|
|
|
|
|
|
|
|
![[Congressional Presentation]](/images/cp00bnnr.gif)
MOLDOVA
FY 1998
ActualFY 1999
EstimateFY 2000
RequestFREEDOM Support Act $33,070,000 $35,860,000 $73,500,000 Introduction.
The goal of the U.S. assistance program in Moldova is to help build a market-oriented, democratically governed republic. The U.S. has interest in establishing a mutually beneficial political, economic and security relationship with Moldova to ensure stability in the region and to illustrate the benefits of reform to Moldova’s neighbors. Because Moldova has come so far in its transition and is a top New Independent State (NIS) performer in democratic and economic development, it is important that Moldova not falter in its commitment to economic and political reform. The escalating difficulties with the energy situation and the problems in resolving the conflict in the Transdniester region could possibly reverse the impressive progress already made in economic and democratic reforms.
The Development Challenge.
Moldova’s economic and democratic transition continues to be among the most notable in the NIS. Moldova has completed its mass privatization program, implemented policies that led to comprehensive land reform, adopted and begun to implement new fiscal policies and accounting reform based on international accounting standards, and infrastructure for capital markets development. Progress has been made in structural reform, particularly in the liberalization of prices, finance and trade, and the privatization of state assets. In addition, the new currency is stable, and inflation is relatively low.
Energy is the most critical problem facing the country. Moldova suffers from dependence on energy imports from Russia and Ukraine, utilizes energy very inefficiently, and is not collecting fees from power consumers. This situation is increasing the national debt and jeopardizing the country's financial stability. The financial condition of the energy sector has reached crisis proportions, endangering the sustainability of the country's economic restructuring efforts. USAID and the World Bank are addressing the growing energy problem by supporting sectoral reform and privatization necessary to restore commercial operations and reduce losses and rising debt to Russia. In addition, the United States provided a special humanitarian grant for heating assistance during the 1999 winter for vulnerable institutions, such as hospitals, orphanages, schools, and where possible, to needy households.
Progress has been made in the structural reform of the economy, particularly in the liberalization of prices, finance and trade, and the privatization of State Assets. In addition, the new currency is stable, and inflation is relatively low. However, only limited success has been achieved so far in enforcing hard budget constraints and in restructuring the industrial and energy sectors. Because of the high fiscal deficit and slowness with some policy reforms, the International Monetary Fund (IMF) and the World Bank (WB) suspended loan disbursements in 1997. However, the IMF resumed loan disbursements in January 1999, and the WB is expected to begin loan disbursements in early 1999.
Other key challenges facing Moldova include: restoring the production sector, stimulating economic activity and foreign investment, progressing towards democratic reform and decentralization, accelerating enterprise restructuring, and strengthening the legal and financial framework for private sector development. To address these needs, USAID’s strategy is to devote its resources to strengthening institutions and systems by focusing on restructuring and privatizing the energy sector, and assisting with post privatization activities, particularly in land reform, and decentralization efforts. Since 1992, the U.S., largely through USAID has supported a program that addresses multiple constraints to Moldova’s economic and democratic transition. Most of USAID’s assistance has been devoted to economic restructuring in an effort to promote an integrated approach to economic change and growth in Moldova. A prominent feature of USAID’s technical assistance program has been the use of pilots to test new concepts and approaches at the grassroots level. This approach allows USAID to maintain flexibility and shift resources, if necessary, and to train a cadre of host country nationals. Moldova’s reputation as a reformer, as well as its compact territory, make it an ideal laboratory for testing innovative approaches to delivering assistance.
Other Donors.
The chief donors in Moldova are World Bank, IMF, USAID, EU-TACIS and UNDP. A variety of bilateral donors are involved in Moldova on a smaller scale and several have entered into co-financing arrangements with the World Bank as a way to concentrate resources and improve the impact of their assistance. Donors coordinate on a regular basis. USAID, IMF, IBRD, EBRD, EU-TACIS, UNDP, UNICEF and the American Ambassador meet monthly to discuss the overall reform environment, points of program coordination, policy problems and pending GOM legislation.
Since 1991, the World Bank has committed approximately $357 million in investment and technical assistance support. Initial work focused on emergency drought recovery, rehabilitation, and the first structural adjustment loan (SAL I) for $60 million. On-going efforts are in post-privatization reform (e.g., credit, automation of tax and banking systems, etc.), agriculture research and extension, health care reform, energy restructuring, and financing for a pre-export guarantee facility. Current programs cover basic education, private sector development, institutional framework for land titling and registration, water resources and transport, and the second structural adjustment loan (SAL II). Due to increasing poverty levels, it is expected that Moldova will become eligible in 1999 for assistance from the International Development Association (IDA), reducing the cost of World Bank loans to Moldova.
The European Commission committed $76 million over the 1991-1999 period, with priorities in: food production, processing and distribution; enterprise restructuring and development; energy; human resources development. UNDP projects in 1998 total $3.3 million and concentrate on strengthening judicial and legislative systems, some preliminary work in local government, and financing in conjunction with the World Bank for the Center for Strategic Studies and Reforms. The UNDP also supports management reform of public enterprises, promotion of foreign investment and trade, crime and drug prevention, and strengthening the role of women in Moldova’s transition.
Bilateral donor’s include, in addition to the U.S., Germany, Japan and the Netherlands. German Technical Cooperation in Moldova provides technical assistance in export promotion and integrated business service development. The Government of Japan has provided a variety of grants to assist preparation of World Bank loan projects, and the Government of Netherlands has entered into co-financing arrangements with the World Bank.
FY 2000 Program.
USAID-Implemented Programs: Under the economic restructuring goal, USAID priorities encompass business development, land and energy privatization, accounting reform, agribusiness partnerships as well as financial/monetary system restructuring. FY 2000 funding is requested for the following objectives: increased transfer of state-owned assets to the private sector; increased soundness of fiscal policies and fiscal management practices; accelerated development and growth of private enterprises; a more competitive and market responsive private financial sector as well as continued development of a modern capital market infrastructure; and, a more economically sustainable and environmentally sound energy sector.
Under the democracy and governance goals, USAID is focusing on increasing citizen involvement in economic and political life at the local level, and improving the management capacity of local governments. Activities include assistance in legal reform and election assistance, voter/civic education, non-governmental organization development, local public administration and independent media. FY 2000 funding is requested for increased better informed citizens’ participation in political and economic decision-making.
Under crosscutting and special initiatives, USAID provides training and seed grants to local NGOs that provide social protection services to vulnerable groups. The Eurasia Foundation has promoted a market economy and civil society through programs focused on accelerating the growth of the private small business sector; improving business education and management training; reinforcing rule of law and citizens rights; increasing citizens' access to objective alternate sources of information, media and communications development; supporting governmental reform and non-profit sector development. Through the Counterpart Humanitarian Assistance Program (CHAP), USAID provides humanitarian assistance to social service NGOs and institutions, and responds to disasters such as the Hynchest floods in 1998, by providing emergency relief.
USAID will also continue to provide health-related assistance through medical partnerships, and the women’s reproductive health program. Through the medical partnerships program, USAID is addressing mortality and morbidity issues, and introducing market-oriented solutions to hospital and health care delivery and finance problems. Coordinated through the American International Health Alliance (AIHA), the partners are Hennepin County Medical Center in Minneapolis with the Chisinau City Ambulance Center, the Republican Clinical Hospital and the Medical University of Moldova. The women’s wellness centers provide primary care treatment for the entire family with an emphasis on prevention. Training medical personnel in the handling of acute emergency care patients is implemented through the Moldovan Emergency Medical Training partnership. Through the women’s reproductive health program, USAID is reducing infant and child illness, and death through an immunization program; improving the effectiveness of child survival programs through strengthening the local health systems; and, developing new approaches to service delivery, training and supervision, logistic and supply systems and management information dissemination.
Other U.S. Agency Programs: Included also with this request are programs implemented by other USG agencies. The request for cross-cutting and special initiatives, in particular, reflects expanded emphasis on the need to reduce the risks of proliferation of weapons of mass destruction through programs which enhance our mutual security. In addition, other USG agencies participating in technical cooperation programs with Moldova through inter-agency transfers from USAID include the U.S. Information Agency and the Departments of State and Treasury.
MOLDOVA
FY 2000 PROGRAM SUMMARY*
(in Thousands of Dollars)
Strategic Objectives Economic Restructuring Democratic Transition Social Stabilization Cross-cutting / Special Initiatives Total Privatization 5,550 -- -- -- 5,500 Fiscal Reform 2,300 -- -- -- 2,300 Private Enterprise 9,700 -- -- -- 9,700 Financial Reform 700 -- -- -- 700 Energy 3,000 -- -- -- 3,000 Environmental Management -- -- -- -- -- Citizens' Participation -- 4,800 -- -- 4,800 Legal Systems -- -- -- -- -- Local Government -- -- -- -- -- Crises -- -- -- -- -- Social Benefits -- -- -- -- -- Environmental Health -- -- -- -- -- Cross-cutting / Special Initiatives -- -- -- 47,500 47,500 TOTAL 21,200 4,800 -- 47,500 73,500 *FREEDOM Support Act (FSA) funds USAID Mission Director: Gregory Huger
ACTIVITY DATA SHEET
PROGRAM: MOLDOVA
TITLE AND NUMBER: Increased Transfer of State-Owned Assets to the Private Sector, 110-S001.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $5,500,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1994; ESTIMATED COMPLETION DATE: FY 2000Summary: While the privatization program concluded in late 1995, privatization of residual state shares, unfinished constructions, and small-scale objects are critical for full ownership and management transfer of these assets to the private sector. Equally daunting is the challenge USAID is facing in supporting the GOM in its privatization efforts of agricultural and urban land. At the GOM’s request, USAID is providing technical assistance to support the break-up, land arrangement and title issuance work involving 550 farms plus 100,000 independent land owners who exited collective farms during 1992-96. The end result of this process will be the issuance of more than 1.6 million individual land titles to new private farmers. Concurrently, efforts will continue in the development of the legal and regulatory environment to support a fledgling land and real estate market, especially in the area of titling and registration. Land under privatized enterprises must also be privatized to ensure clear and unencumbered land titles. The direct beneficiaries of the achievement of the objective will include the Moldovan population at large, as Moldova is primarily an agricultural economy, and therefore, private ownership and possession of land titles are key to achieving market reform and attracting domestic and foreign investment. Also, privatization of the residual state shares will accelerate the restructuring of enterprises and strengthen the corporate governance process under way since 98% of the population directly participated in the mass privatization program. During this program, employees and managers of small to large-scale firms exercised preferential rights to ownership in their own enterprises.
Key Results: Four key intermediate results were concluded to be necessary to achieve this objective: (1) enterprises: 730 medium and large enterprises originally sold for national patrimony bonds are at least 90 percent private, in addition to 250 other enterprises not originally offered during the Mass Privatization Program; (2) farms: 550 state or collective farms broken up; (3) land titles: 1.6 million rural land titles issued to individual members of state or collective farms; (4) land acquisition: 300 enterprises acquire associated land and titles.
Performance and Prospects: Performance over the past year has been as expected or better, however problems have occurred.
USAID technical assistance has produced significant results in land privatization and in streamlining the legal and regulatory environment. The GOM adopted a decision to streamline the rural land titling and registration procedures, resulting in lower actual and transaction costs. It has also succeeded in streamlining land titling and registration procedures, which have been simplified so that an exact survey of the privatized land is no longer required. More important, these processes are now done at the local level rather than the central level. Private survey firms have been allowed to flourish and have begun operating as private sector entities. This represents an extraordinary event and unique to the former Soviet Union, as this is the first instance in which this many individual titles have been issued utilizing private survey firms and at a dramatically reduced cost from $40 to $8 per land share.
Of the 1,142 medium and large enterprises originally sold for National Patrimony Bonds (NPB) during the Mass Privatization Program only 62 were 100% privatized. A new mechanism for the cash sale of residual state-owned shares was implemented. The Residual Share Regulation determined that residual shares would be sold through the Moldova Stock Exchange. Of the 595 enterprises whose residual shares were offered in this manner, shares of 200 enterprises were sold. Despite this progress, results were somewhat below expectations. The remaining unsold shares remain unattractive at the GOM-set prices and represent repeat offerings of enterprises. Low demand reflects both the poor state of the enterprises offered for sale, and the lack of financial resources of the general population. The population at-large showed little interest due to lack of financial resources, possibly insufficient advance notice and too little information on the enterprises offered for sale.
Possible Adjustment to Plans: There are no major program adjustments contemplated during the coming year.
Other Donor Programs: USAID works closely with the World Bank and International Monetary Fund in setting common privatization targets and garnering support in Parliament for privatization laws and other issues.
Principal Contractors, Grantees, or Agencies: East-West Management Institute is the implementor of the rural land privatization program, while Booz Allen & Hamilton is implementing the urban land privatization component and all aspects of land titling and registration. International Business & Technical Consultants, Inc. is the contractor providing technical assistance and support for the sale or disposition of residual state owned shares.
Selected Performance Measures:
Baseline Target Number of land titles issued (cumulative) 0 (1995) 1,850,000 (2000) Market-based land pricing system
implementedNo (1995) Yes (2000)
ACTIVITY DATA SHEET
PROGRAM: MOLDOVA
TITLE: Increased Soundness of Fiscal Policies and Fiscal Management Practices. 110-S001.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY2000: $2,300,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1993; ESTIMATED COMPLETION DATE: FY 2000Summary: Fiscal reform is key to the success of Moldova's transition. Its success or failure will impact the long-term viability of other objectives. USAID has, therefore, provided tools and training to Ministry of Finance (MOF) staff in the areas of tax policy, tax analysis and revenue forecasting, tax administration, computerization of tax collection. More recently, in response to concerns voiced by the IMF and World Bank, and the withdrawal of a U.S. Treasury Budget Advisor, USAID has also been providing technical assistance to the MOF on budget process and intergovernmental finance. In addition, USAID has also assisted the Parliament to develop its legislative drafting and analysis capacity, particularly in the tax and budget areas. Under its auspices, a Center for Budgetary and Financial Analysis has been established to advise the Parliament. U.S. Treasury advisors were instrumental in helping the MOF in budget law, budget classification, organization of a Treasury, and implementation of a computerized budget execution, accounting and cash and debt management system proposed and assisted by the IMF. However, as indicated, the U.S. Treasury is phasing out its involvement in Moldova. Fiscal reform is proving to be a long, arduous task involving many steps, but Moldova has been making steady, albeit slow, progress.
Key Results: Three key intermediate results are necessary to achieve this objective: (1) budgeting and financial management practices are reformed; (2) a market-oriented tax system that encourages compliance is created; and (3) Parliament acts effectively on fiscal reform.
Performance and Prospects: Moldova has achieved steady progress in its fiscal reform program. Most of the targets have been met. The single tax code has advanced considerably, with the passage of the corporate and individual income tax law and the value-added tax law. Implementation of these laws has proceeded on schedule, and tax administration is being aided by the implementation of a computerized system with USAID technical assistance under a World Bank loan. In addition, the MOF has established a training center with USAID assistance. This will help with implementation of new tax laws and tax administration techniques, as well as with development of other MOF functions. Training activities have been undertaken in related areas, notably international accounting standards.
Improvements in the MOF’s budget preparation process moved ahead, with the adoption of detailed budget instructions for the 1998 budget, including ministry expenditure ceilings, and continuation of these practices for the 1999 budget. The treasury system has also advanced, with the opening of the Chisinau regional office and the installation of computerized systems that now handle virtually all government financial transactions. Moldova is also proceeding with decentralization in the form of establishment of regional entities. However, not all of the details as to how these entities will operate have been spelled out, nor it is clear whether there will be any expenditure savings as a result of this development. USAID advisors are now providing technical assistance in the areas of budget process and intergovernmental finance, with the objective of helping to improve financial management and strengthen the financial condition of local governments. Toward the latter end, efforts are in progress to develop a real property tax system in Moldova, as a component of the tax code.
In addition, the USAID-assisted Center for Budgetary and Financial Analysis has enhanced Parliament’s capacity to deliberate on budgets and other economic policy legislation. However, political divisions within the Parliament have complicated this task.
Despite real progress on fiscal reform, concerns about Moldova’s economy and budget persist. The GOM continues to fall short of IMF budget deficit targets, owning largely to expenditures in excess of plan targets. The economy continues to be problematic, and energy shortages have become acute as supplies are interrupted due to payment arrears. While further progress is expected on tax reform and other fiscal measures, along with gains from the implementation of new tax laws, Moldova needs to make a more concerted effort to comply with its IMF program and spur the growth of its private economy if it is to pursue realistic fiscal policies.
Possible Adjustments to Plan: Work is proceeding according to Plan.
Other Donors Programs: The World Bank has provided a $1.9 million loan for computerization of the State Tax Service, with USAID providing the technical assistance necessary for the procurement of the computer equipment and, more recently, the development of systems for implementing the computerization, which is expected to take additional time. The IMF is providing assistance to the MOF in macroeconomic analysis and development of the treasury system. GTZ and various other donors are assisting with reform of customs law and procedures, which complements USAID’s efforts on VAT and excise taxes..
Principal Contractors, Grantees, or Agencies: The contractor for USAID's tax reform, budget process, intergovernmental finance and parliamentary development activities is KPMG/Barents Group. The USAID-funded U.S. Department of Treasury has an advisor assisting with government securities issuance, but this activity may be discontinued when the current contract expires.
Selected Performance Measures:
Baseline Target Government meets IMF deficit targets No (1996) Yes (2000) Comprehensive budget law adopted and
implementedNo (1995) Yes (1998) State budget revenues equal or exceed
forecast levelNo (1995) Yes (1998) Treasury system operational, centrally
and locallyNo (1995) Yes (1999) Ratio of cost of tax administration to
tax collection decreasesNo (1995) Yes (2003)
ACTIVITY DATA SHEET
PROGRAM: MOLDOVA
TITLE: Accelerated development and growth of private enterprises, 110-S001.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $9,700,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2002Summary: The success of Moldova’s transition hinges on the ability of the private sector to attract private investment, expand production and increase exports. To help in this process, USAID focuses on removing the impediments to sustained enterprise growth, and trade and investment. Advisors continue to work on developing a sound legal and regulatory framework conducive to sustained growth through business advocacy and stronger Parliament analysis of proposed legislation. Cooperative U.S.-Moldovan efforts are promoted to increase firm-level investment, competition and productivity. Privatized and start-up businesses will benefit directly from these activities, but specific focus will be on restructuring the agro-industrial complex, including food processing, marketing, equipment and services suppliers, as well as light manufacturing, construction and the service industry.
Key Results: Three key intermediate results contribute to accelerated development and growth of private enterprises: (1) firms: private sector firms operating and generating employment, business management consulting industry developed, USAID business networks expanded, and business training widely available; (2) investment: increase in total foreign direct investment, and commercial laws and international accounting standards adopted and implemented; (3) joint ventures: 15 joint ventures created and Moldovan firms created and strengthened to include seven farm service centers and eight agriculture processing enterprises, increase in amount of U.S. private investment leveraged by the joint ventures, and venture equity or debt supplied to Moldovan businesses. Three other strategic objectives complement the efforts under this objective; they are increased transfer of state-owned assets to the private sector, increased soundness of fiscal policies and fiscal management, and a more competitive and market-responsive private financial sector.
Performance and Prospects: Performance over the past year has been as expected or better, although Russia economic crisis has put financial pressure on enterprises due to payment arrears and decreasing orders. USAID assistance is helping Moldovan firms look to other, more stable markets.
Progress is growing in the availability and flow of business-related information and services. The Economic Review/Logo Press is one of three profitable periodicals in Moldova, and unlike others, contains about 60 percent paid advertising. Paid subscriptions account for about half the circulation, with 40 percent of it is outside of Chisinau. The periodical added a section on legal and regulatory information, which increased its size from 32 to 40 pages. The same publisher started a business-related newspaper whose circulation has grown to 2,000 despite a 30 percent increase in price over the start-up price. There is a growing market of people willing to pay for business information and services.
The NewBizNet Center is approaching self-sufficiency faster than expected. It became employee-owned in 1997 and had 314 participants/clients and 145 paying customers. As of January 1998, monthly revenue was $9,805. The Center estimates $10,000 as the break-even point.
Possible Adjustments to Plans: USAID will strengthen the policy reform component, pursuing more direct input on deregulation, and building linkages between Moldovan and Ukrainian policy reform efforts.
Other Donor Programs: USAID coordinates with the United Nations Development Programme and EU-TACIS to provide technical assistance and funding for business service centers that help small and medium-sized business managers improve business plans and management skills. USAID also coordinates with the German assistance agency regarding World Trade Organization (WTO) accession.
Principal Contractors, Grantees or Agencies: Development Alternatives Inc. provides business support services. Peace Corps provides business volunteers to advise the Moldovan managers of the business service centers. Citizens Network for Foreign Affairs (CNFA) provides funding for technical and other assistance to develop business partnerships through American investment in the country’s agriculture sector. IRIS builds Moldovan capacity for drafting good commercial legislation. The Alliance provides volunteer executives to work in Moldovan enterprises, business associations, and business service providers. The West NIS Enterprise Fund makes debt and equity investments in Moldovan firms.
Selected Performance Measures:
Baseline Target Number of MBA graduates from Moldovan
state institutions (cumulative)50 (1995) 1,500 (2000) Number of companies listed on stock
exchange with financial statements conforming
to international accounting standards (cumulative)0 (1995) 70 (2000) Compliance with trade standards of World
Trade Organization (WTO)No (1995) Yes (2000) Number of Farm Service Centers established 0 (1995) 7 (2000) Number of agriculture processing centers established 0 (1995) 8 (2000)
ACTIVITY DATA SHEET
PROGRAM: MOLDOVA
TITLE: A More Competitive and Market-Responsive Private Financial Sector. 110-S001.4
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $700,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2000Summary: Moldova is still a largely cash economy and the financial sector is underdeveloped. The development of a strong and dynamic market-based economy requires an effective, transparent and safe financial sector. USAID strategy emphasizes the creation of a private banking sector together with the creation of a transparent and open securities system. The revitalized banking sector will provide a vehicle to transfer ownership and funds between individuals and enterprises, and a sound capital markets environment to facilitate restructuring of enterprises and provide them with a flexible source of funds for investment. The beneficiaries are the National Bank of Moldova and virtually all the larger banks in the country that have both sent employees to a USAID-funded training center and received direct training in the conversion to international accounting standards. By extension, depositors and borrowers will benefit, as will firms and their employees that access securities markets and the financial intermediaries - banks, brokerage firms, etc. - that participate in the financial market. Last year was obviously a difficult one for the banking systems in the former Soviet Union countries particularly after the Russian default in August. Moldova was not an exception, although the crises was not nearly as severe as in Russia. Importantly, there was no debt moratorium. Loans were rescheduled in an orderly fashion weak creditor agreement.
Key Results: Three intermediate results are necessary and sufficient to achieve this objective: (1) private banking: market-oriented private banking sector developed through development of a modern, standardized accounting system, increase in depository savings, and an increase in banking sector competition; (2) policies: government macro and structural adjustment policies support market reform; (3) securities system: transparent and open securities system will perform the function of direct intermediation of capital from savings to the private sector.
Performance and Prospects: Performance was largely in line with projections.
During the year the NBM Supervision Department has make significant strikes in developing a computerized system of analyzing financial data in order to give signals in developing of potential problems of both individual banks and the banking system while the banks have deepened the level of IAS reporting during the year, as well as made some progress upgrading their financial reporting, what is by and large still lacking is conceptual understanding of how IAS can assist in risk analysis and more efficient bank management. This is a progress which will take some period to transmit.
A significant part of USAID’s work concerns the development of the financial infrastructure. There is a large USAID project to convert the banking system to international accounting standards (IAS) and upgrade the back office functions of commercial banks. In January 1998, the conversion to IAS took place. USAID also assisted in establishing Moldova’s Securities Commission, the Stock Exchange, and Securities Depository.
Possible Adjustments to plans: There are no major program adjustments contemplated during the coming year.
Other Donor Programs: In the division of labor among the donors, the International Monetary Fund has been assisting the National Bank with its on-site inspection program and legal work while USAID has been developing the Bank's loan capacity, off-site inspection program, and conversion to International Accounting Standards.
Principal Contractors, Grantees, or Agencies: Barents-KPMG, Financial Services Volunteer Corps are implementing USAID’s banking support activities. The capital markets assistance implementors were The Intrados Group and Price Waterhouse.
Selected Performance Measures:
Baseline Target Commercial bank credit to private enterprises
and households (as % of total bank credit)35% (1995) 55% (2000) Equity capital of private banks (as
% of assets of total banking system)15% (1995) 30% (2000) International accounting standards
adopted by commercial banksNo (1997) Yes (2000) Number of corporations filing quarterly
reports with State Commission on Securities
Markets (cumulative)0 (1996) 100 (2000) Number of listings on Moldovan Stock Exchange 0 (1998) 800 (2000) Volume of shares traded on MSE 0 (1998) $3 mil. (2000)
ACTIVITY DATA SHEET
PROGRAM: MOLDOVA
TITLE: A More Economically Sustainable and Environmentally Sound Energy Sector 110-S001.5
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $3,000,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1996; ESTIMATED COMPLETION DATE: FY 2000Summary: There appears to be consensus among experts that failure to restructure the energy sector will jeopardize Moldova’s gains in economic reform. Large debts have built up to Russia Gazprom due to commercial and technical losses in the power and gas sectors. Energy sector restructuring is expected to move towards demonopolization and privatization and include transfer to the private sector of the role of importation and supply of oil products, gas and electricity. The GOM is moving ahead with privatization of the power sector designed to attract strategic international electric utilities. USAID and the World Bank are supporting the privatization effort as well as the energy sector framework. The GOM, with USAID’s assistance, has established an independent energy regulatory body, moved forward on tariff reform and passed electricity and gas laws. The State Department of Energy, Moldtranselectro, Moldovagas, Fossil-fuel power plants (Chisinau CHP#1, CHP#2) will directly benefit, and the environment and consumers of energy resource will indirectly benefit from subsequent improvements.
Key Results: There are three intermediate results required to achieve this strategic objective: (1) subsidies, efficiency, tariffs: reduce budgetary subsidies, increase efficiency and keep costs down, introduce market-based wholesale/retail tariffs; (2) profits: increase profits at two major power plants; (3) policy: GOM meets World Bank energy sector restructuring conditions and requirements.
Performance and Prospects: Performance over the last year has been as expected.
The National Electricity Regulatory Commission (ANRE) is functioning, so licenses and tariffs are set by them in order to assure that companies are operating to market-based rules. The power generation and distribution system was restructured into three generating companies and five distribution companies. The licenses for electricity production, transmission and distribution were issued by ANRE in 1998, and all power assets are expected to be privatized in 1999.
Technical and financial assessment of the power utilities have been completed (for privatization purposes). An old, soviet-type tariff methodology was replaced with a cost-based methodology, critical for power sector financial solvency. A new tariff for electricity based on the new cost-recovery methodology has been introduced. Market development is in a process, and requires further assistance to Moldtranselectro enterprise. Both Strategic-based Privatization Concept and Individual Companies’ Privatization Plans have been ratified by the Parliament of Moldova in spring-fall of 1998. At the moment, all pre-qualification documents are ready for the next Phase II (tender and transaction) process. It is planned that a qualified Foreign Investment Bank will deal with tendering of companies, recommend winners, and does assets transaction to the new, private owners.
Possible Adjustments to plans: In 1999 a new contractor (Deloitte Touche - DTT) will initiate the phase II privatization task.
Other Donor Programs: USAID coordinates with the World Bank, EU-TACIS and EBRD.
Principal Contractors, Grantees, or Agencies: USAID's energy sector activities are implemented by Hagler-Bailly Consulting, Inc., the US Energy Association, and Deloitte Touche.
Selected Performance Measures:
Baseline Target Restructured energy utilities 0 (1996) 8 (2000) Elimination of budgetary subsidies for
power and gasNo (1996) Yes (2000) Number of privately-owned utilities operating 0 (1996) 8 (2000) Independent regulatory agency established No (1996) Yes (2000)
ACTIVITY DATA SHEET
PROGRAM: MOLDOVA
TITLE: Increased, Better-informed Citizen's Participation in Political and Economic Decision-Making at the Local Level. 110-S002.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $4,800,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1999; ESTIMATED COMPLETION DATE: FY 2005Summary: Improving the capacity of local governments to manage resources and provide services is crucial to the success and sustainability of Moldova’s overall reform effort. Assistance at the local level not only has visible impact on people’s lives, but also improves public perceptions of and experience with democracy and economic reform. In cities, towns and villages, the interaction between citizens and government is most vigorous. There is evidence that local governments with the capacity to exercise well-informed choices in partnership with citizens and civil society can solve problems, identify and maximize opportunities, narrow the gap between resources and responsibilities, and engage the central government on policies that encourage local initiative.
The strength of USAID’s community-based approach lies in the fact that U.S. assistance results in tangible evidence that priority community concerns can be addressed more effectively through local government initiative and citizen participation. USAID/Chisinau will promote: (1) democratic governance -- transparency, accountability, responsiveness, citizen participation and effectiveness; (2) improved fiscal and financial management, including the development of operating and capital budgets, financial planning, business and investment plans, and economic development plans; (3) improved management capacity and administrative practices; (4) improved services delivery; and (5) strengthening of the Association of Mayors and other major non-governmental organizations that are involved in local government training, education and advocacy.
These programs are mutually supportive of programs under other strategic objectives that increase citizen participation, build citizen confidence in political processes, and strengthen the rule of law. In addition, fiscal reform efforts under S.O. 1.2, particularly the restructuring of the intergovernmental finance system and the adoption of a new Law on Local Public Financing, will make an essential contribution to the achievement of this objective. Finally, as development at the local level is truly a cross-cutting issue, objectives in the areas of economic growth, business development and health that promote development or address citizen needs and concerns at the local level reinforce the efforts of activities under this objective.
The principal beneficiaries of these programs are mayors, local government elected officials, city/town/village administrators and policy makers through increased local authority and improved management. The citizens of these communities benefit through improved services and greater transparency of government operations.
Key Results: USAID will consider progress towards the achievement of this strategic objective on track as targeted local governments and citizens begin to work together to solve priority community problems and to identify opportunities for future development. These efforts will bring about tangible improvements in service delivery. Sharing positive experience and lessons learned with other local governments in Moldova and in the region will facilitate the duplication of effective approaches in other localities, enabling a broader impact of USAID programming.
Performance and Prospects: Program activities will begin in Moldova the spring of FY 1999. Based on a recent Local Government Needs Assessment, done by Development Associates, Inc., it is clear that progress toward democratic reform and decentralization can be made in Moldova, and that this is a pivotal time for USAID technical assistance and training, particularly given the recent passage of several key laws in local public administration and administrative and territorial reform. In addition, few organizations and donors have been providing training and education of local government officials, but the need is great, in terms of public administration in general as well as targeted to specific needs. There is also a role for public information and education, focussing on citizen awareness of democratic governance and their role and responsibilities, and of the new legislation and its impact.
Possible Adjustments to Plans: Given that this program has not started yet, there may very well be future adjustments.
Other Donor Programs: Only a few donors and international organizations are working to strengthen local government, including UNDP, EU-TACIS, World Bank and Soros Foundation.
Principal Contractors, Grantees, or Agencies: Unknown.
Selected Performance Measures: This objective is still in the design phase and performance measures have not yet been determined.
 |
|||
|
![[CP FY2000 Home Page]](/images/cpfy2k_sm.gif){kind=small}
