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USAID Mission to Lithuania
Europe & Eurasia
>> E&E Home >> Lithuania >> Success Stories (2000)
USAID/Lithuania: Success Stories (2000)
Baltic Regional Energy Development Program
In 1995 in response to a request from the three Baltic states to help their power utilities develop a least-cost energy investment planning capability, the USAID established The Baltic Regional Energy Development Program (BREDP). Regional investment planning is critical for these countries to help defray the costs of power investments, to operate their systems in a coordinated and more efficient manner, and to facilitate a joint approach on major issues such as the future of the Ignalina nuclear power plant. The program has been so successful that the BREDP Steering Committee is considering a request to make the Working Group a permanent body to carry out least-cost planning for the region. The planning capabilities developed are therefore likely to be integral to coordination of the Baltic power systems long after USAID funding for the effort has ended. USAID's support for the BREDP also included the development of financial expertise to help the utilities prepare regional projects for financing as well as training in regional operational planning in order to allow the power systems to be operated in a more coordinated and competitive fashion.
Support for Improved Nuclear Safety in Lithuania
Shortly after independence, Lithuania assumed ownership of the world's largest nuclear reactor, consisting of two Soviet-designed RBMK units. These units did not meet international safety standards, and Lithuania did not have any safety regulatory authority to oversee the plant's operation. USAID assisted with the establishment and operations of that regulatory authority (VATESI). Through the U.S. Nuclear Regulatory Commission, technical advisors were provided to assist VATESI establish procedures and conduct safety reviews. These advisors also served on an international board of nuclear safety experts who oversaw a thorough analysis of the plant. In cooperation with other donors, USAID provided funding to make safety improvements at the plant. As a result of this assistance, the reactor is the only RBMK operating under a license issued by an internationally recognized regulatory authority. These efforts have resulted in increased safety for the citizens of Lithuania and neighboring countries.
The Seimas Program on Open Legislative Process
At an open hearing held 9 December 1998, by the Committees on Budget and Finance and Social Security and Labor of the Lithuanian Parliament (Seimas), representatives of NGOs testified concerning draft Amendments to the Law on Charity and Sponsorship for NGOs. Both the hearing and a plenary session for MPs and government officials earlier in the day were organized by the USAID and its training provider World Learning, under an agreement with Seimas. The plenary session set the stage for the open hearing by covering topics such as the importance and benefits of greater citizen access to the legislature, and the procedures employed by various democratic countries to promote transparency and solicit comments concerning draft legislation. Building upon the concrete experience gained, open hearings are now taking place on a regular basis.
NGO-Coalition Building Project
USAID provided grant to the NGO Information and Support Center in Vilnius to facilitate the creation of a national Coalition of NGOs working together to improve the legal and general climate for philanthropy. At the formal launching of this initiative, nearly 100 NGO representatives agreed to the coalition documents and formally ratified them. The Coalition representatives have already begun successful work with government officials support passage of draft amendments to the Law on Charity and Sponsorship for NGOs, and tax provisions that enable citizens to contribute a small portion of their taxes to NGOs of their choice. The Coalition is also engaged in local networking, information dissemination, research and publication, and media outreach. Increasing the number of sectoral initiatives like coalitions is an important component of the USAID strategy, and improved philanthropy is crucial for the future sustainable development of the entire NGO sector in Lithuania.
Credit Union Development-World Council of Credit Unions (WOCCU)
The WOCCU project has facilitated the establishment of nine financially sound and professionally managed credit unions in Lithuania. Areas covered through services and training include the formation of credit unions, management, membership services, financial monitoring, cash flow management, business planning, reporting, and improving the legislative framework. The goal has been to introduce a new form of democratic economic institution in Lithuania, that can generate savings and enable citizens to participate more effectively in the management of their financial affairs. These new institutions also serve as models for other economic entities, and concretely demonstrate the advantages of economic empowerment.
Assistance to Small and Medium Businesses
One of the companies that has received a major investment from the Baltic American Enterprise Fund is the Nematekas Meat Processing Factory, located in Lithuania's second largest city, Kaunas. It produces a full range of meat products that are distributed throughout the country. Despite the difficult situation in Lithuanian agriculture, Nematekas posted sales growth of 36% in 1997, 34% in 1998, and 30% during 1999. Employment has grown from twelve in 1994 to 170 today, and there are three shifts at the plant. The growth in the value of the enterprise since it received support from the Enterprise Fund is estimated at 634%. All of this has been made possible by investments/loans from the Enterprise Fund.
Prevention of HIV/AIDS and Drug Abuse in Klaipeda
Under the USAID-supported project on the prevention of HIV/AIDS and drug abuse in Klaipeda, the AIDS Prevention and Education Center organized a series of educational competitions in middle schools. Students formed groups that created artistic works and arranged presentations, while receiving informational materials and holding discussions with experts concerning HIV/AIDS, drug abuse, sexually transmitted diseases, etc. On May 9, 2000, the final event was held. Seven teams from different schools presented skits, answered challenging questions, and displayed creative works in front of an audience of nearly 200 students. The panel selected three winning teams, which were invited to Vilnius to visit the Lithuanian AIDS Center. This activity enabled hundreds and hundreds of students to learn accurate and practical information about difficult social issues. Furthermore, it was done in a friendly, interactive, and extremely meaningful way. Lives are saved through such education, and at very low cost.
Training Programs in Support of SMEs
In November 1994, a group of Lithuanian entrepreneurs visited the U.S. under the USAID/Lithuania training program, implemented by World Learning. The training provided the businessmen with an opportunity to establish contacts, learn new ideas about products that could be produced and sold, and a new perspective on how to operate their own businesses. One of the training participants, Gintaras Gavenas, the owner of the BIOK cosmetics company, used the U.S. visit to learn how to establish a more effective marketing and distribution system. Using the new ideas that Mr. Gavenas gained during the USAID-funded training, BIOK company has increased its staff from 10 to 28 full-time employees, and its product line has expanded from 11 to 36 different products.
The Lithuanian American Business Initiative
After their visits to the U.S., participants of the USAID training programs for Lithuania wanted to remain in contact with each other to develop further the business ideas they had gained. With assistance from the USAID training provider, World Learning, they formed the Lithuanian American Business Initiative (LABI). This self-sustainable NGO holds quarterly seminars, weekend retreats on preferred subjects, and networks with other organizations. Their activities are designed to be both useful and fun. During this time of national transition, LABI members have come to view each other as people who can be trusted, whose goals are shared under the organization's mission statement, "American experience for the success of Lithuanian business".
Assistance to Lithuanian Securities Commission
In 1995, USAID launched a comprehensive program of technical assistance and training to strengthen capital markets institutions in Lithuania. Through assistance to the Lithuanian Securities Commission, USAID and its implementor Pragma helped to draft regulations, and develop the Commission's competence in enforcement and market surveillance, including the ability to conduct inspections of registered entities, and drafting and reviewing amendments to Lithuanian laws on securities, investment companies and joint stock companies. Through the years of cooperation with USAID, the Securities Commission has developed into a strong institution, successfully cooperating in setting the rules and regulations of capital markets, and analyzing the specific operations of financial brokerages. Its accomplishments include an established code of ethical conduct for brokerage firms, rules to protect minority shareholders and to prohibit insider trading by firms, and approved new trading rules for Exchange in 1998.
Introduction of THE LITHUANIAN NATIONAL Currency
The introduction of the Lithuanian national currency, the litas, was one of the most important financial events in Lithuania during the 1990s. In the spring of 1993, the Governor of the Central Bank met on a daily basis with the USAID-funded U.S. Treasury advisor, IESC volunteer (former Governor of the Federal Reserve) and IESC Country Director (also a former banker) to ensure a smooth introduction of the currency. This teamwork and preparation led to the June 15 announcement of the litas introduction, which went very well. Seven years later, the litas has withstood a bank crisis and several international economic crises and continues to be a source of stability for the financial system of Lithuania.
Assistance to Monetary Policy Development
In April 1994, the Government of Lithuania introduced a currency board which pegged the Lithuanian currency to the U.S. dollar (4 Litas = $1). This was done to reduce political pressure on monetary policy and ensure a stable currency. This goal was successfully achieved and in the late 1990s, the Bank of Lithuania, with its USAID-funded U.S. Treasury advisor, began to take steps to be fully able to undertake all monetary policy functions. This was a difficult task, as no country has smoothly departed from a currency board. Functions such as currency forecasting, deposit auctions and a lombard facility were implemented, along with a committee on money market issues. The Bank of Lithuania continues to operate according to the currency board, but is now situated to undertake the full array of monetary policy responsibilities when the currency board is dismantled.
Commercial Bank Training
In the early 1990s, the Lithuanian commercial banking sector was growing at an amazing speed. By late 1993, 28 commercial banks were in operation. Most of these bankers had little to no banking experience. In addition, there was no systemitized approach for providing training to the bankers. Donors provided what they thought was useful, but no partnership existed between the donor programs and banks. In mid-1994, USAID undertook a bank training diagnostic to determine the training needs in the banking sector. Later that same year, USAID worked with other donors to establish a Bank Training Center at the Commercial Bankers Association. The center would be the coordinating body for the training courses and would serve as the focal venue for training. To ensure a fast start-up for the center, USAID provided 22 training courses on topics such as asset-liability management, credit analysis, and international banking. These courses strengthened the skills of almost 400 bankers and improved their ability to work in a global financial market.
Bank Supervision Program
Private commercial banks began operations in Lithuania in 1988. For several years, they operated with minimal regulation and a weak legislative base. Bank supervision activities began in the early 1990s, but strengthened significantly with the start of the USAID bank supervision program. Advisors from the U.S. helped to standardize examination and reporting procedures according to international standards, implemented the CAMEL rating system as part of the examinations, and worked with the counterparts in developing a bad-bank unit within the department. This assistance was coupled with on-site training during the examinations and with training in U.S. bank supervision agencies. Lithuanian banks are now examined annually, provide timely information on their financial situation, meet all Central Bank prudential financial requirements, and are generally considered safe and sound.
Financial Sector NGO Support
In the late 1980s, all institutions in Lithuania were government-owned and government controlled. This changed as private companies and non-profit organizations formed. Although most of the non-profits were in the social sector, important institutions developed in the financial sector, such as the Lithuanian Free Market Institute, Lithuanian Financial Brokers Association, and the Lithuanian Banking, Insurance, and Finance Institute. USAID provided financial support and training to these organizations to ensure their viability and self-sustainability. This assistance targeted improved fund-raising skills, institution-building, and work with financial sector and government institutions. These three NGOs not only provide better services to the financial sector, but also serve as important watchdogs to government programs and government market interventions.
Support for Capital Markets
The primary capital markets institutions (Stock Exchange, Securities Commission, and Depository) were formed in the 1992-93 period. USAID began to provide support in 1995, focusing on an improved legal foundation for the entire system. USAID-funded advisors worked on primary laws and supporting rules to ensure transparency and safety in the securities markets. Investor rights were improved and the financial viability of brokerage companies was strengthened. In addition, the Stock Exchange’s trading system was improved to process transactions faster, provide more information, and improve surveillance and reliability. The Lithuanian capital markets are stable and have a solid technical and legal base for further growth.
Treasury System Development
In 1992, Lithuania had no treasury system. This system, which ensures efficient cash collections and appropriate disbursements, is fundamental to government operations. USAID, in cooperation with other donors, created and implemented a treasury system for collections and a central disbursement system which linked all Ministries’ payments. This ensures that payments are only made when needed. As a result of the assistance, collections and disbursements are tracked, so that cash levels are forecast six months in advance, and the government treasury bill operations are linked to the cash balances for better debt management. The government now knows how much money is available and how much is needed to ensure the normal operations.
Improved Budgeting Process
As with other Ministry of Finance systems, the budgeting process had to be developed anew in 1990. In the early part of the decade, government budget control was weak and there were no established links between spending and the government’s goals. USAID funded a U.S. Treasury program to assist the Ministry of Finance to improve the budgeting process. This included consolidating the budget and incorporating performance and program based budgeting principles into the budget process. The advisor worked not only with the Ministry of Finance, but also with other Ministries and Parliament officials to explain the process and to achieve broad support. Training in Lithuania and the U.S. was provided to better understand how the new systems would operate. As a result, most off-budget items are now in the primary government budget, budget forecasts are done for three-year periods, and the budget process undergoes greater scrutiny. All Ministries currently operate according to the new principles, which allows expenditures to be more closely tied to the government’s goals, ensuring more effective use of revenues.
Macro-Economic Forecasting
As the Ministry of Finance’s fiscal systems were developed, there was a growing need to understand and anticipate changes in the economy. Such skills would allow the Ministry of Finance and other institutions to better predict upcoming fiscal needs. A USAID-funded advisor trained Ministry staff to analyze the linkages between fiscal policy and macroeconomic conditions. In addition, short-term forecasting models and macroeconomic forecasting systems were introduced. As a result, Ministry of Finance staff are better able to predict changes in the economy and undertake measures to reduce or prevent large economic fluctuations. In addition, macroeconomic forecasts and briefings are prepared for decision-makers and the public.
Self-Sustainable Training
As USAID funded programs were entering their final years, it became clear that there was an important need to ensure that the training provided by U.S. advisors would be passed on to new specialists in the Ministry. With this goal in mind, USAID started a concerted in-country training program with a ‘training-of-trainers’ element. USAID-funded experts worked with Lithuanian counterparts and developed training programs in public finance, fiscal policy, debt and treasury management, and budget policy. Over 30 trainers have been prepared to provide these courses in the future to Ministry of Finance employees.
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Last Updated on: June 25, 2009 |
