FAX: (202) 483-9326 (part 1)

FAX: (202) 332-0826

Zimbabwe: chief of mission: Ambassador Simbi Veke MUBAKO

chancery: 1608 New Hampshire Avenue NW, Washington, DC 20009

telephone: (202) 332-7100

Taiwan:
none; unofficial commercial and cultural relations with the
people of the US are maintained through a private instrumentality,
the Taipei Economic and Cultural Representative Office (TECRO) in
the US with headquarters in Taipei and field offices in Washington
and 12 other US cities

@Disputes - international

Afghanistan:
support to Islamic militants worldwide by some
factions; question over which group should hold Afghanistan's seat
at the UN

Albania:
the Albanian Government supports protection of the rights
of ethnic Albanians outside of its borders but has downplayed them
to further its primary foreign policy goal of regional cooperation;
Albanian majority in Kosovo seeks independence from Yugoslavia;
Albanians in The Former Yugoslav Republic of Macedonia claim
discrimination in education, access to public-sector jobs, and
representation in government

Algeria:
part of southeastern region claimed by Libya; Algeria
supports exiled West Saharan Polisario Front and rejects Moroccan
administration of Western Sahara

American Samoa:
none

Andorra:
none

Angola:
none

Anguilla:
none

Antarctica:
Antarctic Treaty freezes claims (see Antarctic Treaty
Summary in Government type entry); sections (some overlapping)
claimed by Argentina, Australia, Chile, France, New Zealand, Norway,
and UK; the US and most other nations do not recognize the
territorial claims of other nations and have made no claims
themselves (the US and Russia reserve the right to do so); no claims
have been made in the sector between 90 degrees west and 150 degrees
west

Antigua and Barbuda:
none

Arctic Ocean:
some maritime disputes (see littoral states)

Argentina:
claims UK-administered Falkland Islands (Islas Malvinas);
claims UK-administered South Georgia and the South Sandwich Islands;
territorial claim in Antarctica partially overlaps British and
Chilean claims

Armenia:
Armenia supports ethnic Armenians in the Nagorno-Karabakh
region of Azerbaijan in the longstanding, separatist conflict
against the Azerbaijani Government; traditional demands regarding
former Armenian lands in Turkey have subsided

Aruba:
none

Ashmore and Cartier Islands:
none

Atlantic Ocean:
some maritime disputes (see littoral states)

Australia:
territorial claim in Antarctica (Australian Antarctic
Territory)

Austria:
minor disputes with Czech Republic and Slovenia over
nuclear power plants and post-World War II treatment of
German-speaking minorities

Azerbaijan:
Armenia supports ethnic Armenians in the
Nagorno-Karabakh region of Azerbaijan in the longstanding,
separatist conflict against the Azerbaijani Government; Caspian Sea
boundaries are not yet determined among Azerbaijan, Iran,
Kazakhstan, Russia, and Turkmenistan

Bahamas, The:
none

Bahrain:
in March of 2001, the International Court of Justice (ICJ)
awarded the Hawar Islands to Bahrain and also adjusted Bahrain's
maritime boundary with Qatar

Baker Island:
none

Bangladesh:
a portion of the boundary with India is indefinite;
exchange of 151 enclaves along border with India subject to
ratification by Indian parliament; dispute with India over South
Talpatty/New Moore Island

Barbados:
none

Bassas da India:
claimed by Madagascar

Belarus:
none

Belgium:
none

Belize:
Guatemala periodically asserts claims to territory in
southern Belize; to deter cross-border squatting, both states in
2000 agreed to a "line of adjacency" based on the de facto boundary,
which is not recognized by Guatemala

Benin:
none

Bermuda:
none

Bhutan:
refugee issue over the presence in Nepal of approximately
98,700 Bhutanese refugees, 90% of whom are in seven United Nations
Office of the High Commissioner for Refugees (UNHCR) camps

Bolivia:
has wanted a sovereign corridor to the South Pacific Ocean
since the Atacama area was lost to Chile in 1884; dispute with Chile
over Rio Lauca water rights

Bosnia and Herzegovina:
none

Botswana:
none

Bouvet Island:
none

Brazil:
none

British Indian Ocean Territory:
the Chagos Archipelago is claimed by
Mauritius and Seychelles

British Virgin Islands:
none

Brunei:
possibly involved in a complex dispute over the Spratly
Islands with China, Malaysia, Philippines, Taiwan, and Vietnam; in
1984, Brunei established an exclusive fishing zone that encompasses
Louisa Reef in the southern Spratly Islands, but has not publicly
claimed the island

Burkina Faso:
none

Burma:
sporadic border hostilities with Thailand over border
alignment and ethnic Shan rebels operating in cross-border region

Burundi:
none

Cambodia:
portions of boundary with Vietnam are disputed; parts of
border with Thailand are indefinite

Cameroon:
delimitation of international boundaries in the vicinity
of Lake Chad, the lack of which led to border incidents in the past,
is complete and awaits ratification by Cameroon, Chad, Niger, and
Nigeria; tripartite maritime boundary and economic zone dispute with
Equatorial Guinea and Nigeria is currently before the ICJ

Canada:
maritime boundary disputes with the US (Dixon Entrance,
Beaufort Sea, Strait of Juan de Fuca, Machias Seal Island)

Cape Verde:
none

Cayman Islands:
none

Central African Republic:
none

Chad:
delimitation of international boundaries in the vicinity of
Lake Chad, the lack of which led to border incidents in the past,
has been completed and awaits ratification by Cameroon, Chad, Niger,
and Nigeria

Chile:
Bolivia has wanted a sovereign corridor to the South Pacific
Ocean since the Atacama area was lost to Chile in 1884; dispute with
Bolivia over Rio Lauca water rights; territorial claim in Antarctica
(Chilean Antarctic Territory) partially overlaps Argentine and
British claims

China:
most of boundary with India in dispute; dispute over at least
two small sections of the boundary with Russia remains to be
settled, despite 1997 boundary agreement; portions of the boundary
with Tajikistan are indefinite; 33-km section of boundary with North
Korea in the Paektu-san (mountain) area is indefinite; involved in a
complex dispute over the Spratly Islands with Malaysia, Philippines,
Taiwan, Vietnam, and possibly Brunei; maritime boundary agreement
with Vietnam in the Gulf of Tonkin awaits ratification; Paracel
Islands occupied by China, but claimed by Vietnam and Taiwan; claims
Japanese-administered Senkaku-shoto (Senkaku Islands/Diaoyu Tai), as
does Taiwan

Christmas Island:
none

Clipperton Island:
none

Cocos (Keeling) Islands:
none

Colombia:
maritime boundary dispute with Venezuela in the Gulf of
Venezuela; territorial disputes with Nicaragua over Archipelago de
San Andres y Providencia and Quita Sueno Bank

Comoros:
claims French-administered Mayotte; the island of Anjouan
(Nzwani) has moved to secede from Comoros

Congo, Democratic Republic of the: the Democratic Republic of the Congo is in the grip of a civil war that has drawn in military forces from neighboring states, with Uganda and Rwanda supporting the rebel movements that occupy much of the eastern portion of the state; most of the Congo river boundary with the Republic of the Congo is indefinite (no agreement has been reached on the division of the river or its islands, except in the Pool Malebo/Stanley Pool area)

Congo, Republic of the:
most of the Congo river boundary with the
Democratic Republic of the Congo is indefinite (no agreement has
been reached on the division of the river or its islands, except in
the Stanley Pool/Pool Malebo area)

Cook Islands:
none

Coral Sea Islands:
none

Costa Rica:
legal dispute over navigational rights of Rio San Juan
on border with Nicaragua

Cote d'Ivoire:
none

Croatia:
Croatia and Italy made progress toward resolving a
bilateral issue dating from World War II over property and ethnic
minority rights; progress with Slovenia on discussions of
adjustments to land boundary, but problems remain in defining
maritime boundary in Gulf of Piran; Croatia and Yugoslavia are
negotiating the status of the strategically important Prevlaka
Peninsula, which is currently under a UN military observer mission
(UNMOP)

Cuba:
US Naval Base at Guantanamo Bay is leased to US and only
mutual agreement or US abandonment of the area can terminate the
lease

Cyprus:
1974 hostilities divided the island into two de facto
autonomous areas, a Greek Cypriot area controlled by the
internationally recognized Cypriot Government (59% of the island's
land area) and a Turkish-Cypriot area (37% of the island), that are
separated by a UN buffer zone (4% of the island); there are two UK
sovereign base areas mostly within the Greek Cypriot portion of the
island

Czech Republic:
Liechtenstein's royal family claims restitution for
1,600 sq km of land in the Czech Republic confiscated in 1918;
individual Sudeten German claims for restitution of property
confiscated in connection with their expulsion after World War II;
Austria has minor dispute with Czech Republic over nuclear power
plants and post-World War II treatment of German-speaking minorities

Denmark:
Rockall continental shelf dispute involving Iceland and the
UK (Ireland and the UK have signed a boundary agreement in the
Rockall area); dispute with Iceland over the Faroe Islands fisheries
median line boundary within 200 NM; disputes with Iceland, the UK,
and Ireland over the Faroe Islands continental shelf boundary
outside 200 NM

Djibouti:
none

Dominica:
none

Dominican Republic:
none

Ecuador:
none

Egypt:
Egypt asserts its claim to the "Hala'ib Triangle," a barren
area of 20,580 sq km under partial Sudanese administration that is
defined by an administrative boundary which supersedes the treaty
boundary of 1899

El Salvador:
with respect to the maritime boundary in the Golfo de
Fonseca, the ICJ referred to the line determined by the 1900
Honduras-Nicaragua Mixed Boundary Commission and advised that some
tripartite resolution among El Salvador, Honduras and Nicaragua
likely would be required

Equatorial Guinea:
tripartite maritime boundary and economic zone
dispute with Cameroon and Nigeria is currently before the ICJ;
maritime boundary dispute with Gabon because of disputed sovereignty
over islands in Corisco Bay

Eritrea:
as a result of the 12 December 2000 peace agreement ending
a two-year war with Ethiopia, the UN will administer a 25-km wide
temporary security zone within Eritrea until a joint boundary
commission delimits and demarcates a final boundary

Estonia:
Estonian and Russian negotiators reached a technical border
agreement in December 1996 which has not been signed nor ratified by
Russia as of February 2001

Ethiopia:
most of the southern half of the boundary with Somalia is
a Provisional Administrative Line; as a result of the 12 December
2000 peace agreement ending a two year war with Eritrea, the UN will
administer a 25-km wide temporary security zone within Eritrea until
a joint boundary commission delimits and demarcates a final
boundary; dispute over alignment of boundary with Eritrea led to
armed conflict in 1998; a peace accord signed in December 2000
provides for UN-assisted arbitration and demarcation of the border

Europa Island:
claimed by Madagascar

Falkland Islands (Islas Malvinas):
claimed by Argentina

Faroe Islands:
Faroese are considering proposals for full
independence

Fiji:
none

Finland:
none

France:
Madagascar claims Bassas da India, Europa Island, Glorioso
Islands, Juan de Nova Island, and Tromelin Island; Comoros claims
Mayotte; Mauritius claims Tromelin Island; territorial dispute
between Suriname and French Guiana; territorial claim in Antarctica
(Adelie Land); Matthew and Hunter Islands east of New Caledonia
claimed by France and Vanuatu

French Guiana:
Suriname claims area between Riviere Litani and
Riviere Marouini (both headwaters of the Lawa)

French Polynesia:
none

French Southern and Antarctic Lands:
"Adelie Land" claim in
Antarctica is not recognized by the US

Gabon:
maritime boundary dispute with Equatorial Guinea because of
disputed sovereignty over islands in Corisco Bay

Gambia, The:
none

Gaza Strip:
West Bank and Gaza Strip are Israeli-occupied with
current status subject to the Israeli-Palestinian Interim Agreement
- permanent status to be determined through further negotiation

Georgia:
none

Germany:
none

Ghana:
none

Gibraltar:
source of friction between Spain and the UK

Glorioso Islands:
claimed by Madagascar

Greece:
complex maritime, air, and territorial disputes with Turkey
in Aegean Sea; Cyprus question with Turkey; dispute with The Former
Yugoslav Republic of Macedonia over its name

Greenland:
none

Grenada:
none

Guadeloupe:
none

Guam:
none

Guatemala:
Guatemala periodically asserts claims to territory in
southern Belize; to deter cross-border squatting, both states in
2000 agreed to a "line of adjacency" based on the de facto boundary,
which is not recognized by Guatemala

Guernsey:
none

Guinea:
border incursions by Revolutionary United Front combatants
from Sierra Leone; civil war in that country has engendered a
massive flow of refugees to southern Guinea and Liberia

Guinea-Bissau:
none

Guyana:
all of the area west of the Essequibo (river) claimed by
Venezuela; Suriname claims area between New (Upper Courantyne) and
Courantyne/Kutari [Koetari] rivers (all headwaters of the Courantyne)

Haiti:
claims US-administered Navassa Island

Heard Island and McDonald Islands:
none

Holy See (Vatican City):
none

Honduras:
with respect to the maritime boundary in the Golfo de
Fonseca, the ICJ referred to the line determined by the 1900
Honduras-Nicaragua Mixed Boundary Commission and advised that some
tripartite resolution among El Salvador, Honduras, and Nicaragua
likely would be required; the maritime boundary dispute with
Nicaragua in the Caribbean Sea is before the ICJ

Hong Kong:
none

Howland Island:
none

Hungary:
Gabcikovo/Nagymaros Dam dispute with Slovakia is before the
ICJ

Iceland:
Rockall continental shelf dispute involving Denmark and the
UK (Ireland and the UK have signed a boundary agreement in the
Rockall area); dispute with Denmark over the Faroe Islands fisheries
median line boundary within 200 NM; disputes with Denmark, the UK,
and Ireland over the Faroe Islands continental shelf boundary
outside 200 NM

India:
boundary with China in dispute; status of Kashmir with
Pakistan; water-sharing problems with Pakistan over the Indus River
(Wular Barrage); a portion of the boundary with Bangladesh is
indefinite; exchange of 151 enclaves along border with Bangladesh
subject to ratification by Indian parliament; dispute with
Bangladesh over New Moore/South Talpatty Island

Indian Ocean:
some maritime disputes (see littoral states)

Indonesia:
Sipadan and Ligitan Islands in dispute with Malaysia

Iran:
Iran and Iraq restored diplomatic relations in 1990 but are
still trying to work out written agreements settling outstanding
disputes from their eight-year war concerning border demarcation,
prisoners-of-war, and freedom of navigation and sovereignty over the
Shatt al Arab waterway; Iran occupies two islands in the Persian
Gulf claimed by the UAE: Lesser Tunb (called Tunb as Sughra in
Arabic by UAE and Jazireh-ye Tonb-e Kuchek in Persian by Iran) and
Greater Tunb (called Tunb al Kubra in Arabic by UAE and Jazireh-ye
Tonb-e Bozorg in Persian by Iran); Iran jointly administers with the
UAE an island in the Persian Gulf claimed by the UAE (called Abu
Musa in Arabic by UAE and Jazireh-ye Abu Musa in Persian by Iran) -
over which Iran has taken steps to exert unilateral control since
1992, including access restrictions and a military build-up on the
island; the UAE has garnered significant diplomatic support in the
region in protesting these Iranian actions; Caspian Sea boundaries
are not yet determined among Azerbaijan, Iran, Kazakhstan, Russia,
and Turkmenistan

Iraq:
Iran and Iraq restored diplomatic relations in 1990 but are
still trying to work out written agreements settling outstanding
disputes from their eight-year war concerning border demarcation,
prisoners-of-war, and freedom of navigation and sovereignty over the
Shatt al Arab waterway; in November 1994, Iraq formally accepted the
UN-demarcated border with Kuwait which had been spelled out in
Security Council Resolutions 687 (1991), 773 (1993), and 883 (1993);
this formally ends earlier claims to Kuwait and to Bubiyan and
Warbah islands although the government continues periodic rhetorical
challenges; dispute over water development plans by Turkey for the
Tigris and Euphrates rivers

Ireland:
Northern Ireland issue with the UK (historic peace
agreement signed 10 April 1998); disputes with Iceland, Denmark, and
the UK over the Faroe Islands continental shelf boundary outside 200
NM

Israel:
West Bank and Gaza Strip are Israeli-occupied with current
status subject to the Israeli-Palestinian Interim Agreement -
permanent status to be determined through further negotiation; Golan
Heights is Israeli-occupied (Lebanon claims the Shab'a Farms area of
Golan Heights)

Italy:
Croatia and Italy made progress toward resolving a bilateral
issue dating from World War II over property and ethnic minority
rights

Jamaica:
none

Jan Mayen:
none

Japan:
islands of Etorofu, Kunashiri, and Shikotan, and the Habomai
group occupied by the Soviet Union in 1945, now administered by
Russia, claimed by Japan; Liancourt Rocks (Takeshima/Tokdo) disputed
with South Korea; Senkaku-shoto (Senkaku Islands) claimed by China
and Taiwan

Jarvis Island:
none

Jersey:
none

Johnston Atoll:
none

Jordan:
none

Juan de Nova Island:
claimed by Madagascar

Kazakhstan:
Caspian Sea boundaries are not yet determined among
Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan

Kenya:
administrative boundary with Sudan does not coincide with
international boundary

Kingman Reef:
none

Kiribati:
none

Korea, North:
33-km section of boundary with China in the Paektu-san
(mountain) area is indefinite; Demarcation Line with South Korea

Korea, South:
Demarcation Line with North Korea; Liancourt Rocks
(Takeshima/Tokdo) disputed with Japan

Kuwait:
in November 1994, Iraq formally accepted the UN-demarcated
border with Kuwait which had been spelled out in Security Council
Resolutions 687 (1991), 773 (1993), and 883 (1993); this formally
ends earlier claims to Kuwait and to Bubiyan and Warbah islands

Kyrgyzstan:
territorial dispute with Tajikistan on southwestern
boundary in Isfara Valley area; periodic target of Islamic
insurgents from Uzbekistan, Tajikistan, and Afghanistan

Laos:
parts of the border with Thailand are indefinite

Latvia:
draft treaty delimiting the boundary with Russia has not
been signed; has not ratified 1998 maritime boundary agreement with
Lithuania (primary concern is oil exploration rights)

Lebanon:
Syrian troops in northern, central, and eastern Lebanon
since October 1976; Lebanese government claims Shab'a Farms area of
Israeli-occupied Golan Heights as a part of Lebanon from which
Hizballah conducts cross-border attacks

Lesotho:
none

Liberia:
large refugee population from civil war in Sierra Leone

Libya:
Libya claims about 19,400 sq km in northern Niger and also a
part of southeastern Algeria

Liechtenstein:
Liechtenstein's royal family claims restitution for
1,600 sq km of land in the Czech Republic confiscated in 1918

Lithuania:
Latvia has not ratified a 1998 maritime boundary
agreement with Lithuania (primary concern is oil exploration
rights); 1997 border agreement with Russia not yet ratified by Russia

Luxembourg:
none

Macau:
none

Macedonia, The Former Yugoslav Republic of:
dispute with Greece over
its name; February 2001 agreement with Yugoslavia settled alignment
of boundary, stipulating implementation within two years

Madagascar:
claims Bassas da India, Europa Island, Glorioso Islands,
Juan de Nova Island, and Tromelin Island (all administered by France)

Malawi:
dispute with Tanzania over the boundary in Lake Nyasa (Lake
Malawi)

Malaysia:
involved in a complex dispute over the Spratly Islands
with China, Philippines, Taiwan, Vietnam, and possibly Brunei;
Philippines have not fully revoked claim to Sabah State; Pulau Batu
Putih (Pedra Branca Island) disputed with Singapore; Sipadan and
Ligitan Islands in dispute with Indonesia

Maldives:
none

Mali:
none

Malta:
none

Man, Isle of:
none

Marshall Islands:
claims US territory of Wake Island

Martinique:
none

Mauritania:
none

Mauritius:
claims the Chagos Archipelago (UK-administered British
Indian Ocean Territory); claims French-administered Tromelin Island

Mayotte:
claimed by Comoros

Mexico:
none

Micronesia, Federated States of:
none

Midway Islands:
none

Moldova:
separatist Transnistria region, comprising the area between
the Nistru (Dniester) River and Ukraine, has its own de facto
government, dominated by Moldovan Slavs

Monaco:
none

Mongolia:
none

Montserrat:
none

Morocco:
claims and administers Western Sahara, but sovereignty is
unresolved and the UN is attempting to hold a referendum on the
issue; the UN-administered cease-fire has been in effect since
September 1991; Spain controls five places of sovereignty (plazas de
soberania) on and off the coast of Morocco - the coastal enclaves of
Ceuta and Melilla which Morocco contests, as well as the islands of
Penon de Alhucemas, Penon de Velez de la Gomera, and Islas Chafarinas

Mozambique:
none

Namibia:
none

Nauru:
none

Navassa Island:
claimed by Haiti

Nepal:
refugee issue over the presence in Nepal of approximately
98,700 Bhutanese refugees, 90% of whom are in seven United Nations
Office of the High Commissioner for Refugees (UNHCR) camps

Netherlands:
none

Netherlands Antilles:
none

New Caledonia:
Matthew and Hunter Islands east of New Caledonia
claimed by France and Vanuatu

New Zealand:
territorial claim in Antarctica (Ross Dependency)

Nicaragua:
territorial disputes with Colombia over the Archipelago
de San Andres y Providencia and Quita Sueno Bank; with respect to
the maritime boundary question in the Golfo de Fonseca, the ICJ
referred to the line determined by the 1900 Honduras-Nicaragua Mixed
Boundary Commission and advised that some tripartite resolution
among El Salvador, Honduras, and Nicaragua likely would be required;
maritime boundary dispute with Honduras in the Caribbean Sea is
before the ICJ; legal dispute over navigational rights of San Juan
River on border with Costa Rica

Niger:
Libya claims about 19,400 sq km in northern Niger;
delimitation of international boundaries in the vicinity of Lake
Chad, the lack of which led to border incidents in the past, has
been completed and awaits ratification by Cameroon, Chad, Niger, and
Nigeria

Nigeria:
delimitation of international boundaries in the vicinity of
Lake Chad, the lack of which led to border incidents in the past,
has been completed and awaits ratification by Cameroon, Chad, Niger,
and Nigeria; dispute with Cameroon over land and maritime boundaries
around the Bakasi Peninsula is currently before the ICJ; tripartite
maritime boundary and economic zone dispute with Equatorial Guinea
and Cameroon is currently before the ICJ

Niue:
none

Norfolk Island:
none

Northern Mariana Islands:
none

Norway:
territorial claim in Antarctica (Queen Maud Land); Svalbard
is the focus of a maritime boundary dispute between Norway and Russia

Oman:
boundary with the UAE has not been bilaterally defined;
northern section in the Musandam Peninsula is an administrative
boundary

Pacific Ocean:
some maritime disputes (see littoral states)

Pakistan:
status of Kashmir with India; water-sharing problems with
India over the Indus River (Wular Barrage)

Palau:
none

Palmyra Atoll:
none

Panama:
none

Papua New Guinea:
none

Paracel Islands:
occupied by China, but claimed by Taiwan and Vietnam

Peru:
none

Philippines:
involved in a complex dispute over the Spratly Islands
with China, Malaysia, Taiwan, Vietnam, and possibly Brunei; claim to
Malaysia's Sabah State has not been fully revoked

Pitcairn Islands:
none

Poland:
none

Puerto Rico:
none

Qatar:
in March of 2001, the International Court of Justice (ICJ)
awarded the Hawar Islands to Bahrain and adjusted its maritime
boundary with Qatar; a final border resolution was agreed to with
Saudi Arabia in March of 2001

Reunion:
none

Romania:
none

Russia:
dispute over at least two small sections of the boundary
with China remains to be settled, despite 1997 boundary agreement;
islands of Etorofu, Kunashiri, and Shikotan and the Habomai group
occupied by the Soviet Union in 1945, now administered by Russia,
claimed by Japan; Caspian Sea boundaries are not yet determined
among Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan;
Estonian and Russian negotiators reached a technical border
agreement in December 1996, which has not been signed or ratified by
Russia as of February 2001; draft treaty delimiting the boundary
with Latvia has not been signed; 1997 border agreement with
Lithuania not yet ratified; has made no territorial claim in
Antarctica (but has reserved the right to do so) and does not
recognize the claims of any other nation; Svalbard is the focus of a
maritime boundary dispute between Norway and Russia

Rwanda:
Rwandan military forces are supporting the rebel forces in
the civil war in the Democratic Republic of the Congo

Saint Helena:
none

Saint Kitts and Nevis:
none

Saint Lucia:
none

Saint Pierre and Miquelon:
none

Saint Vincent and the Grenadines:
none

Samoa:
none

San Marino:
none

Sao Tome and Principe:
none

Saudi Arabia:
a final border resolution was agreed to with Qatar in
March of 2001; location and status of boundary with UAE is not
final, de facto boundary reflects a 1974 agreement; a June 2000
treaty delimited the boundary with Yemen, but final demarcation
requires adjustments based on tribal considerations

Senegal:
none

Seychelles:
claims the Chagos Archipelago (UK-administered British
Indian Ocean Territory)

Sierra Leone:
civil war has engendered massive refugee movements
into neighboring Guinea and Liberia

Singapore:
Pedra Branca Island (Pulau Batu Putih) disputed with
Malaysia

Slovakia:
Gabcikovo/Nagymaros Dam dispute with Hungary is before the
ICJ

Slovenia:
progress with Croatia on discussions of adjustments to
land boundary, but problems remain in defining maritime boundary in
Gulf of Piran; Austria has minor dispute with Slovenia over nuclear
power plants and post-World War II treatment of German-speaking
minorities

Solomon Islands:
none

Somalia:
most of the southern half of the boundary with Ethiopia is
a Provisional Administrative Line; territorial dispute with Ethiopia
over the Ogaden

South Africa:
Swaziland has asked South Africa to open negotiations
on reincorporating some nearby South African territories that are
populated by ethnic Swazis or that were long ago part of the Swazi
Kingdom

South Georgia and the South Sandwich Islands:
claimed by Argentina

Southern Ocean:
Antarctic Treaty defers claims (see Antarctic Treaty
Summary in the Antarctica entry); sections (some overlapping)
claimed by Argentina, Australia, Chile, France, New Zealand, Norway,
and UK; the US and most other nations do not recognize the maritime
claims of other nations and have made no claims themselves (the US
and Russia have reserved the right to do so); no formal claims have
been made in the sector between 90 degrees west and 150 degrees west

Spain:
Gibraltar issue with UK; Spain controls five places of
sovereignty (plazas de soberania) on and off the coast of Morocco -
the coastal enclaves of Ceuta and Melilla, which Morocco contests,
as well as the islands of Penon de Alhucemas, Penon de Velez de la
Gomera, and Islas Chafarinas

Spratly Islands:
all of the Spratly Islands are claimed by China,
Taiwan, and Vietnam; parts of them are claimed by Malaysia and the
Philippines; in 1984, Brunei established an exclusive fishing zone
that encompasses Louisa Reef in the southern Spratly Islands, but
has not publicly claimed the island; in 2000, China joined ASEAN
discussions towards creating a South China Sea "code of conduct" - a
non-legally binding confidence building measure

Sri Lanka:
none

Sudan:
administrative boundary with Kenya does not coincide with
international boundary; Egypt asserts its claim to the "Hala'ib
Triangle," a barren area of 20,580 sq km under partial Sudanese
administration that is defined by an administrative boundary which
supersedes the treaty boundary of 1899

Suriname:
area disputed by French Guiana between Riviere Litani and
Riviere Marouini (both headwaters of the Lawa); area disputed by
Guyana between New (Upper Courantyne) and Courantyne/Koetari
[Kutari] rivers (all headwaters of the Courantyne)

Svalbard:
focus of a maritime boundary dispute between Norway and
Russia

Swaziland:
Swaziland has asked South Africa to open negotiations on
reincorporating some nearby South African territories that are
populated by ethnic Swazis or that were long ago part of the Swazi
Kingdom

Sweden:
none

Switzerland:
none

Syria:
Golan Heights is Israeli occupied; dispute with upstream
riparian Turkey over Turkish water development plans for the Tigris
and Euphrates rivers; Syrian troops in northern, central, and
eastern Lebanon since October 1976

Tajikistan:
portions of Tajikistan's northern and western border
with Uzbekistan and its eastern border with China have not been
officially demarcated; territorial dispute with Kyrgyzstan on
northern boundary in Isfara Valley area

Tanzania:
dispute with Malawi over the boundary in Lake Nyasa (Lake
Malawi); a resurvey of the latitudinal boundary with Uganda in 2000
revealed a 300-meter discrepancy that both sides are currently
adjudicating

Thailand:
parts of the border with Laos are indefinite; parts of
border with Cambodia are indefinite; sporadic border hostilities
with Burma over border alignment and ethnic Shan rebels operating in
cross-border region

Togo:
none

Tokelau:
none

Tonga:
none

Trinidad and Tobago:
none

Tromelin Island:
claimed by Madagascar and Mauritius

Tunisia:
none

Turkey:
complex maritime, air, and territorial disputes with Greece
in Aegean Sea; Cyprus question with Greece; dispute with downstream
riparian states (Syria and Iraq) over water development plans for
the Tigris and Euphrates rivers; traditional demands regarding
former Armenian lands in Turkey have subsided

Turkmenistan:
Caspian Sea boundaries are not yet determined among
Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan

Turks and Caicos Islands:
none

Tuvalu:
none

Uganda:
the Ugandan military is deployed to the Democratic Republic
of Congo in support of rebel forces in that country's civil war; a
resurvey of the latitudinal boundary with Tanzania in 2000 revealed
a 300-meter discrepancy that both sides are currently adjudicating

Ukraine:
has made no territorial claim in Antarctica (but has
reserved the right to do so) and does not recognize the claims of
any other nation

United Arab Emirates:
location and status of boundary with Saudi
Arabia is not final, de facto boundary reflects 1974 agreement;
boundary with Oman has not been bilaterally defined; northern
section in the Musandam Peninsula is an administrative boundary;
claims two islands in the Persian Gulf occupied by Iran: Lesser Tunb
(called Tunb as Sughra in Arabic by UAE and Jazireh-ye Tonb-e Kuchek
in Persian by Iran) and Greater Tunb (called Tunb al Kubra in Arabic
by UAE and Jazireh-ye Tonb-e Bozorg in Persian by Iran); claims
island in the Persian Gulf jointly administered with Iran (called
Abu Musa in Arabic by UAE and Jazireh-ye Abu Musa in Persian by
Iran) - over which Iran has taken steps to exert unilateral control
since 1992, including access restrictions and a military build-up on
the island; the UAE has garnered significant diplomatic support in
the region in protesting these Iranian actions

United Kingdom:
Northern Ireland issue with Ireland (historic peace
agreement signed 10 April 1998); Gibraltar issue with Spain;
Argentina claims Falkland Islands (Islas Malvinas); Argentina claims
South Georgia and the South Sandwich Islands; Mauritius and the
Seychelles claim Chagos Archipelago (UK-administered British Indian
Ocean Territory); Rockall continental shelf dispute involving
Denmark and Iceland; territorial claim in Antarctica (British
Antarctic Territory) overlaps Argentine claim and partially overlaps
Chilean claim; disputes with Iceland, Denmark, and Ireland over the
Faroe Islands continental shelf boundary outside 200 NM

United States:
maritime boundary disputes with Canada (Dixon
Entrance, Beaufort Sea, Strait of Juan de Fuca, Machias Seal
Island); US Naval Base at Guantanamo Bay is leased from Cuba and
only mutual agreement or US abandonment of the area can terminate
the lease; Haiti claims Navassa Island; US has made no territorial
claim in Antarctica (but has reserved the right to do so) and does
not recognize the claims of any other nation; Marshall Islands
claims Wake Island

Uruguay:
none

Uzbekistan:
occasional target of Islamic insurgents based in
Tajikistan and Afghanistan

Vanuatu:
claims Matthew and Hunter Islands east of New Caledonia

Venezuela:
claims all of Guyana west of the Essequibo (river);
maritime boundary dispute with Colombia in the Gulf of Venezuela

Vietnam:
maritime boundary with Cambodia not defined; involved in a
complex dispute over the Spratly Islands with China, Malaysia,
Philippines, Taiwan, and possibly Brunei; maritime boundary
agreement with China in the Gulf of Tonkin awaits ratification;
Paracel Islands occupied by China but claimed by Vietnam and Taiwan;
portions of boundary with Cambodia are in dispute; agreement on land
border with China was signed in December 1999, but details of
alignment have not yet been made public

Virgin Islands:
none

Wake Island:
claimed by Marshall Islands

Wallis and Futuna:
none

West Bank:
West Bank and Gaza Strip are Israeli-occupied with
current status subject to the Israeli-Palestinian Interim Agreement
- permanent status to be determined through further negotiation

Western Sahara:
claimed and administered by Morocco, but sovereignty
is unresolved and the UN is attempting to hold a referendum on the
issue; the UN-administered cease-fire has been in effect since
September 1991

Yemen:
a June 2000 treaty delimited the boundary with Saudi Arabia,
but final demarcation requires adjustments based on tribal
considerations

Yugoslavia:
Albanian majority in Kosovo seeks independence from
Yugoslavia; Croatia and Yugoslavia are negotiating the status of the
strategically important Prevlaka Peninsula, which is currently under
a UN military observer mission (UNMOP); the February 2001 agreement
with the Former Yugoslav Republic of Macedonia settled alignment of
boundary, stipulating implementation within two years

Taiwan:
involved in complex dispute over the Spratly Islands with
China, Malaysia, Philippines, Vietnam, and possibly Brunei; Paracel
Islands occupied by China, but claimed by Vietnam and Taiwan; claims
Japanese-administered Senkaku-shoto (Senkaku Islands/Diaoyu Tai), as
does China

@Economic aid - donor

Australia:
ODA, $1.43 billion (FY97/98)

Austria:
ODA, $472 million (1999)

Belgium:
ODA, $764 million (1997)

Canada:
ODA, $1.3 billion (1999)

Denmark:
ODA, $1.63 billion (1999)

Finland:
ODA, $379 million (1997)

France:
ODA, $6.3 billion (1997)

Germany:
ODA, $5.6 billion (1998)

Iceland:
$NA

Ireland:
ODA, $245 million (2000)

Italy:
ODA, $1.3 billion (1997)

Japan:
ODA, $9.1 billion (1999)

Luxembourg:
ODA, $160 million (1999)

Netherlands:
ODA, $3.5 billion (2000 est.)

New Zealand:
ODA, $123 million (1995)

Norway:
ODA, $1.4 billion (1998)

Portugal:
ODA, $271 million (1995)

Saudi Arabia:
pledged $100 million in 1993 to fund reconstruction of
Lebanon; since 1993, Saudi Arabia has committed $208 million for
assistance to the Palestinians

Spain:
ODA, $1.3 billion (1995)

Sweden:
ODA, $1.7 billion (1997)

Switzerland:
ODA, $1.1 billion (1995)

United Kingdom:
ODA, $3.4 billion (1997)

United States:
ODA, $6.9 billion (1997)

@Economic aid - recipient

Afghanistan:
US provided about $70 million in humanitarian
assistance in 1997; US continues to contribute to multilateral
assistance through the UN programs of food aid, immunization, land
mine removal, and a wide range of aid to refugees and displaced
persons

Albania:
$NA; aid for energy from China, Germany, Norway (2000)

Algeria:
$100 million (1999 est.)

American Samoa:
important financial support from the US, more than
$40 million in 1994

Andorra:
none

Angola:
$493.1 million (1995)

Anguilla:
$3.5 million (1995)

Antigua and Barbuda:
$2.3 million (1995)

Argentina:
IMF offer of $13.7 billion (January 2001)

Armenia:
$245.5 million (1995)

Aruba:
$26 million (1995); note - the Netherlands provided a $127
million aid package to Aruba and Suriname in 1996

Azerbaijan:
ODA, $113 million (1996)

Bahamas, The:
$9.8 million (1995)

Bahrain:
$48.4 million (1995)

Bangladesh:
$1.575 billion (2000 est.)

Barbados:
$9.1 million (1995)

Belarus:
$194.3 million (1995)

Belize:
$NA

Benin:
$274.6 million (1997)

Bermuda:
$27.9 million (1995)

Bhutan:
$73.8 million (1995)

Bolivia:
$588 million (1997)

Bosnia and Herzegovina:
$1 billion (1999 est.)

Botswana:
$73 million (1995)

Brazil:
NA

British Virgin Islands:
$2.6 million (1995)

Brunei:
$4.3 million (1995)

Bulgaria:
$1 billion (1999 est.)

Burkina Faso:
$484.1 million (1995)

Burma:
$99 million (FY98/99)

Burundi:
$1.344 billion (1999 est.)

Cambodia:
$548 million pledged in grants and concessional loans for
2001 by international donors

Cameroon:
on 23 January 2001, the Paris Club agreed to reduce
Cameroon's debt of $1.3 billion by $900 million; total debt relief
now amounts to $1.26 billion

Cape Verde:
$111.3 million (1995)

Cayman Islands:
$NA

Central African Republic:
$172.2 million (1995); note - traditional
budget subsidies from France

Chad:
$238.3 million (1995); note - $125 million committed by Taiwan
(August 1997); $30 million committed by African Development Bank

Chile:
ODA, $40 million (2001 est.)

China:
$NA

Christmas Island:
$NA

Cocos (Keeling) Islands:
$NA

Colombia:
$40.7 million (1995)

Comoros:
$28.1 million (1997)

Congo, Democratic Republic of the:
$195.3 million (1995)

Congo, Republic of the:
$159.1 million (1995)

Cook Islands:
$13.1 million (1995); note - New Zealand continues to
furnish the greater part

Cote d'Ivoire:
ODA, $1 billion (1996 est.)

Croatia:
$NA

Cuba:
$68.2 million (1997 est.)

Cyprus:
Greek Cypriot area - $17 million (1998); Turkish Cypriot
area - $700 million from Turkey in grants and loans (1990-97) that
are usually forgiven

Czech Republic:
$NA

Djibouti:
$106.3 million (1995)

Dominica:
$24.4 million (1995)

Dominican Republic:
$239.6 million (1995)

Ecuador:
$695.7 million (1995)

Egypt:
ODA, $2.25 billion (1999)

El Salvador:
total $252 million; $57 million from US (1999 est.)

Equatorial Guinea:
$33.8 million (1995)

Eritrea:
$77 million (1999)

Estonia:
$137.3 million (1995)

Ethiopia:
$367 million (FY95/96)

Falkland Islands (Islas Malvinas):
$1.7 million (1995)

Faroe Islands:
$135 million (annual subsidy from Denmark) (1999)

Fiji:
$40.3 million (1995)

French Guiana:
$NA

French Polynesia:
$367 million (1997)

Gabon:
$331 million (1995)

Gambia, The:
$45.4 million (1995)

Gaza Strip:
$121 million disbursed (2000) (includes West Bank)

Georgia:
$212.7 million (1995)

Ghana:
$477.3 million (1995)

Gibraltar:
$NA

Greece:
$5.4 billion from EU (1997 est.)

Greenland:
$380 million subsidy from Denmark (1999)

Grenada:
$8.3 million (1995)

Guadeloupe:
$NA; note - substantial annual French subsidies

Guam:
Guam receives large transfer payments from the US Federal
Treasury ($143 million in 1997) into which Guamanians pay no income
or excise taxes; under the provisions of a special law of Congress,
the Guam Treasury, rather than the US Treasury, receives federal
income taxes paid by military and civilian Federal employees
stationed in Guam

Guatemala:
$212 million (1995)

Guernsey:
$NA

Guinea:
$359.2 million (1998)

Guinea-Bissau:
$115.4 million (1995)

Guyana:
$84 million (1995), Heavily Indebted Poor Country Initiative
(HIPC) $253 million (1997)

Haiti:
$730.6 million (1995)

Holy See (Vatican City):
none

Honduras:
$557.8 million (1999)

Hungary:
$122.7 million (1995)

India:
$2.9 billion (FY98/99)

Indonesia:
$43 billion from IMF program and other official external
financing (1997-2000)

Iran:
$116.5 million (1995)

Iraq:
$327.5 million (1995)

Israel:
$1.1 billion from the US (1999)

Jamaica:
$102.7 million (1995)

Jersey:
none

Jordan:
ODA, $850 million (1996 est.)

Kazakhstan:
$409.6 million (1995)

Kenya:
$457 million (1997)

Kiribati:
$15.5 million (1995), largely from UK and Japan

Korea, North:
$NA; note - an estimated $200 million to $300 million
in humanitarian aid from US, South Korea, Japan, and EU in 1997 plus
much additional aid from the UN and non-governmental organizations;
substantial continuing humanitarian aid, 1998-2000

Korea, South:
$NA

Kuwait:
$27.6 million (1995)

Kyrgyzstan:
$329.4 million (1995)

Laos:
$345 million (1999 est.)

Latvia:
$96.2 million (1995)

Lebanon:
$3.5 billion (pledges 1997-2001)

Lesotho:
$123.7 million (1995)

Liberia:
$200 million pledged (1998)

Libya:
$8.4 million (1995)

Liechtenstein:
none

Lithuania:
$228.5 million (1995)

Macau:
$NA

Macedonia, The Former Yugoslav Republic of: $100 million from the EU (2000)

Madagascar:
$838 million (1997)

Malawi:
$427 million (1999)

Maldives:
$NA

Mali:
$596.4 million (1995)

Malta:
$NA

Man, Isle of:
$NA

Marshall Islands:
approximately $65 million annually from the US

Martinique:
$NA; note - substantial annual aid from France

Mauritania:
$300 million (1998)

Mauritius:
$42 million (1997)

Mayotte:
$107.7 million (1995); note - extensive French financial
assistance

Mexico:
$1.166 billion (1995)

Micronesia, Federated States of:
under terms of the Compact of Free
Association, the US will provide $1.3 billion in grant aid during
the period 1986-2001

Moldova:
$100.8 million (1995); note - $547 million from the IMF and
World Bank (1992-99)

Monaco:
$NA

Mongolia:
$200 million (1998 est.)

Montserrat:
$9.8 million (1995); note - about $100 million (1996-98)
in reconstruction aid from the UK; Country Policy Plan (1999) is a
three-year program for spending $122.8 million in British budgetary
assistance

Morocco:
$565.6 million (1995)

Mozambique:
$1.04 billion (1998)

Namibia:
$127 million (1998)

Nauru:
$2.25 million from Australia (FY96/97 est.)

Nepal:
$411 million (FY97/98)

Netherlands Antilles:
IMF provided $61 million in 2000, and the
Netherlands continued its support with $40 million

New Caledonia:
$880 million annual subsidy from France

Nicaragua:
NA

Niger:
$341 million (1997)

note: the IMF approved a $73 million poverty reduction and growth
facility for Niger in 2000 and announced $115 million in debt relief
under the Heavily Indebted Poor Countries (HIPC) initiative

Nigeria:
ODA $250 million (1998)

Niue:
$8.3 million (1995)

Norfolk Island:
$NA

Northern Mariana Islands:
extensive funding from US

Oman:
$76.4 million (1995)

Pakistan:
$2 billion (FY99/00)

Palau:
$155.8 million (1995); note - the Compact of Free Association
with the US, entered into after the end of the UN trusteeship on 1
October 1994, will provide Palau with up to $700 million in US aid
over 15 years in return for furnishing military facilities

Panama:
$197.1 million (1995)

Papua New Guinea:
$400 million (1999 est.)

Paraguay:
$NA

Peru:
$895.1 million (1995)

Philippines:
ODA, $1.1 billion (1998)

Pitcairn Islands:
$NA

Poland:
$NA

Puerto Rico:
$NA

Qatar:
$NA

Reunion:
$NA; note - substantial annual subsidies from France

Russia:
$8.523 billion (1995)

Rwanda:
$591.5 million (1997); note - in summer 1998, Rwanda
presented its policy objectives and development priorities to donor
governments resulting in multiyear pledges in the amount of $250
million

Saint Helena:
$12.6 million (1995); note - $5.3 million from UK
(1997)

Saint Kitts and Nevis:
$5.5 million (1995)

Saint Lucia:
$51.8 million (1995)

Saint Pierre and Miquelon:
approximately $65 million in annual
grants from France

Saint Vincent and the Grenadines:
$47.5 million (1995); note - EU
$34.5 million (1998)

Samoa:
$42.9 million (1995)

San Marino:
$NA

Sao Tome and Principe: $200 million in December 2000 under the HIPC program

Senegal:
$647.5 million (1995)

Seychelles:
$16.4 million (1995)

Sierra Leone:
$203.7 million (1995)

Singapore:
$NA

Slovakia:
$421.9 million (1995)

Slovenia:
ODA, $5 million (1993)

Solomon Islands:
$47 million (1999 est.), mainly from Japan,
Australia, China, and NZ

Somalia:
$191.5 million (1995)

South Africa:
$676.3 million

Sri Lanka:
$577 million (1998)

Sudan:
$187 million (1997)

Suriname:
Netherlands provided $37 million for project and program
assistance, European Development Fund $4 million, Belgium $2 million
(1998)

Svalbard:
$8.2 million from Norway (1998)

Swaziland:
$55 million (1995)

Syria:
$199 million (1997 est.)

Tajikistan:
$64.7 million (1995)

Tanzania:
$963 million (1997)

Thailand:
$131.5 million (1998 est.)

Togo:
$201.1 million (1995)

Tokelau:
$3.8 million (1995)

Tonga:
$38.8 million (1995)

Trinidad and Tobago:
$121.4 million (1995)

Tunisia:
$933.2 million (1995); note - ODA, $90 million (1998 est.)

Turkey:
ODA, $195 million (1993)

Turkmenistan:
$27.2 million (1995)

Turks and Caicos Islands:
$4.1 million (1997)

Tuvalu:
$13 million (1999 est.); note - major donors are Japan and
Australia

Uganda:
$1.4 billion (2000)

Ukraine:
$637.7 million (1995); IMF Extended Funds Facility $2.2
billion (1998)

United Arab Emirates:
$NA

Uruguay:
$NA

Uzbekistan:
$276.6 million (1995)

Vanuatu:
$45.8 million (1995)

Venezuela:
$35 million with more assistance likely as a result of
flooding (1999)

Vietnam:
$2.1 billion in credits and grants pledged by international
donors for 2000

Virgin Islands:
$NA

Wallis and Futuna:
assistance from France

West Bank:
$121 million disbursed (includes Gaza Strip) (2000)

Western Sahara:
$NA

World:
traditional worldwide foreign aid $50 billion (1997 est.)

Yemen:
$176.1 million (1995)

Yugoslavia:
$NA

Zambia:
$1.99 billion (1995)

Zimbabwe:
$200 million (2000 est.)

@Economy - overview

Afghanistan:
Afghanistan is an extremely poor, landlocked country,
highly dependent on farming and livestock raising (sheep and goats).
Economic considerations have played second fiddle to political and
military upheavals during two decades of war, including the nearly
10-year Soviet military occupation (which ended 15 February 1989).
During that conflict one-third of the population fled the country,
with Pakistan and Iran sheltering a combined peak of more than 6
million refugees. In early 2000, 2 million Afghan refugees remained
in Pakistan and about 1.4 million in Iran. Gross domestic product
has fallen substantially over the past 20 years because of the loss
of labor and capital and the disruption of trade and transport;
severe drought added to the nation's difficulties in 1998-2000. The
majority of the population continues to suffer from insufficient
food, clothing, housing, and medical care. Inflation remains a
serious problem throughout the country. International aid can deal
with only a fraction of the humanitarian problem, let alone promote
economic development. In 1999-2000, internal civil strife continued,
hampering both domestic economic policies and international aid
efforts. Numerical data are likely to be either unavailable or
unreliable. Afghanistan was by far the largest producer of opium
poppies in 2000, and narcotics trafficking is a major source of
revenue.

Albania:
Poor by European standards, Albania is making the difficult
transition to a more open-market economy. The economy rebounded in
1993-95 after a severe depression accompanying the end of the
previous centrally planned system in 1990 and 1991. However, a
weakening of government resolve to maintain stabilization policies
in the election year of 1996 contributed to renewal of inflationary
pressures, spurred by the budget deficit which exceeded 12% of GDP.
The collapse of financial pyramid schemes in early 1997 - which had
attracted deposits from a substantial portion of Albania's
population - triggered severe social unrest which led to more than
1,500 deaths, widespread destruction of property, and a 7% drop in
GDP. The government has taken measures to curb violent crime and to
revive economic activity and trade. The economy is bolstered by
remittances from some 20% of the labor force that works abroad,
mostly in Greece and Italy. These remittances supplement GDP and
help offset the large foreign trade deficit. Most agricultural land
was privatized in 1992, substantially improving peasant incomes. In
1998, Albania recovered the 7% drop in GDP of 1997 and pushed ahead
by 8% in 1999 and by 7.5% in 2000. International aid helped defray
the high costs of receiving and returning refugees from the Kosovo
conflict. Privatization scored some successes in 2000, but other
reforms lagged.

Algeria:
The hydrocarbons sector is the backbone of the economy,
accounting for roughly 60% of budget revenues, 30% of GDP, and over
95% of export earnings. Algeria has the fifth-largest reserves of
natural gas in the world and is the second largest gas exporter; it
ranks fourteenth for oil reserves. Algiers' efforts to reform one of
the most centrally planned economies in the Arab world stalled in
1992 as the country became embroiled in political turmoil. Algeria's
financial and economic indicators improved during the mid-1990s, in
part because of policy reforms supported by the IMF and debt
rescheduling from the Paris Club. Algeria's finances in 2000
benefited from the spike in oil prices and the government's tight
fiscal policy, leading to a large increase in the trade surplus, the
near tripling of foreign exchange reserves, and reduction in foreign
debt. The government continues efforts to diversify the economy by
attracting foreign and domestic investment outside the energy
sector, but has had little success in reducing high unemployment and
improving living standards.

American Samoa:
This is a traditional Polynesian economy in which
more than 90% of the land is communally owned. Economic activity is
strongly linked to the US, with which American Samoa conducts the
great bulk of its foreign trade. Tuna fishing and tuna processing
plants are the backbone of the private sector, with canned tuna the
primary export. Transfers from the US Government add substantially
to American Samoa's economic well-being. Attempts by the government
to develop a larger and broader economy are restrained by Samoa's
remote location, its limited transportation, and its devastating
hurricanes. Tourism, a developing sector, has been held back by the
recurring financial difficulties in East Asia.

Andorra:
Tourism, the mainstay of Andorra's tiny, well-to-do
economy, accounts for roughly 80% of GDP. An estimated 9 million
tourists visit annually, attracted by Andorra's duty-free status and
by its summer and winter resorts. Andorra's comparative advantage
has recently eroded as the economies of neighboring France and Spain
have been opened up, providing broader availability of goods and
lower tariffs. The banking sector, with its "tax haven" status, also
contributes substantially to the economy. Agricultural production is
limited by a scarcity of arable land, and most food has to be
imported. The principal livestock activity is sheep raising.
Manufacturing output consists mainly of cigarettes, cigars, and
furniture. Andorra is a member of the EU Customs Union and is
treated as an EU member for trade in manufactured goods (no tariffs)
and as a non-EU member for agricultural products.

Angola:
Angola is an economy in disarray because of a quarter
century of nearly continuous warfare. Despite its abundant natural
resources, output per capita is among the world's lowest.
Subsistence agriculture provides the main livelihood for 85% of the
population. Oil production and the supporting activities are vital
to the economy, contributing about 45% to GDP and 90% of exports.
Violence continues, millions of land mines remain, and many farmers
are reluctant to return to their fields. As a result, much of the
country's food must still be imported. To fully take advantage of
its rich resources - gold, diamonds, extensive forests, Atlantic
fisheries, and large oil deposits - Angola will need to end its
conflict and continue reforming government policies. Despite the
increase in the pace of civil warfare in late 1998, the economy grew
by an estimated 5% in 2000. The government introduced new currency
denominations in 1999, including 1 and 5 kwanza notes. Internal
strife discourages investment outside of the petroleum sector, which
is producing roughly 800,000 barrels of oil per day. Angola has
entered into a Staff Monitored Program (SMP) with the IMF. Continued
growth depends on sharp cuts in inflation, further economic reform,
and a lessening of fighting.

Anguilla:
Anguilla has few natural resources, and the economy
depends heavily on luxury tourism, offshore banking, lobster
fishing, and remittances from emigrants. The economy, and especially
the tourism sector, suffered a setback in late 1995 due to the
effects of Hurricane Luis in September but recovered in 1996.
Increased activity in the tourism industry, which has spurred the
growth of the construction sector, has contributed to economic
growth. Anguillan officials have put substantial effort into
developing the offshore financial sector. A comprehensive package of
financial services legislation was enacted in late 1994. In the
medium term, prospects for the economy will depend on the tourism
sector and, therefore, on continuing income growth in the
industrialized nations as well as favorable weather conditions.

Antarctica:
Fishing off the coast and tourism, both based abroad,
account for the limited economic activity. Antarctic fisheries in
1998-99 (1 July-30 June) reported landing 119,898 metric tons.
Unregulated fishing landed five to six times more than the regulated
fishery, and allegedly illegal fishing in antarctic waters in 1998
resulted in the seizure (by France and Australia) of at least eight
fishing ships. Companies interested in commercial fishing activities
in Antarctica have put forward proposals. The Convention on the
Conservation of Antarctic Marine Living Resources determines the
recommended catch limits for marine species. A total of 13,193
tourists visited in the 1999-2000 summer, up from the 10,013 who
visited the previous year. Nearly all of them were passengers on 24
commercial (nongovernmental) ships and several yachts that made 143
trips during the summer. Most tourist trips lasted approximately two
weeks.

Antigua and Barbuda:
Tourism continues to be the dominant activity
in the economy accounting directly or indirectly for more than half
of GDP. The budding offshore financial sector has been seriously
hurt by financial sanctions imposed by the US and UK as a result of
the loosening of its money-laundering controls. The government has
made efforts to comply with international demands in order to get
the sanctions lifted. Antigua and Barbuda was listed as a tax haven
by the OECD in 2000. The dual island nation's agricultural
production is mainly directed to the domestic market; the sector is
constrained by the limited water supply and labor shortages that
reflect the pull of higher wages in tourism and construction.
Manufacturing comprises enclave-type assembly for export with major
products being bedding, handicrafts, and electronic components.
Prospects for economic growth in the medium term will continue to
depend on income growth in the industrialized world, especially in
the US, which accounts for about one-third of all tourist arrivals.

Arctic Ocean:
Economic activity is limited to the exploitation of
natural resources, including petroleum, natural gas, fish, and seals.

Argentina:
Argentina benefits from rich natural resources, a highly
literate population, an export-oriented agricultural sector, and a
diversified industrial base. However, when President Carlos MENEM
took office in 1989, the country had piled up huge external debts,
inflation had reached 200% per month, and output was plummeting. To
combat the economic crisis, the government embarked on a path of
trade liberalization, deregulation, and privatization. In 1991, it
implemented radical monetary reforms which pegged the peso to the US
dollar and limited the growth in the monetary base by law to the
growth in reserves. Inflation fell sharply in subsequent years. In
1995, the Mexican peso crisis produced capital flight, the loss of
banking system deposits, and a severe, but short-lived, recession; a
series of reforms to bolster the domestic banking system followed.
Real GDP growth recovered strongly, reaching 8% in 1997. In 1998,
international financial turmoil caused by Russia's problems and
increasing investor anxiety over Brazil produced the highest
domestic interest rates in more than three years, halving the growth
rate of the economy. Conditions worsened in 1999 with GDP falling by
3%. President Fernando DE LA RUA, who took office in December 1999,
sponsored tax increases and spending cuts to reduce the deficit,
which had ballooned to 2.5% of GDP in 1999. Growth in 2000 was a
disappointing 0.8%, as both domestic and foreign investors remained
skeptical of the government's ability to pay debts and maintain its
fixed exchange rate with the US dollar. One bright spot at the start
of 2001 was the IMF's offer of $13.7 billion in support.

Armenia:
Under the old Soviet central planning system, Armenia had
developed a modern industrial sector, supplying machine tools,
textiles, and other manufactured goods to sister republics in
exchange for raw materials and energy. Since the implosion of the
USSR in December 1991, Armenia has switched to small-scale
agriculture away from the large agroindustrial complexes of the
Soviet era. The agricultural sector has long-term needs for more
investment and updated technology. The privatization of industry has
been at a slower pace, but has been given renewed emphasis by the
current administration. Armenia is a food importer, and its mineral
deposits (gold, bauxite) are small. The ongoing conflict with
Azerbaijan over the ethnic Armenian-dominated region of
Nagorno-Karabakh and the breakup of the centrally directed economic
system of the former Soviet Union contributed to a severe economic
decline in the early 1990s. By 1994, however, the Armenian
Government had launched an ambitious IMF-sponsored economic program
that has resulted in positive growth rates in 1995-2000. Armenia
also managed to slash inflation and to privatize most small- and
medium-sized enterprises. The chronic energy shortages Armenia
suffered in recent years have been largely offset by the energy
supplied by one of its nuclear power plants at Metsamor. Armenia's
severe trade imbalance, importing three times its exports, has been
offset somewhat by international aid, domestic restructuring of the
economy, and foreign direct investment.

Aruba:
Tourism is the mainstay of the Aruban economy, although
offshore banking and oil refining and storage are also important.
The rapid growth of the tourism sector over the last decade has
resulted in a substantial expansion of other activities.
Construction has boomed, with hotel capacity five times the 1985
level. In addition, the reopening of the country's oil refinery in
1993, a major source of employment and foreign exchange earnings,
has further spurred growth. Aruba's small labor force and less than
1% unemployment rate have led to a large number of unfilled job
vacancies, despite sharp rises in wage rates in recent years.

Ashmore and Cartier Islands:
no economic activity

Atlantic Ocean:
The Atlantic Ocean provides some of the world's most
heavily trafficked sea routes, between and within the Eastern and
Western Hemispheres. Other economic activity includes the
exploitation of natural resources, e.g., fishing, the dredging of
aragonite sands (The Bahamas), and production of crude oil and
natural gas (Caribbean Sea, Gulf of Mexico, and North Sea).

Australia:
Australia has a prosperous Western-style capitalist
economy, with a per capita GDP at the level of the four dominant
West European economies. Rich in natural resources, Australia is a
major exporter of agricultural products, minerals, metals, and
fossil fuels. Commodities account for 57% of the value of total
exports, so that a downturn in world commodity prices can have a big
impact on the economy. The government is pushing for increased
exports of manufactured goods, but competition in international
markets continues to be severe. While Australia has suffered from
the low growth and high unemployment characterizing the OECD
countries in the early 1990s and during the recent financial
problems in East Asia, the economy has expanded at a solid 4% annual
growth pace in the last five years. Canberra's emphasis on reforms
is a key factor behind the economy's resilience to the regional
crisis and its stronger than expected growth rate. Growth in 2001
will depend on key international commodity prices, the extent of
recovery in nearby Asian economies, and the strength of US and
European markets.

Austria:
Austria with its well-developed market economy and high
standard of living is closely tied to other EU economies, especially
Germany's. Membership in the EU has drawn an influx of foreign
investors attracted by Austria's access to the single European
market and proximity to EU aspirant economies. In 2000, Austria
moved to further cut government spending and raise taxes to meet EMU
deficit targets after facing unexpected difficulties in reducing the
public deficit. To meet increased competition from both EU and
Central European countries, Austria will need to emphasize
knowledge-based sectors of the economy and continue to deregulate
the service sector. Growth is expected to remain at about 3% in 2001.

Azerbaijan:
Azerbaijan's most prominent products are oil, cotton,
and natural gas. Azerbaijan's oil production declined through 1997
but has registered an increase every year since. Negotiation of 19
production-sharing arrangements (PSAs) with foreign firms, which
have thus far committed $60 billion to oil field development, should
generate the funds needed to spur future industrial development. Oil
production under the first of these PSAs, with the Azerbaijan
International Operating Company, began in November 1997. Azerbaijan
shares all the formidable problems of the former Soviet republics in
making the transition from a command to a market economy, but its
considerable energy resources brighten its long-term prospects. Baku
has only recently begun making progress on economic reform, and old
economic ties and structures are slowly being replaced. An obstacle
to economic progress, including stepped up foreign investment, is
the continuing conflict with Armenia over the Nagorno-Karabakh
region. Trade with Russia and the other former Soviet republics is
declining in importance while trade is building up with Turkey,
Iran, UAE, and the nations of Europe. Long-term prospects will
depend on world oil prices, the location of new pipelines in the
region, and Azerbaijan's ability to manage its oil wealth.

Bahamas, The:
The Bahamas is a stable, developing nation with an
economy heavily dependent on tourism and offshore banking. Tourism
alone accounts for more than 60% of GDP and directly or indirectly
employs 40% of the archipelago's labor force. Moderate growth in
tourism receipts and a boom in construction of new hotels, resorts,
and residences led to an increase of the country's GDP by an
estimated 3% in 1998, 6% in 1999, and 4.5% in 2000. Manufacturing
and agriculture together contribute only 10% of GDP and show little
growth, despite government incentives aimed at those sectors.
Overall growth prospects in the short run will depend heavily on the
fortunes of the tourism sector and continued sturdy growth in the
US, which accounts for the majority of tourist visitors.

Bahrain:
In Bahrain, petroleum production and refining account for
about 60% of export receipts, 60% of government revenues, and 30% of
GDP. With its highly developed communication and transport
facilities, Bahrain is home to numerous multinational firms with
business in the Gulf. Bahrain is dependent on Saudi Arabia for oil
revenue granted as aid. A large share of exports consists of
petroleum products made from imported crude. Construction proceeds
on several major industrial projects. Unemployment, especially among
the young, and the depletion of both oil and underground water
resources are major long-term economic problems.

Baker Island:
no economic activity

Bangladesh:
Despite sustained domestic and international efforts to
improve economic and demographic prospects, Bangladesh remains one
of the world's poorest, most densely populated, and least developed
nations. Although more than half of GDP is generated through the
service sector, nearly two-thirds of Bangladeshis are employed in
the agriculture sector, with rice as the single most important
product. Major impediments to growth include frequent cyclones and
floods, inefficient state-owned enterprises, inadequate port
facilities, a rapidly growing labor force that cannot be absorbed by
agriculture, delays in exploiting energy resources (natural gas),
insufficient power supplies, and slow implementation of economic
reforms. Reform is stalled in many instances by political infighting
and corruption at all levels of government. Even so, Prime Minister
Sheikh HASINA's Awami League government has made some headway
improving the climate for foreign investors and liberalizing the
capital markets. Progress on other economic reforms has been halting
because of opposition from the bureaucracy, public sector unions,
and other vested interest groups.

Barbados:
Historically, the Barbadian economy had been dependent on
sugarcane cultivation and related activities, but production in
recent years has diversified into manufacturing and tourism. The
start of the Port Charles Marina project in Speightstown helped the
tourism industry continue to expand in 1996-2000. Offshore finance
and information services are important foreign exchange earners, and
there is also a light manufacturing sector. The government continues
its efforts to reduce unemployment, encourage direct foreign
investment, and privatize remaining state-owned enterprises. Growth
should remain steady in 2001, with new tourist facilities a plus
factor.

Bassas da India:
no economic activity

Belarus:
Belarus has seen little structural reform since 1995, when
President LUKASHENKO launched the country on the path of "market
socialism." In keeping with this policy, LUKASHENKO reimposed
administrative controls over prices and currency exchange rates and
expanded the state's right to intervene in the management of private
enterprise. In addition to the burdens imposed by extremely high
inflation, businesses have been subject to pressure on the part of
central and local governments, e.g., arbitrary changes in
regulations, numerous rigorous inspections, and retroactive
application of new business regulations prohibiting practices that
had been legal. Further economic problems are two consecutive bad
harvests, 1998-99, and persistent trade deficits. Close relations
with Russia, possibly leading to reunion, color the pattern of
economic developments. For the time being, Belarus remains
self-isolated from the West and its open-market economies.

Belgium:
This modern private enterprise economy has capitalized on
its central geographic location, highly developed transport network,
and diversified industrial and commercial base. Industry is
concentrated mainly in the populous Flemish area in the north,
although the government is encouraging investment in the southern
region of Wallonia. With few natural resources, Belgium must import
substantial quantities of raw materials and export a large volume of
manufactures, making its economy unusually dependent on the state of
world markets. About three-quarters of its trade is with other EU
countries. Belgium's public debt is expected to fall below 100% of
GDP in 2002, and the government has succeeded in balancing is
budget. Belgium became a charter member of the European Monetary
Union (EMU) in January 1999. Economic growth in 2000 was broad
based, putting the government in a good position to pursue its
energy market liberalization policies and planned tax cuts.

Belize:
The small, essentially private enterprise economy is based
primarily on agriculture, agro-based industry, and merchandising,
with tourism and construction assuming greater importance. Sugar,
the chief crop, accounts for nearly half of exports, while the
banana industry is the country's largest employer. The government's
tough austerity program in 1997 resulted in an economic slowdown
that continued in 1998. The trade deficit has been growing, mostly
as a result of low export prices for sugar and bananas. The tourist
and construction sectors strengthened in early 1999, supporting
growth of 6% in 1999 and 4% in 2000. Aided by international donors,
the government's key short-term objective remains the reduction of
poverty.

Benin:
The economy of Benin remains underdeveloped and dependent on
subsistence agriculture, cotton production, and regional trade.
Growth in real output averaged a sound 5% in 1996-99, but a rapid
population rise offset much of this growth. Inflation has subsided
over the past several years. Commercial and transport activities,
which make up a large part of GDP, are vulnerable to developments in
Nigeria, particularly fuel shortages. The Paris Club and bilateral
creditors have eased the external debt situation in recent years.
While high fuel prices constrained growth in 2000, increased cotton
production - enabled by a major restructuring program - and an
expansion of the Cotonou port, may lead to increased growth in 2001.

Bermuda:
Bermuda enjoys one of the highest per capita incomes in the
world, having successfully exploited its location by providing
financial services for international firms and luxury tourist
facilities for 360,000 visitors annually. The tourist industry,
which accounts for an estimated 28% of GDP, attracts 84% of its
business from North America. The industrial sector is small, and
agriculture is severely limited by a lack of suitable land. About
80% of food needs are imported. International business contributes
over 60% of Bermuda's economic output; a failed independence vote in
late 1995 can be partially attributed to Bermudian fears of scaring
away foreign firms. Government economic priorities are the further
strengthening of the tourist and international financial sectors.

Bhutan:
The economy, one of the world's smallest and least
developed, is based on agriculture and forestry, which provide the
main livelihood for more than 90% of the population. Agriculture
consists largely of subsistence farming and animal husbandry. Rugged
mountains dominate the terrain and make the building of roads and
other infrastructure difficult and expensive. The economy is closely
aligned with India's through strong trade and monetary links. The
industrial sector is technologically backward, with most production
of the cottage industry type. Most development projects, such as
road construction, rely on Indian migrant labor. Bhutan's hydropower
potential and its attraction for tourists are key resources. The
Bhutanese Government has made some progress in expanding the
nation's productive base and improving social welfare. Model
education, social, and environment programs in Bhutan are underway
with support from multilateral development organizations. Each
economic program takes into account the government's desire to
protect the country's environment and cultural traditions. Detailed
controls and uncertain policies in areas like industrial licensing,
trade, labor, and finance continue to hamper foreign investment.

Bolivia:
Bolivia, long one of the poorest and least developed Latin
American countries, has made considerable progress toward the
development of a market-oriented economy. Successes under President
SANCHEZ DE LOZADA (1993-97) included the signing of a free trade
agreement with Mexico and joining the Southern Cone Common Market
(Mercosur), as well as the privatization of the state airline,
telephone company, railroad, electric power company, and oil
company. His successor, Hugo BANZER Suarez has tried to further
improve the country's investment climate with an anticorruption
campaign. Growth slowed in 1999, in part due to tight government
budget policies, which limited needed appropriations for
anti-poverty programs, and the fallout from the Asian financial
crisis. In 2000, major civil disturbances in April, and again in
September and October, held down overall growth to 2.5%.

Bosnia and Herzegovina:
Bosnia and Herzegovina ranked next to The
Former Yugoslav Republic of Macedonia as the poorest republic in the
old Yugoslav federation. Although agriculture is almost all in
private hands, farms are small and inefficient, and the republic
traditionally is a net importer of food. Industry has been greatly
overstaffed, one reflection of the socialist economic structure of
Yugoslavia. TITO had pushed the development of military industries
in the republic with the result that Bosnia hosted a large share of
Yugoslavia's defense plants. The bitter interethnic warfare in
Bosnia caused production to plummet by 80% from 1990 to 1995,
unemployment to soar, and human misery to multiply. With an uneasy
peace in place, output recovered in 1996-98 at high percentage rates
from a low base; but output growth slowed appreciably in 1999 and
2000, and GDP remains far below the 1990 level. Economic data are of
limited use because, although both entities issue figures,
national-level statistics are not available. Moreover, official data
do not capture the large share of activity that occurs on the black
market. The marka - the national currency introduced in 1998 - has
gained wide acceptance, and the Central Bank of Bosnia and
Herzegovina has dramatically increased its reserve holdings.
Implementation of privatization, however, has been slower than
anticipated. Banking reform accelerated in early 2001 as all the
communist-era payments bureaus were shut down. The country receives
substantial amounts of reconstruction assistance and humanitarian
aid from the international community but will have to prepare for an
era of declining assistance.

Botswana:
Botswana has maintained one of the world's highest growth
rates since independence in 1966. Through fiscal discipline and
sound management, Botswana has transformed itself from one of the
poorest countries in the world to a middle-income country with a per
capita GDP of $6,600 in 2000. Diamond mining has fueled much of
Botswana's economic expansion and currently accounts for more than
one-third of GDP and for three-fourths of export earnings. Tourism,
subsistence farming, and cattle raising are other key sectors. The
government must deal with high rates of unemployment and poverty.
Unemployment officially is 19%, but unofficial estimates place it
closer to 40%. HIV/AIDS infection rates are the highest in the world
and threaten Botswana's impressive economic gains.

Bouvet Island:
no economic activity; declared a nature reserve

Brazil:
Possessing large and well-developed agricultural, mining,
manufacturing, and service sectors, Brazil's economy outweighs that
of all other South American countries and is expanding its presence
in world markets. In the late eighties and early nineties, high
inflation hindered economic activity and investment. "The Real
Plan", instituted in the spring of 1994, sought to break
inflationary expectations by pegging the real to the US dollar.
Inflation was brought down to single digit annual figures, but not
fast enough to avoid substantial real exchange rate appreciation
during the transition phase of the "Real Plan". This appreciation
meant that Brazilian goods were now more expensive relative to goods
from other countries, which contributed to large current account
deficits. However, no shortage of foreign currency ensued because of
the financial community's renewed interest in Brazilian markets as
inflation rates stabilized and the debt crisis of the eighties faded
from memory. The maintenance of large current account deficits via
capital account surpluses became problematic as investors became
more risk averse to emerging market exposure as a consequence of the
Asian financial crisis in 1997 and the Russian bond default in
August 1998. After crafting a fiscal adjustment program and pledging
progress on structural reform, Brazil received a $41.5 billion
IMF-led international support program in November 1998. In January
1999, the Brazilian Central Bank announced that the real would no
longer be pegged to the US dollar. This devaluation helped moderate
the downturn in economic growth in 1999 that investors had expressed
concerns about over the summer of 1998. Brazil's debt to GDP ratio
for 1999 beat the IMF target and helped reassure investors that
Brazil will maintain tight fiscal and monetary policy even with a
floating currency. The economy continued to recover in 2000, with
inflation remaining in the single digits and expected growth for
2001 of 4.5%. Foreign direct investment set a record of more than
$30 billion in 2000.

British Indian Ocean Territory:
All economic activity is
concentrated on the largest island of Diego Garcia, where joint
UK-US defense facilities are located. Construction projects and
various services needed to support the military installations are
done by military and contract employees from the UK, Mauritius, the
Philippines, and the US. There are no industrial or agricultural
activities on the islands. When the Ilois return, they plan to
reestablish sugarcane production and fishing.

British Virgin Islands:
The economy, one of the most stable and
prosperous in the Caribbean, is highly dependent on tourism, which
generates an estimated 45% of the national income. An estimated
350,000 tourists, mainly from the US, visited the islands in 1997.
In the mid-1980s, the government began offering offshore
registration to companies wishing to incorporate in the islands, and
incorporation fees now generate substantial revenues. An estimated
250,000 companies were on the offshore registry by yearend 1997. The
adoption of a comprehensive insurance law in late 1994, which
provides a blanket of confidentiality with regulated statutory
gateways for investigation of criminal offenses, is expected to make
the British Virgin Islands even more attractive to international
business. Livestock raising is the most important agricultural
activity; poor soils limit the islands' ability to meet domestic
food requirements. Because of traditionally close links with the US
Virgin Islands, the British Virgin Islands has used the dollar as
its currency since 1959.

Brunei:
This small, wealthy economy is a mixture of foreign and
domestic entrepreneurship, government regulation and welfare
measures, and village tradition. Exports of crude oil and natural
gas account for over half of GDP. Per capita GDP is far above most
other Third World countries, and substantial income from overseas
investment supplements income from domestic production. The
government provides for all medical services and subsidizes rice and
housing. Brunei's leaders are concerned that steadily increased
integration in the world economy will undermine internal social
cohesion although it became a more prominent player by serving as
chairman for the 2000 APEC (Asian Pacific Economic Cooperation)
forum. Plans for the future include upgrading the labor force,
reducing unemployment, strengthening the banking and tourist
sectors, and, in general, a further widening of the economic base
beyond oil and gas.

Bulgaria:
Bulgaria, a former communist country struggling to enter
the European market economy, suffered a major economic downturn in
1996 and 1997, with triple digit inflation and GDP contraction of
10.6% and 6.9%. The current government - which took office in May
1997 after pre-term parliamentary elections - stabilized the economy
and promoted growth by implementing a currency board, practicing
sound financial policies, invigorating privatization, and pursuing
structural reforms. Additionally, strong assistance from
international financial institutions - most notably the IMF which
approved a three-year Extended Fund Facility worth approximately
$900 million in September 1998 - played a critical role in turning
the economy around. After several years of tumult, Bulgaria's
economy has stabilized. Its better-than-expected economic
performance in 1999 - despite the impact of the Kosovo conflict, the
1998 Russian financial crisis, and structural reforms - and strong
growth in 2000 portends solid growth over the next few years; this
assumes continued fiscal restraint, additional structural reforms,
aid from abroad, and prosperous times in the EU economy.

Burkina Faso:
One of the poorest countries in the world, landlocked
Burkina Faso has a high population density, few natural resources,
and a fragile soil. About 90% of the population is engaged in
(mainly subsistence) agriculture which is highly vulnerable to
variations in rainfall. Industry remains dominated by unprofitable
government-controlled corporations. Following the African franc
currency devaluation in January 1994 the government updated its
development program in conjunction with international agencies, and
exports and economic growth have increased. Maintenance of its
macroeconomic progress in 2001-02 depends on continued low
inflation, reduction in the trade deficit, and reforms designed to
encourage private investment.

Burma:
Burma has a mixed economy with private activity dominant in
agriculture, light industry, and transport, and with substantial
state-controlled activity, mainly in energy, heavy industry, and the
rice trade. Government policy in the 1990s has aimed at revitalizing
the economy after three decades of tight central planning. Private
activity markedly increased in the early to mid-1990s, but began to
decline in the past several years due to frustrations with the
unfriendly business environment and political pressure from western
nations. Published estimates of Burma's foreign trade are greatly
understated because of the volume of black-market, illicit, and
border trade. A major ongoing problem is the failure to achieve
monetary and fiscal stability. Burma remains a poor Asian country
and living standards for the majority have not improved over the
past decade. Short-term growth will continue to be restrained
because of poor government planning and minimal foreign investment.

Burundi:
Burundi is a landlocked, resource-poor country with an
underdeveloped manufacturing sector. The economy is predominantly
agricultural with roughly 90% of the population dependent on
subsistence agriculture. Its economic health depends on the coffee
crop, which accounts for 80% of foreign exchange earnings. The
ability to pay for imports therefore rests largely on the vagaries
of the climate and the international coffee market. Since October
1993 the nation has suffered from massive ethnic-based violence
which has resulted in the death of perhaps 250,000 persons and the
displacement of about 800,000 others. Only one in four children go
to school, and one in nine adults has HIV/AIDS. Foods, medicines,
and electricity remain in short supply.

Cambodia:
Cambodia's economy slowed dramatically in 1997-98 due to
the regional economic crisis, civil violence, and political
infighting. Foreign investment and tourism fell off. In 1999, the
first full year of peace in 30 years, progress was made on economic
reforms and growth resumed at 4%. GDP growth for 2000 had been
projected to reach 5.5%, but the worst flooding in 70 years severely
damaged agricultural crops, and high oil prices hurt industrial
production, and growth for the year is estimated at only 4%. Tourism
is Cambodia's fastest growing industry, with arrivals up 34% in
2000. The long-term development of the economy after decades of war
remains a daunting challenge. The population lacks education and
productive skills, particularly in the poverty-ridden countryside,
which suffers from an almost total lack of basic infrastructure.
Fear of renewed political instability and corruption within the
government discourage foreign investment and delay foreign aid. On
the brighter side, the government is addressing these issues with
assistance from bilateral and multilateral donors.

Cameroon:
Because of its oil resources and favorable agricultural
conditions, Cameroon has one of the best-endowed primary commodity
economies in sub-Saharan Africa. Still, it faces many of the serious
problems facing other underdeveloped countries, such as a top-heavy
civil service and a generally unfavorable climate for business
enterprise. Since 1990, the government has embarked on various IMF
and World Bank programs designed to spur business investment,
increase efficiency in agriculture, improve trade, and recapitalize
the nation's banks. In June 2000, the government completed an
IMF-sponsored, three-year structural adjustment program; however,
the IMF is pressing for more reforms, including increased budget
transparency and privatization. Higher oil prices in 2000 helped to
offset the country's lower cocoa export revenues. A rebound in the
cocoa market should increase growth to over 5% in 2001.

Canada:
As an affluent, high-tech industrial society, Canada today
closely resembles the US in its market-oriented economic system,
pattern of production, and high living standards. Since World War
II, the impressive growth of the manufacturing, mining, and service
sectors has transformed the nation from a largely rural economy into
one primarily industrial and urban. Real rates of growth have
averaged nearly 3.0% since 1993. Unemployment is falling and
government budget surpluses are being partially devoted to reducing
the large public sector debt. The 1989 US-Canada Free Trade
Agreement (FTA) and 1994 North American Free Trade Agreement (NAFTA)
(which included Mexico) have touched off a dramatic increase in
trade and economic integration with the US. With its great natural
resources, skilled labor force, and modern capital plant Canada
enjoys solid economic prospects. Two shadows loom, the first being
the continuing constitutional impasse between English- and
French-speaking areas, which has been raising the possibility of a
split in the federation. Another long-term concern is the flow south
to the US of professional persons lured by higher pay, lower taxes,
and the immense high-tech infrastructure.

Cape Verde:
Cape Verde's low per capita GDP reflects a poor natural
resource base, including serious water shortages exacerbated by
cycles of long-term drought. The economy is service-oriented, with
commerce, transport, and public services accounting for almost 70%
of GDP. Although nearly 70% of the population lives in rural areas,
the share of agriculture in GDP in 1998 was only 13%, of which
fishing accounts for 1.5%. About 90% of food must be imported. The
fishing potential, mostly lobster and tuna, is not fully exploited.
Cape Verde annually runs a high trade deficit, financed by foreign
aid and remittances from emigrants; remittances constitute a
supplement to GDP of more than 20%. Economic reforms, launched by
the new democratic government in 1991, are aimed at developing the
private sector and attracting foreign investment to diversify the
economy. Prospects for 2001 depend heavily on the maintenance of aid
flows, remittances, and the momentum of the government's development
program.

Cayman Islands:
With no direct taxation, the islands are a thriving
offshore financial center. More than 40,000 companies were
registered in the Cayman Islands as of 1997, including almost 600
banks and trust companies; banking assets exceed $500 billion. A
stock exchange was opened in 1997. Tourism is also a mainstay,
accounting for about 70% of GDP and 75% of foreign currency
earnings. The tourist industry is aimed at the luxury market and
caters mainly to visitors from North America. Total tourist arrivals
exceeded 1.2 million visitors in 1997. About 90% of the islands'
food and consumer goods must be imported. The Caymanians enjoy one
of the highest outputs per capita and one of the highest standards
of living in the world.

Central African Republic:
Subsistence agriculture, together with
forestry, remains the backbone of the economy of the Central African
Republic (CAR), with more than 70% of the population living in
outlying areas. The agricultural sector generates half of GDP.
Timber has accounted for about 16% of export earnings and the
diamond industry for nearly 54%. Important constraints to economic
development include the CAR's landlocked position, a poor
transportation system, a largely unskilled work force, and a legacy
of misdirected macroeconomic policies. The 50% devaluation of the
currencies of 14 Francophone African nations on 12 January 1994 had
mixed effects on the CAR's economy. Diamond, timber, coffee, and
cotton exports increased, leading an estimated rise of GDP of 7% in
1994 and nearly 5% in 1995. Military rebellions and social unrest in
1996 were accompanied by widespread destruction of property and a
drop in GDP of 2%. The IMF approved an Extended Structure Adjustment
Facility in 1998 and the World Bank extended further credits in 1999
and approved a $10 million loan in early 2001. The government has
set targets of 3.5% GDP growth in 2001 and 2002. As of January 2001,
many civil servants were owed as much as 30 months pay, leading them
to go on strike and further damaging the economy.

Chad:
Landlocked Chad's economic development suffers from its
geographic remoteness, drought, lack of infrastructure, and
political turmoil. About 85% of the population depends on
agriculture, including the herding of livestock. Of Africa's
Francophone countries, Chad benefited least from the 50% devaluation
of their currencies in January 1994. Financial aid from the World
Bank, the African Development Fund, and other sources is directed
largely at the improvement of agriculture, especially livestock
production. The World Bank's decision to back the Doba oil field
development and the Chad-Cameroon pipeline will add Chad to the
group of already booming West African oil exporters. However, the
rank and file may not benefit much from the oil development projects.

Chile:
Chile has a market-oriented economy characterized by a high
level of foreign trade. During the early 1990s, Chile's reputation
as a role model for economic reform was strengthened when the
democratic government of Patricio AYLWIN - which took over from the
military in 1990 - deepened the economic reform initiated by the
military government. Growth in real GDP averaged 8% during 1991-97,
but fell to half that level in 1998 because of tight monetary
policies implemented to keep the current account deficit in check
and lower export earnings - the latter a product of the global
financial crisis. A severe drought exacerbated the recession in
1999, reducing crop yields and causing hydroelectric shortfalls and
electricity rationing, and Chile experienced negative economic
growth for the first time in more than 15 years. Despite the effects
of the recession, Chile maintained its reputation for strong
financial institutions and sound policy that have given it the
strongest sovereign bond rating in South America. By the end of
1999, exports and economic activity had begun to recover, and growth
rebounded to 5.5% in 2000. Unemployment remains stubbornly high,
however, putting pressure on President LAGOS to improve living
standards. Meanwhile, Chile has launched free trade negotiations
with the US.

China: In late 1978 the Chinese leadership began moving the economy from a sluggish Soviet-style centrally planned economy to a more market-oriented system. Whereas the system operates within a political framework of strict Communist control, the economic influence of non-state managers and enterprises has been steadily increasing. The authorities have switched to a system of household responsibility in agriculture in place of the old collectivization, increased the authority of local officials and plant managers in industry, permitted a wide variety of small-scale enterprise in services and light manufacturing, and opened the economy to increased foreign trade and investment. The result has been a quadrupling of GDP since 1978. In 2000, with its 1.26 billion people but a GDP of just $3,600 per capita, China stood as the second largest economy in the world after the US (measured on a purchasing power parity basis). Agricultural output doubled in the 1980s, and industry also posted major gains, especially in coastal areas near Hong Kong and opposite Taiwan, where foreign investment helped spur output of both domestic and export goods. On the darker side, the leadership has often experienced in its hybrid system the worst results of socialism (bureaucracy and lassitude) and of capitalism (windfall gains and stepped-up inflation). Beijing thus has periodically backtracked, retightening central controls at intervals. The government has struggled to (a) collect revenues due from provinces, businesses, and individuals; (b) reduce corruption and other economic crimes; and (c) keep afloat the large state-owned enterprises many of which had been shielded from competition by subsides and had been losing the ability to pay full wages and pensions. From 80 to 120 million surplus rural workers are adrift between the villages and the cities, many subsisting through part-time low-paying jobs. Popular resistance, changes in central policy, and loss of authority by rural cadres have weakened China's population control program, which is essential to maintaining growth in living standards. Another long-term threat to continued rapid economic growth is the deterioration in the environment, notably air pollution, soil erosion, and the steady fall of the water table especially in the north. China continues to lose arable land because of erosion and economic development. Weakness in the global economy in 2001 could hamper growth in exports. Beijing will intensify efforts to stimulate growth through spending on infrastructure—such as water control and power grids—and poverty relief and through rural tax reform aimed at eliminating arbitrary local levies on farmers.

Christmas Island:
Phosphate mining had been the only significant
economic activity, but in December 1987 the Australian Government
closed the mine. In 1991, the mine was reopened by union workers.
With the support of the government, Australian-based Casinos Austria
International Ltd. built a $34 million casino on Christmas Island,
which opened in 1993. As of yearend 1999, gaming facilities at the
casino were temporarily closed but were expected to reopen in early
2000. Another economic prospect is the possible location of a
space-launching site on the island.

Clipperton Island:
Although 115 species of fish have been identified
in the territorial waters of Clipperton Island, the only economic
activity is tuna fishing.

Cocos (Keeling) Islands:
Grown throughout the islands, coconuts are
the sole cash crop. Copra and fresh coconuts are the major export
earners. Small local gardens and fishing contribute to the food
supply, but additional food and most other necessities must be
imported from Australia.

Colombia:
Colombia is poised for muted growth in the next several
years, marking continued recovery from the severe 1999 recession
when GDP fell by about 4%. President PASTRANA's well-respected
economic team is working to keep the economy on track, maintaining
low interest rates, for example. In accordance with its IMF loan
agreement, the administration also is taking steps to improve the
public sector's fiscal health. However, many challenges to improved
prosperity remain. Unemployment was stuck at a record 20% in 2000,
contributing to the extreme inequality in income distribution. Two
of Colombia's leading exports, oil and coffee, face an uncertain
future; new exploration is needed to offset declining oil
production, while coffee harvests and prices are depressed. The lack
of public security is a key concern for investors, making progress
in the government's peace negotiations with insurgent groups an
important driver of economic performance. Colombia is looking for
continued support from the international community to boost economic
and peace prospects.

Comoros:
One of the world's poorest countries, Comoros is made up of
three islands that have inadequate transportation links, a young and
rapidly increasing population, and few natural resources. The low
educational level of the labor force contributes to a subsistence
level of economic activity, high unemployment, and a heavy
dependence on foreign grants and technical assistance. Agriculture,
including fishing, hunting, and forestry, is the leading sector of
the economy. It contributes 40% to GDP, employs 80% of the labor
force, and provides most of the exports. The country is not
self-sufficient in food production; rice, the main staple, accounts
for the bulk of imports. The government is struggling to upgrade
education and technical training, to privatize commercial and
industrial enterprises, to improve health services, to diversify
exports, to promote tourism, and to reduce the high population
growth rate. Continued foreign support is essential if the goal of
4% annual GDP growth is to be met. Remittances from 150,000 Comorans
abroad help supplement GDP.

Congo, Democratic Republic of the:
The economy of the Democratic
Republic of the Congo - a nation endowed with vast potential wealth
- has declined drastically since the mid-1980s. The new government
instituted a tight fiscal policy that initially curbed inflation and
currency depreciation, but these small gains were quickly reversed
when the foreign-backed rebellion in the eastern part of the country
began in August 1998. The war has dramatically reduced national
output and government revenue and has increased external debt.
Foreign businesses have curtailed operations due to uncertainty
about the outcome of the conflict and because of increased
government harassment and restrictions. The war has intensified the
impact of such basic problems as an uncertain legal framework,
corruption, raging inflation, and lack of openness in government
economic policy and financial operations. A number of IMF and World
Bank missions have met with the government to help it develop a
coherent economic plan but associated reforms are on hold.

Congo, Republic of the:
The economy is a mixture of village
agriculture and handicrafts, an industrial sector based largely on
oil, support services, and a government characterized by budget
problems and overstaffing. Oil has supplanted forestry as the
mainstay of the economy, providing a major share of government
revenues and exports. In the early 1980s, rapidly rising oil
revenues enabled the government to finance large-scale development
projects with GDP growth averaging 5% annually, one of the highest
rates in Africa. Moreover, the government has mortgaged a
substantial portion of its oil earnings, contributing to the
government's shortage of revenues. The 12 January 1994 devaluation
of Franc Zone currencies by 50% resulted in inflation of 61% in
1994, but inflation has subsided since. Economic reform efforts
continued with the support of international organizations, notably
the World Bank and the IMF. The reform program came to a halt in
June 1997 when civil war erupted. Denis SASSOU-NGUESSO, who returned
to power when the war ended in October 1997, publicly expressed
interest in moving forward on economic reforms and privatization and
in renewing cooperation with international financial institutions.
However, economic progress was badly hurt by slumping oil prices and
the resumption of armed conflict in December 1998, which worsened
the Republic of the Congo's budget deficit. Even with the IMF's
renewed confidence and high world oil prices, Congo is unlikely to
realize growth of more than 5% in 2001-02. With the return to
fragile peace, the IMF approved a $14 million credit in November
2000 to aid post-conflict reconstruction.

Cook Islands:
Like many other South Pacific island nations, the Cook
Islands' economic development is hindered by the isolation of the
country from foreign markets, the limited size of domestic markets,
lack of natural resources, periodic devastation from natural
disasters, and inadequate infrastructure. Agriculture provides the
economic base with major exports made up of copra and citrus fruit.
Manufacturing activities are limited to fruit processing, clothing,
and handicrafts. Trade deficits are made up for by remittances from
emigrants and by foreign aid, overwhelmingly from New Zealand. In
the 1980s and 1990s, the country lived beyond its means, maintaining
a bloated public service and accumulating a large foreign debt.
Subsequent reforms, including the sale of state assets, the
strengthening of economic management, the encouragement of tourism,
and a debt restructuring agreement, have rekindled investment and
growth.

Coral Sea Islands:
no economic activity

Costa Rica:
Costa Rica's basically stable economy depends on
tourism, agriculture, and electronics exports. Poverty has been
substantially reduced over the past 15 years, and a strong social
safety net has been put into place. Foreign investors remain
attracted by the country's political stability and high education
levels, and tourism continues to bring in foreign exchange. However,
traditional export sectors have not kept pace. Low coffee prices and
an overabundance of bananas have hurt the agricultural sector. The
government continues to grapple with its large deficit and massive
internal debt and with the need to modernize the state-owned
electricity and telecommunications sector.

Cote d'Ivoire:
Cote d'Ivoire is among the world's largest producers
and exporters of coffee, cocoa beans, and palm oil. Consequently,
the economy is highly sensitive to fluctuations in international
prices for these products and to weather conditions. Despite
government attempts to diversify the economy, it is still largely
dependent on agriculture and related activities, which engage
roughly 68% of the population. After several years of lagging
performance, the Ivorian economy began a comeback in 1994, due to
the 50% devaluation of the CFA franc and improved prices for cocoa
and coffee, growth in nontraditional primary exports such as
pineapples and rubber, limited trade and banking liberalization,
offshore oil and gas discoveries, and generous external financing
and debt rescheduling by multilateral lenders and France. Moreover,
government adherence to donor-mandated reforms led to a jump in
growth to 5% annually in 1996-99. Growth was negative in 2000
because of the difficulty of meeting the conditions of international
donors, continued low prices of key exports, and post-coup
instability. In 2001-02, a moderate rebound in the cocoa market
could boost growth back above 3%; however, political instability
could impede growth again.

Croatia:
Before the dissolution of Yugoslavia, the Republic of
Croatia, after Slovenia, was the most prosperous and industrialized
area, with a per capita output perhaps one-third above the Yugoslav
average. Croatia faces considerable economic problems stemming from:
the legacy of longtime communist mismanagement of the economy;
damage during the internecine fighting to bridges, factories, power
lines, buildings, and houses; the large refugee and displaced
population, both Croatian and Bosnian; and the disruption of
economic ties. Stepped-up Western aid and investment, especially in
the tourist and oil industries, would help bolster the economy. The
economy emerged from its mild recession in 2000 with tourism the
main factor. Massive unemployment remains a key negative element.
The government's failure to press the economic reforms needed to
spur growth is largely the result of coalition politics and public
resistance, particularly from the trade unions, to measures that
would cut jobs, wages, or social benefits.

Cuba:
The government, the primary player in the economy, has
undertaken limited reforms in recent years to stem excess liquidity,
increase enterprise efficiency, and alleviate serious shortages of
food, consumer goods, and services, but prioritizing of political
control makes extensive reforms unlikely. Living standards for the
average Cuban, without access to dollars, remain at a depressed
level compared with 1990. The liberalized farmers' markets
introduced in 1994, sell above-quota production at market prices,
expand legal consumption alternatives, and reduce black market
prices. Income taxes and increased regulations introduced since 1996
have sharply reduced the number of legally self-employed from a high
of 208,000 in January 1996. Havana announced in 1995 that GDP
declined by 35% during 1989-93 as a result of lost Soviet aid and
domestic inefficiencies. The slide in GDP came to a halt in 1994
when Cuba reported growth in GDP of 0.7%. Cuba reported that GDP
increased by 2.5% in 1995 and 7.8% in 1996, before slowing down in
1997 and 1998 to 2.5% and 1.2% respectively. Growth recovered with a
6.2% increase in GDP in 1999 and a 5.6% increase in 2000. Much of
Cuba's recovery can be attributed to tourism revenues and foreign
investment. Growth in 2001 should continue at the same level as the
government balances the need for economic loosening against its
concern for firm political control.

Cyprus:
Economic affairs are affected by the division of the
country. The Greek Cypriot economy is prosperous but highly
susceptible to external shocks. Erratic growth rates in the 1990s
reflect the economy's vulnerability to swings in tourist arrivals,
caused by political instability on the island and fluctuations in
economic conditions in Western Europe. Economic policy is focused on
meeting the criteria for admission to the EU. As in the Turkish
sector, water shortage is a growing problem, and several
desalination plants are planned. The Turkish Cypriot economy has
about one-fifth the population and one-third the per capita GDP of
the south. Because it is recognized only by Turkey, it has had much
difficulty arranging foreign financing, and foreign firms have
hesitated to invest there. It remains heavily dependent on
agriculture and government service, which together employ about half
of the work force. Moreover, the small, vulnerable economy has
suffered because the Turkish lira is legal tender. To compensate for
the economy's weakness, Turkey provides direct and indirect aid to
tourism, education, industry, etc.

Czech Republic:
Basically one of the most stable and prosperous of
the post-Communist states, the Czech Republic has been recovering
from recession since mid-1999. The economy grew about 2.5% in 2000
and should achieve somewhat higher growth in 2001. Growth is led by
exports to the EU, especially Germany, and foreign investment, while
domestic demand is reviving. Uncomfortably high fiscal and current
account deficits could be future problems. Unemployment is down to
8.7% as job creation continues in the rebounding economy; inflation
is up to 3.8% but still moderate. The EU put the Czech Republic just
behind Poland and Hungary in preparations for accession, which will
give further impetus and direction to structural reform. Moves to
complete banking, telecommunications and energy privatization will
add to foreign investment, while intensified restructuring among
large enterprises and banks and improvements in the financial sector
should strengthen output growth.

Denmark:
This thoroughly modern market economy features high-tech
agriculture, up-to-date small-scale and corporate industry,
extensive government welfare measures, comfortable living standards,
and high dependence on foreign trade. Denmark is a net exporter of
food and energy and has a comfortable balance of payments surplus.
The center-left coalition government has reduced the formerly high
unemployment rate and attained a budget surplus as well as followed
the previous government's policies of maintaining low inflation and
a stable currency. The coalition has lowered marginal income tax
rates and raised environmental taxes thus maintaining overall tax
revenues. Problems of bottlenecks, and longer term demographic
changes reducing the labor force, are being addressed through labor
market reforms. The government has been successful in meeting, and
even exceeding, the economic convergence criteria for participating
in the third phase (a common European currency) of the European
Monetary Union (EMU), but Denmark, in a September 2000 referendum,
reconfirmed its decision not to join the 11 other EU members in the
euro. Even so, the Danish currency remains pegged to the euro.

Djibouti:
The economy is based on service activities connected with
the country's strategic location and status as a free trade zone in
northeast Africa. Two-thirds of the inhabitants live in the capital
city, the remainder being mostly nomadic herders. Scanty rainfall
limits crop production to fruits and vegetables, and most food must
be imported. Djibouti provides services as both a transit port for
the region and an international transshipment and refueling center.
It has few natural resources and little industry. The nation is,
therefore, heavily dependent on foreign assistance to help support
its balance of payments and to finance development projects. An
unemployment rate of 40% to 50% continues to be a major problem.
Inflation is not a concern, however, because of the fixed tie of the
franc to the US dollar. Per capita consumption dropped an estimated
35% over the last seven years because of recession, civil war, and a
high population growth rate (including immigrants and refugees).
Faced with a multitude of economic difficulties, the government has
fallen in arrears on long-term external debt and has been struggling
to meet the stipulations of foreign aid donors. The year 2001 will
see only small growth as port activity should decrease now that
Ethiopia has more trade route options.

Dominica:
The economy depends on agriculture and is highly
vulnerable to climatic conditions, notably tropical storms.
Agriculture, primarily bananas, accounts for 21% of GDP and employs
40% of the labor force. Development of the tourist industry remains
difficult because of the rugged coastline, lack of beaches, and the
lack of an international airport. Hurricane Luis devastated the
country's banana crop in September 1995; tropical storms had wiped
out one-quarter of the crop in 1994 as well. The subsequent recovery
has been fueled by increases in construction, soap production, and
tourist arrivals. The government is attempting to develop an
offshore financial industry in order to diversify the island's
production base.

Dominican Republic:
The Dominican economy experienced dramatic
growth over the last decade, even though the economy was hit hard by
Hurricane Georges in 1998. Although the country has long been viewed
primarily as an exporter of sugar, coffee, and tobacco, in recent
years the service sector has overtaken agriculture as the economy's
largest employer, due to growth in tourism and free trade zones. The
country suffers from marked income inequality; the poorest half of
the population receives less than one-fifth of GNP, while the
richest ten percent enjoy 40% of national income. In December 2000,
the new MEJIA administration passed broad new tax legislation which
it hopes will provide enough revenue to offset rising oil prices and
to service foreign debt.

Ecuador:
Ecuador has substantial oil resources and rich agricultural
areas. Because the country exports primary products such as oil,
bananas, and shrimp, fluctuations in world market prices can have a
substantial domestic impact. Ecuador joined the World Trade
Organization in 1996, but has failed to comply with many of its
accession commitments. In recent years, growth has been uneven due
to ill-conceived fiscal stabilization measures. The aftermath of El
Nino and depressed oil market of 1997-98 drove Ecuador's economy
into a free-fall in 1999. The beginning of 1999 saw the banking
sector collapse, which helped precipitate an unprecedented default
on external loans later that year. Continued economic instability
drove a 70% depreciation of the currency throughout 1999, which
eventually forced a desperate government to "dollarize" the currency
regime in 2000. The move stabilized the currency, but did not stave
off the ouster of the government. The new president, Gustavo NOBOA
has yet to complete negotiations for a long sought IMF accord. He
will find it difficult to push through the reforms necessary to make
"dollarization" work in the long run.

Egypt:
A series of IMF arrangements - along with massive external
debt relief resulting from Egypt's participation in the Gulf war
coalition - helped Egypt improve its macroeconomic performance
during the 1990s. Sound fiscal and monetary policies through the
mid-1990s helped to tame inflation, slash budget deficits, and build
up foreign reserves, while structural reforms such as privatization
and new business legislation prompted increased foreign investment.
By mid-1998, however, the pace of structural reform slackened, and
lower combined hard currency earnings resulted in pressure on the
Egyptian pound and sporadic US dollar shortages. External payments
were not in crisis, but Cairo's attempts to curb demand for foreign
exchange convinced some investors and currency traders that
government financial operations lacked transparency and
coordination. Monetary pressures have since eased, however, with the
1999-2000 higher oil prices, a rebound in tourism, and a series of
mini-devaluations of the pound. The development of a gas export
market is a major plus factor in future growth.

El Salvador:
El Salvador is a struggling Central American economy
which has been suffering from a weak tax collection system, factory
closings, the aftermaths of Hurricane Mitch of 1998 and the
devastating earthquakes of early 2001, and weak world coffee prices.
On the bright side, in recent years inflation has fallen to single
digit levels, and total exports have grown substantially. The trade
deficit has been offset by remittances (an estimated $1.6 billion in
2000) from Salvadorans living abroad and by external aid. As of 1
January 2001, the US dollar was made legal tender alongside the
colon.

Equatorial Guinea:
The discovery and exploitation of large oil
reserves have contributed to dramatic economic growth in recent
years. Forestry, farming, and fishing are also major components of
GDP. Subsistence farming predominates. Although pre-independence
Equatorial Guinea counted on cocoa production for hard currency
earnings, the deterioration of the rural economy under successive
brutal regimes has diminished potential for agriculture-led growth.
A number of aid programs sponsored by the World Bank and the IMF
have been cut off since 1993 because of the government's gross
corruption and mismanagement. Businesses, for the most part, are
owned by government officials and their family members. Undeveloped
natural resources include titanium, iron ore, manganese, uranium,
and alluvial gold. The country responded favorably to the
devaluation of the CFA franc in January 1994. Boosts in production
and high world oil prices stimulated growth in 2000, with oil
accounting for 90% of greatly increased exports.

Eritrea:
With independence from Ethiopia on 24 May 1993, Eritrea
faced the economic problems of a small, desperately poor country.
The economy is largely based on subsistence agriculture, with 80% of
the population involved in farming and herding. The small industrial
sector consists mainly of light industries with outmoded
technologies. Domestic output (GDP) is substantially augmented by
worker remittances from abroad. Government revenues come from custom
duties and taxes on income and sales. Road construction is a top
domestic priority. In the long term, Eritrea may benefit from the
development of offshore oil, offshore fishing, and tourism.
Eritrea's economic future depends on its ability to master
fundamental social and economic problems, e.g., by reducing
illiteracy, promoting job creation, expanding technical training,
attracting foreign investment, and streamlining the bureaucracy.
Eritrea's agriculture over the last two years was severely weakened
by war and drought, and many farmlands must wait to be demined.
Another major difficulty is the ports, which prior to the war were
Ethiopia's preferred outlets but since have seen trade dry up.

Estonia:
In 2000, Estonia rebounded from the Russian financial
crisis by scaling back its budget and reorienting trade away from
Russian markets into EU member states. After GDP shrank 1.1% in
1999, the economy made a strong recovery in 2000, with growth
estimated at 6.4% - the highest in Central and Eastern Europe.
Estonia joined the World Trade Organization in November 1999 - the
second Baltic state to join - and continues its EU accession talks.
For 2001, Estonians predict GDP to grow around 6%, inflation of
between 4.2%-5.3%, and a balanced budget. Substantial gains were
made in completing privatization of Estonia's few remaining large,
state-owned companies in 2000, and this momentum is expected to
continue in 2001. Estonia hopes to join the EU during the next round
of enlargement tentatively set for 2004.

Ethiopia:
Ethiopia's economy is based on agriculture, which accounts
for half of GDP, 90% of exports, and 80% of total employment. The
agricultural sector suffers from frequent periods of drought and
poor cultivation practices, and as many as 4.6 million people need
food assistance annually. Coffee is critical to the Ethiopian
economy, and Ethiopia earned $267 million in 1999 by exporting
105,000 metric tons. According to current estimates, coffee
contributes 10% of Ethiopia's GDP. More than 15 million people (25%
of the population) derive their livelihood from the coffee sector.
Other exports include live animals, hides, gold, and qat. In
December 1999, Ethiopia signed a $1.4 billion joint venture deal to
develop a huge natural gas field in the Somali Regional State. The
war with Eritrea forced the government to spend scarce resources on
the military and to scale back ambitious development plans. Foreign
investment has declined significantly. Government taxes imposed in
late 1999 to raise money for the war depressed an already weak
economy. The war forced the government to improve roads and other
parts of the previously neglected infrastructure, but only certain
regions of the nation benefited. Recovery from the war is mostly
contingent on natural factors. A drought has continued into the end
of 2000 and food relief is expected to be needed through mid-2001 at
least. Ethiopia may receive Highly Indebted Poor Countries (HIPC)
debt relief by the end of the year.

Europa Island:
no economic activity

Falkland Islands (Islas Malvinas): The economy was formerly based on agriculture, mainly sheep farming, but today fishing contributes the bulk of economic activity. In 1987 the government began selling fishing licenses to foreign trawlers operating within the Falklands exclusive fishing zone. These license fees total more than $40 million per year, which goes to support the island's health, education, and welfare system. Squid accounts for 75% of the fish taken. Dairy farming supports domestic consumption; crops furnish winter fodder. Exports feature shipments of high-grade wool to the UK and the sale of postage stamps and coins. To encourage tourism, the Falkland Islands Development Corporation has built three lodges for visitors attracted by the abundant wildlife and trout fishing. The islands are now self-financing except for defense. The British Geological Survey announced a 200-mile oil exploration zone around the islands in 1993, and early seismic surveys suggest substantial reserves capable of producing 500,000 barrels per day; to date no exploitable site has been identified. An agreement between Argentina and the UK in 1995 seeks to defuse licensing and sovereignty conflicts that would dampen foreign interest in exploiting potential oil reserves.

Faroe Islands:
The Faroese economy has had a strong performance
since 1994, mostly as a result of increasing fish landings and high
and stable export prices. Unemployment is falling and there are
signs of labor shortages in several sectors. The positive economic
development has helped the Faroese Home Rule Government produce
increasing budget surpluses which in turn help to reduce the large
public debt, most of it owed to Denmark. However, the total
dependence on fishing makes the Faroese economy extremely
vulnerable, and the present fishing efforts appear in excess of what
is required to ensure a sustainable level of fishing in the long
term. Oil finds close to the Faroese area give hope for deposits in
the immediate Faroese area, which may eventually lay the basis for a
more diversified economy and thus less dependence on Denmark and
Danish economic assistance. Aided by a substantial annual subsidy
(15% of GDP) from Denmark, the Faroese have a standard of living not
far below the Danes and other Scandinavians.

Fiji:
Fiji, endowed with forest, mineral, and fish resources, is one
of the most developed of the Pacific island economies, though still
with a large subsistence sector. Sugar exports and a growing tourist
industry are the major sources of foreign exchange. Sugar processing
makes up one-third of industrial activity. Roughly 300,000 tourists
visit each year, including thousands of Americans following the
start of regularly scheduled non-stop air service from Los Angeles.
Fiji's growth slowed in 1997 because the sugar industry suffered
from low world prices and rent disputes between farmers and
landowners. Drought in 1998 further damaged the sugar industry, but
its recovery in 1999 contributed to robust GDP growth. Long-term
problems include low investment and uncertain property rights. The
political turmoil in Fiji has had a severe impact with the economy
shrinking by 8% in 1999 and over 7,000 people losing their jobs. The
interim government's 2001 budget is an attempt to attract foreign
investment and restart economic activity. The government's ability
to manage the budget and fulfill predictions of 4% growth for 2001
will depend on a return to stability, a regaining of investor
confidence, and the absence of international sanctions (which could
cripple Fiji's sugar and textile industry).

Finland:
Finland has a highly industrialized, largely free-market
economy, with per capita output roughly that of the UK, France,
Germany, and Italy. Its key economic sector is manufacturing -
principally the wood, metals, engineering, telecommunications, and
electronics industries. Trade is important, with exports equaling
more than one-third of GDP. Except for timber and several minerals,
Finland depends on imports of raw materials, energy, and some
components for manufactured goods. Because of the climate,
agricultural development is limited to maintaining self-sufficiency
in basic products. Forestry, an important export earner, provides a
secondary occupation for the rural population. Rapidly increasing
integration with Western Europe - Finland was one of the 11
countries joining the euro monetary system (EMU) on 1 January 1999 -
will dominate the economic picture over the next several years.
Growth in 2001 will be bolstered by strong private consumption, yet
may be 1 or 2 points lower than in 2000, largely because of a
weakening in export demand.

France:
France is in the midst of transition, from an economy that
featured extensive government ownership and intervention to one that
relies more on market mechanisms. The government remains dominant in
some sectors, particularly power, public transport, and defense
industries, but it has been relaxing its control since the
mid-1980s. The Socialist-led government has sold off part of its
holdings in France Telecom, Air France, Thales, Thomson Multimedia,
and the European Aerospace and Defense Company (EADS). The
telecommunications sector is gradually being opened to competition.
France's leaders remain committed to a capitalism in which they
maintain social equity by means of laws, tax policies, and social
spending that reduce income disparity and the impact of free markets
on public health and welfare. The government has done little to cut
generous unemployment and retirement benefits which impose a heavy
tax burden and discourage hiring. It has also shied from measures
that would dramatically increase the use of stock options and
retirement investment plans; such measures would boost the stock
market and fast-growing IT firms as well as ease the burden on the
pension system, but would disproportionately benefit the rich. In
addition to the tax burden, the reduction of the work week to
35-hours has drawn criticism for lowering the competitiveness of
French companies.

French Guiana:
The economy is tied closely to that of France through
subsidies and imports. Besides the French space center at Kourou,
fishing and forestry are the most important economic activities. The
large reserves of tropical hardwoods, not fully exploited, support
an expanding sawmill industry which provides sawn logs for export.
Cultivation of crops is limited to the coastal area, where the
population is largely concentrated; rice and manioc are the major
crops. French Guiana is heavily dependent on imports of food and
energy. Unemployment is a serious problem, particularly among
younger workers.

French Polynesia:
Since 1962, when France stationed military
personnel in the region, French Polynesia has changed from a
subsistence economy to one in which a high proportion of the work
force is either employed by the military or supports the tourist
industry. Tourism accounts for about one-fourth of GDP and is a
primary source of hard currency earnings. The small manufacturing
sector primarily processes agricultural products. The territory
benefited from a five-year (1994-98) development agreement with
France aimed principally at creating new jobs.

French Southern and Antarctic Lands:
Economic activity is limited to
servicing meteorological and geophysical research stations and
French and other fishing fleets. The fish catches landed on Iles
Kerguelen by foreign ships are exported to France and Reunion.

Gabon:
Gabon enjoys a per capita income four times that of most
nations of sub-Saharan Africa. This has supported a sharp decline in
extreme poverty; yet because of high income inequality a large
proportion of the population remains poor. Gabon depended on timber
and manganese until oil was discovered offshore in the early 1970s.
The oil sector now accounts for 50% of GDP. Gabon continues to face
fluctuating prices for its oil, timber, manganese, and uranium
exports. Despite the abundance of natural wealth, the economy is
hobbled by poor fiscal management. In 1992, the fiscal deficit
widened to 2.4% of GDP, and Gabon failed to settle arrears on its
bilateral debt, leading to a cancellation of rescheduling agreements
with official and private creditors. Devaluation of its Francophone
currency by 50% on 12 January 1994 sparked a one-time inflationary
surge, to 35%; the rate dropped to 6% in 1996. The IMF provided a
one-year standby arrangement in 1994-95, a three-year Enhanced
Financing Facility (EFF) at near commercial rates beginning in late
1995, and stand-by credit of $119 million in October 2000. Those
agreements mandate progress in privatization and fiscal discipline.
France provided additional financial support in January 1997 after
Gabon had met IMF targets for mid-1996. In 1997, an IMF mission to
Gabon criticized the government for overspending on off-budget
items, overborrowing from the central bank, and slipping on its
schedule for privatization and administrative reform. The rebound of
oil prices in 1999-2000 helped growth, but drops in production
hampered Gabon from fully realizing potential gains. An expected
decline in oil output may lead to contraction in GDP in 2001-02.

Gambia, The:
The Gambia has no important mineral or other natural
resources and has a limited agricultural base. About 75% of the
population depends on crops and livestock for its livelihood.
Small-scale manufacturing activity features the processing of
peanuts, fish, and hides. Reexport trade normally constitutes a
major segment of economic activity, but a 1999 government-imposed
preshipment inspection plan, instability of the Gambian dalasi, and
the stable political situation in Senegal have drawn some of the
reexport trade away from Banjul. The government's 1998 seizure of
the private peanut firm Alimenta eliminated the largest purchaser of
Gambian groundnuts; the following two marketing seasons have seen
significantly lower prices and sales. A decline in tourism from 1999
to 2000 has also held back growth. Unemployment and underemployment
rates are extremely high. Shortrun economic progress remains highly
dependent on sustained bilateral and multilateral aid, on
responsible government economic management as forwarded by IMF
technical help and advice, and on expected growth in the
construction sector.

Gaza Strip:
Economic output in the Gaza Strip - which comes under
the responsibility of the Palestinian Authority since the Cairo
Agreement of May 1994 - declined perhaps one-third between 1992 and
1996. The downturn was largely the result of Israeli closure
policies - the imposition of generalized border closures in response
to security incidents in Israel - which disrupted previously
established labor and commodity market relationships between Israel
and the WBGS (West Bank and Gaza Strip). The most serious negative
social effect of this downturn was the emergence of high
unemployment; unemployment in the WBGS during the 1980s was
generally under 5%; by 1995 it had risen to over 20%. Since 1997
Israel's use of comprehensive closures has decreased and, in 1998,
Israel implemented new policies to reduce the impact of closures and
other security procedures on the movement of Palestinian goods and
labor. These changes fueled an almost three-year long economic
recovery in the West Bank and Gaza Strip; real GDP grew by 5% in
1998 and 6% in 1999. Recovery was upended in the last quarter of
2000 with the outbreak of Palestinian violence, which triggered
tight Israeli closures of Palestinian self-rule areas and a severe
disruption of trade and labor movements.

Georgia:
Georgia's economy has traditionally revolved around Black
Sea tourism; cultivation of citrus fruits, tea, and grapes; mining
of manganese and copper; and output of a small industrial sector
producing wine, metals, machinery, chemicals, and textiles. The
country imports the bulk of its energy needs, including natural gas
and oil products. Its only sizable internal energy resource is
hydropower. Despite the severe damage the economy has suffered due
to civil strife, Georgia, with the help of the IMF and World Bank,
has made substantial economic gains since 1995, increasing GDP
growth and slashing inflation. The Georgian economy continues to
experience large budget deficits due to a failure to collect tax
revenues. Georgia also still suffers from energy shortages; it
privatized the distribution network in 1998, and deliveries are
steadily improving. The country is pinning its hopes for long-term
recovery on the development of an international transportation
corridor through the key Black Sea ports of P'ot'i and Bat'umi. The
growing trade deficit, continuing problems with tax evasion and
corruption, and political uncertainties cloud the short-term
economic picture.

Germany:
Germany possesses the world's third most technologically
powerful economy after the US and Japan, but structural market
rigidities - including the substantial non-wage costs of hiring new
workers - have made unemployment a long-term, not just a cyclical,
problem. Germany's aging population, combined with high
unemployment, has pushed social security outlays to a level
exceeding contributions from workers. The modernization and
integration of the eastern German economy remains a costly long-term
problem, with annual transfers from western Germany amounting to
roughly $70 billion. Growth picked up to 3% in 2000, largely due to
recovering global demand; newly passed business and income tax cuts
are expected to keep growth strong in 2001. Corporate restructuring
and growing capital markets are transforming the German economy to
meet the challenges of European economic integration and
globalization in general.

Ghana:
Well endowed with natural resources, Ghana has twice the per
capita output of the poorer countries in West Africa. Even so, Ghana
remains heavily dependent on international financial and technical
assistance. Gold, timber, and cocoa production are major sources of
foreign exchange. The domestic economy continues to revolve around
subsistence agriculture, which accounts for 36% of GDP and employs
60% of the work force, mainly small landholders. In 1995-97, Ghana
made mixed progress under a three-year structural adjustment program
in cooperation with the IMF. On the minus side, public sector wage
increases and regional peacekeeping commitments have led to
continued inflationary deficit financing, depreciation of the cedi,
and rising public discontent with Ghana's austerity measures.
Political uncertainty and a depressed cocoa market led to
disappointing growth in 2000. A rebound in the cocoa market should
push growth over 4% in 2001-02.

Gibraltar:
Gibraltar benefits from an extensive shipping trade,
offshore banking, and its position as an international conference
center. The British military presence has been sharply reduced and
now contributes about 11% to the local economy. The financial sector
accounts for 20% of GDP; tourism (almost 6 million visitors in
1998), shipping services fees, and duties on consumer goods also
generate revenue. In recent years, Gibraltar has seen major
structural change from a public to a private sector economy, but
changes in government spending still have a major impact on the
level of employment.

Glorioso Islands:
no economic activity

Greece:
Greece has a mixed capitalist economy with the public sector
accounting for about half of GDP. Tourism is a key industry,
providing a large portion of GDP and foreign exchange earnings.
Greece is a major beneficiary of EU aid, equal to about 4% of GDP.
The economy has improved steadily over the last few years, as the
government has tightened policy in the run-up to Greece's entry into
the EU's Economic and Monetary Union (EMU) on 1 January 2001. In
particular, Greece has cut its budget deficit to below 1% of GDP and
tightened monetary policy, with the result that inflation fell from
20% in 1990 to 3.1% in 2000. Major challenges remaining include the
reduction of unemployment and further restructuring of the economy,
including the privatization of some leading state enterprises.
Growth, 3.8% in 2000, may fall off to 3%-3.5% in 2001.

Greenland:
The economy remains critically dependent on exports of
fish and substantial support from the Danish Government, which
supplies about half of government revenues. The public sector,
including publicly owned enterprises and the municipalities, plays
the dominant role in the economy. Despite several interesting
hydrocarbon and minerals exploration activities, it will take
several years before production can materialize. Tourism is the only
sector offering any near-term potential, and even this is limited
due to a short season and high costs.

Grenada:
In this island economy progress in fiscal reforms and
prudent macroeconomic management have kept annual growth steady
since 1998. The increase in economic activity has been led by
construction and trade. Tourist facilities are being expanded;
tourism is the leading foreign exchange earner. Major short-term
concerns are the rising fiscal deficit and the deterioration in the
external account balance. Grenada shares a common central bank and a
common currency with seven other members of the Organization of
Eastern Caribbean States (OECS).

Guadeloupe:
The economy depends on agriculture, tourism, light
industry, and services. It also depends on France for large
subsidies and imports. Tourism is a key industry, with most tourists
from the US; an increasingly large number of cruise ships visit the
islands. The traditional sugarcane crop is slowly being replaced by
other crops, such as bananas (which now supply about 50% of export
earnings), eggplant, and flowers. Other vegetables and root crops
are cultivated for local consumption, although Guadeloupe is still
dependent on imported food, mainly from France. Light industry
features sugar and rum production. Most manufactured goods and fuel
are imported. Unemployment is especially high among the young.
Hurricanes periodically devastate the economy.

Guam:
The economy depends on US military spending, tourism, and the
export of fish and handicrafts. Total US grants, wage payments, and
procurement outlays amounted to $1 billion in 1998. Over the past 20
years, the tourist industry has grown rapidly, creating a
construction boom for new hotels and the expansion of older ones.
More than 1 million tourists visit Guam each year. The industry has
recently suffered setbacks because of the continuing Japanese
slowdown; the Japanese normally make up almost 90% of the tourists.
Most food and industrial goods are imported. Guam faces the problem
of building up the civilian economic sector to offset the impact of
military downsizing.

Guatemala:
The agricultural sector accounts for about one-fourth of
GDP, two-thirds of exports, and half of the labor force. Coffee,
sugar, and bananas are the main products. Former President ARZU
(1996-2000) worked to implement a program of economic liberalization
and political modernization. The 1996 signing of the peace accords,
which ended 36 years of civil war, removed a major obstacle to
foreign investment. In 1998, Hurricane Mitch caused relatively
little damage to Guatemala compared to its neighbors. Ongoing
challenges include increasing government revenues, negotiating
further assistance from international donors, and increasing the
efficiency and openness of both government and private financial
operations. Despite low international prices for Guatemala's main
commodities, the economy grew by 3% in 2000 and is forecast to grow
by 4% in 2001. Guatemala, along with Honduras and El Salvador,
recently concluded a free trade agreement with Mexico and has moved
to protect international property rights. However, the PORTILLO
administration has undertaken a review of privatizations under the
previous administration, thereby creating some uncertainty among
investors.

Guernsey:
Financial services - banking, fund management, insurance,
etc. - account for about 55% of total income in this tiny Channel
Island economy. Tourism, manufacturing, and horticulture, mainly
tomatoes and cut flowers, have been declining. Light tax and death
duties make Guernsey a popular tax haven. The evolving economic
integration of the EU nations is changing the rules of the game
under which Guernsey operates.

Guinea:
Guinea possesses major mineral, hydropower, and agricultural
resources, yet remains a poor underdeveloped nation. The country
possesses over 30% of the world's bauxite reserves and is the second
largest bauxite producer. The mining sector accounted for about 75%
of exports in 1999. Long-run improvements in government fiscal
arrangements, literacy, and the legal framework are needed if the
country is to move out of poverty. The government made encouraging
progress in budget management in 1997-99, and reform progress was
praised in the World Bank/IMF October 2000 assessment. However,
escalating fighting along the Sierra Leonean and Liberian borders
will cause major economic disruptions. In addition to direct defense
costs, the violence has led to a sharp decline in investor
confidence. Foreign mining companies have reduced expatriate staff,
while panic buying has created food shortages and inflation in local
markets. Real GDP growth is expected to fall to 2% in 2001.

Guinea-Bissau:
One of the 20 poorest countries in the world,
Guinea-Bissau depends mainly on farming and fishing. Cashew crops
have increased remarkably in recent years, and the country now ranks
sixth in cashew production. Guinea-Bissau exports fish and seafood
along with small amounts of peanuts, palm kernels, and timber. Rice
is the major crop and staple food. However, intermittent fighting
between Senegalese-backed government troops and a military junta
destroyed much of the country's infrastructure and caused widespread
damage to the economy in 1998; the civil war led to a 28% drop in
GDP that year, with partial recovery in 1999-2000. Before the war,
trade reform and price liberalization were the most successful part
of the country's structural adjustment program under IMF
sponsorship. The tightening of monetary policy and the development
of the private sector had also begun to reinvigorate the economy.
Because of high costs, the development of petroleum, phosphate, and
other mineral resources is not a near-term prospect. However,
unexploited offshore oil reserves could provide much-needed revenue
in the long run.

Guyana:
Severe drought and political turmoil contributed to Guyana's
negative growth of -1.8% for 1998 following six straight years of
growth of 5% or better. Growth came back to a positive 1.8% in 1999
and 3% in 2000. Underlying growth factors have included expansion in
the key agricultural and mining sectors, a more favorable atmosphere
for business initiative, a more realistic exchange rate, a moderate
inflation rate, and continued support by international
organizations. President JAGDEO, the former finance minister, is
taking steps to reform the economy, including drafting an investment
code and restructuring the inefficient and unresponsive public
sector. Problems include a shortage of skilled labor and a deficient
infrastructure. The government must persist in efforts to manage its
sizable external debt and attract new investment.

Haiti:
About 80% of the population lives in abject poverty. Nearly
70% of all Haitians depend on the agriculture sector, which consists
mainly of small-scale subsistence farming and employs about
two-thirds of the economically active work force. The country has
experienced little job creation since the former President PREVAL
took office in February 1996, although the informal economy is
growing. Following legislative elections in May 2000, fraught with
irregularities, international donors - including the US and EU -
suspended almost all aid to Haiti. This destabilized the Haitian
currency, the gourde, and, combined with a 40% fuel price hike in
September, caused widespread price increases. Prices appear to have
leveled off in January 2001.

Heard Island and McDonald Islands:
no economic activity

Holy See (Vatican City):
This unique, noncommercial economy is
supported financially by contributions (known as Peter's Pence) from
Roman Catholics throughout the world, the sale of postage stamps and
tourist mementos, fees for admission to museums, and the sale of
publications. The incomes and living standards of lay workers are
comparable to, or somewhat better than, those of counterparts who
work in the city of Rome.

Honduras:
Honduras, one of the poorest countries in the Western
Hemisphere, is banking on expanded trade privileges under the
Enhanced Caribbean Basin Initiative and on debt relief under the
Heavily Indebted Poor Countries (HIPC) initiative. While
reconstruction from 1998's Hurricane Mitch is at an advanced stage,
and the country has met most of its macroeconomic targets, it failed
to meet the IMF's goals to liberalize its energy and
telecommunications sectors. Economic growth has rebounded nicely
since the hurricane and should continue in 2001.

Hong Kong:
Hong Kong has a bustling free market economy highly
dependent on international trade. Natural resources are limited, and
food and raw materials must be imported. Indeed, imports and
exports, including reexports, each exceed GDP in dollar value. Even
before Hong Kong reverted to Chinese administration on 1 July 1997
it had extensive trade and investment ties with China. Per capita
GDP compares with the level in the four big countries of Western
Europe. GDP growth averaged a strong 5% in 1989-97. The widespread
Asian economic difficulties in 1998 hit this trade-dependent economy
quite hard, with GDP down 5%. The economy is undergoing a rapid
recovery, with growth of 10% in 2000 to be followed by projected
growth of 5% in 2001.

Howland Island:
no economic activity

Hungary:
Hungary continues to demonstrate strong economic growth and
to work toward accession to the European Union. The private sector
accounts for over 80% of GDP. Foreign ownership of and investment in
Hungarian firms is widespread, with cumulative foreign direct
investment totaling $23 billion by 2000. Hungarian sovereign debt
was upgraded in 2000 to the second-highest rating among all the
Central European transition economies. Inflation - a top economic
concern in 2000 - is still high at almost 10%, pushed upward by
higher world oil and gas and domestic food prices. Economic reform
measures such as health care reform, tax reform, and local
government financing have not yet been addressed by the ORBAN
government.

Iceland:
Iceland's Scandinavian-type economy is basically
capitalistic, yet with an extensive welfare system, low
unemployment, and remarkably even distribution of income. In the
absence of other natural resources (except for abundant hydrothermal
and geothermal power), the economy depends heavily on the fishing
industry, which provides 70% of export earnings and employs 12% of
the work force. The economy remains sensitive to declining fish
stocks as well as to drops in world prices for its main exports:
fish and fish products, aluminum, and ferrosilicon. The center-right
government plans to continue its policies of reducing the budget and
current account deficits, limiting foreign borrowing, containing
inflation, revising agricultural and fishing policies, diversifying
the economy, and privatizing state-owned industries. The government
remains opposed to EU membership, primarily because of Icelanders'
concern about losing control over their fishing resources. Iceland's
economy has been diversifying into manufacturing and service
industries in the last decade, and new developments in software
production, biotechnology, and financial services are taking place.
The tourism sector is also expanding, with the recent trends in
ecotourism and whale watching. Growth has been remarkably steady
over the past five years at 4%-5%.

India:
India's economy encompasses traditional village farming,
modern agriculture, handicrafts, a wide range of modern industries,
and a multitude of support services. More than a third of the
population is too poor to be able to afford an adequate diet.
India's international payments position remained strong in 2000 with
adequate foreign exchange reserves, moderately depreciating nominal
exchange rates, and booming exports of software services. Growth in
manufacturing output slowed, and electricity shortages continue in
many regions.

Indian Ocean:
The Indian Ocean provides major sea routes connecting
the Middle East, Africa, and East Asia with Europe and the Americas.
It carries a particularly heavy traffic of petroleum and petroleum
products from the oilfields of the Persian Gulf and Indonesia. Its
fish are of great and growing importance to the bordering countries
for domestic consumption and export. Fishing fleets from Russia,
Japan, South Korea, and Taiwan also exploit the Indian Ocean, mainly
for shrimp and tuna. Large reserves of hydrocarbons are being tapped
in the offshore areas of Saudi Arabia, Iran, India, and western
Australia. An estimated 40% of the world's offshore oil production
comes from the Indian Ocean. Beach sands rich in heavy minerals and
offshore placer deposits are actively exploited by bordering
countries, particularly India, South Africa, Indonesia, Sri Lanka,
and Thailand.

Indonesia:
Indonesia, a vast polyglot nation, faces severe economic
problems, stemming from secessionist movements and the low level of
security in the regions, the lack of reliable legal recourse in
contract disputes, corruption, weaknesses in the banking system, and
strained relations with the IMF. Investor confidence will remain low
and few new jobs will be created under these circumstances. Growth
of 4.8% in 2000 is not sustainable, being attributable to favorable
short-term factors, including high world oil prices, a surge in
nonoil exports, and increased domestic demand for consumer durables.

Iran:
Iran's economy is a mixture of central planning, state
ownership of oil and other large enterprises, village agriculture,
and small-scale private trading and service ventures. President
KHATAMI has continued to follow the market reform plans of former
President RAFSANJANI and has indicated that he will pursue
diversification of Iran's oil-reliant economy although he has made
little progress toward that goal. The strong oil market in 1996
helped ease financial pressures on Iran and allowed for Tehran's
timely debt service payments. Iran's financial situation tightened
in 1997 and deteriorated further in 1998 because of lower oil
prices. The subsequent zoom in oil prices in 1999-2000 afforded Iran
fiscal breathing room but does not solve Iran's structural economic
problems, including the encouragement of foreign investment.

Iraq:
Iraq's economy is dominated by the oil sector, which has
traditionally provided about 95% of foreign exchange earnings. In
the 1980s, financial problems caused by massive expenditures in the
eight-year war with Iran and damage to oil export facilities by Iran
led the government to implement austerity measures, borrow heavily,
and later reschedule foreign debt payments; Iraq suffered economic
losses of at least $100 billion from the war. After the end of
hostilities in 1988, oil exports gradually increased with the
construction of new pipelines and restoration of damaged facilities.
Iraq's seizure of Kuwait in August 1990, subsequent international
economic sanctions, and damage from military action by an
international coalition beginning in January 1991 drastically
reduced economic activity. Although government policies supporting
large military and internal security forces and allocating resources
to key supporters of the regime have hurt the economy,
implementation of the UN's oil-for-food program in December 1996 has
helped improve conditions for the average Iraqi citizen. For the
first six, six-month phases of the program, Iraq was allowed to
export limited amounts of oil in exchange for food, medicine, and
some infrastructure spare parts. In December 1999, the UN Security
Council authorized Iraq to export under the program as much oil as
required to meet humanitarian needs. Oil exports are now more than
three-quarters their prewar level. Per capita food imports have
increased significantly, while medical supplies and health care
services are steadily improving. Per capita output and living
standards are still well below the prewar level, but any estimates
have a wide range of error.

Ireland:
Ireland is a small, modern, trade-dependent economy with
growth averaging a robust 9% in 1995-2000. Agriculture, once the
most important sector, is now dwarfed by industry, which accounts
for 38% of GDP and about 80% of exports and employs 28% of the labor
force. Although exports remain the primary engine for Ireland's
robust growth, the economy is also benefiting from a rise in
consumer spending and recovery in both construction and business
investment. Over the past decade, the Irish government has
implemented a series of national economic programs designed to curb
inflation, reduce government spending, increase labor force skills,
and promote foreign investment. Ireland joined in launching the euro
currency system in January 1999 along with 10 other EU nations. The
Irish economy is in danger of overheating, with the tight labor
market driving up wage demands and inflation.

Israel:
Israel has a technologically advanced market economy with
substantial government participation. It depends on imports of crude
oil, grains, raw materials, and military equipment. Despite limited
natural resources, Israel has intensively developed its agricultural
and industrial sectors over the past 20 years. Israel is largely
self-sufficient in food production except for grains. Cuts diamonds,
high-technology equipment, and agricultural products (fruits and
vegetables) are the leading exports. Israel usually posts sizable
current account deficits, which are covered by large transfer
payments from abroad and by foreign loans. Roughly half of the
government's external debt is owed to the US, which is its major
source of economic and military aid. The influx of Jewish immigrants
from the former USSR topped 750,000 during the period 1989-99,
bringing the population of Israel from the former Soviet Union to 1
million, one-sixth of the total population, and adding scientific
and professional expertise of substantial value for the economy's
future. The influx, coupled with the opening of new markets at the
end of the Cold War, energized Israel's economy, which grew rapidly
in the early 1990s. But growth began moderating in 1996 when the
government imposed tighter fiscal and monetary policies and the
immigration bonus petered out. Growth was a strong 5.9% in 2000. But
the outbreak of Palestinian unrest in late September and the
collapse of the BARAK Government - coupled with a cooling off in the
high-technology and tourist sectors - undercut the boom and
foreshadows a slowdown to 2%-3% in 2001.

Italy:
Italy has a diversified industrial economy with roughly the
same total and per capita output as France and the UK. This
capitalistic economy remains divided into a developed industrial
north, dominated by private companies, and a less developed
agricultural south, with more than 20% unemployment. Most raw
materials needed by industry and more than 75% of energy
requirements are imported. Since 1992, Italy has adopted budgets
compliant with the requirements of the European Monetary Union
(EMU); wage moderation agreements by representatives of government,
labor, and employers have helped to bring Italy's inflation into
conformity with EMU requirements. Italy's economic performance,
however, has lagged behind that of its EU partners and it must work
to stimulate employment, promote labor flexibility, reform its
expensive pension system, and tackle the informal economy.

Jamaica:
Key sectors in this island economy are bauxite (alumina and
bauxite account for more than half of exports) and tourism. Since
assuming office in 1992, Prime Minister PATTERSON has eliminated
most price controls, streamlined tax schedules, and privatized
government enterprises. Continued tight monetary and fiscal policies
have helped slow inflation - although inflationary pressures are
mounting - and stabilize the exchange rate, but have resulted in the
slowdown of economic growth (moving from 1.5% in 1992 to 0.5% in
1995). In 1996, GDP showed negative growth (-1.4%) and remained
negative through 1999. Serious problems include: high interest
rates; increased foreign competition; the weak financial condition
of business in general resulting in receiverships or closures and
downsizings of companies; the shift in investment portfolios to
non-productive, short-term high yield instruments; a pressured,
sometimes sliding, exchange rate; a widening merchandise trade
deficit; and a growing internal debt for government bailouts to
various ailing sectors of the economy, particularly the financial
sector. Depressed economic conditions in 1999-2000 led to increased
civil unrest, including a mounting crime rate. Jamaica's medium-term
prospects will depend upon encouraging investment in the productive
sectors, maintaining a competitive exchange rate, stabilizing the
labor environment, selling off reacquired firms, and implementing
proper fiscal and monetary policies.

Jan Mayen:
Jan Mayen is a volcanic island with no exploitable
natural resources. Economic activity is limited to providing
services for employees of Norway's radio and meteorological stations
located on the island.

Japan:
Government-industry cooperation, a strong work ethic, mastery
of high technology, and a comparatively small defense allocation (1%
of GDP) have helped Japan advance with extraordinary rapidity to the
rank of second most technologically powerful economy in the world
after the US and third largest economy in the world after the US and
China. One notable characteristic of the economy is the working
together of manufacturers, suppliers, and distributors in
closely-knit groups called keiretsu. A second basic feature has been
the guarantee of lifetime employment for a substantial portion of
the urban labor force. Both features are now eroding. Industry, the
most important sector of the economy, is heavily dependent on
imported raw materials and fuels. The much smaller agricultural
sector is highly subsidized and protected, with crop yields among
the highest in the world. Usually self-sufficient in rice, Japan
must import about 50% of its requirements of other grain and fodder
crops. Japan maintains one of the world's largest fishing fleets and
accounts for nearly 15% of the global catch. For three decades
overall real economic growth had been spectacular: a 10% average in
the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s.
Growth slowed markedly in the 1990s largely because of the
aftereffects of overinvestment during the late 1980s and
contractionary domestic policies intended to wring speculative
excesses from the stock and real estate markets. Government efforts
to revive economic growth have met little success and were further
hampered in late 2000 by the slowing of the US and Asian economies.
The crowding of habitable land area and the aging of the population
are two major long-run problems. Robotics constitutes a key
long-term economic strength, with Japan possessing 410,000 of the
world's 720,000 "working robots".

Jarvis Island:
no economic activity

Jersey:
The economy is based largely on international financial
services, agriculture, and tourism. Potatoes, cauliflower, tomatoes,
and especially flowers are important export crops, shipped mostly to
the UK. The Jersey breed of dairy cattle is known worldwide and
represents an important export income earner. Milk products go to
the UK and other EU countries. In 1996 the finance sector accounted
for about 60% of the island's output. Tourism, another mainstay of
the economy, accounts for 24% of GDP. In recent years, the
government has encouraged light industry to locate in Jersey, with
the result that an electronics industry has developed alongside the
traditional manufacturing of knitwear. All raw material and energy
requirements are imported, as well as a large share of Jersey's food
needs. Light taxes and death duties make the island a popular tax
haven.

Johnston Atoll:
Economic activity is limited to providing services
to US military personnel and contractors located on the island. All
food and manufactured goods must be imported.

Jordan:
Jordan is a small Arab country with inadequate supplies of
water and other natural resources such as oil. The Persian Gulf
crisis, which began in August 1990, aggravated Jordan's already
serious economic problems, forcing the government to stop most debt
payments and suspend rescheduling negotiations. Aid from Gulf Arab
states, worker remittances, and trade revenues contracted. Refugees
flooded the country, producing serious balance-of-payments problems,
stunting GDP growth, and straining government resources. The economy
rebounded in 1992, largely due to the influx of capital repatriated
by workers returning from the Gulf. After averaging 9% in 1992-95,
GDP growth averaged only 1.5% during 1996-99. In an attempt to spur
growth, King ABDALLAH has undertaken limited economic reform,
including partial privatization of some state-owned enterprises and
Jordan's entry in January 2000 into the World Trade Organization
(WTrO). Debt, poverty, and unemployment are fundamental ongoing
economic problems.

Juan de Nova Island:
Up to 12,000 tons of guano are mined per year.

Kazakhstan:
Kazakhstan, the second largest of the former Soviet
republics in territory, possesses enormous fossil fuel reserves as
well as plentiful supplies of other minerals and metals. It also is
a large agricultural - livestock and grain - producer. Kazakhstan's
industrial sector rests on the extraction and processing of these
natural resources and also on a growing machine-building sector
specializing in construction equipment, tractors, agricultural
machinery, and some defense items. The breakup of the USSR in
December 1991 and the collapse of demand for Kazakhstan's
traditional heavy industry products resulted in a short-term
contraction of the economy, with the steepest annual decline
occurring in 1994. In 1995-97, the pace of the government program of
economic reform and privatization quickened, resulting in a
substantial shifting of assets into the private sector. The Caspian
Pipeline Consortium agreement to build a new pipeline from western
Kazakhstan's Tengiz oil field to the Black Sea increases prospects
for substantially larger oil exports in several years. Kazakhstan's
economy again turned downward in 1998 with a 2% decline in GDP due
to slumping oil prices and the August financial crisis in Russia.
The recovery of international oil prices in 1999, combined with a
well-timed tenge devaluation and a bumper grain harvest, pulled the
economy out of recession in 2000. Astana has embarked upon an
industrial policy designed to diversify the economy away from
overdependence on the oil sector by developing light industry.

Kenya:
Kenya is well placed to serve as an engine of growth in East
Africa, but its economy has been stagnating because of poor
management and uneven commitment to reform. In 1993, the government
of Kenya implemented a program of economic liberalization and reform
that included the removal of import licensing, price controls, and
foreign exchange controls. With the support of the World Bank, IMF,
and other donors, the reforms led to a brief turnaround in economic
performance following a period of negative growth in the early
1990s. Kenya's real GDP grew 5% in 1995 and 4% in 1996, and
inflation remained under control. Growth slowed after 1997,
averaging only 1.5% in 1997-2000. In 1997, political violence
damaged the tourist industry, and Kenya's Enhanced Structural
Adjustment Program lapsed due to the government's failure to
maintain reform or address public sector corruption. Severe drought
in 1999 and 2000 caused water and energy rationing and reduced
agricultural sector productivity. A new economic team was put in
place in 1999 to revitalize the reform effort, strengthen the civil
service, and curb corruption. The IMF and World Bank renewed their
support to Kenya in mid-2000, but a number of setbacks to the
economic reform program in late 2000 have renewed donor and private
sector concern about the government's commitment to sound
governance. Long-term barriers to development include electricity
shortages, inefficient government dominance of key sectors, endemic
corruption, and high population growth.

Kingman Reef:
no economic activity

Kiribati:
A remote country of 33 scattered coral atolls, Kiribati
has few national resources. Commercially viable phosphate deposits
were exhausted at the time of independence from the UK in 1979.
Copra and fish now represent the bulk of production and exports. The
economy has fluctuated widely in recent years. Economic development
is constrained by a shortage of skilled workers, weak
infrastructure, and remoteness from international markets. Tourism
provides more than one-fifth of GDP. The financial sector is at an
early stage of development as is the expansion of private sector
initiatives. Foreign financial aid, largely from the UK and Japan,
is a critical supplement to GDP, equal to 25%-50% of GDP in recent
years. Remittances from workers abroad account for more than $5
million each year. Performance in 2000 fell short of the 2.5% growth
in 1999, which benefited from increased copra production and
exceptionally large revenues from fishing licenses.

Korea, North:
North Korea, one of the world's most centrally planned
and isolated economies, faces desperate economic conditions.
Industrial capital stock is nearly beyond repair as a result of
years of underinvestment and spare parts shortages. The nation faces
its seventh year of food shortages because of weather-related
problems, including major drought in 2000, and chronic shortages of
fertilizer and fuel. Massive international food aid deliveries have
allowed the regime to escape the major consequence of spreading
economic failure, such as mass starvation, but the population
remains vulnerable to prolonged malnutrition and deteriorating
living conditions. Large-scale military spending eats up resources
needed for expanding investment and consumption goods. In 2000, the
regime placed emphasis on expanding foreign trade links, embracing
modern technology, and attracting foreign investment, but in no way
at the expense of relinquishing central control over key national
assets or undergoing market-oriented reforms.

Korea, South:
As one of the Four Dragons of East Asia, South Korea
has achieved an incredible record of growth. Three decades ago GDP
per capita was comparable with levels in the poorer countries of
Africa and Asia. Today its GDP per capita is seven times India's, 16
times North Korea's, and comparable to the lesser economies of the
European Union. This success through the late 1980s was achieved by
a system of close government/business ties, including directed
credit, import restrictions, sponsorship of specific industries, and
a strong labor effort. The government promoted the import of raw
materials and technology at the expense of consumer goods and
encouraged savings and investment over consumption. The Asian
financial crisis of 1997-99 exposed certain longstanding weaknesses
in South Korea's development model, including high debt/equity
ratios, massive foreign borrowing, and an undisciplined financial
sector. By 1999 GDP growth had recovered, reversing the substantial
decline of 1998. Seoul has pressed the country's largest business
groups to restructure and to strengthen their financial base. Growth
in 2001 likely will be a more sustainable rate of 5%.

Kuwait:
Kuwait is a small, relatively open economy with proved crude
oil reserves of about 94 billion barrels - 10% of world reserves.
Petroleum accounts for nearly half of GDP, 90% of export revenues,
and 75% of government income. Kuwait's climate limits agricultural
development. Consequently, with the exception of fish, it depends
almost wholly on food imports. About 75% of potable water must be
distilled or imported. Higher oil prices put the FY99/00 budget into
a $2 billion surplus. The FY00/01 budget covers only nine months
because of a change in the fiscal year. The budget for FY01/02,
which begins 1 April, contains higher expenditures for salaries,
construction, and other general categories. Kuwait continues its
discussions with foreign oil companies to develop fields in the
northern part of the country.

Kyrgyzstan:
Kyrgyzstan is a small, poor, mountainous country with a
predominantly agricultural economy. Cotton, wool, and meat are the
main agricultural products and exports. Industrial exports include
gold, mercury, uranium, and electricity. Kyrgyzstan has been one of
the most progressive countries of the former Soviet Union in
carrying out market reforms. Following a successful stabilization
program, which lowered inflation from 88% in 1994 to 15% for 1997,
attention is turning toward stimulating growth. Much of the
government's stock in enterprises has been sold. Drops in production
had been severe since the breakup of the Soviet Union in December
1991, but by mid-1995 production began to recover and exports began
to increase. Pensioners, unemployed workers, and government workers
with salary arrears continue to suffer. Foreign assistance played a
substantial role in the country's economic turnaround in 1996-97.
Growth was held down to 2.1% in 1998 largely because of the
spillover from Russia's economic difficulties, but moved ahead to
3.6% in 1999 and an estimated 5.7% in 2000. The government has
adopted a series of measures to combat such persistent problems as
excessive external debt, inflation, and inadequate revenue
collection.

Laos:
The government of Laos - one of the few remaining official
communist states - began decentralizing control and encouraging
private enterprise in 1986. The results, starting from an extremely
low base, were striking - growth averaged 7% during 1988-97. Reform
efforts subsequently slowed, and GDP growth dropped an average of 3
percentage points. Because Laos depends heavily on its trade with
Thailand, it was damaged by the regional financial crisis beginning
in 1997. Government mismanagement deepened the crisis, and from June
1997 to June 1999 the Lao kip lost 87% of its value. Laos' foreign
exchange problems peaked in September 1999 when the kip fell from
3,500 kip to the dollar to 9,000 kip to the dollar in a matter of
weeks. Now that the currency has stabilized, however, the government
seems content to let the current situation persist, despite limited
government revenue and foreign exchange reserves. A landlocked
country with a primitive infrastructure, Laos has no railroads, a
rudimentary road system, and limited external and internal
telecommunications. Electricity is available in only a few urban
areas. Subsistence agriculture accounts for half of GDP and provides
80% of total employment. For the foreseeable future the economy will
continue to depend on aid from the IMF and other international
sources; Japan is currently the largest bilateral aid donor; aid
from the former USSR/Eastern Europe has been cut sharply.

Latvia:
In 2000, Latvia's transitional economy recovered from the
1998 Russian financial crisis, largely due to the SKELE government's
budget stringency and a gradual reorientation of exports toward EU
countries, lessening Latvia's trade dependency on Russia. Latvia
officially joined the World Trade Organization in February 1999 -
the first Baltic state to join - and was invited at the Helsinki EU
Summit in December 1999 to begin accession talks in early 2000.
Unemployment fell to 7.8% in 2000, down from 9.6% in 1999, and 9.2%
in 1998. Privatization of large state-owned utilities and the
shipping industry faced more delays in 2000, and political
instability will continue to delay completion of the privatization
process over the next year. Latvia projects 6% GDP growth, 2.5%-3.0%
inflation, and a 1.7% fiscal deficit in 2001. Preparing for EU
membership over the next few years remains a top foreign policy goal.

Lebanon:
The 1975-91 civil war seriously damaged Lebanon's economic
infrastructure, cut national output by half, and all but ended
Lebanon's position as a Middle Eastern entrepot and banking hub.
Peace enabled the central government to restore control in Beirut,
begin collecting taxes, and regain access to key port and government
facilities. Economic recovery was helped by a financially sound
banking system and resilient small- and medium-scale manufacturers.
Family remittances, banking services, manufactured and farm exports,
and international aid provided the main sources of foreign exchange.
Lebanon's economy has made impressive gains since the launch in 1993
of "Horizon 2000," the government's $20 billion reconstruction
program. Real GDP grew 8% in 1994, 7% in 1995, 4% per year in 1996
and 1997 but slowed to 2% in 1998, -1% in 1999, and 1% in 2000.
Annual inflation fell during the course of the 1990s from more than
100% to 0%, and foreign exchange reserves jumped from $1.4 billion
to more than $6 billion. Burgeoning capital inflows have generated
foreign payments surpluses, and the Lebanese pound has remained very
stable for the past two years. Lebanon has rebuilt much of its
war-torn physical and financial infrastructure. Solidere, a
$2-billion firm, has managed the reconstruction of Beirut's central
business district; the stock market reopened in January 1996; and
international banks and insurance companies are returning. The
government nonetheless faces serious challenges in the economic
arena. It has funded reconstruction by tapping foreign exchange
reserves and by borrowing heavily - mostly from domestic banks. The
newly re-installed HARIRI government's announced policies fail to
address the ever-increasing budgetary deficits and national debt
burden. The gap between rich and poor has widened in the 1990s,
resulting in grassroots dissatisfaction over the skewed distribution
of the reconstruction's benefits.

Lesotho:
Small, landlocked, and mountainous, Lesotho's primary
natural resource is water. Its economy is based on subsistence
agriculture, livestock, and remittances from miners employed in
South Africa. The number of such mineworkers has declined steadily
over the past several years. A small manufacturing base depends
largely on farm products that support the milling, canning, leather,
and jute industries. Agricultural products are exported primarily to
South Africa. Proceeds from membership in a common customs union
with South Africa form the majority of government revenue. Although
drought has decreased agricultural activity over the past few years,
completion of a major hydropower facility in January 1998 now
permits the sale of water to South Africa, generating royalties for
Lesotho. The pace of substantial privatization has increased in
recent years. In December 1999, the government embarked on a
nine-month IMF staff-monitored program aimed at structural
adjustment and stabilization of macroeconomic fundamentals. The
government is in the process of applying for a three-year successor
program with the IMF under its Poverty Reduction and Growth Facility.

Liberia:
A civil war in 1989-96 destroyed much of Liberia's economy,
especially the infrastructure in and around Monrovia. Many
businessmen fled the country, taking capital and expertise with
them. Some returned during 1997. Many will not return. Richly
endowed with water, mineral resources, forests, and a climate
favorable to agriculture, Liberia had been a producer and exporter
of basic products, while local manufacturing, mainly foreign owned,
had been small in scope. The democratically elected government,
installed in August 1997, inherited massive international debts and
currently relies on revenues from its maritime registry to provide
the bulk of its foreign exchange earnings. The restoration of the
infrastructure and the raising of incomes in this ravaged economy
depend on the implementation of sound macro- and micro-economic
policies of the new government, including the encouragement of
foreign investment. Recent growth has been from a low base, and
continued growth will require major policy successes.

Libya:
The socialist-oriented economy depends primarily upon
revenues from the oil sector, which contributes practically all
export earnings and about one-quarter of GDP. These oil revenues and
a small population give Libya one of the highest per capita GDPs in
Africa, but little of this income flows down to the lower orders of
society. In this statist society, import restrictions and
inefficient resource allocations have led to periodic shortages of
basic goods and foodstuffs. The nonoil manufacturing and
construction sectors, which account for about 20% of GDP, have
expanded from processing mostly agricultural products to include the
production of petrochemicals, iron, steel, and aluminum. Climatic
conditions and poor soils severely limit agricultural output, and
Libya imports about 75% of its food requirements. Higher oil prices
in 1999 and 2000 led to an increase in export revenues, which
improved macroeconomic balances and helped to stimulate the economy.
Following the suspension of UN sanctions in 1999, Libya has been
trying to increase its attractiveness to foreign investors, and
several foreign companies have visited in search of contracts.

Liechtenstein:
Despite its small size and limited natural resources,
Liechtenstein has developed into a prosperous, highly
industrialized, free-enterprise economy with a vital financial
service sector and living standards on a par with the urban areas of
its large European neighbors. Low business taxes - the maximum tax
rate is 18% - and easy incorporation rules have induced 73,700
holding or so-called letter box companies to establish nominal
offices in Liechtenstein, providing 30% of state revenues. The
country participates in a customs union with Switzerland and uses
the Swiss franc as its national currency. It imports more than 90%
of its energy requirements. Liechtenstein has been a member of the
European Economic Area (an organization serving as a bridge between
European Free Trade Association (EFTA) and EU) since May 1995. The
government is working to harmonize its economic policies with those
of an integrated Europe.

Lithuania:
Lithuania, the Baltic state that has conducted the most
trade with Russia, has been slowly rebounding from the 1998 Russian
financial crisis. High unemployment and weak consumption have held
back recovery. GDP growth for 2000 - estimated at 2.9% - fell behind
that of Estonia and Latvia, and unemployment is estimated at 10.8%,
the country's highest since regaining independence in 1990. For
2001, Lithuanians forecast 3.2% growth, 1.8% inflation, and a fiscal
deficit of 3.3%. In early 2001, the Lithuanian Government announced
that it will repeg its currency, the litas, to the euro (the litas
is currently pegged to the dollar) some time in 2002. Lithuania must
ratify 25 agreements along with other legal documents and
obligations by 1 May 2001 before gaining World Trade Organization
membership. Lithuania was invited to the Helsinki summit in December
1999 and began EU accession talks in early 2000. Privatization of
the large, state-owned utilities, particularly in the energy sector,
remains a key challenge for 2001.

Luxembourg:
The stable, high-income economy features solid growth,
low inflation, and low unemployment. The industrial sector,
initially dominated by steel, has become increasingly diversified to
include chemicals, rubber, and other products. Growth in the
financial sector has more than compensated for the decline in steel.
Services, especially banking, account for a substantial proportion
of the economy. Agriculture is based on small family-owned farms.
The economy depends on foreign and trans-border workers for 30% of
its labor force. Luxembourg has a custom union with Belgium and the
Netherlands, and, as a member of the EU, enjoys the advantages of
the open European market. It joined with 10 other EU members to
launch the euro on 1 January 1999.

Macau:
The economy is based largely on tourism (including gambling)
and textile and fireworks manufacturing. Efforts to diversify have
spawned other small industries - toys, artificial flowers, and
electronics. The tourist sector has accounted for roughly 25% of
GDP, and the clothing industry has provided about three-fourths of
export earnings; the gambling industry probably represents over 40%
of GDP. More than 8 million tourists visited Macau in 2000. Macau
depends on China for most of its food, fresh water, and energy
imports. Japan and Hong Kong are the main suppliers of raw materials
and capital goods. Output dropped 5% in 1998 and 3% in 1999, with a
small 2% gain in 2000. Macau reverted to Chinese administration on
20 December 1999. Gang violence, a dark spot in the economy,
probably will be reduced in 2000-01 to the advantage of the tourism
sector.

Macedonia, The Former Yugoslav Republic of:
At independence in
November 1991, Macedonia was the least developed of the Yugoslav
republics, producing a mere 5% of the total federal output of goods
and services. The collapse of Yugoslavia ended transfer payments
from the center and eliminated advantages from inclusion in a de
facto free trade area. An absence of infrastructure, UN sanctions on
its largest market Yugoslavia, and a Greek economic embargo hindered
economic growth until 1996. GDP has subsequently increased each
year, rising by 5% in 2000. Successful privatization in 2000 boosted
the country's reserves to over $700 million. Also, the leadership
demonstrated a continuing commitment to economic reform, free trade,
and regional integration. Inflation jumped to 11% in 2000, largely
due to higher oil prices.

Madagascar:
Madagascar faces problems of chronic malnutrition,
underfunded health and education facilities, a roughly 3% annual
population growth rate, and severe loss of forest cover, accompanied
by erosion. Agriculture, including fishing and forestry, is the
mainstay of the economy, accounting for 30% of GDP and contributing
more than 70% to export earnings. Industry features textile
manufacturing and the processing of agricultural products. Growth in
output in 1992-97 averaged less than the growth rate of the
population. Growth has been held back by antigovernment strikes and
demonstrations, a decline in world coffee prices, and the erratic
commitment of the government to economic reform. The extent of
government reforms, outside financial aid, and foreign investment
will be key determinants of future growth. For 2001, growth should
again be about 5%.

Malawi:
Landlocked Malawi ranks among the world's least developed
countries. The economy is predominately agricultural, with about 90%
of the population living in rural areas. Agriculture accounts for
37% of GDP and 85% of export revenues. The economy depends on
substantial inflows of economic assistance from the IMF, the World
Bank, and individual donor nations. In late 2000, Malawi was
approved for relief under the Heavily Indebted Poor Countries (HIPC)
program. The government faces strong challenges, e.g., to fully
develop a market economy, to improve educational facilities, to face
up to environmental problems, and to deal with the rapidly growing
problem of HIV/AIDS.

Malaysia:
GDP grew at 8.6% in 2000, mainly on the strength of
double-digit export growth and continued government fiscal stimulus.
As an oil exporter, Malaysia also benefited from higher petroleum
prices. Higher export revenues allowed the country to register a
current account surplus, but foreign exchange reserves have been
declining - from a peak of $34.5 billion in April 2000 to $29.7
billion by December - as foreign investors pulled money out of the
country. Despite this development, Kuala Lumpur is unlikely to
abandon its currency peg soon. An economic slowdown in key Western
markets, especially the United States, and lower world demand for
electronics products will slow GDP growth to 3%-6% in 2001,
according to private forecasters. Over the longer term, Malaysia's
failure to make substantial progress on key reforms of the corporate
and financial sectors clouds prospects for sustained growth and the
return of critical foreign investment.

Maldives:
Tourism, Maldives largest industry, accounts for 20% of
GDP and more than 60% of the Maldives' foreign exchange receipts.
Over 90% of government tax revenue comes from import duties and
tourism-related taxes. Almost 400,000 tourists visited the islands
in 1998. Fishing is a second leading sector. The Maldivian
Government began an economic reform program in 1989 initially by
lifting import quotas and opening some exports to the private
sector. Subsequently, it has liberalized regulations to allow more
foreign investment. Agriculture and manufacturing continue to play a
minor role in the economy, constrained by the limited availability
of cultivable land and the shortage of domestic labor. Most staple
foods must be imported. Industry, which consists mainly of garment
production, boat building, and handicrafts, accounts for about 18%
of GDP. Maldivian authorities worry about the impact of erosion and
possible global warming on their low-lying country; 80% of the area
is one meter or less above sea level.

Mali:
Mali is among the poorest countries in the world, with 65% of
its land area desert or semidesert. Economic activity is largely
confined to the riverine area irrigated by the Niger. About 10% of
the population is nomadic and some 80% of the labor force is engaged
in farming and fishing. Industrial activity is concentrated on
processing farm commodities. Mali is heavily dependent on foreign
aid and vulnerable to fluctuations in world prices for cotton, its
main export. In 1997, the government continued its successful
implementation of an IMF-recommended structural adjustment program
that is helping the economy grow, diversify, and attract foreign
investment. Mali's adherence to economic reform and the 50%
devaluation of the African franc in January 1994 have pushed up
economic growth to a sturdy 5% average in 1996-2000. Growth should
remain around 5% in 2001-02, and inflation should stay less than 2%.

Malta:
Major resources are limestone, a favorable geographic
location, and a productive labor force. Malta produces only about
20% of its food needs, has limited freshwater supplies, and has no
domestic energy sources. The economy is dependent on foreign trade,
manufacturing (especially electronics and textiles), and tourism.
Malta is privatizing state-controlled firms and liberalizing markets
in order to prepare for membership in the European Union. However,
the island is divided politically over the question of joining the
EU. The sizable budget deficit remains a key concern.

Man, Isle of:
Offshore banking, manufacturing, and tourism are key
sectors of the economy. The government's policy of offering
incentives to high-technology companies and financial institutions
to locate on the island has paid off in expanding employment
opportunities in high-income industries. As a result, agriculture
and fishing, once the mainstays of the economy, have declined in
their shares of GDP. Banking and other services now contribute 42%
to GDP. Trade is mostly with the UK. The Isle of Man enjoys free
access to EU markets.

Marshall Islands:
US Government assistance is the mainstay of this
tiny island economy. Agricultural production is concentrated on
small farms, and the most important commercial crops are coconuts,
tomatoes, melons, and breadfruit. Small-scale industry is limited to
handicrafts, fish processing, and copra. The tourist industry, now a
small source of foreign exchange employing less than 10% of the
labor force, remains the best hope for future added income. The
islands have few natural resources, and imports far exceed exports.
Under the terms of the Compact of Free Association, the US provides
roughly $65 million in annual aid. Negotiations were underway in
1999 for an extended agreement. Government downsizing, drought, a
drop in construction, and the decline in tourism and foreign
investment due to the Asian financial difficulties caused GDP to
fall in 1996-98.

Martinique:
The economy is based on sugarcane, bananas, tourism, and
light industry. Agriculture accounts for about 6% of GDP and the
small industrial sector for 11%. Sugar production has declined, with
most of the sugarcane now used for the production of rum. Banana
exports are increasing, going mostly to France. The bulk of meat,
vegetable, and grain requirements must be imported, contributing to
a chronic trade deficit that requires large annual transfers of aid
from France. Tourism has become more important than agricultural
exports as a source of foreign exchange. The majority of the work
force is employed in the service sector and in administration.

Mauritania:
A majority of the population still depends on
agriculture and livestock for a livelihood, even though most of the
nomads and many subsistence farmers were forced into the cities by
recurrent droughts in the 1970s and 1980s. Mauritania has extensive
deposits of iron ore, which account for half of total exports. The
decline in world demand for this ore, however, has led to cutbacks
in production. The nation's coastal waters are among the richest
fishing areas in the world, but overexploitation by foreigners
threatens this key source of revenue. The country's first deepwater
port opened near Nouakchott in 1986. In the past, drought and
economic mismanagement have resulted in a buildup of foreign debt.
In March 1999, the government signed an agreement with a joint World
Bank-IMF mission on a $54 million enhanced structural adjustment
facility (ESAF). Mauritania withdrew its membership in the Economic
Community of West African States (ECOWAS) in 2000. Privatization and
debt relief are in full swing, and the rate of economic growth
appears to be accelerating, especially in the construction,
telecommunication, and information sectors. Diamonds and petroleum
are beginning to be explored and exploited.

Mauritius:
Since independence in 1968, Mauritius has developed from
a low-income, agriculturally based economy to a middle-income
diversified economy with growing industrial, financial, and tourist
sectors. For most of the period, annual growth has been in the order
of 5% to 6%. This remarkable achievement has been reflected in
increased life expectancy, lowered infant mortality, and a
much-improved infrastructure. Sugarcane is grown on about 90% of the
cultivated land area and accounts for 25% of export earnings. The
government's development strategy centers on foreign investment.
Mauritius has attracted more than 9,000 offshore entities, many
aimed at commerce in India and South Africa, and investment in the
banking sector alone has reached over $1 billion. Economic
performance since 1991 has continued strong with solid growth and
low unemployment.

Mayotte:
Economic activity is based primarily on the agricultural
sector, including fishing and livestock raising. Mayotte is not
self-sufficient and must import a large portion of its food
requirements, mainly from France. The economy and future development
of the island are heavily dependent on French financial assistance,
an important supplement to GDP. Mayotte's remote location is an
obstacle to the development of tourism.

Mexico:
Mexico has a free market economy with a mixture of modern
and outmoded industry and agriculture, increasingly dominated by the
private sector. The number of state-owned enterprises in Mexico has
fallen from more than 1,000 in 1982 to fewer than 200 in 2000. The
ZEDILLO administration privatized and expanded competition in
seaports, railroads, telecommunications, electricity, natural gas
distribution, and airports. A strong export sector helped to cushion
the economy's decline in 1995 and led the recovery in 1996-2000.
Private consumption became the leading driver of growth in 2000,
accompanied by increased employment and higher real wages. Mexico
still needs to overcome many structural problems as it strives to
modernize its economy and raise living standards. Income
distribution is very unequal, with the top 20% of income earners
accounting for 55% of income. Trade with the US and Canada has
tripled since NAFTA was implemented in 1994. Mexico completed free
trade agreements with the EU, Israel, El Salvador, Honduras, and
Guatemala in 2000, and is pursuing additional trade agreements with
countries in Latin America and Asia to lessen its dependence on the
US.

Micronesia, Federated States of:
Economic activity consists
primarily of subsistence farming and fishing. The islands have few
mineral deposits worth exploiting, except for high-grade phosphate.
The potential for a tourist industry exists, but the remoteness of
the location and a lack of adequate facilities hinder development.
In 1996, the country experienced a 20% reduction in revenues from
the Compact of Free Association - the agreement between the US and
Micronesia in which Micronesia receives $1.3 billion in financial
and technical assistance over a 15-year period until 2001 - as a
result of the second step-down under the agreement. Since these
revenues accounted for 57% of consolidated government revenues,
reduced Compact funding resulted in a severe depression. While
Micronesia's economy appears to have bottomed out in 1999, the
country's medium-term economic outlook remains fragile due to likely
further reductions in external grants made under the US Compact
funding. Geographical isolation and a poorly developed
infrastructure remain major impediments to long-term growth.

Midway Islands:
The economy is based on providing support services
for the national wildlife refuge activities located on the islands.
All food and manufactured goods must be imported.

Moldova:
Moldova enjoys a favorable climate and good farmland but
has no major mineral deposits. As a result, the economy depends
heavily on agriculture, featuring fruits, vegetables, wine, and
tobacco. Moldova must import all of its supplies of oil, coal, and
natural gas, largely from Russia. Energy shortages contributed to
sharp production declines after the breakup of the Soviet Union in
1991. As part of an ambitious reform effort, Moldova introduced a
convertible currency, freed all prices, stopped issuing preferential
credits to state enterprises, backed steady land privatization,
removed export controls, and freed interest rates. Yet these efforts
could not offset the impact of political and economic difficulties,
both internal and regional. In 1998, the economic troubles of
Russia, by far Moldova's leading trade partner, were a major cause
of the 8.6% drop in GDP. In 1999, GDP fell again, by 4.4%, the fifth
drop in the past seven years; exports were down, and energy supplies
continued to be erratic. GDP declined slightly in 2000, with a
serious drought hurting agriculture. Growth should turn positive in
2001.

Monaco:
Monaco, situated on the French Mediterranean coast, is a
popular resort, attracting tourists to its casino and pleasant
climate. The Principality has successfully sought to diversify into
services and small, high-value-added, nonpolluting industries. The
state has no income tax and low business taxes and thrives as a tax
haven both for individuals who have established residence and for
foreign companies that have set up businesses and offices. The state
retains monopolies in a number of sectors, including tobacco, the
telephone network, and the postal service. Living standards are
high, roughly comparable to those in prosperous French metropolitan
areas. Monaco does not publish national income figures; the
estimates below are extremely rough.

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.

Sweden:
Aided by peace and neutrality for the whole twentieth
century, Sweden has achieved an enviable standard of living under a
mixed system of high-tech capitalism and extensive welfare benefits.
It has a modern distribution system, excellent internal and external
communications, and a skilled labor force. Timber, hydropower, and
iron ore constitute the resource base of an economy heavily oriented
toward foreign trade. Privately owned firms account for about 90% of
industrial output, of which the engineering sector accounts for 50%
of output and exports. Agriculture accounts for only 2% of GDP and
2% of the jobs. In recent years, however, this extraordinarily
favorable picture has been somewhat clouded by budgetary
difficulties, high unemployment, and a gradual loss of
competitiveness in international markets. Sweden has harmonized its
economic policies with those of the EU, which it joined at the start
of 1995. GDP growth is forecast for 4% in 2001.

Switzerland:
Switzerland, a prosperous and stable modern market
economy with a per capita GDP 20% above that of the big western
European economies, experienced solid growth of 3% in 2000, but
growth is expected to fall back to about 2% in 2001. The Swiss in
recent years have brought their economic practices largely into
conformity with the EU's to enhance their international
competitiveness. Although the Swiss are not pursuing full EU
membership in the near term, in 1999 Bern and Brussels signed
agreements to further liberalize trade ties, and the agreements
should come into force in 2001. Switzerland is still considered a
safe haven for investors, because it has maintained a degree of bank
secrecy and has kept up the franc's long-term external value.

Syria:
Syria's predominantly statist economy is on a shaky footing
because of Damascus's failure to implement extensive economic
reform. The dominant agricultural sector remains underdeveloped,
with roughly 80% of agricultural land still dependent on rain-fed
sources. Although Syria has sufficient water supplies in the
aggregate at normal levels of precipitation, the great distance
between major water supplies and population centers poses serious
distribution problems. The water problem is exacerbated by rapid
population growth, industrial expansion, and increased water
pollution. Private investment is critical to the modernization of
the agricultural, energy, and export sectors. Oil production is
leveling off, and the efforts of the nonoil sector to penetrate
international markets have fallen short. Syria's inadequate
infrastructure, outmoded technological base, and weak educational
system make it vulnerable to future shocks and hamper competition
with neighbors such as Jordan and Israel. The government recognizes
the need to open the economy to additional domestic and foreign
investment.

Tajikistan:
Tajikistan has the lowest per capita GDP among the 15
former Soviet republics. Cotton is the most important crop. Mineral
resources, varied but limited in amount, include silver, gold,
uranium, and tungsten. Industry consists only of a large aluminum
plant, hydropower facilities, and small obsolete factories mostly in
light industry and food processing. The Tajikistani economy has been
gravely weakened by six years of civil conflict and by the loss of
subsidies from Moscow and of markets for its products. Most of its
people live in abject poverty. Tajikistan depends on aid from Russia
and Uzbekistan and on international humanitarian assistance for much
of its basic subsistence needs. The future of Tajikistan's economy
and the potential for attracting foreign investment depend upon
stability and continued progress in the peace process.

Tanzania:
Tanzania is one of the poorest countries in the world. The
economy is heavily dependent on agriculture, which accounts for half
of GDP, provides 85% of exports, and employs 80% of the work force.
Topography and climatic conditions, however, limit cultivated crops
to only 4% of the land area. Industry is mainly limited to
processing agricultural products and light consumer goods. The World
Bank, the International Monetary Fund, and bilateral donors have
provided funds to rehabilitate Tanzania's deteriorated economic
infrastructure. Growth in 1991-2000 featured a pick up in industrial
production and a substantial increase in output of minerals, led by
gold. Natural gas exploration in the Rufiji Delta looks promising
and production could start by 2002. Recent banking reforms have
helped increase private sector growth and investment. Continued
donor support and solid macroeconomic policies should allow Tanzania
to achieve real GDP growth of 6% in 2001 and in 2002.

Thailand:
After enjoying the world's highest growth rate from 1985
to 1995 - averaging almost 9% annually - increased speculative
pressure on Thailand's currency in 1997 led to a crisis that
uncovered financial sector weaknesses and forced the government to
float the baht. Long pegged at 25 to the dollar, the baht reached
its lowest point of 56 to the dollar in January 1998 and the economy
contracted by 10.2% that same year. Thailand entered a recovery
stage in 1999, expanding 4.2% and grew about the same amount in
2000, largely due to strong exports - which increased about 20% in
2000. An ailing financial sector and the slow pace of corporate debt
restructuring, combined with a softening of global demand, is likely
to slow growth in 2001.

Togo:
This small sub-Saharan economy is heavily dependent on both
commercial and subsistence agriculture, which provides employment
for 65% of the labor force. Some basic foodstuffs must still be
imported. Together, cocoa, coffee, and cotton generate some 40% of
export earnings, with cotton being the most significant cash crop
despite falling prices on the world market. In the industrial
sector, phosphate mining is by far the most important activity. Togo
is the world's fourth largest producer, and geological advantages
keep production costs low. The recently privatized mining operation,
Office Togolais des Phosphates (OTP), is slowly recovering from a
steep fall in prices in the early 1990's, but continues to face the
challenge of tough foreign competition, exacerbated by weakening
demand. Togo serves as a regional commercial and trade center. It
continues to expand its duty-free export-processing zone (EPZ),
launched in 1989, which has attracted enterprises from France,
Italy, Scandinavia, the US, India, and China and created jobs for
Togolese nationals. The government's decade-long effort, supported
by the World Bank and the IMF, to implement economic reform
measures, encourage foreign investment, and bring revenues in line
with expenditures has stalled. Progress depends on following through
on privatization, increased openness in government financial
operations, progress towards legislative elections, and possible
downsizing of the military, on which the regime has depended to stay
in place. Lack of foreign aid, deterioration of the financial
sector, energy shortages, and depressed commodity prices continue to
constrain economic growth; however, Togo did realize a 3% gain in
GDP in 1999. The takeover of the national power company by a
Franco-Canadian consortium in 2000 should ease the energy crisis and
if successful legislative elections pave the way for increased aid,
growth should rise to 5% a year in 2001-02.

Tokelau:
Tokelau's small size (three villages), isolation, and lack
of resources greatly restrain economic development and confine
agriculture to the subsistence level. The people must rely on aid
from New Zealand to maintain public services, annual aid being
substantially greater than GDP. The principal sources of revenue
come from sales of copra, postage stamps, souvenir coins, and
handicrafts. Money is also remitted to families from relatives in
New Zealand.

Tonga:
Tonga has a small, open economy with a narrow export base in
agricultural goods, which contributes 30% to GDP. Squash, coconuts,
bananas, and vanilla beans are the main crops, and agricultural
exports make up two-thirds of total exports. The country must import
a high proportion of its food, mainly from New Zealand. The
industrial sector accounts for only 10% of GDP. Tourism is the
primary source of hard currency earnings. The country remains
dependent on sizable external aid and remittances from Tongan
communities overseas to offset its trade deficit. The government is
emphasizing the development of the private sector, especially the
encouragement of investment, and is committing increased funds for
health and education. Tonga has a reasonable basic infrastructure
and well-developed social services.

Trinidad and Tobago:
Trinidad and Tobago has earned a reputation as
an excellent investment site for international businesses.
Successful economic reforms were implemented in 1995, and foreign
investment and trade are flourishing. Persistently high unemployment
remains one of the chief challenges of the government. The
petrochemical sector has spurred growth in other related sectors,
reinforcing the government's commitment to economic diversification.
Tourism is growing, especially in the pleasure boat sector. New
investment and construction also will continue to drive the economy.

Tromelin Island:
no economic activity

Tunisia:
Tunisia has a diverse economy, with important agricultural,
mining, energy, tourism, and manufacturing sectors. Governmental
control of economic affairs while still heavy has gradually lessened
over the past decade with increasing privatization, simplification
of the tax structure, and a prudent approach to debt. Real growth
averaged 5.5% in the past four years, and inflation is slowing.
Growth in tourism and increased trade have been key elements in this
steady growth. Tunisia's association agreement with the European
Union entered into force on 1 March 1998, the first such accord
between the EU and Mediterranean countries to be activated. Under
the agreement Tunisia will gradually remove barriers to trade with
the EU over the next decade. Broader privatization, further
liberalization of the investment code to increase foreign
investment, and improvements in government efficiency are among the
challenges for the future.

Turkey:
Turkey's dynamic economy is a complex mix of modern industry
and commerce along with traditional agriculture that still accounts
for nearly 40% of employment. It has a strong and rapidly growing
private sector, yet the state still plays a major role in basic
industry, banking, transport, and communication. The most important
industry - and largest exporter - is textiles and clothing, which is
almost entirely in private hands. In recent years the economic
situation has been marked by erratic economic growth and serious
imbalances. Real GNP growth has exceeded 6% in most years, but this
strong expansion was interrupted by sharp declines in output in 1994
and 1999. Meanwhile the public sector fiscal deficit has regularly
exceeded 10% of GDP - due in large part to the huge burden of
interest payments, which now account for more than 40% of central
government spending - while inflation has remained in the high
double digit range. Perhaps because of these problems, foreign
direct investment in Turkey remains low - less than $1 billion
annually. Prospects for the future are improving, however, because
the ECEVIT government since June 1999 has been implementing an
IMF-backed reform program, including a tighter budget, social
security reform, banking reorganization, and accelerated
privatization. As a result, the fiscal situation is greatly improved
and inflation has dropped below 40% - the lowest rate since 1987.
The country experienced a financial crisis in late 2000, including
sharp drops in the stock market and foreign exchange reserves, but
is recovering rapidly, thanks to additional IMF support and the
government's commitment to a specific timetable of economic reforms.

Turkmenistan:
Turkmenistan is largely desert country with intensive
agriculture in irrigated oases and huge gas (fifth largest reserves
in the world) and oil resources. One-half of its irrigated land is
planted in cotton, making it the world's tenth largest producer.
Until the end of 1993, Turkmenistan had experienced less economic
disruption than other former Soviet states because its economy
received a boost from higher prices for oil and gas and a sharp
increase in hard currency earnings. In 1994, Russia's refusal to
export Turkmen gas to hard currency markets and mounting debts of
its major customers in the former USSR for gas deliveries
contributed to a sharp fall in industrial production and caused the
budget to shift from a surplus to a slight deficit. With an
authoritarian ex-communist regime in power and a tribally based
social structure, Turkmenistan has taken a cautious approach to
economic reform, hoping to use gas and cotton sales to sustain its
inefficient economy. Privatization goals remain limited. In
1998-2000, Turkmenistan suffered from the continued lack of adequate
export routes for natural gas and from obligations on extensive
short-term external debt. At the same time, however, total exports
rose sharply because of higher international oil and gas prices.
Prospects in the near future are discouraging because of widespread
internal poverty and the burden of foreign debt. IMF assistance
would seem to be necessary, yet the government is not as yet ready
to accept IMF requirements. Turkmenistan's 1999 deal to ship 20
billion cubic meters (bcm) of natural gas through Russia's Gazprom
pipeline helped alleviate the 2000 fiscal shortfall. Inadequate
fiscal restraint and the tenuous nature of Turkmenistan's 2001 gas
deals, combined with a lack of economic reform, will limit progress
in the near term.

Turks and Caicos Islands:
The Turks and Caicos economy is based on
tourism, fishing, and offshore financial services. Most capital
goods and food for domestic consumption are imported. The US was the
leading source of tourists in 1996, accounting for more than half of
the 87,000 visitors; tourist arrivals had risen to 93,000 by 1998.
Major sources of government revenue include fees from offshore
financial activities and customs receipts.

Tuvalu:
Tuvalu consists of a densely populated, scattered group of
nine coral atolls with poor soil. The country has no known mineral
resources and few exports. Subsistence farming and fishing are the
primary economic activities. Government revenues largely come from
the sale of stamps and coins and worker remittances. About 1,000
Tuvaluans work in Nauru in the phosphate mining industry. Nauru has
begun repatriating Tuvaluans, however, as phosphate resources
decline. Substantial income is received annually from an
international trust fund established in 1987 by Australia, NZ, and
the UK and supported also by Japan and South Korea. Thanks to wise
investments and conservative withdrawals, this Fund has grown from
an initial $17 million to over $35 million in 1999. The US
government is also a major revenue source for Tuvalu, with 1999
payments from a 1988 treaty on fisheries at about $9 million, a
total which is expected to rise annually. In an effort to reduce its
dependence on foreign aid, the government is pursuing public sector
reforms, including privatization of some government functions and
personnel cuts of up to 7%. In 1998, Tuvalu began deriving revenue
from use of its area code for "900" lines and in 2000, from the sale
of its ".tv" Internet domain name. Royalties from these new
technology sources could raise GDP three or more times over the next
decade. In 1999, with merchandise exports falling and financing
reaching less than 5% of imports, continued reliance was placed on
fishing and telecommunications license fees, remittances from
overseas workers, official transfers, and investment income from
overseas assets to cover the trade deficit.

Uganda:
Uganda has substantial natural resources, including fertile
soils, regular rainfall, and sizable mineral deposits of copper and
cobalt. Agriculture is the most important sector of the economy,
employing over 80% of the work force. Coffee is the major export
crop and accounts for the bulk of export revenues. Since 1986, the
government - with the support of foreign countries and international
agencies - has acted to rehabilitate and stabilize the economy by
undertaking currency reform, raising producer prices on export
crops, increasing prices of petroleum products, and improving civil
service wages. The policy changes are especially aimed at dampening
inflation and boosting production and export earnings. In 1990-2000,
the economy turned in a solid performance based on continued
investment in the rehabilitation of infrastructure, improved
incentives for production and exports, reduced inflation, gradually
improved domestic security, and the return of exiled Indian-Ugandan
entrepreneurs. Ongoing Ugandan involvement in the war in the
Democratic Republic of the Congo, corruption within the government,
and slippage in the government's determination to press reforms
raise doubts about the continuation of strong growth. In 2000,
Uganda qualified for enhanced HIPC debt relief worth $1.3 billion
and Paris Club debt relief worth $145 million. These amounts
combined with the original Highly Indebted Poor Countries HIPC debt
relief add up to about $2 billion. Growth for 2001 should be
somewhat lower than in 2000, because of a decline in the price of
coffee, Uganda's principal export.