign exchange have
hindered short-term economic prospects. The black market value of
the Seychelles ruppee is half the official exchange rate; without a
devaluation of the currency the tourist sector should remain
sluggish as vacationers seek cheaper destinations such as Comoros,
Mauritius, and Madagascar.

Sierra Leone:
Sierra Leone is an extremely poor African nation with
tremendous inequality in income distribution. It does have
substantial mineral, agricultural, and fishery resources. However,
the economic and social infrastructure is not well developed, and
serious social disorders continue to hamper economic development.
About two-thirds of the working-age population engages in
subsistence agriculture. Manufacturing consists mainly of the
processing of raw materials and of light manufacturing for the
domestic market. Bauxite and rutile mines have been shut down by
civil strife. The major source of hard currency is found in the
mining of diamonds, the large majority of which are smuggled out of
the country. The resurgence of internal warfare in 1999 brought
another substantial drop in GDP, with GNP recovering part of the way
in 2000. The fate of the economy depends upon the maintenance of
domestic peace and the continued receipt of substantial aid from
abroad.

Singapore:
Singapore is blessed with a highly developed and
successful free-market economy, a remarkably open and
corruption-free business environment, stable prices, and the fifth
highest per capita GDP in the world. Exports, particularly in
electronics and chemicals, and services are the main drivers of the
economy. Mainly because of robust exports, especially electronic
goods, the economy grew 10.1% in 2000. Forecasters, however, are
projecting only 4%-6% growth in 2001 largely because of weaker
global demand, especially in the US. The government promotes high
levels of savings and investment through a mandatory savings scheme
and spends heavily in education and technology. It also owns
government-linked companies (GLCs) - particularly in manufacturing -
that operate as commercial entities. As Singapore looks to a future
increasingly marked by globalization, the country is positioning
itself as the region's financial and high-tech hub.

Slovakia:
Slovakia continues the difficult transition from a
centrally planned economy to a modern market economy. The economic
slowdown in 1999 stemmed from large budget and current account
deficits, fast-growing external debt, and persistent corruption.
Even though GDP growth reached only 2.2% in 2000, the year was
marked by positive developments such as foreign direct investment of
$1.5 billion, strong export performance, restructuring and
privatization in the banking sector, entry into the OECD, and
initial efforts to stem corruption. Strong challenges face the
government in 2001, especially the maintenance of fiscal balance,
the further privatization of the economy, and the reduction of
unemployment.

Slovenia:
Although Slovenia enjoys one of the highest GDPs per
capita among the transition economies of Central Europe, it needs to
speed up the privatization process and the dismantling of
restrictions on foreign investment. About 45% of the economy remains
in state hands, and the level of foreign direct investment inflows
as a percent of GDP is the lowest in the region. Analysts are
predicting between 4.0% and 4.2% growth for 2001. Export growth is
expected to slow in 2001 and 2002 as EU markets soften. Inflation
rose from 6.1% to 8.9% in 2000 and remains a matter of concern.

Solomon Islands:
The bulk of the population depends on agriculture,
fishing, and forestry for at least part of their livelihood. Most
manufactured goods and petroleum products must be imported. The
islands are rich in undeveloped mineral resources such as lead,
zinc, nickel, and gold. However, severe ethnic violence, the closing
of key business enterprises, and an empty government treasury have
led to a continuing economic downslide. Deliveries of crucial fuel
supplies (including those for electrical generation) by tankers have
become sporadic due to the government's inability to pay and attacks
against ships. Telecommunications are threatened by the lack of
technical and maintenance staff many of whom have left the country.

Somalia:
One of the world's poorest and least developed countries,
Somalia has few resources. Moreover, much of the economy has been
devastated by the civil war. Agriculture is the most important
sector, with livestock accounting for about 40% of GDP and about 65%
of export earnings. Nomads and semi-nomads, who are dependent upon
livestock for their livelihood, make up a large portion of the
population. Livestock and bananas are the principal exports; sugar,
sorghum, corn, fish, and qat are products for the domestic market.
The small industrial sector, based on the processing of agricultural
products, accounts for 10% of GDP; most facilities have been shut
down because of the civil strife. Moreover, ongoing civil
disturbances in Mogadishu and outlying areas have interfered with
any substantial economic advance and with international aid
arrangements. Due to the civil strife, economic data is susceptible
to an exceptionally wide margin of error.

South Africa:
South Africa is a middle-income, developing country
with an abundant supply of resources, well-developed financial,
legal, communications, energy, and transport sectors, a stock
exchange that ranks among the 10 largest in the world, and a modern
infrastructure supporting an efficient distribution of goods to
major urban centers throughout the region. However, growth has not
been strong enough to cut into the 30% unemployment, and daunting
economic problems remain from the apartheid era, especially the
problems of poverty and lack of economic empowerment among the
disadvantaged groups. Other problems are crime, corruption, and
HIV/AIDS. At the start of 2000, President MBEKI vowed to promote
economic growth and foreign investment, and to reduce poverty by
relaxing restrictive labor laws, stepping up the pace of
privatization, and cutting unneeded governmental spending.

South Georgia and the South Sandwich Islands:
Some fishing takes
place in adjacent waters. There is a potential source of income from
harvesting fin fish and krill. The islands receive income from
postage stamps produced in the UK.

Southern Ocean:
Fisheries in 1998-99 (1 July to 30 June) landed
119,898 metric tons, of which 85% was krill and 14% Patagonian
toothfish. International agreements were adopted in late 1999 to
reduce illegal, unreported, and unregulated fishing, which in the
1998-99 season landed five to six times more Patagonian toothfish
than the regulated fishery. In the 1999-2000 antarctic summer 13,193
tourists, most of them seaborne, visited the Southern Ocean and
Antarctica, compared to 10,013 the previous year. Nearly 16,000
tourists are expected during the 2000-01 season.

Spain:
Spain's mixed capitalist economy supports a GDP that on a per
capita basis is 80% that of the four leading West European
economies. Its center-right government successfully worked to gain
admission to the first group of countries launching the European
single currency on 1 January 1999. The AZNAR administration has
continued to advocate liberalization, privatization, and
deregulation of the economy and has introduced some tax reforms to
that end. Unemployment has been steadily falling under the AZNAR
administration but remains the highest in the EU at 14%. The
government intends to make further progress in changing labor laws
and reforming pension schemes, which are key to the sustainability
of both Spain's internal economic advances and its competitiveness
in a single currency area. Adjusting to the monetary and other
economic policies of an integrated Europe - and further reducing
unemployment - will pose challenges to Spain in the next few years.

Spratly Islands:
Economic activity is limited to commercial fishing.
The proximity to nearby oil- and gas-producing sedimentary basins
suggests the potential for oil and gas deposits, but the region is
largely unexplored, and there are no reliable estimates of potential
reserves; commercial exploitation has yet to be developed.

Sri Lanka:
In 1977, Colombo abandoned statist economic policies and
its import substitution trade policy for market-oriented policies
and export-oriented trade. Sri Lanka's most dynamic sectors now are
food processing, textiles and apparel, food and beverages,
telecommunications, and insurance and banking. By 1996 plantation
crops made up only 20% of exports (compared with 93% in 1970), while
textiles and garments accounted for 63%. GDP grew at an annual
average rate of 5.5% throughout the 1990s until a drought and a
deteriorating security situation lowered growth to 3.8% in 1996. The
economy rebounded in 1997-98 with growth of 6.4% and 4.7% - but
slowed to 4.3% in 1999. Growth increased to 5.6% in 2000, with
growth in tourism and exports leading the way. But a resurgence of
civil war between the Sinhalese and the minority Tamils and a
possible slowdown in tourism dampen prospects for 2001. For the next
round of reforms, the central bank of Sri Lanka recommends that
Colombo expand market mechanisms in nonplantation agriculture,
dismantle the government's monopoly on wheat imports, and promote
more competition in the financial sector.

Sudan:
Sudan is buffeted by civil war, chronic instability, adverse
weather, weak world agricultural prices, a drop in remittances from
abroad, and counterproductive economic policies. The private
sector's main areas of activity are agriculture (which employs 80%
of the work force), trading, and light industry which is mostly
processing of agricultural goods. Most of the 1990s were
characterized by sluggish economic growth as the IMF suspended
lending, declared Sudan a non-cooperative state, and threatened to
expel Sudan from the IMF. Starting in 1997, Sudan began implementing
IMF macroeconomic reforms which have successfully stabilized
inflation at 10% or less. Sudan continues to have limited
international credit resources as over 75% of Sudan's debt of $24.9
billion is in arrears and Khartoum's continued prosecution of the
civil war works to isolate Sudan. In 1999, Sudan began exporting oil
and in 1999-2000 had recorded its first trade surpluses. Current oil
production stands at 185,000 barrels per day, of which about 70% is
exported and the rest refined for domestic consumption. Despite its
many infrastructure problems, Sudan's increased oil production, the
return of regular rainfall, and recent investments in irrigation
schemes should allow the country to achieve economic growth of 6% in
2001.

Suriname:
The economy is dominated by the bauxite industry, which
accounts for more than 15% of GDP and 70% of export earnings. After
assuming power in the fall of 1996, the WIJDENBOSCH government ended
the structural adjustment program of the previous government,
claiming it was unfair to the poorer elements of society. Tax
revenues fell as old taxes lapsed and the government failed to
implement new tax alternatives. By the end of 1997, the allocation
of new Dutch development funds was frozen as Surinamese Government
relations with the Netherlands deteriorated. Economic growth slowed
in 1998, with decline in the mining, construction, and utility
sectors. Rampant government expenditures, poor tax collection, a
bloated civil service, and reduced foreign aid in 1999 contributed
to the fiscal deficit, estimated at 11% of GDP. The government
sought to cover this deficit through monetary expansion, which led
to a dramatic increase in inflation and exchange rate depreciation.
Suriname's economic prospects for the medium term will depend on
renewed commitment to responsible monetary and fiscal policies and
to the introduction of structural reforms to liberalize markets and
promote competition. The new government of Ronald VENETIAAN has
begun an austerity program, raised taxes, and attempted to control
spending. the exchange rate has responded by stabilizing. The Dutch
Government has restarted the aid flow, which will allow Suriname to
access international development financing.

Svalbard:
Coal mining is the major economic activity on Svalbard.
The treaty of 9 February 1920 gives the 41 signatories equal rights
to exploit mineral deposits, subject to Norwegian regulation.
Although US, UK, Dutch, and Swedish coal companies have mined in the
past, the only companies still mining are Norwegian and Russian. The
settlements on Svalbard are essentially company towns. The Norwegian
state-owned coal company employs nearly 60% of the Norwegian
population on the island, runs many of the local services, and
provides most of the local infrastructure. There is also some
trapping of seal, polar bear, fox, and walrus.

Swaziland:
In this small landlocked economy, subsistence agriculture
occupies more than 60% of the population. Manufacturing features a
number of agroprocessing factories. Mining has declined in
importance in recent years: diamond mines have shut down because of
the depletion of easily accessible reserves; high-grade iron ore
deposits were depleted by 1978; and health concerns have cut world
demand for asbestos. Exports of soft drink concentrate, sugar, and
wood pulp are the main earners of hard currency. Surrounded by South
Africa, except for a short border with Mozambique, Swaziland is
heavily dependent on South Africa from which it receives four-fifths
of its imports and to which it sends two-thirds of its exports.
Remittances from the Southern African Customs Union and Swazi
workers in South African mines substantially supplement domestically
earned income. The government is trying to improve the atmosphere
for foreign investment. Overgrazing, soil depletion, drought, and
sometimes floods persist as problems for the future. Prospects for
2001 are strengthened by government millennium projects for a new
convention center, additional hotels, an amusement park, a new
airport, and stepped-up roadbuilding and factory construction plans.