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Montenegro
FY 2001 Program Description and Activity Data Sheets
>> Regional Overview >> Montenegro Overview FY 2001 Program
The USAID assistance program in FY 2001 will continue supporting the Djukanovic Government’s efforts to reform, encouraging political and economic change in an effort to help lead the country into transition status. USAID's economic restructuring support program in Montenegro will focus on macro-economic and structural adjustment measures, privatization, and private sector development that will encourage investment and support a more economically independent and democratic form of governance. Specifically, the program will facilitate: the privatization of state-owned assets; creation of a policy, legal, and regulatory framework that favors the private sector; and the design and implementation of a strong banking regulatory framework and enforcement system. The U.S. role is particularly important because the multilateral development banks are not likely to engage in Montenegro in any meaningful way until its status within the framework of FRY is clarified.
USAID will concentrate its democratic resources on empowering change agents. These include: information providers such as media and educational institutions; political organizations; professional and trade groups; reform-minded individuals and organizations; democratic institutions; human rights organizations; and economic reform entities. USAID will increase its emphasis on municipal-government, capacity building in order to help Montenegrins implement the new decentralization law in calendar year 2000. Through public diplomacy and regional training programs, USAID will support participant training programs that support the transition to a more democratic society and free market-based economy.
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ACTIVITY DATA SHEET
PROGRAM: Montenegro
TITLE AND NUMBER: Montenegro Economic Restructuring Support, 170-013
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $7,000,000 SEED
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $14,000,000, SEED
STATUS: Continuing
INITIAL OLBIGATION: FY 1997 ESTIMATED COMPLETION DATE: FY 2004Summary: The USAID economic restructuring support program in Montenegro is focused on macro-economic and structural adjustment measures, privatization, and private sector development that will encourage investment and support a more independent and democratic form of governance. Progress has been hampered by the Republic of Montenegro’s continued linkage with the fiscal and monetary systems of the Federal Republic of Yugoslavia (FRY) government in Belgrade, which led to disruptions of trade, transport and services. The importance of this activity increased significantly when the Government of Montenegro implemented a dual currency policy in November 999 which permitted the Deutsche mark to be accepted as legal tender in Montenegro along with the dinar. The USAID support programs were halted as well during the spring and summer of 1999 because of the conflict in Kosovo.
In 1999, the U.S. Government provided approximately $35 million in direct financial support to shore up the Djukanovic government including $20 million in SEED commodity support for the purchase of electricity and essential pharmaceuticals. Additional support included PL 480 Title II commodities. In addition, USAID provided approximately $11.5 million in development assistance support, largely focused in the privatization, business development, agribusiness, micro-finance, and policy analysis areas.
What Montenegro lacks is a well defined roadmap which details the measures the Government of Montenegro must take to effectively stabilize the current precarious monetary and fiscal imbalances it faces; and to then appropriately prioritize and sequence the critical structural reform measures required for a sustainable economic recovery. Thus, the Government of Montenegro must define and execute a strategy for the adoption of (1) the integrated monetary management and fiscal policy measures required to stabilize the current parallel currency system during its early stages of implementation; and (2) the medium-term sequenced structural reform measures in the fiscal restructuring, financial sector reform, privatization, and market environment areas which are required for the economy to move towards economic recovery.
The provision of technical and training support in each of these key macroeconomic and structural reform areas in FY 2000-FY 2001 will prove crucial to successful implementation of the Government of Montenegro’s near-term macro-financial reform policies and of its medium term structural adjustment strategy.
Key Results: The results considered necessary for realizing significant acceleration in the development and growth of private enterprises in Montenegro include: (1) increased transfer of state-owned assets to the private sector; (2) an improved policy and regulatory environment supportive of the private sector; (3) improved budgeting and reporting systems necessary for good governance; (4) design and implementation of comprehensive regulatory reforms in contract, property and business law areas; (5) design and implementation of a strong banking and regulatory framework and enforcement system; and (6) design and implementation of a market-based commercial bank restructuring strategy.
Performance and Prospects: Although enthusiasm for reform remains high, progress has been limited because of the Kosovo conflict (which necessitated the evacuation of U.S. advisors from February through July 1999) and rising tensions with Serbia. An influx of refugees and the resultant shift in ethnic balance -- toward Serb supporters of Milosevic -- have caused the Djukanovic government to proceed cautiously with reforms. In addition, Milosevic and the FRY Government have pressured Montenegro by taking a number of measures intended to slow the pace of reforms and to inflict damage on the Montenegrin economy. These included closing the borders between Montenegro, Croatia and Bosnia, and flooding the market with FRY dinars.
With regard to privatization reforms, limited progress was made. Work continues on developing information on companies to be privatized. Several meetings were held in Sarajevo, with Djukanovic and key counterparts from the Montenegrin Payments Bureau and the Privatization Council, to coordinate and address specific issues such as the development of the auction software and central registry. While the Djukanovic Government remains committed to privatization of state-owned assets, political necessity will require cautious implementation of these reforms.
The preparatory work for the USAID led mass privatization program is nearly complete. Company data and lists of citizens eligible to participate in the voucher-based privatization program have been prepared, and the logistics of the auction have been worked out. Moreover, work on the auction software as well as development of the central registrar needs to be completed, formation of privatization funds, and installation of a trading, clearing and settlement system. This is expected to be in place in time for the conduct of Mass Privatization Program auctions, now slated for April 2000.
In the business support area, a major accomplishment during 1999 was strengthening of the Center for Entrepreneurship (CIPE). CIPE supported the development of 83 business plans, each of which was awarded funding. It provided one-day entrepreneurial training for 202 attendees, and developed three publications on business start-up and operation. In addition, USAID financed targeted technical support to a range of private dairy producers and milk processing plants; and is facilitating initial planning activities geared at establishing a private milk producers association. Also in the business support area, a USAID-supported, micro credit program began full operation in July 1999, and has disbursed some 779 loans totaling approximately $1.25 million in six months. Approximately 40% of the funds are for production and agro-business loans. The remaining 60% are financing trade and service activities. The project has 23 employees, including 17 loan officers.
In the economic policy and institutional reform area, the USAID-funded Institute for Strategic Studies and Prognosis was initiated operations, including the provision of two major seminars on pension reform and business financial planning.
Possible Adjustments to Plans: The Government of Montenegro has asserted its commitment to an ambitious, overarching, macroeconomic and structural reform program over the next 12-24 months. USAID envisions adjusting its strategic plan for Montenegro from one that provides immediate, urgent technical assistance to address the continuously evolving threats posed by Serbian policies. A new strategy would call for systematic overhaul of the tax policy regime; improved public expenditure efficiency and decentralized fiscal responsibilities; establishment of an independent central bank and development of a strong financial regulatory system; restructuring of the banking system; acceleration of the current mass privatization program and privatization of major infrastructure and other "strategic" assets; and creation of a market-friendly climate for local and foreign investors.
Other Donor Programs: The other principal donor is the European Union, which is supporting infrastructure rehabilitation, small-and micro-enterprise development, and technical assistance for tax administration.
Principal Contractors, Grantees, and Implementing Agencies: Barent’s Group, Opportunity International, Land O' Lakes, Firm Level Assistance Group and the Center for International Private Enterprise.
Major Results Indicators: Appropriate results frameworks and indicators are being developed.
ACTIVITY DATA SHEET
PROGRAM: Montenegro
TITLE AND NUMBER: Increased, Better Informed Citizen's Participation in Political and Economic Decision Making, 170-021
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $2,000,000 SEED
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $7,500,000, SEED
STATUS: Continuing
INITIAL OBLIGATION: FY 1997 ESTIMATED COMPLETION DATE: FY 2004Summary: This objective promotes citizen participation in the political process and public decision-making. USAID’s program emphasizes: development of an independent media; judicial and local government reform; municipal government capacity building; political party development; election reform; development of legal systems that better support democratic and market reforms; and Non-Governmental Organization (NGO) strengthening.
Key Results: While responding to rapidly changing circumstances and shifting priorities, USAID has managed to remain focussed on achieving the following results: (1) improved political process as indicated by increased citizen involvement in political parties and increased voter participation in elections; (2) more effective civil society as indicated by a growing number of NGOs and other civil society organizations active in the country; (3) a more independent media as indicated by increased numbers of citizens who listen to, watch, read and have access to independent media and have informed opinions regarding government actions; (4) legal systems that better support democratic processes and market reforms as indicated by how well the rule of law is institutionalized in terms of fairness, objectivity and consistency in application; and (5) more effective, responsive and accountable local government.
Performance and Prospects: Although the Djukanovic government remains committed to democratic reform, the Kosovo conflict, the rising tensions with Serbia, an influx of refugees and the resultant shift in ethnic balance – mostly Serb supporters of Milosevic – have caused the Djukanovic government to proceed cautiously. USAID’s support of the reform effort was also hampered because of the evacuation of expatriate staff in February.
Despite these obstacles progress was made on several fronts particularly with the judiciary. A Courts Act, scheduled for enactment in April 2000, will revamp the judiciary. Key provisions in the act provide for an independent council, under the control of the judiciary, instead of the central government, to appoint judges and the separation of the judiciary's budget from control of the Ministry of Justice. Another favorable development is the establishment of an independent Judges Association. USAID’s Office of Transition Initiatives is supporting the new association with a grant providing funding to equip a facility, hire a director, and conduct several important training activities. Training sessions held so far include a tour to the International Criminal Tribunal for the Former Yugoslavia, conferences on legal educational reform and curriculum development, and sessions on drafting legislation for Members of Parliament, law faculty and members of NGOs.
Of late the Djukanovic government has shown a willingness to promote the independence of state-controlled as well as independent media. USAID has played a key role in increasing the capacity of various media to produce independent sources of news and related information. In order to capitalize on the new attitude towards media, USAID will support training, equipment grants, Internet development, media partnerships, study tours and association development will be the activities supported in the Montenegro program.
With regard to civil society development, a new law on NGOs, among the first of its kind in Eastern Europe and the Balkans, was passed. This legislation establishes NGOs as entities that can operate unencumbered by Republican law; thereby facilitating their establishment. USAID will continue its work in capacity building of NGOs while increasing emphasis on promoting more activism on a range of political issues.
Support for political party development focused first on developing baseline information on political parties and the parliament. USAID worked closely with almost every political party as well as the parliament in defining missions and assisting them in developing and implementing programs. With regard to political parties the emphasis has been on helping them survey the electorate to better understand the concerns of the citizenry and showing them how to mobilize party structures to address public issues, particularly at the local level. Next year the focus will be on political party development at the national level through polling and leadership development. USAID will continue to work with the parliament improving its rules of procedure, roles and operation of committees, and staffing issues.
The government, with assistance from the Konrad Adenauer Foundation, is prepared to go forward next year with a law on public administration that will redefine the roles and responsibilities of various levels of government. This legislation was formulated during the latter part of calendar year 1999. A key feature is the decentralization of authority to local government. USAID is funding a new activity that will assist in shaping the decentralization process and help develop the capacity of local governments to carry out their responsibilities. The activity will provide training and technical assistance to support participatory local urban service delivery and improved service quality. USAID will also facilitate development of partnerships between the Association of Montenegrin Municipalities and the Massachusetts Municipal Management Association. The reform of the judiciary will continue by putting into place mechanisms that provide it with greater autonomy from the Ministry of Justice; e.g., separate budgets, less control of judgeship appointments by the central government, training, and strengthened judiciary associations.
Possible Adjustments to Plans: Given the positive signs for reform, particularly the shifting of authority to municipal governments, USAID intends to place greater emphasis on strengthening the capacity of local governments to provide services and be responsive to their constituencies.
Other Donor Programs: Assistance being provided for democracy and governance activities is minimal. The European Union is providing some support to media and NGO strengthening. The Office of Security and Cooperation in Europe is providing limited support on rule of law issues and local government. The SOROS Foundation is supporting NGO capacity building.
Principal Contractors, Grantees or Agencies: USAID implements its democracy activities primarily through U. S.-based NGOs such as the American Bar Association/Central and East European Law Institute, the National Democratic Institute, the International City Managers Association, the Institute for Democracy in Eastern Europe, the International Research and Exchange Board, Radio Network ANEM, and the Solidarity Committee.
Selected Performance Indicators: Appropriate results framework and indicators are being developed.
EXPLANATION FOR SPECIAL INITIATIVES and CROSS-CUTTING PROGRAMS
Title: Special Initiatives, 170-041
Planned FY 2000 Obligation and Funding Source: $4,000,000 SEED, $11,000,000 ESF
Proposed FY 2001 Obligation and Funding Source: NONE PROPOSEDSummary: This objective includes most 632 (a) transfers to other USG entities. The majority of funding in this objective goes to the State Department for public diplomacy.
USAID activities under this objective meet criteria outlined in Agency guidance for special objectives or interests. That is, they are of limited scope and/or duration and respond to particular windows of opportunity. For USAID/Montenegro, these activities include budget support.
Title: Cross-cutting Programs, 170-042
Planned FY 2000 Obligation and Funding Source: $11,000,000 SEED
Proposed FY 2001 Obligation and Funding Source: $33,500,000 SEEDSummary: This objective is designed to accommodate activities that make significant contributions to more than one objective. The activities included in this objective for Montenegro are the participant training program, and program development and support activities.
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Last Updated on: February 01, 2001 |
