ROMANIA

	FY 1998 Actual	FY 1999 Estimate	FY 2000 Request
Support for East European Democracy	$37,119,000	$36,000,000	$30,000,000

Introduction.

A democratic and free market Romania is of paramount importance to the United States. Continued progress in Romania serves to fortify the deepening democratic and free market traditions in the whole of Southeast Europe. Success will bring stability and prosperity to a country with great potential and with a pivotal position near strife-riddled areas and countries still trying to make the transition. Success will facilitate expanded trade not only between the United States and Romania, but the rest of Europe as well, thereby accelerating Romania's integration into the west. Failure could plunge Romania into worsening poverty and humanitarian conditions, produce gains for extremist political parties, exacerbate environmental problems, and undermine the delicate progress being achieved throughout the region. Therefore, assistance supports U.S. economic, democracy, global, and national security interests.

The Development Challenge.

Romania's performance in 1998 was marked by hesitation and the inability to build upon the momentum gained in 1997. The Government of Romania (GOR) moved slowly on needed economic policy changes and implementing reforms. However, the GOR did take steps to deepen democracy by strengthening the role of and the resources available to local government and by making progress on social and environmental issues. At year's end, the GOR began privatizing major state-owned industries and closed large loss-making entities. If the GOR follows through, the atmosphere for economic growth will improve substantially in 1999. The United States continues to adapt its assistance to areas which will help Romania achieve greater success over the next two years.

Opinion polls show broad consensus in favor of reform, but also demonstrate frustration over its pace and current results. The GDP is expected to fall about 5% in 1998. Inflation dropped from 140% in 1997 to 42%, and the exchange rate devalued by 23%. Exports declined by about 2%, while imports rose over 3%. Close to 60% of the economy now is in private sector hands, although this level falls below expectations. The GOR kept a tight rein on money supply, which contributed to lower inflation, but also constricted growth. Foreign direct investment increased but slowly, reaching $620 million through the 3rd quarter. Lack of decisive action slowed reform and caused the suspension of the IMF Stand-By and World Bank Structural Adjustment Loan (SAL) agreements.

In U.S. assistance areas, significant policy advances were made to stimulate agricultural growth, and stronger private sector institutions helped improve farmer and processor incomes. The Romanian American Enterprise Fund (RAEF) loaned about $35.0 million to firms of all sizes, generating growth and creating jobs while maintaining a 99% repayment rate. While privatization advanced by more than 1,000 primarily small and medium enterprises, it fell 50% short of the target. In November, the GOR privatized the telephone company with U.S. private sector participation. It began to move on liquidating loss making firms. The Local Public Finance Law passed, giving greater powers to local governments to address citizen needs. The Ministry of Finance is modernizing tax administration, which will contribute to stabilizing revenue generations. Fiscal reforms took hold as government securities are now successfully utilized to raise revenues which finance nearly 50% of the budget deficit. The stock market functions, although trading fell well below expectations, due to uncertainty in emerging markets. Bank supervision assistance to the National Bank of Romania has begun to set the framework for effective market-based regulation of the banking sector. This will lead to stability and greater access to credit. Bank privatization has logged, partly due to the impact of the Russian financial collapse, but mainly due to the failure of the GOR to move ahead with privatization. Energy sector restructuring inched ahead, increasing the chances for more private investment.

USAID's support to Romania's democratic transition helps improve the effectiveness of the executive and legislative branches of government and increases citizen participation in decision-making, primarily through non-governmental organizations (NGOs) and local governments. Parliament improved constituency outreach services. The Prime Minister's office improved internal management functions. Key legal and regulatory reforms streamlined judicial proceedings. Dozens of NGOs improved service delivery. NGOs banded together to push legislation to promote charitable giving. Local governments received greater authority and improved their management capacities. Opinion polls show a higher level of confidence in local officials than any other civilian leaders.

Social sector programs target reforms in women's health and child welfare. USAID's community-based methodology promotes decentralization and provides alternatives to institutionalization. This approach has been endorsed by the GOR and is now being adopted by other donors. USAID's emphasis on primary health care has had strong results, i.e., over a 50% reduction of maternal mortality, increased use of safe family planning methods, and the spread of small, private clinics. The Department of Labor continues to help displaced workers develop skills and open small enterprises.

Despite gains, Romania still confronts serious problems. Reforms are required across the economic spectrum: farmers and small businesses need technical assistance, new opportunities for U.S. private sector trade should be exploited, the financial sector does not yet support the market system, the fiscal system provides huge investment disincentives, environmental problems still persist, the central government is plagued by administrative inefficiencies, corruption must be addressed, local government needs assistance to implement new responsibilities, NGOs can play a greater service delivery role, health sector reforms must be deepened, safe family planning methods need greater exposure and further support to deinstitutionalize the child welfare system is necessary.

Other Donors.

USAID assistance ranks fourth behind the World Bank, the European Bank for Reconstruction and Development (EBRD) and the European Union (EU). SEED resources are coordinated with other donors and leverage substantial financial contributions from multilateral banks. In some cases, USAID provides the technical assistance component to the loan, as in the energy sector and employment services. The World Bank's portfolio of around $ 3.8 billion, focuses on energy, agriculture, privatization and financial reform, employment services, industrial pollution, health rehabilitation and social development. The EBRD investment is about $250 million annually, with projects in energy, municipal utilities and financial sector. The EU has about $130 million for 1998-2000 in areas such as banking, small and micro-lending, democracy, social sector, health and environment.

FY 2000 Program.

USAID will adapt its program to invest in areas having the greatest chances for impact in advancing economic growth, democracy building and social sector restructuring. FY 2000 funding is requested for the following strategic objectives in privatization, private enterprise growth, financial sector reform, energy sector restructuring, environmental management, citizens' participation, local government, and improved welfare of women and children. USAID will expand assistance to build agribusiness and small/medium business associations to better service clients and advocate policy changes, spur privatization and increase U.S. trade opportunities, continue fiscal reforms and expand the private banking sector. Democracy-building priorities include solidifying authority and fiscal control at the local level, strengthening the role of NGOs, training young political leaders and judicial reforms, including anti-corruption. USAID will pursue health system improvements, continue child welfare reform and emphasize private sector solutions and local control. Under special initiatives, FY 2000 funds will focus on training in support of the other objectives.

ROMANIA

FY 2000 PROGRAM SUMMARY*
(in thousands of dollars)

Mission Director: Peter Lapera

Strategic Objectives	Economic Restructuring	Democratic Transition	Social Stabilization	Cross-cutting / Special Initiatives	Total
Privatization	2,825	---	---	---	2,825
Fiscal Reform	---	---	---	---	---
Private Enterprise	8,475	---	---	---	8,475
Financial Reform	1,200	---	---	---	1,200
Energy	3,000	---	---	---	3,000
Environmental Management	1,000	---	---	---	1,000
Citizen's Participation	---	3,500	---	---	3,500
Legal Systems	---	---	---	---	---
Local Government	---	3,400	---	---	3,400
Crises	---	---	---	---	---
Social Benefits	---	---	4,500	---	4,500
Environmental Health	---	---	---	---	---
Cross-cutting/ Special Initiatives	---	---	---	2,100	2,100
TOTAL	16,500	6,900	4,500	2,100	30,000
* Support for East European Democracy (SEED) Act funds

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ACTIVITY DATA SHEET

PROGRAM: ROMANIA
TITLE AND NUMBER: Increased Transfer of State Assets to the Private Sector, 180-SO01.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $2,825,000 SEED Act
INITIAL OBLIGATION: FY 1993 ESTIMATED COMPLETION DATE: FY 2000

Summary: In 1993 when USAID began assistance in privatization, almost 100 per cent of Romania's economic assets were state-controlled. Steady but unspectacular progress has been made in transferring state assets. Most activity has centered on small and medium firms. The purpose of this SO is to increase the proportion of economic assets owned by the private sector and thus to form the basis of a Western-oriented, market driven economy. USAID assistance has established a share registry and an over-the-counter market (RASDAQ) for the sales and trading of shares of privatized companies. The effectiveness and transparency of the RASDAQ to sell off state shares has been demonstrated. USAID continues to provide advisory assistance in privatization, banking supervision and fiscal policy. The beneficiaries are the people of Romania who can participate in privatization and share in the benefits of increased prosperity that will come from a market-based economy.

The U.S. Treasury Department provides three advisors to the Ministry of Finance. A Government Debt Advisor provides assistance in establishing a system of government securities. A Budget Advisor helps make improvements in the budget process and fiscal management. The Tax Administration Advisor provides technical assistance and some training in tax returns processing and collections, tax payer services and case unit operations to improve government revenues.

Key Results: Two intermediate results contribute to the achievement of this objective: (1) decreased percentage of state assets retained; and (2) increased number of companies privatized.

Performance and Prospects: Performance during FY 1998 has shown gradual progress with 58% of GDP attributed to the private sector. After providing assistance in drafting improved privatization legislation in early FY 1998 and helping to develop the government's institutional capacity to complete mass privatization, USAID has held assistance waiting for the government to demonstrate its political will to complete privatization. Late in the year, the GoR privatized the phone company, an oil refinery and a bank; another major bank is positioned for privatization in January, 1999.

While short term prospects in achieving results is promising, progress will be difficult to assess insofar as the number of companies, both private and state-owned, continue to increase due to new business start-ups, and restructuring and dismantling of state-owned enterprises and utilities. Having fallen short of previous targets, the government has set ambitious privatization targets for the coming year and these are reinforced by World Bank conditionalities.

The U.S. Treasury Advisor on Government Securities had success in the treasury bill program which, in conjunction with dollar-denominated securities, serves as an effective revenue raiser financing nearly 50% of the budget deficit in 1998. The Budget Advisor is helping to institute program budgeting and contributed to the Local Public Finance Law which passed this year. The Tax Administration Advisor has initiated a broad training effort to develop the GoR's capacity to administer the new tax law which goes into effect in 1999. Political uncertainty impacting policy decisions and restructuring at the Ministry of Finance throughout 1998 have hindered the efforts of the U.S. Treasury advisors.

Possible Adjustments to plans: Over the next year, USAID will revise its approach to respond to the government's renewed interest in completing privatization. This will involve assistance beyond FY 1999, the original target date for completion of this objective. The U.S. Treasury advisory program will continue through 1999 with an expanded effort in tax administration.

Other Donor Programs: USAID is chiefly responsible to assist its counterpart, the State Ownership Fund in the sale of its portfolio of small and medium enterprises. The World Bank provides investment advisors to prepare the sale of large companies to strategic investors. The EU provides technical assistance for direct negotiations with potential investors for larger companies. French-sponsored consultants assist in bank privatization. Technical assistance from the Canadian aid agency (CIDA) has been targeted at the Bucharest Stock Exchange (BSE).

Principal Contractors, Grantees or Agencies: Carana's privatization assistance consists of a providing a privatization advisor to the State Ownership Fund.

Selected Performance Measures:

	Baseline	Target
Percent State Assets Retained	~100% (1993)	15% (2000)
Number of Companies Privatized	1304 (1997)	based upon GoR target to be presented to Parliament in early 1999

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ACTIVITY DATA SHEET

PROGRAM: ROMANIA
TITLE AND NUMBER: Accelerated Development and Growth of Private Enterprises, 180-SOO 1.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $8,475,000 SEED Act
INITIAL OBLIGATION: FY 1991 ESTIMATED COMPLETION DATE: 2002

Summary: The private sector continues to grow and now contributes almost 60% of GDP. However, significant impediments remain, including a continuing, pervasive state presence, stalled privatization of state-owned enterprises, lack of access to capital and management know-how, and a difficult legal and regulatory environment. USAID's legal and regulatory assistance in competition, bankruptcy, securities and judicial reform, which will contribute to commercial dispute resolution, is reported elsewhere. Agriculture sector assistance to trade associations and citizen coalitions has helped to improve policy and regulations impacting farmers and processors. Through the Romanian-American Enterprise Fund, $35 million in loans and venture capital was provided to 15 medium-sized private companies, $1.5 million for 23 small loans, and $1.5 million for micro-loans to 227 micro-enterprises. The repayment rate is 99%. USAID assistance has facilitated technology transfer and enterprise restructuring and offers marketing and management support services on a firm-by-firm basis. The direct beneficiaries of the achievement of this objective are the private entrepreneurs of small and medium-sized enterprises.

Key Results: Three key intermediate results will contribute to the achievement of this objective: (1) improved policy/legal and regulatory framework supporting private enterprise development; (2) increased capital investment in private enterprises; and (3) improved management practices adopted by enterprises.

Performance and Prospects: Performance over the past year has been mixed. The long process required to draft legislation and gain consensus for passage impedes progress in legal and regulatory reform. This year the Parliament passed only two laws required by IMF conditionality.

While foreign direct investment has increased (about $620 million through three quarters in 1998), it is far lower than comparative Central European economies and it does not come close to meeting the capital needs of the approximately 700,000 small and medium private enterprises nor the several thousand large and newly privatized companies.

Progress is being made on a firm-by-firm basis in improving marketing, production and management, restructuring former state-owned enterprises and building the capacity of business support organizations and professional associations. In the longer term, however, the overall investment climate must improve, and associations must play a greater role in facilitating growth.

Possible Adjustments to plans: Future USAID assistance will help address the key constraints to enterprise development and will target agricultural and small/medium enterprises working through associations to have a wider impact. In addition, USAID will coordinate much closer with other donor programs, which are providing significant financial resources. This approach offers the comparative advantage of reaching more than 42% of Romania's workforce. The further development of small and medium enterprises and agribusiness can become a significant engine of growth to drive other sectors forward and inspire support for further legal and regulatory reforms.

Other Donor Programs: Support from the Romanian government, totalling about $12 million, includes subsidized credit to small enterprises, credits for job creation, support for business start-ups, co-funding for export-oriented enterprises, and the establishment of a state co-guarantee fund for small and medium enterprises. The World Bank's Redeployment Program (with assistance from the U.S. Department of Labor) provides $8.5 million for micro lending and business support; and, its Industrial Development Project provides $63 million in support to export companies through Romanian banks. The EBRD offers $58 million in credit through the Romanian Development Bank to support restructuring and privatization; $50 million credit for both state-owned and private companies in agriculture, food, forestry and aquaculture; and, together with the EU, co-finances investments in private or privatized companies. Significant European resources are also available through EU-PHARE (more than $50 million) and the German and Swiss governments. Smaller credit programs are offered by UNDP, the Canadian government and the Soros Foundation.

Principal Contractors, Grantees or Agencies: Current contractors and grantees include, the Romanian-American Enterprise Fund, Citizens Democracy Corps, ACDI/VOCA, Land O'Lakes, Aid to Artisans and the U.S. Peace Corps.

Selected Performance Measures:

	Baseline	Target
Percent of annual GDP from the Private Sector	45% (1995)	65-70% (2000)
Annual level of foreign direct investment (USD million)	$300 (1995)	$800 (2000)
Average increase in sales for USAID-assisted firms	5% (1995)	25% (2000)

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ACTIVITY DATA SHEET

PROGRAM: ROMANIA
TITLE AND NUMBER: Development of a Competitive, Market-Oriented Financial Sector, 180-SOO1.4
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $ 1,200,000 SEED Act
INITIAL OBLIGATION: FY 1993 ESTIMATED COMPLETION DATE: 2002

Summary: The purpose of this objective is to improve the efficiency and soundness of financial intermediation and ultimately to increase the availability of private capital. Financial sector assistance also supports investment promotion. Capital markets assistance was intended to complement the mass privatization program and empower citizens to participate in a market economy. Initial progress was remarkable in terms of the rapid growth in secondary market activity and the volume of trading on the RASDAQ. However with stalled privatization, shrinkage of the Romanian economy, and contamination from Russian and the Asia crises, USAID is reassessing the form of its intervention. In response to improvements in the legal framework for the banking industry, a partnership with the National Bank's (NBR) Banking Supervision Department was initiated in 1997 to train qualified examiners to conduct on-site and off-site supervision of State and private banks. The expanded banking supervision program is intended to help Romanian banks decrease the risks as well as increase public confidence in the banking sector. USAID continues to provide training and technical assistance in competition and bankruptcy law to enhance the legal framework and strengthen proper regulatory enforcement of the financial sector. A small cadre of retired executives from the Financial Services Volunteer Corps (FSVC) provides advisory assistance to contribute to the development of financial institutions.

Key Results: Two intermediate results will contribute to the achievement of this objective: (1) decrease in percentage of banking assets in state hands; and, (2) increased availability of private capital through private financial intermediaries.

Performance and Prospects: The framework for capital markets has been largely established. USAID is reassessing its participation to determine what future efforts will best increase the effectiveness of private financial intermediaries. When USAID assistance to the Privatization Operations Center (POC) ended in September 1998, the POC 's staff, equipment and expertise were absorbed by the State Ownership Fund (SOF).

The NBR has only recently begun to permit bank supervisors to make off-site inspections. However, the NBR Chairman has demonstrated increased understanding of the importance of the training program and has now begun to institute program recommendations. This latter development will increase the effectiveness of USAID's banking supervision program and an expansion is planned in 1999. This effort will help strengthen the private banking sector.

Training has been provided in bankruptcy and competition law to more than 150 judges, inspectors and their professional staffs, but because judicial understanding of new laws is weak and enforcement is still less effective than desired, additional training will be necessary. FSVC support to private financial sector institutions will continue through FY 2000.

Possible Adjustments to plans: The expansion of the banking supervision program will progress with the National Bank's responsiveness. New demands may arise when bank privatization gets underway.

Other Donor Programs: USAID's financial sector assistance helps to leverage the programs of international financial institutions by directly complementing World Bank objectives and helping the Romanian government to meet conditionality established by the IMF. EU-PHARE support was provided to develop another share registry, but has not been successful. Canadian assistance has gone to the Bucharest Stock Exchange. USAID banking supervision program coordinates closely with EU-PHARE and French advisors to insure consistency with EU accession requirements.

Principal Contractors, Grantees or Agencies: The Barents Group conducts USAID's Banking Supervision Program, Carana provides training in bankruptcy and the Federal Trade Commission along with the Department of Justice provide training in competition. Volunteers from the FSVC also contribute to financial sector development.

Selected Performance Measures:

	Baseline	Target
Decrease in percentage of banking assets in state hands	70% (1997)	50% (2000)
Increased availability of private capital *	TBD (1997)	TBD (2000)
* USAID dropped reliance on only RASDAQ data and is, through private financial intermediaries, identifying meaningful new measures to track increased availability of private capital

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ACTIVITY DATA SHEET

PROGRAM: ROMANIA
TITLE AND NUMBER: A More Economically Sustainable and Environmentally Sound Energy Sector, 180-SOO1.5
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $ 3,000,000 SEED
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: 2002

Summary: USAID has shaped its energy reform program to promote competition, private sector participation and compliance with EU requirements, and to leverage significant multilateral lending to the sector. Assistance continues to emphasize restructuring and commercialization of the power sector, beginning with electricity distribution, and the creation of an independent regulatory authority. Technical assistance and training has also supported the establishment of energy service companies and private consulting firms to carry out energy efficiency projects in targeted private industries. The beneficiaries are commercial and household customers who will ultimately receive more efficient and less costly energy service.

Key Results: Three intermediate results will contribute to the achievement of this objective: (1) oil and gas market liberalized; (2) competitive electric power system established; and (3) improved energy efficiency.

Performance and Prospects: In July 1998, the government approved the USAID-supported restructuring plan for the electric power sector. Separation of distribution, generation and transmission has begun and efforts are underway to commercialize and ultimately privatize much of the sector. Assistance will identify and support economically-viable groupings of distribution sector assets and efforts to build upon USAID's pilot commercialization work will be extended to other distribution companies. Support through the regional Utility Partnership program, which included a partnership agreement between Mississippi Power Company and the state electric power company in 1998, will be continued through the Utility Management Institute program. An interim regulatory authority has been created and considerable training, technical assistance and economic support will be necessary.

Energy efficiency assistance emphasizing the development of private capacity and sustainability will be consolidated and completed in 1999.

Possible Adjustments to plans: While USAID assistance helps to leverage considerable investment by multilateral banks, delays in loan negotiations have also proven to negatively impact timing and implementation. USAID will continue to closely monitor progress and evidence of the government's commitment to reform - particularly in relation to the petroleum sector where limited assistance remains a possibility. Limited assistance may be provided to the newly established regulatory authority to promote its independence from the Ministry of Industry.

Other Donor Programs: USAID assistance leverages approximately $600 million in World Bank and EBRD loans to restructure the petroleum and power sectors and to promote modernization and investment in the Romanian energy sector. EU-PHARE has become a recent contributor in support of USAID-proposed energy sector reforms.

Principal Contractors, Grantees or Agencies: Current grantees and contractors include: Electrotek Concepts, the U.S. Energy Association and another yet-to-be-determined implementor.

Selected Performance Measures:

	Baseline	Target
Private foreign investment in oil and gas (in US $ millions)	336 (1997)	400 (1999)
Market share of independent electric power production (% increase in annual MW production)	0 (1996)	30% (2000)
Dollars saved as a result of energy efficiency (net savings in US $ M from energy efficiency projects)	0 (1998)	4 (2000)

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ACTIVITY DATA SHEET

PROGRAM: ROMANIA
TITLE AND NUMBER: Increased Management Capacity to Promote Sustainable Economic Growth, 180-SOO1.6
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $ 1,000,000 SEED Act
INITIAL OBLIGATION: FY 1991 ESTIMATED COMPLETION DATE: 1999

Summary: USAID assistance helps increase both public and private management capacity to address critical environmental constraints to sustainable development. Assistance in drafting and implementing environmental laws and regulations is helping to introduce the self-financing concept (the polluter pays), increase transparency in environmental policy and foster consistent regulations. Assistance goes to select local environmental protection agencies (EPAs) providing them access to least-cost technologies and low tech practices to monitor and enforce compliance with new regulations. In partnership with the private sector, USAID-financed demonstration projects for cleaner technologies have introduced conservation and protection technologies. These projects have had success generating economic benefits for targeted industries and communities and are being replicated elsewhere. The private sector projects complement USAID's effort to help develop a cadre of private environmental service firms (ESFs). USAID also supports a graduate program in environmental management at the University of Cluj, the only such program in Romania.

The direct beneficiaries are the Ministry of Waters, Forests and Environmental Protection and targeted industries. Local communities benefit from pollution reduction.

Key Results: Three intermediate results will contribute to the achievement of this objective: (1) improved environmental resource management; (2) enhanced environmental legal authority; and (3) increased environmental sector financial sustainability.

Performance and Prospects: Assistance to help enact the Waters and Environment Laws has facilitated the integrated management and self-sustainability of the sector. Complementary regulations for privatization and promoting investment and growth have also been designed. USAID assistance produced the scope and norms for environmental audits; training in conducting audits has been provided to inspectors of 41 local EPAs. All legal and regulatory assistance is in harmony with EU directives and will help Romania meet conditions for EU accession.

Assistance to help privatize the national water systems utility has introduced full-cost pricing of water services. The financial sustainability of local EPAs is enhanced by a new ordinance which will permit the retention of a portion of self-generated revenues. Model projects to address production and pollution problems, developed in cooperation with local enterprises and the Pollution Prevention Center, have generated significant savings and reduced risks to workers' health. The success of the Environmental Management Program in training managers and local officials from the EPAs and the water authority has spurred some enterprises to require their managers to attend the program. This program will be self-financing after FY 1999.

Possible Adjustments to plans: Limited legal and regulatory assistance is still required to insure that Romania has a comprehensive environmental regulatory framework. Assistance will continue to increase the capacity of the water authority and local EPAs to execute new laws and regulations. Assistance to enterprises, on a co-finance basis, will continue to provide replicable models. USAID will undertake an examination of "green" issues.

Other Donor Programs: The World Bank and EBRD provide investment loans to improve local water management systems and pollution prevention investment at select enterprises. The GoR provides targeted cash contributions, staff salaries and in-kind contributions.

Principal Contractors, Grantees or Agencies: Current grantees and contractors include Chemonics, International, Harvard Institute for International Development, the University of Minnesota, and the World Environment Center.

Selected Performance Measures:

	Baseline	Target
Number of demonstration models established and replicated	0 (1996)	15 (2000)
Response to regulatory enforcement (% increase in regulatory revenues over the previous year, beginning in 1997)	0 (1997)	+18% (2000)
Increased issuance of regulatory permits by EPAs (% increase annually beginning in 1997)	0 (1997)	+80% (2000)
Institutional cost retention (% of tariff revenue retained by the sector)	0 (1997)	40% (2000)

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ACTIVITY DATA SHEET

PROGRAM: ROMANIA
TITLE AND NUMBER: Increased, Better-Informed Citizens' Participation in Political and Economic Decision-Making, 180-SOO2.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $ 3,500,000 SEED Act
INITIAL OBLIGATION: FY 1994 ESTIMATED COMPLETION DATE: 2002

Summary: The thrust of this objective is to help consolidate democracy in Romania. USAID supports activities that improve the effectiveness and accountability of Romanian leadership. Parliamentary assistance promotes a more transparent policy-making process and opportunities for civil society to impact decision-making. Assistance to the executive branch supports improvements in communication and management systems which facilitate responses to citizen concerns. Judicial assistance provides legislative drafting support and training to help judges understand and better administer new legislation.

USAID assistance to civil society, through the Democracy Network Program, aims to increase the capacity of nongovernment organizations (NGOs) to: influence the formulation and implementation of public policy; serve as a forum for public policy debate and advocacy; mobilize private resources for local needs; form partnerships and alliances with public and private organizations; and improve NGO service delivery, and secure their financial and organizational sustainability. At the request of local communities and the GoR, assistance was expanded to help civil society institutions to better organize themselves, to form coalitions and to forge partnerships with local governments to address community needs. Public relations training is provided to government officials to enhance their public information role and facilitate relations with the media. In addition, training for the media not only helps to improve journalists' coverage of economic reforms but it also helps develop managerial skills to improve sustainability.

The direct beneficiaries, Parliament, the Executive, the judiciary, NGOs and media all play a critical role in guaranteeing Romanian democracy. The indirect beneficiaries are Romanian people who, directly and indirectly participate in and derive the benefits of a more transparent and participatory democratic system.

Key Results: Two intermediate results will contribute to achieve this objective: (1) increased effectiveness and accountability of the Romanian leadership; and (2) strengthened ability of civil society to address policy concerns.

Performance and Prospects: Assistance to the foregoing democratic institutions has strengthened institutional capacity and led to reforms and improved systems to become responsive to and encourage citizen participation. The two Chambers of Parliament have established and strengthened Press and Public Relations Offices and expanded constituency outreach services. Debates in the Senate are now open to the public, the media and special interest groups. This year, the National Magistrates Institute became operational and regional magistrate associations have formed to support professional development and training.

USAID support has strengthened the capacity of a number of NGOs, enabling them to better represent citizens' concerns, to improve services and to move closer to sustainability. NGOs, political parties and professional associations now identify and advocate citizens' interests and work to influence decision-makers and public opinion. In 1998, a coalition formed to champion legislation pertaining to taxes on agricultural workers pensions; and NGOs led efforts to promote secondary school reform and community-based AIDS services. Managerial assistance to targeted media outlets has strengthened their capacity to increase advertising revenue and streamline operations. USAID assistance also helped to establish a Romanian branch of the International Audit Bureau of Circulation, to bring Romania in compliance with accepted standards for the operation and certification of print media outlets. Additional concerns arose about administration of justice in civil and criminal matters, as well as corruption, as destabilizing influences.

Possible Adjustments to plans: Parliamentary leaders have acknowledged the need to improve operations and facilitate citizen access. Additional training to enhance the leadership skills of young Parliamentarians and local leaders is planned as well as potential election-related assistance. Some key legislation and reforms have been enacted to improve the administration of justice, but implementation will take more time. And the political will to move forward on the internal reorganization of the judiciary is not yet evident. New activities will be developed to spur anti-corruption efforts.

NGOs continue to experience difficulties becoming financially self-sustaining and additional enabling legislation is needed. Fundraising efforts and other support are challenged by the lack of tradition of citizen contributions. NGOs need to actively promote a positive public image and improve service delivery. USAID's Democracy Network will continue to focus on these issues and, at the same time, support local development initiatives. Assistance to the media will be phased out at the end of 1999.

Other Donor Programs: USAID's support to community-based NGOs helps to leverage the World Bank's $20 million Social Development Fund loan. Soros, UNDP and EU-PHARE also provide assistance to NGOs and media; no matching funds or other support are provided by the Romanian government.

Principal Contractors, Grantees or Agencies: Current grantees and contractors include Development Alternatives, Freedom House, the American Bar Association's Central and East European Law Initiative, and World Learning.

Selected Performance Measures:

	Baseline	Target
Number of priority community concerns formally targeted through collaboration between public authorities, civil society and citizens	0 (1997)	14 (1999)
Number of MP's field offices with formal systems to receive and act on citizen inquiries	5 (1997)	350 (2000)
Average capacity rating for USAID-assisted local NGOs (4 point scale)	1.3 (1997)	3.2 (2000)

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ACTIVITY DATA SHEET

PROGRAM: ROMANIA
TITLE AND NUMBER: More Effective, Responsive and Accountable Local Governments, 180-SOO2.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $3,400,000 SEED Act
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: 2002

Summary: With USAID assistance, Romania has recently adopted significant fiscal decentralization legislation which will devolve upon local governments the power to manage their own financial affairs, to prepare and adopt budgets on their own authority, to set rates for local taxes and fees, to collect their own revenues for planned capital improvements and to finance construction of those improvements. Local governments are responding to these new responsibilities and actively participating in USAID-sponsored training opportunities. Training is offered to city and county council members and local government officials in public budgeting and operations, personnel and organizational management, revenue generation, council training, customer service and citizen information. USAID-initiated citizen information centers are being replicated without additional funding and local government processes are increasingly open to public participation. In addition to legislative drafting assistance, USAID provides training to local governments to familiarize them with the new laws. USAID is cooperating closely with international financial institutions in the creation of a system of municipal credit. An additional NGO project provides small loans to community associations to impact local economic development and services.

Direct beneficiaries are local officials who receive training and develop their skills in management and finance. Citizens of the targeted communities will benefit from improved services and having an increased role in local decision-making. Ultimately, the central government will benefit by turning over authority and responsibility for local services to local governments.

Key Results: Three intermediate results will contribute to achieving this objective: (1) advanced capacity of local governments to manage resources; (2) enabling regulations and policy framework for decentralization established; and (3) increased revenues available for local governments.

Performance and Prospects: The legislative process for fiscal decentralization has been substantially completed and implementation has begun. Local government is now legally and practically able to incur debt and to finance capital improvements on its own initiative, and to service that debt. The effort to introduce program performance budgeting and reformed financial management which began initially in three cities has expanded to make training more widely available. Program performance budgeting is now the national standard. Computer systems and local capacity necessary to support the management reforms underway are in place in more than thirty participating cities and counties. Customer service and citizen information centers have been so successful that they are replicating naturally and are self-sustaining.

Possible Adjustments to plans: City and county organizations will develop into full service membership organizations capable of providing information, education, training and advocacy. The need for financial management assistance will increase as local governments begin to use their new financing authority and as a municipal credit facility is created. Assistance to citizen information centers will be reduced to a maintenance level and replication will occur naturally.

Other Donor Programs: Both the EBRD and World Bank are key partners in establishing municipal credit systems. Soros, EU-PHARE and the U.K. Know-How Fund also contribute to local government development.

Principal Contractors, Grantees or Agencies: Current grantees and contractors include Chemonics, International, the Urban Institute, Cooperative Housing Foundation and Citizens Democracy Corps. USAID works closely with professional associations of local government officials and condominium residents.

Selected Performance Measures:

	Baseline	Target
Increased citizen satisfaction in municipalities surveyed (Survey indicates >50% satisfaction)	unknown (1996)	>50% (2000)
Laws establishing regulatory and policy framework for decentralization	0 (1995)	5 (2000)
Creation, development and use of performance based budgets	2 (1995)	24 (2000)
Number of municipalities borrowing for capital investment	5 (1996)	25 (2000)

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ACTIVITY DATA SHEET

PROGRAM: ROMANIA
TITLE AND NUMBER: Improved Welfare of Women and Children, 180-SOO3.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $4,500,000 SEED Act
INITIAL OBLIGATION: FY 1990 ESTIMATED COMPLETION DATE: 2002

Summary: The GoR is committed to reducing the number of children at risk of abandonment through the decentralization of child welfare services. USAID's assistance has targeted three counties where "best practice" models of community-based services in abandonment prevention, family reintegration, domestic adoption and foster care, pregnancy counseling and maternal-child shelters are being demonstrated. The county-level approach involves a partnership between local government, NGOs and child welfare professionals. With USAID support, children's rights groups are advocating improvements in child welfare legislation and administrative policies.

Likewise, USAID assistance is targeted at the local level to reduce unwanted pregnancy and abortion by increasing demand for, expanding access to and improving the quality of women's health services. Women's reproductive health services, such as modern contraception, cancer screening, STD/HIV/AIDs prevention and treatment did not exist until 1990. USAID has led in promoting the expansion of primary health care for women - including modern contraceptive services and the enhanced role of general practitioners and pharmacists - in the context of Romanian health reform. Training goes to health managers and providers to improve the quality of care, methods for determining cost, and performance to insure fiscal viability and sustainability. Because funding for primary care, especially modern contraception, is contingent on the effective use of health care funds, USAID is embarking on two demonstration projects to focus on cost-effective delivery of health care in extremely poor regions.

Direct beneficiaries include women of reproductive age and children, who together account for 40% of the population in Romania. USAID's programs reach about one-half or 4.5 million of these beneficiaries. All Romanians will eventually benefit from health care reform.

Key Results: Four intermediate results will contribute to decreased dependency on the use of institutions for children: (1) improved child welfare policies and administrative procedures; (2) improved quality of community child welfare services; (3) increased utilization of community child welfare services; and (4) increased parental and citizen involvement with children. Three intermediate results will contribute to increased use of women's health services: (1) improved quality of women's reproductive health services; (2) improved access to women's reproductive health services; and (3) increased demand for women's reproductive health services.

Performance and Prospects: USAID has dramatically strengthened child welfare policies and procedures by introducing a community-based, family-focused model of child welfare. Training in new models has inspired local leaders to develop innovative local services for children. Local commissions are seeking alternatives to institutionalization and the use of foster care has increased.

Maternal mortality rates, primarily attributable to unsafe abortions, have declined from 84 per 100,000 live births in 1990 to 41 in 1997. USAID-supported model clinics are the only sites offering comprehensive, high quality women's health services; additional service delivery sites are being developed. Awareness and advocacy activities through the media and local NGOs promote improved quality and accessibility of contraception and health care for women.

Possible Adjustments to plans: Assistance will continue to focus on the local capacity building in child welfare services and women's health. Building on successes in the three target counties, activities will expand into seven additional ones. Increased reliance upon local agents - NGOs, local government, professional medical associations and service providers - will help spur sustainability.

Other Donor Programs: USAID has a successful working partnership with GoR agencies including the Prime Minister's Office, the Ministry of Health, the Institute of Health Services Management, the Ministry of Education, the College of Physicians and local government authorities. The World Bank is the major donor in the health sector providing loans for primary health care, family planning clinics and a health management training institute. USAID is the second largest donor in women's health and the most influential donor in child welfare where it has successfully convinced other donors to support community services. Other contributions for women's health and child welfare come from the EU Child Protection Program, Soros, the Council of Europe, the United Nations Children's Fund (UNICEF), the United Nations Fund for Population Activities (UNFPA) and the United Nations Development Program (UNDP).

Principal Contractors, Grantees or Agencies: Current grantees and contractors include: World Vision/ Bethany Services, Holt International, Feed the Children, Johns Hopkins University Christian Population Communications Studies, the Centers for Disease Control, Management Sciences for Health, Population Services International, the Department of Health and Human Services, American International Health Alliance (University of Chicago, Humana, University of Louisville, and Hennepin County Hospital) and Howard University. Local NGOs supported by USAID include: the Foundation for Our Children, the Romanian Association Against AIDS, Youth for Youth Foundation and the Society for Education in Contraception and Sexuality and several professional medical associations.

Selected Performance Measures:

	Baseline	Target
Number of children living in all institutions (in three target counties)	7,343 (1997)	5,400 (2002)
Number of children serviced by community-based child welfare services (in three target counties)	0 (1998)	3,000 (2002)
Maternal mortality rate (Deaths per 100,000 births)	84 (1990)	40 (2000)
Number of women in target utilizing women's*	TBD (1998)	TBD (2000)
*Baseline data is now being collected for health services women's health initiative begun in fall, 1998.

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