Kosovo

FY 2001 Program Description and Activity Data Sheets

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FY 2001 Program As emergency, humanitarian needs subside, USAID interventions in FY 2001 will focus on areas where USAID can achieve significant impact in advancing economic growth, democracy building, and social sector restructuring. USAID will continue to address the urgent need for restoring basic infrastructure and community services, repairing small-scale community infrastructure throughout the province. Community participation in funding and maintaining local facilities such as schools and health centers will be encouraged. Efforts will be undertaken to strengthen utility companies by improving cost recovery systems and developing management and accounting skills. USAID’s Kosovo Assistance Program (KAP), an umbrella grant implemented through NGOs, will continue to support priority activities which stabilize communities such as income generation, the restoration of community services, and women’s issues. Activities under the KAP will be closely linked to our infrastructure rehabilitation activities at the community level. USAID’s economic restructuring program will continue to support the creation of a stable macro-economic environment that is market friendly and encourages foreign and domestic investment. One of the most important challenges is to empower the Kosovars during the transition from UNMIK and international community control. We anticipate that the role of USAID advisors in UNMIK will shift from writing laws and functioning as the de facto government to serving as mentors and institution builders as the Kosovars take over much more responsibility for government administration. Significant resources will be required in FY 2001 to help the Kosovars implement and enforce the legal and institutional structures established with USAID assistance in FY 2000, in areas such as privatization, and tax and budget administration. As the banking system matures, USAID expects to increase its intervention in this critical sector. Similarly, assistance to the private sector, particularly agribusiness, will increase in FY 2001 as the business environment improves. The transition to democracy will remain a priority area for USAID in FY 2001. USAID will continue to work on political party development, particularly important given that elections are expected in 2000. Support for independent and professional media, the rule of law, as well as the promotion of grass roots activities that encourage participation in decision-making and governance will continue to be emphasized. Participant training, using USAID and public diplomacy training programs and budget support, will also support the U.S. Government’s democracy and institutional development agenda in Kosovo. Most SEED resources being requested will be transferred to the Department of State to address the need for police and other basic security and governance costs of the interim administration, and for war-crimes documentation and other human rights needs. USAID-managed programs, as described above, are estimated at less than one-third of the SEED funds requested. [an error occurred while processing this directive] ACTIVITY DATA SHEET PROGRAM: Kosovo TITLE AND NUMBER: Economic Restructuring, 167-013 STATUS: Continuing PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $21,500,000 SEED PROPOSED FY 2001 OBLIGATIONS AND FUNDING SOURCE: $28,700,000 SEED INITIAL OBLIGATION: FY 1999 ESTIMATED COMPLETION DATE: FY 2005 Summary: The USAID economic restructuring portfolio in Kosovo focuses on strategic policy and institutional support efforts to foster: (1) a stable macro-economic environment and market-friendly investment climate; and (2) a dynamic private business sector. The program is geared towards the institutionalization of fiscal policy and administration and financial regulatory reforms; and the systematic development of appropriate procedural and institutional reforms which promote open trade flows, facilitate business formation and operation, protect market rights, and stimulate private investment. At the same time, the program will help the private sector take advantage of improved macro-economic conditions through targeted technology transfers, creation of new market linkages, and provision of capital financing support in sectors with strong growth potential and significant linkage effects on other market segments. Key Results: Principal performance benchmarks and measures for this new objective have not been developed or approved at this time. However, USAID activities will promote the institutionalization of sound macroeconomic policies and the formulation and full implementation of market-friendly, sectoral policy frameworks. These activities will promote cost-efficient expenditure planning based on performance indicators in major expenditure areas (including each of the vital social service provision areas). USAID will support increased transparency in government through the establishment of a comprehensive procurement system for all public purchases of goods, services, and equipment. Budget tracking and reporting systems will be developed in order to ensure proper control over aggregate expenditure levels and consistency between actual expenditures and planned budgetary allocations. Improved local government budget planning will complement fiscal management reforms at the provincial level. USAID assistance will help establish an efficient and transparent tax regime capable of raising income tax revenues from the enterprise sector and collecting payroll taxes for social insurance payments. USAID will support the effective implementation of contract, property, and corporate law reforms necessary to protect the rights of parties in economic transactions, as well as the development of basic institutional enforcement capability. USAID will promote the transparent and competitive privatization of state-owned enterprises in Kosovo to increase the level and efficiency of productive investment. USAID will provide business development advisory and financial support that will create vibrant private markets in key agribusiness and other small/medium-scale enterprise (SME) sectors, and increase employment and income growth in the Kosovar economy. Performance and Prospects: Significant progress toward a sound basic macroeconomic and structural policy framework has been made since the startup of support activities in October 1999. As a result of USAID assistance in the development of the legal and regulatory framework for the operation of the fiscal policy and administration system, the Central Fiscal Agency (CFA) was established in late October 1999. It is now functioning as a full-fledged Ministry of Finance with competencies in the areas of budget, treasury, and taxation. USAID support enabled UNMIK to prepare and pass the 1999 budget in late October and work on a detailed 2000 budget. In addition, USAID has supported development of a systematic regulatory framework for public procurement, and a comprehensive set of forms and procedures to promote competitive procurement actions. The Revenue Authority under the CFA has started the difficult task of designing and implementing an efficient tax policy and administration system. Priority emphasis has been placed on drafting key tax policy regulations and tax administration guidelines, including a wage withholding tax, a presumptive business income tax, and a service establishment sales tax (all slated for implementation in early 2000). In addition, USAID advisory support has contributed significantly to the development of sales and excise tax and customs implementation guidelines, and detailed planning for the establishment of a taxpayer identification system. In the financial regulatory area, USAID helped establish the Banking and Payments Authority (BPK)and is now focused on finalizing operational regulations and developing bank licensing and supervision provisions. Most notably, the BPK and commercial banking regulations put into effect will promote financial sector stability by establishing a rigorous bank licensing system and tight financial reporting and performance requirements. This includes a strong regulatory framework for micro-finance institutions. In the privatization area, the outline of a strategy for encouraging private sector investment in and management of public enterprises, based on the application of intermediate steps towards privatization, such as concessions/leasing agreements and management contracts, has been developed. In addition, the establishment of the Kosovo Public Property Agency to deal with ownership issues has been agreed upon and preliminary steps taken to define its future activities. At the same time, USAID legal specialists are working with UNMIK on legal strategies and justification for full privatization of selected state enterprises within the framework established by UNSCR 1244 and subsequent implementation guidelines. UN headquarters in New York continues to hold to the view that UNMIK administration of state-owned assets does not include disposal rights. Dialogue on this core issue between UNMIK legal and economic policy officials and UN, New York continues. USAID commercial law specialists have developed a prioritized set of business, legal, and regulatory reforms required for private sector development, including laws on the company, contracts, secured transactions, land use and ownership, and bankruptcy. A draft concession regulation has been developed for discussion within UNMIK and draft regulations covering contractual rights and company formation are being finalized. USAID is providing business development support designed to improve the operation of key agricultural input supply markets and improve investment and operating efficiency in selected agro-processing sectors. USAID also launched a targeted micro-finance program in late 1999 to provide crucially needed financing to micro-entrepreneurs. The program will also have a small- and medium-enterprise financing component. Possible Adjustments to Plans: USAID economic reform support programs in Kosovo are being developed and implemented within the context of extremely fluid and challenging geo-political and institutional circumstances. The program is designed to take this situation into account. As conditions in Kosovo permit, the program will shift increasingly towards full institutionalization of economic policy formulation and management reforms by locally-elected and national governments, and support for the implementation of major public administration reforms at the municipal level. In addition, the program will become more heavily weighted towards targeted business development and finance initiatives designed to facilitate the expansion and more efficient channeling of private investment. Other Donor Programs: The United States is playing a leading role in supporting economic restructuring in Kosovo. The European Union and a large number of bilateral donors are providing support to Kosovo in the business development and micro-credit areas. The IMF and World Bank have provided short-term support to UNMIK in the design and implementation of macroeconomic and sectoral reform policies. USAID programs complement the work of other donors working in this area. Principal Contractors, Grantees or Agencies: USAID implements its economic recovery and reform activities primarily through U.S.-based NGO’s and contractors, including the Barents Group, the International Fertilizer Development Corporation, and the Foundation for International Community Assistance. Major Results Indicators: Appropriate results and performance measures are under development. U.S. Finance Table ACTIVITY DATA SHEET PROGRAM: Kosovo TITLE and Number: Democratic Transition, 167-021 STATUS: Continuing PLANNED FY 2000 OBLIGATIONS AND FUNDING SOURCE: $14,300,000 SEED PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $11,300,000 SEED INITIAL OBLIIGATION: FY 1999 ESTIMATED COMPLETION DATE: FY 2005 Summary: USAID’s democracy building activities are designed to respond to the demands for rapid change and results, as Kosovo begins to recover from the past decade of suppression and the recent military conflict. The people of Kosovo have passed through a violent period of upheaval and readjustment, and are now poised at the threshold of a new beginning with the promise of democratic self-governance and economic growth. While the future holds promise, there are serious obstacles which could delay Kosovo’s transition to democracy, and undermine the recovery process. Many of these obstacles are tied to the political realities of the time, including the uncertainty regarding the future status of the province within the Federal Republic of Yugoslavia (FRY), while others are more fundamentally tied to the lack of basic democratic institutions and experience. USAID is addressing both the political and systemic constraints to democratic reform through a portfolio of programs focused on supporting free and fair elections, establishing the rule of law, strengthening independent media, and engaging grass root organizations in democratic governance. Key Results: Principal performance benchmarks and measures for this new objective have not been developed or approved at this time. However, USAID seeks to build the capacity of civil society institutions in Kosovo to better support democratic transition. USAID will work to develop the capacity of independent media to provide the public with access to more objective, professionally produced information. USAID is supporting the process of holding free and fair elections, including the establishment of necessary electoral institutions, political party development, and increased citizen participation. Once municipal elections are held in 2000, USAID will begin to improve the capacity of newly elected officials to govern. USAID is helping develop the judicial system by training judges and lawyers, and creating professional legal associations. Performance and Prospects: Kosovo is starting its democratization process from ground zero under the provisional administration of the UN Mission in Kosovo (UNMIK). UNMIK has defined a new administrative structure for the province – including legislative, judicial, and executive functions based upon democratic principles, many of which are alien to, or not clearly understood by the majority of the population. Progress in democratization will depend on a number of critical factors: the ability of UNMIK to complete work on civil administration codes in a timely manner; Organization for Security and Cooperation in Europe’s (OSCE’s) ability to complete voter registration and organize municipal elections; political support for the new government structure; and local participation in the process. The importance of the UNMIK civil administration structure must be underscored. Without a government, meaningful elections are questionable. Aside from known personalities, citizens will not know what they are voting for; and candidates will not understand their responsibilities. The media will play a major role in educating the public about important issues as well as more abstract concepts associated with democratic governance. USAID plans to devote considerable resources to the professional development of journalists and their professional associations. Initially, media programs will provide necessary production equipment while increasing emphasis will be on resolving legal issues impeding the free press and the sustainability of media outlets. Transparent, well-managed elections are critical to generate public support for the new government and for holding newly elected leadership accountable. USAID’s election support activities include completing operational plans for the upcoming municipal and provincial elections in 2000 and 2001, working on the civil and voter registration process, and capacity building for the Central Elections Commission as well as the Joint Registration Task Force. USAID provides assistance for the election administration process through the International Foundation for Electoral Systems (IFES), in partnership with the Organization for Security and Cooperation in Europe (OSCE). USAID funding has also allowed the National Democratic Institute to place a political party development advisor in Kosovo to help parties prepare for the upcoming elections. Following municipal elections in 2000, USAID will implement a program aimed at providing assistance to municipal administration, developing the capacity of local authorities to plan and manage in the areas of municipal finance, taxation, capital planning and budgeting, acquisition, and income generation. This program will give local authorities the ability to develop capital improvements programs, raise money to pay maintenance and reoccurring costs, and manage infrastructure rehabilitated by USAID and other donors. USAID will continue to identify opportunities to support selected civil society organizations and programs that encourage citizen participation. Funding will focus on those non-government organizations (NGOs) and Community Improvement Councils (CICs), created by USAID’s Office of Transition Initiatives (OTI), which demonstrate the capacity to play a leading advocacy role in areas such as human rights, economic development, the environment, and social welfare. The level of effort and type of support will be defined following an NGO assessment early in 2000. Technical assistance and training will focus on organizational capacity building, financial sustainability, grants, network building, and NGO associations. As the OTI program phases down, future NGO support activities will build upon the successful efforts of OTI in establishing its network of CICs throughout Kosovo. A number of the CICs have evolved into genuine grass-roots organizations, and many CIC initiatives hold promise for the longer term. Possible Adjustments to the Plan: USAID planning will be influenced by UNMIK’s decisions regarding province-wide and local legislative, regulatory, judicial and executive administrative structures. Once UNMIK’s plans are clearly established, USAID will know how to target assistance to support municipal service regulation, delivery, maintenance, reoccurring costs, as well as local economic development initiatives. In addition to support for the electoral system, USAID will develop programs to support democratic governance at the local level. These activities will center on local participation in the public decision making process and public private partnerships for better municipal services and economic growth. As the performance of current activities is assessed, further adjustments to the plan will be made as appropriate. Other Donors: The United States is a leading player in promoting democratic reforms in Kosovo and is working closely with UNMIK, OSCE, and the Soros Foundation on elections, civil society, rule of law, media, political parties. Principal Contractors, Grantees, or Agencies: USAID implements its democracy and governance activities primarily through U.S.-based NGOs and contractors, including IFES, NDI, the International Republican Institute, the International Research and Exchange Board, World Learning, the Institute for Democracy in Eastern Europe, and the American Bar Association. Major Indicators: Appropriate results and performance measures are under development. U.S. Finance Table ACTIVITY DATA SHEET PROGRAM: Kosovo TITLE AND NUMBER: Community Services and Facilities, 167-031 PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $17,700,000 SEED PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $11,000,000 SEED STATUS: Continuing INITIAL OBLIGATION: FY 1998 ESTIMATED COMPLETION DATE: FY 2005 Summary: USAID social sector activities in Kosovo are focused on stabilizing communities by meeting priority, small-scale infrastructure repair needs, and strengthening crucial community services. The Community Infrastructure and Rehabilitation Project (CIRP), a six-month, small-scale infrastructure rehabilitation activity to be carried out in the U.S. KFOR sector, was approved in late 1999. The CIRP is the forerunner of a three-year, Community Infrastructure and Services (CIS) program scheduled to begin in mid-FY 2000. Both programs will provide targeted assistance to quickly restore basic infrastructure and utility services. USAID, working through three international, non-governmental organizations, also conducted a number of humanitarian and social sector activities to meet the needs of Kosovar refugees who fled to Macedonia during the military conflict. As these refugees moved back into Kosovo, USAID’s programs helped facilitate the return and resettlement process. In late 1999, USAID launched the Kosovo Assistance Program (KAP), to continue support for the efforts of international and local non-government organizations (NGOs) to provide health and psychosocial assistance, income generation opportunities, as well as addressing women’s issues in Kosovo. Key Results: Performance benchmarks and measures for this objective have not been developed as yet. USAID activities focus on social transformation from the bottom, up. Activities are focused on results considered necessary to alleviate human suffering and foster the transition from humanitarian relief to sustainable development in the areas of social and civil society development. USAID aims to reestablish essential services to help Kosovars recover and reintegrate into their communities, improve the institutional capacity and sustainability of utilities, and accelerate the economic recovery of participating communities. Performance and Prospects: Progress on social sector reform in Kosovo was severely constrained during 1999 due to the military conflict. USAID grantees working in Kosovo were forced to evacuate to Macedonia. Once the fighting ended, USAID was able to quickly restart activities in Kosovo as refugees rushed to return home. USAID’s grantees – Doctor’s of the World (DOW), Catholic Relief Services (CRS) and the International Rescue Committee (IRC) – focused their assistance in Macedonia on Kosovar refugees’ camps, and extended support to relieve the pressure on Macedonian families and communities hosting Kosovar refugees. The CRS program offered psychosocial training for parents and teachers to help them identify children traumatized by the war for referral to professional psychological counseling. Upon returning to Kosovo, DOW, CRS and IRC, provided significant and life-saving assistance to support displaced persons and other vulnerable groups. IRC, working in seven municipalities, was able to strengthen the foundations of community self-reliance through training in joint problem solving techniques, mobilization of communities in the selection and implementation of small infrastructure projects, and psychosocial activities for women. CRS was able to help improve educational conditions and increase parent participation in school affairs through the establishment of parent councils in several schools. In addition, CRS was able to make progress in trauma recovery through psychosocial training of parents and teachers in a school-based referral system for recognizing traumatic stress in children. DOW focused on improving maternal and infant health care by conducting women’s health education seminars for Kosovar doctors, introducing a standardized training curriculum for midwives and nurses, establishing protocols for risk identification of high-risk pregnancies, and procuring vitally needed equipment and supplies for Kosovo birthing centers. USAID is continuing its support of the NGO community through the Kosovo Assistance Program (KAP) umbrella grant mechanism. Possible Adjustments to plans: In FY 2000, USAID will regularize and expand social sector activities started in Kosovo through this crisis response objective. Two major, new programs will be initiated. The Community Infrastructure and Services (CIS) program will finance small-scale, community-based infrastructure and utility improvement projects throughout the province. The CIS program will be implemented in conjunction with the OTI-established local Community Improvement Councils (CICs) to ensure that priority infrastructure rehabilitation projects are identified which help communities return to a semblance of normalcy and promote local economic development, such as local power and water networks, health clinics and schools. Local engineering and construction expertise will be utilized for project design and execution, generating much-needed local employment and income. A second program will empower the NGO community to effectively deliver services to, and represent the interests of many groups in Kosovo. These groups are essential partners to international NGOs operating in Kosovo. Local NGO effectiveness in the implementation of relief, recovery, and reconstruction programs requires institutional development assistance commensurate with the programmatic responsibilities these organizations are carrying. USAID’s second program is designed to build capacity among local NGOs through the KAP umbrella grant mechanism. The principal grantee will be responsible for mobilizing and strengthening private voluntary organizations and NGOs through competitive sub-grants and technical assistance. This activity will be carried out in close coordination with USAID democracy-building programs. Other Donor Programs: Donor participation in social sector reform activities increased significantly during 1999, as did USAID’s interaction with other donors, particularly in responding to the humanitarian crisis. The principal international donors with programs in Kosovo include most European and Middle Eastern governments, the United Nations, the European Union, and the Soros Foundation. Principal Contractors, Grantees or Agencies: USAID is implementing social sector reform efforts primarily through U.S.-based NGOs, local NGOs and US Contractors, including CRS, Doctors of the World, Save the Children and the International Rescue Committee. Major Results Indicators: Appropriate results and performance measures are under development. U.S. Finance Table EXPLANATION FOR SPECIAL INITIATIVES and CROSS-CUTTING OBJECTIVES Title: Special Initiatives, 167-041 Planned FY 2000 Obligation and Funding Source: $94,000,000 SEED Proposed FY 2001 Obligation and Funding Source: $120,000,000 SEED Summary: This objective includes all of the 632 (a) transfers to other USG entities. The majority of funding in this objective goes to the State Department for UNMIK support, police training, war crimes tribunal, elections support, civilian demining, Kosovo Protection Corps, KVM monitors, public diplomacy and to Treasury. U.S. Finance Table Title: Cross-cutting Programs, 167-042 Planned FY 2000 Obligation and Funding Source: $2,500,000 SEED, $10,139,000 ESF Proposed FY 2001 Obligation and Funding Source: $4,000,000 SEED Summary: This objective is designed to accommodate activities that make significant contributions to more than one objective. The activities included under this objective for Kosovo are the participant training program, program development and support activities and budget support. U.S. Finance Table

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