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Development Challenge The USAID Program Other Program Elements Other Donors Program Data Sheets Summary Tables USAID Search: Romania Previous Years' Activities 2002, 2001, 2000, 1999, 1998, 1997 Last updated: 31     (text taken from the FY 2003 Congressional Budget Justification) THE DEVELOPMENT CHALLENGE: Overall, economic reform progress in Romania has been modest compared to other transition countries in the region. The greatest reform gaps are in areas of enterprise restructuring, financial sector reforms, competition policy, and large-scale privatization. However, economic growth resumed in 2000 at 1.6%, and is forecast to continue at close to 4% in 2001-2002. Inflation remains too high, though it has fallen from 41% in 2000 to approximately 30% by 2001. Exports have surged, expanding at an annual rate of roughly 25% through mid-2001. To a large extent, economic growth is occurring, despite lack of progress on structural reform, due to global economic conditions, coupled with the expansionary policies of the current government and domestic business cycle trends. This current expansion will not be sustainable if critical structural reforms are not undertaken in the near-term. As in many Central and Eastern European countries, political and democratic reforms in Romania are farther along than economic reforms. However, despite significant advances in decentralization and the administration of free and fair elections, Romania has significant problems in democratic governance, especially in the area of rule of law. According to an USAID-financed assessment of democracy and governance issues performed in 2001, the system of governance suffers from institutional weaknesses, especially in the parliament and the judiciary. There is a general lack of accountability on the part of politicians and government officials, an absence of effective oversight mechanisms to provide accountability, and few channels for popular pressures to influence institutional and professional conduct. Corruption is pervasive in the judicial, political as well as economic or private sector arenas. Economic growth resumed in 2000 at 1.6% and is forecast to continue at close to 4% during 2001. Poverty and income inequality have increased in Romania over the last decade of transition. Most efforts to compare income show Romanians increasingly worse off. A recent World Bank study found that approximately 45% of the population fell below the poverty threshold of $4.30 per day. The burdens of poverty impact most heavily on rural households, female-headed families, pensioners/the elderly and children. These groups are disproportionately at risk. As the largest country in the region, Romania plays an important role in the stabilization of conflict-ridden Southeast Europe. A democratically vibrant and economically prosperous Romania is a strategic asset for regional peace and stability. The principal goal of U.S. foreign policy interest is regional stability and the mutually reinforcing objectives of economic growth, democracy and reduced human suffering. THE USAID PROGRAM: FY 2002 Estimate: $36.0 million FY 2003 Request: $29.0 million USAID has provided valued, notable technical assistance in areas ranging from energy deregulation, to fiscal decentralization, to redefining child welfare. The Program Data Sheets provided below cover the three objectives for which USAID is requesting funds. All three strategic objectives are new and constitute the framework for USAID's development assistance strategy for the next five years (FY 2002 - FY 2006). These objectives are informed by successful performance in the past as well as recent evaluations and assessments. The new programs concentrate on the development of a competitive, market-oriented economy, the promotion of democratic governance, and improvements in the effectiveness and accessibility of child welfare, health care and the social service system. Specific activities to be funded by FY 2002 and FY 2003 appropriations are described in more detail in the following Program Data Sheets. ONGOING PROGRAMS FOR WHICH NO FY 2002 OR FY 2003 FUNDING IS REQUESTED: The USAID program in Romania includes the following objectives for which USAID is not requesting new funds but is continuing to expend funds already appropriated. This program change reflects the replacement of the FY 2002 objectives with 3 new ones in FY 2003. Number: Title: Last Notified: Planned Completion: 186-013 Development of private sector FY2002 CBJ, p.257 FY 2002 186-014 Competitive private financial sector FY2002 CBJ, p.262 FY 2003 186-015 Sustainable energy sector FY2002 CBJ, p.266 FY 2002 186-016 Environment management FY2002 CBJ, p.270 FY 2002 186-021 Participatory civil society FY2002 CBJ, p.274 FY 2003 186-023 Effective local governments FY2002 CBJ, p.278 FY 2002 186-032 Quality child welfare and health care FY2002 CBJ, p.282 FY 2002 186-042 Cross-cutting activities FY2002 CBJ, p.286 FY 2003 OTHER PROGRAM ELEMENTS: Activities that are not funded through USAID's bilateral program, but through the regional AEEB funds, will support infrastructure development, foster the creation of business support institutions in Central and Eastern Europe and increase awareness of labor unions regarding all aspects of child labor, including the trafficking of young girls for prostitution and pornography. OTHER DONORS: USAID assistance ranks fourth behind the European Bank for Reconstruction and Development (EBRD), the World Bank, and the EU. The EBRD investment portfolio funds projects in transport, telecommunications, banking, tourism, private corporations, municipal utilities and energy. The World Bank has ongoing programs in energy, agriculture, privatization and financial reform, employment services, industrial pollution, health rehabilitation, and social development. The EU is supporting rural development, agriculture, banking, small and micro-lending, democracy, social sector, health and environment. Program Data Sheets 186-013n  Accelerated Private Sector Growth by Supporting a Market-driven Environment 186-023n  Improved Democratic Governance at the Local Level 186-034n  Improved Effectiveness of Selected Social and Primary Health Care Services for Targeted Vulnerable Groups Country Background Information Resources     CIA Factbook Library of Congress National Geographic Country Maps State Dept. Country Information

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