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Romania
FY 2001 Program Description and Activity Data Sheets
>> Regional Overview >> Romania Overview FY 2001 Program
Romania continues to confront serious economic, democracy and social challenges. USAID’s program in FY 2001 will continue to invest in areas having the greatest chances for impacting economic growth, democracy building and social sector restructuring. USAID assistance will be targeted to spur reform and support the contributions of the private sector and civil society in consummating Romania’s transition. FY 2001 funding is requested for the following strategic objectives: private enterprise growth, financial sector reform, energy sector restructuring, environmental management, citizens' participation, local government, and improved welfare of women and children.
Moreover, new activities are being planned to promote a groundswell of demand for democratic principles and practices among Serbian populations in Romania and the Balkan region, and improve inter-ethnic relations are being planned. Romania and Serbia are expected to benefit from such activities geared toward increasing the capacity of local NGOs and some local-level government units to work within communities to improve relations with and between ethnically and religiously diverse groups. USAID also will consider fine-tuning assistance to advance Romania’s role in regional stability and trade.
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ACTIVITY DATA SHEET
PROGRAM: Romania
TITLE AND NUMBER: Accelerated Development and Growth of Private Enterprises, 186-013
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $8,915,000 SEED
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $9,250,000 SEED
STATUS: Continuing
INITIAL OBLIGATION: FY 1991 ESTIMATED COMPLETION DATE: 2004Summary: Supporting the U.S. Mission Performance Plan’s goal of economic development, and USAID’s Agency goal of promoting broad-based economic growth and agricultural development, this objective provides critical support to small and medium enterprise (SME) and agribusiness sectors, offering Romania the greatest potential to jumpstart economic growth and inspire investor confidence. Assistance to business support organizations and private associations broadens impact and targets Romania’s most competitive sectors. Direct beneficiaries are private entrepreneurs, business support groups, producers and processors associations and agribusiness in sectors comprising 42% of Romania’s workforce. Indirect beneficiaries are all those who benefit from economic growth and increased trade in Romania.
Economic reforms have not taken hold in Romania in ways that provide a commercial, regulatory environment that nurtures private sector growth. The legal framework is unstable and agricultural policy is still dominated by state interests. Large, state enterprises continue to drain the economy while the private sector suffers from a lack of affordable capital. The Government of Romania’s inconsistent macro-economic stabilization has created disincentives to business creation, and forced especially small and micro firms to close or move into the informal sector. The private sector share of GDP, which had increased to 60%, is now stagnating. Economic contraction is negatively affecting employment and real wages. Finally, the Kosovo conflict has inflicted significant damage on the Romanian economy that is still being felt, specifically in export-oriented industries and through the curtailment of shipping on the Danube. Foreign Direct Investment has continued to decrease since its peak in 1996
In late 1999, USAID initiated a two-year effort to improve the operating environment for private enterprises through legal and regulatory reforms. This initiative will ultimately help the Government of Romania and private sector support associations to implement critical policies necessary for a more business-friendly environment. It will address issues related to the underground economy and complement anti-corruption and commercial law assistance efforts. USAID has also expanded credit opportunities, particularly in communities most severely impacted by the Kosovo crisis.
Agriculture is the traditional backbone of the Romanian economy and remains most promising due to the low cost of land and labor, good soil, abundant water and a beneficial climate. With over 40% of its population in rural areas, unimpeded degradation of agricultural lands can disrupt agribusiness and exacerbate macroeconomic instability, impede relations with neighboring countries, and contribute to the urbanization of an ill-prepared workforce and increased social instability. Agricultural success can be a source of stability and economic health in Romania and throughout the region. Further, Romania could become a major customer for U.S. agribusiness equipment, technology, genetic stock, seeds, and other inputs.
Assistance under this objective promotes competitive, private enterprise; maximizes American linkages with Romanian agriculture through trade and investment; and advances the role of the private sector in regional trade and stability. The objective targets the structural problems that impede the ability to derive substantial economic benefits in areas such as grain market policy reform, rural credit and livestock sector analysis, and alternative, environmentally sustainable uses of agricultural products. It confronts the highly political issue of moving state lands into private ownership while maintaining the efficiencies and economies of scale of larger farms. A key approach to achieve policy change through this objective is to support trade associations and citizen coalitions to effect policy and regulatory change that provides greater opportunity for commerce to farmers and processors. Activities include identification and preparation of "investment ready" SMEs in the food industry. USAID cooperates with the U.S. Department of Agriculture (USDA) and U.S. Department of Commerce to identify opportunities for Romania to become a more active customer of the United States, and offers assistance to attract and efficiently utilize investment from local and foreign sources.
Key Results: Three key results contribute to the achievement of this objective: (1) improved policy/legal and regulatory framework supporting private enterprise development; (2) increased capital investment in private enterprises; and (3) improved management practices adopted by enterprises.
Performance and Prospects: Performance over the past year has been mixed, with limited progress in the emerging SME sector. The Government of Romania passed two laws required by the International Monetary Fund, but implementation is moving slowly. Romania’s foreign direct investment is declining and is lower than in several other Central European economies. USAID has helped meet the capital needs of hundreds of private enterprises (SMEs). The Romanian-American Enterprise Fund (RAEF) succeeded in offering $35 million in loans and venture capital to 17 large companies. The RAEF invested $1.1 million in seven, small- and medium-sized enterprises; and offered $6.1 million in loans to 97 small enterprises, and $1.9 million in micro loans for 235 micro-enterprises, with a repayment rate of 99%, during FY 1999 alone. Positive results from USAID’s recent expansion of small and micro loans in Western Romania will be visible next year.
USAID assistance delivered expertise, information and technology transfer, restructuring advice, marketing and management improvements, and improved credit access for more than 300 private firms in 1999. USAID’s, recently-initiated, "red tape analysis" is expected to yield tangible results in the upcoming year in terms of removing barriers to private sector development and foreign investment. In addition, a new and complementary activity that will develop the capacity of business support organizations and professional associations will broaden support to micro, small and medium enterprises, and will be self-sustaining. Together these components form a more comprehensive strategy to address unresolved constraints to private enterprise development.
U.S. assistance has also targeted agricultural policy, trade and investment. The associations of millers and bakers, meat processors and swine producers have had successes advocating beneficial policies to increase market share as a result. These include: legislation to privatize state-owned farms; rules, norms and procedures implemented, and an institution created to complete farm sales; legislation for restitution of farm and forest land which maintains size of farms at an economically efficient size; and a warehouse receipt law with enabling regulations. A warehouse receipt indemnity fund structure has been established and training provided to implement the structure, initially in two grain terminals. Romania now participates in USDA’s commodity support program providing export credit guarantees to U.S. suppliers.
Possible Adjustments to plans: Since new interventions have only recently been initiated, adjustments to future plans will depend upon results achieved in the upcoming year.
Other Donor Programs: In 1999, the World Bank's Redeployment Program (with U.S. Department of Labor participation) provided $8.5 million for micro lending and business support, and its Industrial Development Project disbursed $69 million to support export companies and SMEs through Romanian banks. The European Bank for Reconstruction and Development (EBRD) offered $58 million in credit through the Romanian Development Bank to support restructuring and privatization. The EBRD offered $50 million for both state-owned and private companies in agriculture, food, forestry and aqua culture; and, together with the European Union (EU), co-financed investments in private or privatized companies. European resources of over $50 million are available through the EU’s technical assistance program for Europe, and the German and Swiss governments. The UNDP, the Canadians and the Soros Foundation, and non-government organizations such as World Vision and the Izvor Foundation/Opportunities International offer smaller credit programs. The Romanian government provides support to the private sector; e.g., credit for small enterprises and job creation; co-funding for export-oriented enterprises; and a state, co-guarantee fund for SMEs, totaling about $12 million. U.S. support to private firms and business and professional associations facilitates access to these credit sources and other opportunities through close coordination with the donors. This highly successful donors group has become a key coordination body and advocate for improvements in the business environment, and contributor to proposed legislation relating to SMEs.
Principal Contractors, Grantees or Agencies: Romanian-American Enterprise Fund, the University of Maryland’s IRIS Center, ACDI/VOCA, Land O'Lakes, Price-Waterhouse-Coopers, Aid to Artisans, the Cooperative Housing Foundation, and the U.S. Peace Corps.
Selected Performance Measures:
Baseline
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)Percent of annual GDP from Private Sector
45%(1995) 58% 59% 62% 65% Annual level of actual foreign direct investment (USD million)
300(1995) 222 165.8 200 300 Increase access to finance through the Romanian American Enterprise Fund and Cooperative Housing Foundation)(USD million)
1SME, (1997)
1.5 Micro
3.0 SMEs
1.6 micro
6.1SMEs
2.8 Micro
2.2 SMEs
2.5 Micro
2.5 SMEs
3 Micro
Average increase in sales for USAID-assisted firms 5% (1995) 40% * * * *No plan to report on this Indicator in subsequent Congressional Presentations.
ACTIVITY DATA SHEET
PROGRAM: Romania
TITLE AND NUMBER: A More Competitive and Market-Responsive Financial Sector, 186-014
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $5,650,000 SEED
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $4,425,000 SEED
STATUS: Continuing
INITIAL OBLIGATION: FY 1993 ESTIMATED COMPLETION DATE: FY 2002Summary: To help Romania recover from its financial crisis and to improve the overall functioning of the banking sector, assistance concentrates on bank privatization, banking supervision, bankruptcy, and macroeconomic policy assistance to the Ministry of Finance. The partnership with the National Bank's (NBR) Banking Supervision Department, initiated in 1997, is improving the financial soundness of the State-dominated and financially insolvent banking sector, and building public confidence. Advisory services are provided to help privatize and restructure large State banks. A banking supervision program at the NBR provides training in on-site and off-site supervision of State and private banks. Training and technical assistance in bankruptcy procedures for the Competition Council and the Ministry of Justice modernize aspects of the legal framework and strengthen enforcement. Since 1995, the Financial Services Volunteer provides pro Bonn technical assistance through short-term advisors in central banking activities, pension reform, commodities market and financial sector legislation. In order to stabilize and reform the fiscal system, senior U.S. Treasury advisors provide support in macroeconomic, budget, tax, debt management and bank privatization.
Direct beneficiaries are management and staff of key financial institutions, including the Ministry of Finance and the President’s Office. All receive advisory assistance and training. Increased fiscal stability and financial system improvements will increase public confidence in reform, promote political stability, improve private sector development prospects and enhance long-term investment opportunities. This objective supports the U.S. Mission Performance Plan’s goal of economic development and USAID’s Agency goal of promoting broad-based economic growth and agricultural development.
Key Results: In a 1999 proposal to change the framework for achieving this objective, four results were identified as key to achieving this objective. (1) Private banking sector strengthened. (2) Investment and liquidity increased via a transparent regulated market. (3) Privatization process improved. (4) Sector’s legal and regulatory framework improved. These key results may be modified following review in FY 2000.
Performance and Prospects: U.S. Treasury, macroeconomic, budget, tax, debt management and bank privatization advisors have intensified assistance to advance fiscal reforms and overcome the banking crisis under Support for East European Democracy (SEED) auspices. Key advisory support helped the Government of Romania to stabilize the financial system by liquidating the largest, loss making, State bank, and by servicing some one-third of foreign debt. In addition to the Bank Privatization Advisor, the other Treasury advisors will continue advising the Ministry of Finance to consolidate gains in fiscal management and economic stabilization; enhance debt service capacity; assist in the establishment of a global income tax system; and further fiscal decentralization.
With USAID support, the NBR is now better prepared to resolve bank insolvency, conduct off-site inspections and enforce banking regulations. Continued assistance to build banking supervision capacity will be required to ameliorate the conditions that contributed to the crisis, to augment its developing off-site inspection capacity, and to improve staff capacity in its restructured organization. Ongoing advisory assistance will better prepare State-owned banks for privatization, increase sector transparency and efficiency, and ultimately improve the private banking operational environment.
In USAID’s effort to improve the legal sector, more than 500 judges, court clerks, liquidators, inspectors, and their professional staffs have received training that improved performance in bankruptcy and competition law implementation. Additional training will be required to fortify judicial understanding of new laws and to increase the effectiveness of enforcement. Targeted advisory services in areas such as pensions, insurance and commodity exchange complement the support to the financial sector. The Financial Service Volunteer Corps will continue to provide technical assistance in several financial areas through FY 2001.
Possible Adjustments to plans: The situation in the banking sector remains fluid with considerable merger, privatization and restructuring activity underway. USAID is well positioned to respond to new demands and opportunities. USAID is reassessing its role in financial services’ development to determine what future efforts will best increase the effectiveness of private intermediaries.
Other Donor Programs: USAID’s financial sector assistance has leveraged international financial institution programs; and supports the World Bank’s objectives of designing a solid bankruptcy framework, addressing enforcement issues, and strengthening legal and banking sectors. USAID cooperates with the European Union’s (EU’s) technical assistance program in providing complementary support for accounting reform. The EU’s technical assistance program helped with the international accounting standards conversion for 50 enterprises listed on the Bucharest Stock Exchange, and the RASDAQ. USAID, through the Banking Supervision program, is developing international accounting standards for the banking sector. USAID coordinates closely with the EU and French advisors to ensure consistency with EU accession requirements in banking supervision and competition. Canadian assistance was provided to the Bucharest Stock Exchange.
Principal Contractors, Grantees or Agencies: The Barents Group, Carana, Federal Trade Commission, Department of Justice, U.S. Treasury and volunteers from the Financial Services Volunteer Corp.
Selected Performance Measures:
Baseline (1997)
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)Decrease in percentage of banking assets in state hands 100% 71% 49% 45% 40% Passage of a set of key reforms that enhance the consistency of the Financial Sector legal framework* (% completed)
20% 30% 40% 60% 80% Increased availability of private capital (USD millions)
1,044
1,922
**
2,500
3,500
*Laws include Privatization Law, Company Law, Securities Law, Collateral Law, Foreign Investment Law, Bankruptcy Law, Property Law and Competition Law.
**No target determined for 1999. The 1999 Actual is 1,711. The data represents the value of trades on two Romanian exchanges, BSE and RASDAQ, total sale of government treasury bills and privatization proceeds; and is based upon the exchange rate ROL/USD at the middle of each year reported.
ACTIVITY DATA SHEET
PROGRAM: Romania
TITLE AND NUMBER: A More Economically Sustainable and Environmentally Sound Energy Sector, 186-015
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $ 335,000 SEED
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $1,500,000 SEED
STATUS: Continuing
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: 2002Summary: USAID’s energy reform program promotes competition, private sector participation and compliance with European Union requirements, and leverages significant multilateral lending to the sector. Assistance continues to emphasize restructuring and commercialization of the power sector, beginning with electricity distribution, and the creation of an independent regulatory authority. In July 1998, the government approved the USAID-supported restructuring plan for the electric power sector. Separation of distribution, generation and transmission has now begun and efforts are underway to commercialize and ultimately privatize much of the sector. This contributes to a liberalized electricity market not only in Romania, but also in the region, based on interconnection of high voltage grid with Western Europe and the border countries, thus underpinning the Stability Pact objective of regional integration.
Technical assistance and training has also supported the establishment of energy service companies and private, consulting firms to carry out energy efficiency projects in targeted private industries. The beneficiaries are commercial and household customers who will ultimately receive more efficient and less costly energy service. A more efficient energy sector also decreases negative environmental impacts and fiscal budget expenditures. It reduces dependence on one single supplier and improves economic stability. The model used and results obtained through energy efficiency projects will be disseminated in the country and region to reinforce integration through the Stability Pact. This objective supports the U.S. Mission Performance Plan’s goal of economic development and USAID’s Agency goals of promoting broad-based economic growth.
Key Results: Three results contribute to the achievement of this objective. (1) Private investment and share of electricity generated increased. (2) The National Regulatory Agency for Energy (ANRE) transformed into a sustainable, regulatory body. (3) Energy efficiency improved.
Performance and Prospects: USAID has helped ANRE to become a permanent, independent regulatory authority; and helped to establish a regulatory framework to accelerate industry restructuring and attract capital for needed investments. USAID’s work with ANRE has resulted in a number of important regulations, including the design of a new structure for an open segment of the electricity market and establishing new rules for participation in this market. Also accomplished was the introduction of transparent prices both for commercial and household customers. USAID’s program is providing assistance to help CONEL, the national, power company and its subsidiaries to develop a new market structure – i.e., to structurally unbundle and privatize its assets, improve financial and accounting systems, and prepare grid codes and other standards.
Support through the regional Utility Partnership program, which included an agreement between Mississippi Power Company and Romania’s state electric power company in 1998, is being continued through the Utility Management Institute program. Another Utility and Regulatory Partnership Program, through the U.S. Energy Association (USEA) is being developed to assist CONEL and ANRE in their restructuring and sustainability efforts, respectively.
Energy efficiency assistance emphasizing the development of a private consultancy market for the sector was completed in 1999. Another energy efficiency project aimed at achieving energy savings in schools, and in the district heating system in the city of Constantza, is underway. This project will also assist the municipality in improving its ability to manage loans needed for future implementation; loans expected to be financed by the EBRD. The project is part of the Southeast Europe Cooperation Initiative (SECI), and will be a model for other towns in Romania and the region where energy intensity remains high.
Possible Adjustments to plans: None identified at this time.
Other Donor Programs: USAID assistance leverages approximately $300 million in World Bank and EBRD loans to restructure the power sector and to promote modernization and investment in the Romanian energy sector. The EU closely coordinates its technical assistance with USAID’s to avoid overlap and enhance synergy in overall assistance offered to the sector. A new energy efficiency fund to be developed in 2000 by Global Environment Fund (GEF) could benefit USAID’s Constantza project and accelerate its implementation. While USAID assistance helps to leverage considerable investment by multilateral banks, delays in loan negotiations have negatively impacted timing and overall implementation. USAID will invigorate coordination with the other donors to speed disbursements, while continuing to closely monitor progress and evidence of the government's commitment to reform – particularly in relation to the electricity sector, where assistance for restructuring and eventual privatization of some segments remains a possibility through 2001. In the context of regional electricity, liberalized markets developed will facilitate regional integration, which is an objective under the Stability Pact.
Principal Contractors, Grantees or Agencies: Current grantees and contractors include: Advanced Engineering Associated International (AEAI), Electrotek Concepts, and the U.S. Energy Association.
Selected Performance Measures:
Baseline (1996)
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)Private investment and share of electricity generated increased (power share in total annual MW production) 0 14% 15% 30% 50% Transformation of the ANRE into a sustainable, regulatory body (*)
- A) Achievement of ANRE sustainability;
0 50% 80% 100% --- - B) Achievement of ANRE independence in decision-making;
No
Yes
Yes
---
---
- C) Achievement of capability to issue specific regulations; No No Yes --- Dollars saved as a result of energy efficiency projects (USD million) ** $3 ** ** Private foreign investment in oil and gas (in USD million) *** * Indicator was included in FY 98
**Baseline year was 1998, and baseline value, zero (0). No plan to report on this indicator in subsequent Congressional Presentations.
***USAID suspended efforts to support the petroleum sub-sector at the end of 1997 due to the Government of Romania’s reluctance to implement concrete measures to restructure and privatize. Subsequently, data on private foreign investment in oil and gas ceased to be collected.
ACTIVITY DATA SHEET
PROGRAM: Romania
TITLE AND NUMBER: Increased Management Capacity to Promote Sustainable Economic Growth, 186-016
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $-0-
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $1,750,000 SEEDSTATUS: Continuing
INITIAL OBLIGATION: FY 1991 ESTIMATED COMPLETION DATE: 2004Summary: As in other post-communist countries, the legacy of Romania’s pre-1989 industrial and economic policies severely degraded the environment. Environmental degradation continues, and continues to pose severe economic costs and additional risks to the public health. Romania plans to begin negotiations for accession to the European Union (EU) in early 2000, but faces an estimated $26 billion shortfall in environmental infrastructure and waste management capacity needed for this process to start. Romania’s environmental institutions and programs significantly lag behind other accession candidates and have been unable to adequately respond to the responsibilities of a sustainable global market place. Efforts under the Stability Pact, the Global Environmental Fund (GEF), and other initiatives have highlighted the urgency to respond to the environmental needs of this transitional economy.
USAID assistance builds both public and private management capacities to address critical constraints to sustainable development and facilitates urgently needed environmental investments. Assistance in drafting and implementing environmental policies, laws and regulations, including advancing the polluter pays concept, increases transparency and information exchange, improves the appropriateness and predictability of environmental regulations and procedures, and promotes fair and equitable approaches to ensure compliance. USAID facilitates and leverages a higher level of capital investment directed toward responsible environmental management. Assistance activities are also directed to both national and local environmental protection authorities (EPAs) and for local demonstration projects. USAID supports training and institutional development of the local authorities critical to improving environmental compliance and for participation in international efforts to reduce greenhouse gas emissions and reduced risk of Global Climate Change, a key U.S. environmental objective. USAID also supports environmental training activities including a graduate program in environmental management at the Technical University in Cluj, the only such program in Romania.
The direct beneficiaries of USAID assistance programs are the Ministry of Waters, Forests and Environmental Protection, county EPA’s, targeted industries and municipalities requiring improved environmental management, and non-governmental organizations working in the environmental sector. Environmental improvements directly benefit the health of local populations, provide for the rational management of natural resources and energy, and are directly linked to the sustainability of economic development in emerging market economies. These activities support the U.S. Mission Performance Plan’s goal of economic development and contribute to USAID’s Agency goals of protecting the environment and broad-based economic development.
Key Results: Three results will contribute to the achievement of this objective: (1) improved environmental resource management; (2) enhanced environmental legal authority; and (3) increased environmental sector financial sustainability.
Performance and Prospects: USAID has financed several cleaner technology demonstration projects and continues to promote the ideas of cleaner production, pollution prevention, and waste minimization as preferred environmental management control practices. These projects have generated economic benefits for targeted industries and communities and are being replicated. These private sector projects are helping to develop a cadre of private environmental service firms. USAID technical assistance and training activities have developed an environmental sector much more skilled in critical areas, increased the capacity of national and local, public and private institutions, and established key environmental policies. Over one thousand environmental professionals have participated in more than seventy training courses in subjects critical to sound environmental management. Assistance to help enact the Waters and Environment Laws has facilitated integrated management, improved operations of the EPA regulatory programs and has contributed to greater self-sustainability of the sector. Complementary regulations for privatization that promote investment and growth have also been designed. Policy and regulatory development assistance is harmonized with applicable EU directives.
Full-cost pricing of water services has been introduced. The country’s capacity for sustainable environmental improvement may be moved significantly forward though USAID support to effectively implement a new law on "self-financing." USAID may help establish a possible revenue stream to support environmental licensing and inspections and avert potential reductions that may otherwise occur in the reallocation of the national budget. Model projects to address production and pollution problems, developed in cooperation with local enterprises and the Pollution Prevention Center, have generated significant savings and reduced risks to workers' health. The success of the Environmental Management Program at the Technical University of Cluj has spurred enterprises to require their managers to attend the program. This program has now become self-sustaining and no longer relies on USAID support. With improved environmental professionalism and sound decision making practices, Romania is more ready than ever before to effectively mobilize viable environmental projects that meet the objectives of a healthy and sustainable modern society.
Possible Adjustments to plans: Assistance may be continued to increase the capacity of the water authority and local EPAs to execute new laws and regulations and for other stakeholders to participate in environmental rulemaking and implementation with positive results for public health and the environment. USAID may concentrate on assisting Romania to establish and implement an environmental investment strategy with important national and local policy implications. This effort may ultimately result in the creation of a Romania Environmental Investment Facility, commonly referred to as an Environmental Fund.
Other Donor Programs: USAID’s technical assistance complements World Bank and EBRD loans to improve water management systems and pollution prevention at select enterprises. The French and Germans support advisors in water and waste policy at the Ministry. The EU’s technical assistance program has designated between 20% and 26% of its environmental program funding for environmental infrastructure in Romania. If fully mobilized, these resources will provide $ 150-200 million per year of additional grants to build environmental infrastructure over the next seven years. The Danish Environmental Protection Agency funds project preparation in district heating and municipal wastewater plants, and the Netherlands is promoting joint implementation programs related to climate change. Support for East European Democracy (SEED) regional funding provides additional resources to Romania through the ECOLINKS program; and additional regional support is anticipated for Climate Change training under the Environment and Energy Training Projects. The environmental program strongly links to USAID’s energy efficiency and improved local governance activities. The Government of Romania provides targeted cash contributions, staff salaries and in-kind contributions.
Principal Contractors, Grantees or Agencies: Chemonics, International Resources Group (IRG), World Learning, the University of Minnesota, the U.S. Forest Service, and the U.S. Environmental Protection Agency.
Selected Performance Measures:
Baseline
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)Number of improved regulations issued : 0 (1996) 3 5 10 15 County EPA Compliance Activities Supported by Polluter Pay Principle (Cumulative percentage)
0 (1997) 0 0 20 30 Number of demonstration Models established and Replicated
0 (1996)
10
*
*
*
Response to regulatory Enforcement (% increase In regulatory revenues over the previous year, starting In 1997) 0 (1997) ** Increased issuance of Regulatory permits by EPAs (annually, starting in 1997) 0 (1997) ** Institutional cost retention (% of tariff revenue retained by the sector)*** 0 (1997) 0 * * * *No plans to report on Indicators in subsequent Congressional Presentations.
**These indicators were replaced by "Improved regulations issued" in order to better reflect USAID’s environmental assistance impact, and due to the difficulty of obtaining accurate data.
***It is important to note that energy service companies were not able to increase incomes through fee-based services in 1998 because the self-financing law, though passed, did not yet have implementation regulations in place.
ACTIVITY DATA SHEET
PROGRAM: Romania
TITLE AND NUMBER: Increased, Better-Informed Citizens' Participation in Political and Economic Decision-Making, 186-021
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $8,445,000 SEED
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $5,750,000SEED
STATUS: Continuing
INITIAL OBLIGATION: FY 1994 ESTIMATED COMPLETION DATE: 2004Summary: Ten years after the revolution of 1989, consolidating democracy in Romania continues; but faces several challenges including the impact of severe economic conditions. Facing elections in 2000 after four years of a reformist coalition government, Romanian citizens remain frustrated by the pace of and elusive benefits of political and economic reforms. USAID democracy initiatives have sought to improve the effectiveness and accountability of the Romania’s newly democratic government, on one hand, while increasing citizens’ political efficacy and civic responsibility on the other. Despite enormous strides in the establishment of institutions and mechanisms that make Romania’s democracy function reasonably well, continued assistance is needed to assure the advantages of democracy are assumed widely by ordinary citizens. Complicating the challenges that face Romania’s reformers are pervasive corruption and the instability of Serbia, Romania’s western neighbor. Accordingly, USAID has launched a multifaceted initiative to help Romanians fight corruption; and partnered with Romanian organizations that wish to hasten the arrival of democracy in Serbia.
The direct beneficiaries, Parliament, the Executive, the Judiciary, independent media and civil society, all play crucial roles in consolidating Romanian democracy. Assisting them to play their respective roles more effectively makes democracy more valuable to a wider spectrum of citizens; and frees them to become active participants in obtaining redress, receiving justice, and contributing positively to the future of Romania. This objective supports the U.S. Mission Performance Plan’s goal of consolidating democracy and USAID’s Agency goal of strengthening democracy and good governance.
Key Results: Two principal results will contribute to achieving this objective: (1) increased effectiveness and accountability of the Romanian leadership; and (2) strengthened ability of civil society to address policy concerns.
Performance and Prospects: USAID democracy programs have helped to consolidate democracy and deepen trust in democratic institutions and processes. USAID’s implementing partners have provided technical training and assistance to the Parliamentary, Executive, and judicial branches of government. Support has been provided also to non-government organizations that provide avenues for popular input into public policy. Legal and technical assistance was provided to improve transparency and operations within government institutions that serve the public; and programs to improve the sophistication and independence of media organizations. Alumni of USAID-sponsored exchange programs populate key positions in all branches of government and use skills developed to improve communication and management systems. Assistance to the Parliament has improved legislators’ oversight, and communication between Parliaments’ chambers and the public. Parliamentarians in both chambers now utilize staff resources more effectively. Access to public debate and dissemination of actions taken in Parliament has improved. Considerable challenges remain in order to make the two chambers of Parliament work together seamlessly, provide appropriate oversight of the Executive, or play a more meaningful role in fiscal policy. USAID’s Rule of Law program is helping courts deliver justice more quickly and understandably to citizens. Judicial training, focused on young lawyers, new magistrates and prosecutors, is enabling speedier trials, and introducing alternative dispute resolution mechanisms. Judicial ethics are being emphasized, and will enjoy greater visibility in anti-corruption activities. Assistance to civil society has increased their capacity to meet the public’s need to participate and improve community life, and/or influence public policy and help guide its implementation. Inasmuch as Romania’s non-government organization (NGO) sector has widened, it has not deepened to the grassroots level. As the Government of Romania decentralizes government services, the more "professional" layer of NGOs dependent on foreign donor support will need to decentralize as well. The sustainability of Romania’s vibrant print media outlets has been improved by establishing an Audit Bureau of Circulation and by improving business operations. In late 1999, USAID awarded a new media sector assistance program to build upon the earlier successes. Pro Media II will focus on media enterprise sustainability and the development of investigative journalists. While print media do enjoy editorial independence, business operations remain fragile and prone to using editorial powers to boost advertising sales.
Possible Adjustments to plans: Recognizing three major undercurrents affecting Romanians, decentralization of power, pervasive corruption, and regional stability, USAID is formulating programs to face these trends and better complement other objectives in the program. Decentralizing key government functions, particularly in delivering public services, has encouraged USAID to aim its civil society assistance resources toward the community level. This complements USAID’s assistance to develop effective local public administration and foster privatization of state enterprises. Corruption is a major challenge to all sectors of Romanian society and contributes daily to citizens’ skepticism of democratic reforms. For this reason, USAID plans a systemic approach to complement U.S. Department of Justice assistance. Media programs will complement this transparency strategy by improving the sophistication and independence of investigative journalists. Romanians recently initiated the Euro-Regional Democracy Center to support the region’s democracy activists. USAID will support Romanian-led partnerships with regional counterparts as an adjunct to ongoing civil society and political leadership assistance. To the extent that regional stability depends upon improving inter-ethnic relations within and between states, USAID will help Romanian society face inter-ethnic issues constructively.
Other Donor Programs: USAID's support to community-based NGOs will continue to leverage the World Bank's $20 million Social Development Fund. USAID is positioned to build sustainable partnerships with the "Soros Open Network" of NGOs. The UNDP and the EU’s technical assistance program also provide assistance to NGOs and media, but shifted to smaller, local recipients. Assistance at the national level will have a distinct anti-corruption emphasis and will be coordinated with other donors.
Principal Contractors, Grantees or Agencies: Current grantees and contractors include IREX, Freedom House, the American Bar Association's Central and East European Law Initiative, World Learning, the National Democratic Institute, the International Republican Institute, and ACILS.
Selected Performance Measures:
Baseline
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)Increased Contacts between Parliament with Civil society: Number of MP field offices with formal systems to receive and act upon inquiries from citizens. (*maximum number, assuming all MPs have field offices) 5 (1997) 75 330 350 485* Freedom House" "Nations-in-Transit Index: A rating of elements, including political process, civil society, independent media, governance and public adm, rule of law, corruption, privatization, economics, of 1-7 from best to worst
7 (1989) 4.18 4.15 4.10 4.05 Transparency International Corruption Perception Index: Publicperceptions of the degree of corruption among public officials as seen by business people, risk analysts, and the general public, on a scale of 10 (highly clean) to 0 (highly corrupt).
3.44 (1997)
3.0
3.3
3.5
3.65
Response to regulatory Enforcement (% increase In regulatory revenues over the previous year, starting In 1997) 0 (1997) 16 ** ** ** Number of priority Community concerns Formally targeted through Collaboration between public Authorities, civil society and Citizens Average capacity rating for USAID-assisted local NGOs(4-point scale: 1=start-up, 2=developing, 3=consolidating, 4=sustaining) 1.3 (1996) 3.0 ** ** ** **There are no plans to report on these indicators in subsequent Congressional Presentations.
ACTIVITY DATA SHEET
PROGRAM: Romania
TITLE AND NUMBER: More Effective, Responsive and Accountable Local Governments, 186-023
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $540,000 SEED
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $3,050,000 SEED
STATUS: Continuing
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: 2003Summary: Direct beneficiaries are local officials who receive training and develop their skills in management and finance. Citizens of the targeted communities will benefit from improved services and having an increased role in local decision-making. Ultimately, the central government will benefit by turning over authority and responsibility for local services to local governments. This objective supports the U.S. Mission Performance Plan’s goal of consolidating democracy, and USAID’s Agency goals of strengthening democracy and good governance, and economic prosperity.
Key Results: Three intermediate results under this objective are: (1) advanced capacity of local governments to manage resources; (2) enabling regulations and policy framework for decentralization established; and (3) increased revenues available for local governments.
Performance and Prospects: The legislative process for fiscal decentralization is substantially advanced and municipalities can now legally incur debt, finance capital improvements and service municipal debt. Significant progress has taken place over the past few years in local government strengthening in Romania through USAID and other donor programs aimed at decentralization and capacity building. These efforts have contributed to recent passage of important decentralization laws. In particular, the local government finance law devolves key powers to manage financial affairs, to prepare and adopt budgets, to set rates for local taxes and fees, to collect revenues for planned capital improvements and to finance construction of those improvements.
In addition to legislative support, assistance was provided to city and county council members and local government officials to familiarize them with the new laws. Efforts will continue to deepen the legislative reforms, reconcile inconsistencies in regulations, improve the capacities of officials; and to spur partnerships between the private sector, non-government organizations, and local governments to confront community development challenges. USAID is assisting local governments to respond to these new responsibilities by providing training in public budgeting and operations, IAS, personnel and organizational management, revenue generation, council training, customer service, citizen information and create a business friendly environment to spur economic development.
Assistance to build strong local budgeting capacity has introduced program performance budgeting and reformed financial management; program performance budgeting is now the national standard. In order to increase accessibility to resources and to exercise new capacities and responsibilities at the local government level, critical work is underway to assure municipalities can meet the criteria for market credit, and to encourage banks to understand municipal credit in their risk assessments. This assistance is carefully coordinated with potential lenders, government regulators and potential borrowers, and will be crafted with attention to transparency and citizen participation issues. Continued support to strengthen local government associations will help them offer a full range of services to their members, to conduct effective legislative advocacy and to benefit from peer relations in the United States, and with other Central and Eastern Europe countries. USAID funds citizen participation in local decision-making through work with non-government organizations (NGOs), and provides small loans to community associations, contributing to local economic development and services. The U.S. Department of Labor (DOL) has initiated a local economic development project in seven, pilot localities where it is offering training, and small grant support for community projects. DOL has recently fielded an advisor to provide technical support on national, labor policy issues.
Budgeting and public management assistance will be at the core of local government assistance because it supports the achievement USAID’s three results in local government. The need for financial management assistance will increase as local governments begin to use their new financing authority and as a municipal credit system is created. Municipal finance, local credit and active citizen’s participation all contribute to USAID objectives in other sectors. As the economic contraction intensifies and citizen’s confidence in central government dwindles in response to its failure to effect meaningful reforms, Romanians are increasingly looking to local governments for results. Creating the appropriate business friendly environment will produce the synergies for realizing overall community development.
Possible Adjustments to plans: None identified at this time.
Other Donor Programs: The EBRD and World Bank are key partners in establishing a municipal credit system. USAID coordinates with Soros, the European Union’s technical assistance program and the United Kingdom’s Know How Fund which contribute to improved local government capabilities – with a greater emphasis on general public administration reforms. With USAID support and funds from the World Bank, the U.S. Department of Labor supports active labor measures in communities most heavily impacted by economic restructuring.
Principal Contractors, Grantees or Agencies: Current contractors and grantees include the Research Triangle Institute, Chemonics, Urban Institute, Cooperative Housing Foundation and the U.S. Department of Labor. USAID works closely with various professional associations of local governments and local NGOs.
Selected Performance Measures:
Baseline
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)Laws establishing regulatory and policy framework for decentralization 0(1996) 0 2 3 5 Creation, development and use of performance based budgets
2(1996) 2 2 24 35 Numbers of municipalities borrowing for capital investment
5 (1995)
3
2
10
25
Increased citizen satisfaction in municipalities surveyed (survey indicates >50% satisfaction) unknown(1996) 50% * * * *The first survey for this indicator was taken in 1998. Subsequent surveys were not undertaken because local surveys proved too costly. Nationwide polling, though not directly comparable, demonstrates higher public confidence in local governments relative to other government institutions – local government confidence ratings placing third but well below those for the church and the military. It is important to note, that public confidence in government overall has deteriorated due to the economic crisis.
ACTIVITY DATA SHEET
PROGRAM: Romania
TITLE AND NUMBER: Improved Welfare of Women and Children, 186-O32
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $6,525,000 SEED
PROPOSED FY 2001 OBLIGATIONS AND FUNDING SOURCE: $6,000,000 SEED
STATUS: Continuing
INITIAL OBLIGATION: FY 1990 ESTIMATED COMPLETION DATE: 2004Summary: The communists’ pro-natalist policies, and their prohibition of modern contraception, forced many women to bear children for whom they could not care, or to resort to clandestine abortions. As a consequence, Romania has some of the highest rates for institutionalization of children and maternal mortality in the world. The health of women and children in Romania is compromised. USAID attempts to remedy these problems include a comprehensive system of community-based, family services for children who need protection, a system of reproductive health services, integrated with primary health care, and a reimbursable insurance program.
In child welfare, USAID will reduce Romania’s dependence upon institutional care by developing a continuum of services in three counties, and helping to establish these services in seven additional counties. USAID also works to establish standards of practice; nationwide systems to track children and identify the best placement options; life skills programs to assist children (including the disabled) from institutions, to become productive members of society. Since 1990, women’s reproductive health services have developed, but many women still rely on traditional methods and abortion. USAID plays a key role in integrating modern contraceptive services, improved pre- and post-natal care, breast and cervical cancer screening, and STD/HIV/AIDS screening and treatment into the primary care network with training and technical assistance to general practitioners and pharmacists. In addition, physicians and nurses receive training to manage medical facilities to ensure fiscal viability, sustainability, and quality of care. Because funding for primary care requires effectiveness and efficiency, USAID is embarking on two pilot projects geared to cost-effective health care delivery – a diagnostic-related groupings (DRG)-based reimbursement system, and a model of integrated primary care.
Direct beneficiaries include women of reproductive age and children. These groups account for 40% of the population in Romania. USAID's programs reach about one-half, or 4.5 million, of these beneficiaries. All Romanians will eventually benefit from health care reform. This objective supports the U.S. Mission Performance Plan’s goal of economic development, and USAID’s Agency goals of stabilizing population growth and protecting human health.
Key Results: Four principal results contribute to decreased dependency on the use of institutions for children: (1) improved child welfare policies and administrative procedures; (2) improved quality of community child welfare services; (3) increased utilization of community child welfare services; and (4) increased parental and citizen involvement with children. Three results contribute to increased use of women's reproductive health services: (1) improved access, (2) increased demand, and (3) improved quality.
Performance and Prospects: USAID has expanded access to quality, women's health services to reduce unwanted pregnancy and abortion. Through 1999,USAID trained virtually all counties in child welfare systems and most are shifting from institution-based to community-based services. Foster care systems are in place; Foster Care Standards have been adopted and foster parents have been hired and trained in almost all counties. The number of children in institutions has been reduced in many counties and community based services is now widely accepted. Many children have been reintegrated into their families. Financial problems experienced this year in the child welfare system will be addressed by the soon-to-be established new Agency for Child Welfare with a commitment by the central government for funding to supplement local level financing.
Maternal mortality rates have declined from 84 per 100,000 live births in 1990 to 41 in 1998. USAID-supported model clinics offer comprehensive, high quality women's health services; additional service delivery sites are being developed. Awareness and advocacy activities through the media and local, non-government organizations promote improved quality and accessibility of contraception and health care for women. Preliminary statistics from the 1999 Reproductive Health Survey indicate that the percent of women using modern contraception has doubled (from 14% to 28% of women aged 15-44) since 1993. The Ministry of Health’s plan to initiate nationwide implementation of the USAID cost-containment demonstration project (DRG-based) holds great promise for an approach to funding health care that can afford preventive programs such as reproductive health. This decision was a result of USAID training and technical assistance.
This objective will continue to focus on local capacity building of child welfare and women's health services, taking advantage of synergies with the democratization, local government and economic development activities of USAID to do so. Building on successes in the three target counties, activities are expanding into seven additional counties. Community-based assistance to handicapped children will also be provided. Local work groups, comprised of local officials, non-government organizations, professional medical associations and service providers have organized to address reproductive health needs in those counties.
Possible Adjustments to plans: Programs underway in Romania have great relevance for other countries in the region and could be enhanced for broader coverage.
Other Donor Programs: USAID works in concert with donors to meet priority health and welfare needs. The World Bank has been the major donor in health providing loans for primary care, family planning clinics, and a health management-training institute. An $80 million loan in 2000 will focus on health reform and developing models of integrated care. The European Union’s (EU’s) technical assistance program has three, health reform projects targeting institutional reform at the Ministry of Health, health financing, and legislation in the pharmaceutical sector. USAID’s demonstration projects in integrated primary care and DRG-based reimbursement were precursors for these World Bank and EU efforts. USAID efforts have helped shape the Soros Foundation training for general practitioners. USAID has convinced other donors to advance community alternatives to institutionalization. Other contributions for women's health and child welfare come from the EU Child Protection Program, Soros, the Council of Europe, the UN Children's Fund (UNICEF), the UN Fund for Population Activities (UNFPA) and the UN Development Program (UNDP).
Principal Contractors, Grantees or Agencies: Current grantees and contractors include: World Vision/ Bethany Services, Holt International, Feed the Children, Johns Hopkins University Population Communications Services, the U.S. Centers for Disease Control, John Snow, Inc., Management Sciences for Health, Project Concern Int’l, the U.S. Department of Health and Human Services, American Int’l Health Alliance (University of Chicago, Humana, University of Louisville, and Hennepin County Hospital), Howard University, and several local non-government organizations.
Selected Performance Measures:
Baseline
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)Number of children living in child placement centers (in three target Counties) 7343 (1997) 3891 3184 3000 2682 Number of children serviced by community-based child welfare services(in three target counties)
2155 (1998) 2155 3227 3308 4574 Maternal mortality ratio (Deaths per 100,000 births)
84 (1990)
41
41
40
39
Number of women utilizing modern Contraception* 14%(1993) not avail. 28% 30% 35% * Data is derived from a survey that until late 1999 had not been conducted since 1996, and thus there were no data for 1998. The final report on the 1999 survey is expected shortly, and initial indications are that contraceptive usage has increased 100% -- i.e., from 14% to an estimated 30% prevalence in the target areas surveyed.
EXPLANATION FOR SPECIAL INITIATIVES and CROSS-CUTTING PROGRAMS
Title: Cross-cutting Programs, 186-042
Planned FY 2000 Obligation and Funding Source: $4,590,000 SEED
Proposed FY 2001 Obligation and Funding Source: $3,275,000 SEEDSummary: This objective is designed to accommodate activities that make significant contributions to more than one objective. The activities included in this objective for Romania are the participant training program, labor programs, and program development and support activities.
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Last Updated on: February 01, 2001 |
