PERU

	FY 1998 Actuals	FY 1999 Estimate	FY 2000 Request
Development Assistance	$23,629,000	$24,418,000	$28,900,000
Child Survival & Disease Fund	$7,048,000	$8,437,000	$7,000,000
International Narcotics Control Funds	$14,000,000	$33,000,000	$26,000,000
P.L. 480 Title II	$56,898,000	$55,335,000	$49,996,000
Economic Support Funds	$12,000	---	---

Introduction

USAID assistance to Peru is fully supportive of U.S. vital national interests and strategic goals to: promote democracy and human rights; reduce the amount of illegal coca products entering the United States; protect and promote a healthier population, while reducing the spread of infectious diseases; reduce poverty through broad-based economic growth; support a sustainable environment; and strengthen human capacity.

The Development Challenge

Peru is at a critical juncture as it approaches national elections in April 2000. Recent actions of the Government of Peru (GOP) provide evidence of a slow but steady decline in support for democratic institutions. Despite this situation, USAID support for the municipal elections in 1998 contributed to significant increases in voter participation, increases in the number of women elected to municipal office, and effective monitoring efforts involving civil society. In addition, USAID last year strengthened and expanded the Office of the Human Rights Ombudsman, which has focused on institutional development; support to the Pardon Commission; implementation of activities related to women's and native communities' rights; and research, campaigns and public events on relevant human rights and judicial sector issues. The Ombudsman has implemented decentralized offices in five communities outside Lima. With this activity, the geographical reach of the Ombudsman was further expanded in FY 98 through the implementation of mobile units. USAID has also improved the capacity of the Controller General to carry out performance audits; contributed to the release of hundreds of citizens unjustly accused of terrorism; and increased citizen participation in local government.

Peru remains one of the world's largest producers of coca leaf, the cultivation, processing and trafficking of which continues to cause considerable harm to the country. However, Peru is no longer the largest producer as coca production has registered a net decline of 64,000 hectares, or 56%, over the past three years. This outstanding result has been due to the successful joint U.S./Peru law enforcement efforts to disrupt the coca trade and drive down coca prices and USAID's Alternative Development Program (ADP) assistance which has offered farmers licit income alternatives.

Peru's remarkable economic accomplishments over the past years have been adversely affected by the global economic crisis and the impact from El Niño, causing a reduction of GDP growth from 7.2% in 1997 to around one percent in 1998. Despite these recent economic problems, the GOP remains committed to further reducing poverty (extreme poverty has been reduced from 20.2% in 1994 to 14.7% in 1997) and eliminating serious inequities in income distribution. Toward this end, USAID's food assistance in 1998 reached around 1.5 million food-insecure Peruvians, 361,200 of whom were under five years of age. Food assistance also created 153,300 temporary jobs and contributed to a decline in chronic malnutrition in some of the poorest areas of the country. Food commodities for direct distribution have long been used in support of food-for-work activities as a means of creating temporary employment for the extremely poor. Peru Title II programs now place greater emphasis on using food aid monetized resources to support the creation of permanent jobs and more stable income growth through improved agricultural production and marketing activities and other micro-enterprise initiatives. Under its Microenterprise and Small Producer Support Program (MSP), USAID assistance in 1998 created over 11,000 new full-time jobs and provided 30,000 small farmers and microentrepreneurs (most of whom were women) with increased access to credit, and increased their exports of non-traditional products.

While achievements have been made in the health sector, regional disparities persist, and maternal mortality remains very high. A gap also exists between people's desired family size and current fertility. Substantial progress has taken place this year in improving both general maternal-child health services and in helping the GOP reform its family planning program, so that all Peruvians can realize their reproductive intentions, with full information, voluntarily and safely. Initiatives in the key areas of infectious diseases and nutrition are moving ahead. Safeguarding one of the world's richest and largest natural resource bases depends upon increased attention to the problems of uncontrolled urbanized growth, industrial pollution and low public awareness of environmental problems. USAID is addressing these concerns by improving Peru's environmental legal framework, promoting pollution prevention practices, and collaborating with non-governmental organizations (NGOs) to upgrade their capacity for policy dialogue with other institutions.

While the long-term effects of the 1997-1998 El Niño are still not known, the GOP has estimated overall damages at approximately $1.5 billion. USAID has helped the GOP respond to the most urgent needs of the population with $6 million in humanitarian relief funding to procure and transport plastic sheeting, blankets, water bladders, and other needed supplies--resulting in improved housing and sanitary conditions. In addition, the United States has provided $10 million in P.L. 480 Title I assistance, whose sales proceeds will finance the rehabilitation and reconstruction of infrastructure in affected areas. The GOP has provided around $600 million to meet the urgent needs.

Peru's total foreign debt has increased from $28.5 billion in 1997 to $30.2 billion as of September 1998, mainly due to increases in short-term private sector debt.

In light of Peru's immense development needs, coupled with the slowdown of its economy, all of the areas in which USAID is currently involved will require continued assistance over the medium term.

Other Donors

During 1997, the net official development assistance to Peru was $488 million. U.S. assistance was $119 million (24% of the total), making the United States the largest bilateral donor in Peru. The next four largest bilateral donors are Germany, Japan, the Netherlands and Spain. Germany, Japan and the Netherlands have concentrated on basic infrastructure development and basic health, while Spain has focused primarily on institutional development programs with plans to involve itself in the environment. The UNDP, World Bank, Inter-American Development Bank (IDB), and the European Union (EU) have provided assistance in the areas of basic infrastructure development, disaster relief, education and social development.

FY 2000 Program

The FY 2000 Program will continue to focus on disadvantaged groups to achieve the following program objectives related to Agency Goals: broader citizen participation in democratic processes, reduced illicit coca production in target areas, increased incomes of the poor, improved health and family planning practices of high-risk populations, improved management of the environment in targeted sectors and expanded opportunities for girls' basic education in target areas.

USAID assistance in democracy, representing the top priority, will support: greater participation of disadvantaged groups in the upcoming 2000 elections; increased access to justice and the protection of human rights; greater civil awareness, accountability and strengthening of local governments; and where possible, the promotion of judicial reform through support to non-governmental efforts. USAID activities in economic growth (including P.L. 480 Title II) will continue to improve the economic well-being of the poor through improved policies, increased market access, improved capacity of the extremely poor, increased production/productivity and strengthened NGO organizations. Assistance requested for the ADP Program is needed to keep up momentum to eliminate the illegal production of coca. In population, health and nutrition, USAID will support Peru's efforts to improve child survival and maternal health services, strengthen participation of public and private sector groups in HIV/AIDS prevention, support infectious disease and nutrition efforts, and help the GOP reform its family planning program. In environment, USAID will emphasize the strengthening of private and public institutions; develop a policy framework; disseminate information and provide training; and develop innovative results-oriented sustainable technologies in environmental areas. Finally, USAID will move ahead in its new program to improve basic education for girls.

PERU

FY 2000 PROGRAM SUMMARY
(000's)

USAID Mission Director: Thomas Geiger

USAID Strategic and Special Objectives	Economic Growth & Agriculture	Population & Health	Environment	Democracy	Human Capacity Developmnt	Humanitarian Assistance	TOTALS
SO 1. Broader Citizen Participation in Democratic Processes - DA	---	---	---	3,100	---	---	3,100
SO 2. Increased Incomes of the Poor - DA - PL480 Title II	7,800 ---	--- ---	--- ---	--- ---	--- ---	--- 49,996	7,800 49,996
SO 3. Improved Health Includ-ing Family Planning, of High-Risk Populations - DA - CSD	--- ---	13,500 6,500	--- ---	--- ---	--- ---	--- ---	13,500 6,500
SO 4. Improved Environmental Management in Targeted Sectors - DA	---	---	4,500	---	---	---	4,500
SpO.1 Alternative Development - INC	26,000	---	---	---	---	---	26,000
SpO. Girls' Basic Education - CSD	---	---	---	---	500	---	500
Totals - DA - CSD - PL480 Title II - INC	7,800 --- --- 26,000	13,500 6,500 --- ---	4,500 --- --- ---	3,100 --- --- ---	--- 500 --- ---	--- --- 49,996 ---	28,900 7,000 49,996 26,000

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ACTIVITY DATA SHEET

PROGRAM: Peru
TITLE AND NUMBER: Broader Citizen Participation in Democratic Processes, 527-SO01
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $3,100,000 DA
INITIAL OBLIGATION:FY 1995 ESTIMATED COMPLETION DATE: FY 2003

Summary: The strengthening of democracy in Peru requires an expansion of citizen participation in the decision-making processes that affect their lives, and an increase in GOP responsiveness to citizens' needs. Accordingly, USAID's democracy program targets individuals and community groups previously excluded from access to fair and equitable decision-making processes, particularly the justice system, e.g. indigenous groups, women, minorities and the poor.

Key Results: There are four key results deemed necessary to achieve broader citizen participation. They are: (1) three more effective national institutions (Ministry of Justice, Ombudsman's Office, and Controller General's Office; (2) greater access to justice; (3) 240 local governments more responsive to constituents' needs, and; (4) citizens better prepared to exercise their rights and responsibilities.

Performance and Prospects: In FY 1998 USAID focused on electoral reform and participation, human rights, decentralization, civic education and public accountability. USAID's support for the municipal elections contributed to: (1) significant increases in voter turnout (from 62% in 1995 to 75% in 1998) in USAID-assisted highland areas usually characterized by high levels of absenteeism; (2) an increase in women elected to municipal office (approximate increases of 8.5% in Lima and 15% in the provinces); (3) a successful election monitoring effort with the fielding of nearly 9,000 observers -- many of whom were youth; (4) effective OAS-local NGO coordination on observation; and (5) a highly credible observation report issued by the local elections NGO Transparencia. In the area of more equitable access to justice and improved human rights: the Office of the Ombudsman was strengthened and its geographic coverage expanded through the implementation of mobile units; nearly 700 persons unjustly accused of terrorism were released from jail through the efforts of the Pardon Commission and USAID-supported NGOs; and over 500 human rights promoters were directly trained, who, in turn, have trained an estimated 30,000 people in their communities. USAID-sponsored legal clinics provided free legal and conciliation services in more than 31,000 cases. Support to Ministry of Justice and private groups has begun to prepare the country for entry into effect in FY 2000 of conciliation as an obligatory first step in most civil and family cases. Of the nearly 125 USAID-assisted municipalities, almost one-third have developed strategic plans with the participation of USAID-trained community leaders--many of them women--and representatives of public and private local institutions. All have developed mechanisms for consultation with the community on elaboration of annual work plans. Finally, as a result of USAID assistance in 1998, congress now works with the benefit of an annotated legislative agenda and has gained experience consulting with the public on key pieces of legislation; the capacity of the Controller General's Office to carry out audits was improved; and numerous civic education training and other activities were carried out, promoting greater citizen awareness and involvement, especially of youth.

Prospects for future success in USAID's democracy and governance areas are good. In FY 2000, USAID will focus its assistance on the April 2000 presidential and congressional elections. This assistance will include voter education, electoral observation, promotion of women's political participation and possibly some targeted technical assistance for electoral administration. USAID will also sponsor activities that foster public debate on key democracy issues, such as the importance of independent institutions and decentralization. The mass media will play an important role in these and other efforts. Other areas of emphasis will continue to be: (1) greater access to justice and protection of human rights through continued support to the Ombudsman, human rights groups, and public and private sector organizations promoting legal defense and alternative dispute resolution, especially for the poor; (2) increased civic awareness, through programs of voter, human rights and civic education with a particular focus on key democracy issues; and (3) more accountable public institutions, and more responsive local governments, through the training of municipal officials and promotion of citizen participation and greater accountability.

Judicial reform is a critical concern that USAID is not currently addressing through assistance to the government, due to the limited independence of the judiciary. Where possible, USAID will seek opportunities to promote judicial reform through support to NGOs and other means (e.g. seminars on the criminal procedures code and due process).

Possible Adjustments to Plans: The April 2000 elections are widely believed to be critical for the future of democracy in Peru. USAID will continue to focus on support of preparations for elections, with the expectation that opportunities and priorities for USAID in democracy may change after the elections.

Other Donor Programs: USAID continues to be an important donor in the democracy sector. Other donors are becoming increasingly involved and interested in the sector, in part as a result of their participation in the Democracy Donors Group which USAID helped found. This multi-donor group hosted its first joint event on extra-judicial conciliation in November 1998, which served to highlight and disseminate the importance of conciliation as an alternative dispute resolution mechanism which will be mandatory in Peru by the year 2000. The donors group has selected two themes for concentration and coordination this year: elections, and strengthening of regional and local governance. Since many of the donors are working with the Ombudsman, coordination of this work has begun to take place within the Donors Group. The IDB is financing construction of 83 basic justice modules in order to cover Peru's most urgent needs for justice services at the national level. The World Bank will provide a grant to the Ombudsman to replace the loan funding it lost when the Bank's new judicial reform project was cancelled as a result of steps taken by the GOP to limit judicial independence. Several donors are working in the area of local government as well. Total donor support to the sector (1997-1999) equals approximately $46 million. Finally, the GOP provided approximately $1.7 million in counterpart funding to key institutions with which USAID works--the Ombudsman, Ministry of Justice, and Controller General's Office.

Principal Contractors, Grantees, or Agencies: USAID implements democracy activities through several local NGOs, the Office of the Ombudsman, the Ministry of Justice, the Controller General's Office, a local educational institution, and a national association of municipalities.

Selected Performance Measures:

	Baseline (1996)	Target (2000)	Target (2001)1
Valid votes cast as a percent of registered voters in presidential elections	61% (1995)	70%	N/A
Percent of citizens who actively participate in resolving community problems	32%	39%	42%
Number of incarcerated citizens who are "unjustly" accused of terrorism	1,500	375	250
Percent of citizens from disadvantaged groups who know their basic rights/responsibilities	17%	25%	27%
Number of local governments with formal plans/ budgets developed with the community	80	200	240
1 Targets represent the last year of Mission's current five-year strategy and will be revised during FY 2001 R4.

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ACTIVITY DATA SHEET

PROGRAM: Peru
TITLE AND NUMBER: Increased Incomes of the Poor, 527-SOO2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000 $7,800,000 DA; $49,996,000 P.L. 480 Title II
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2002

Summary: Despite striking economic growth over the past five years, 50% of the Peruvian population remains poor and 14.7% are classified as extremely poor. The purpose of this program is to provide the poor access to income-generating opportunities which will result in reduced poverty and improved food security, consistent with Government of Peru (GOP) goals. Activities include P.L. 480 food assistance, microenterprise and small producers support, the strengthening of NGOs, and a new initiative for poverty reduction and alleviation which will focus on 10 economic corridors in the highland and jungle areas where poor districts are linked with growing markets in intermediate cities. The direct beneficiaries are two million poor people--including microentrepreneurs, small producers, and the unemployed--who are located principally, but not exclusively, in the highland areas of Peru where poverty is the most severe.

Key Results: USAID is focusing on achieving the following key results: (1) improving the policy environment for broad-based economic growth (by focusing on the formulation and monitoring of public policies conducive to reducing poverty and increasing food security); (2) expanding access to 65 new markets; (3) improving production; (4) increasing productive and social investments in extremely poor areas; and (5) strengthening service delivery in poverty areas through 390 NGOs.

Performance and Prospects: Performance of this SO over the past year was negatively affected by El Niño. Nevertheless, 14,000 USAID-assisted small farmers and microentrepreneurs were able to access 12 new export markets and increase their sales by $24.7 million in agricultural products (e.g., onions, coffee and potatoes) and $12.4 million in manufactured products. Since the inception of the program, USAID has generated the equivalent of 40,800 full-time jobs, of which 11,140 were created last year. Half of those jobs were for women. In addition, USAID activities have mobilized $11.3 million in microcredit funds to 30,000 low-income clients, most of whom are women. USAID has also contributed to improvements in the effectiveness and efficiency of 260 Peruvian NGOs from poor highland regions through training in strategic planning, financial management, project design, monitoring and evaluation. Approximately $4.5 million has been leveraged by these strengthened NGOs from other donors for development projects.

In 1998, USAID's food assistance programs improved the food security of more than 1.5 million Peruvians. This includes 361,200 children benefiting from nutrition and growth-monitoring activities, half of whom eventually graduated from feeding programs. Through Title II activities, nearly 150,400 small farmers have improved their agricultural production practices on 26,000 hectares. Food-for-work projects have provided temporary employment to 153,300 families while improving productive and social infrastructure, including the rehabilitation of 6,600 kilometers of access roads and the installation of 13,130 sanitary/health facilities (e.g. latrines, wells, potable water systems, health posts).

The effects of El Niño and the global financial crisis are restraining the country's economic growth. However, it is expected that the economy will improve. USAID support in policy reform will include both the elimination of obstacles and additional enhancements to economic growth at both the regional and national levels. In addition, by 2000, USAID will be fully implementing its poverty reduction strategy in up to 10 economic corridors in the highlands and high jungle areas where there exists a close link between extreme poverty and market potential. Marketing efforts will evolve around programs of quality control and efficiency, reliable supply, and adherence to international trade agreements. USAID assistance will provide for full-time employment to 45,000 Peruvians; technical assistance and training to 25,000 microentrepreneurs and small producers; improved production practices for 80,000 small farmers; and the provision of financial services to 40,000 Peruvians, of whom 80% are women.

Possible Adjustments to Plans: It is critical that the new poverty reduction and alleviation activity receive maximum support from the public sector. GOP support will ensure a more favorable policy and market environment in which the activity can achieve its targets. The Mission will consolidate these activities and increase coordination with other Mission activities to achieve maximum synergy to reduce poverty, especially in the coca-producing areas.

Other Donor Programs: During 1997 and 1998, the IDB and World Bank provided loans of $300 million for the El Niño Emergency Program, while the Japanese also contributed to reconstruction with a loan of $131.9 million. Recent IDB loans include $300 million for highway rehabilitation, $200 million to the Financial Corporation for Development (COFIDE) for multi-sector credit programs, and $30 million for microenterprise programs. Additionally, the World Bank approved in 1998 an Urban Property Rights Project for a total of $38 million. Over the next few years, considerable resources will also be provided by the Japanese, who are planning activities in irrigation ($115.8 million), rural electrification ($109.6 million), and poverty alleviation ($60.4 million).

Principal Contractors, Grantees or Agencies: Principal implementing agencies of USAID-funded activities are: GOP Ministries of the Presidency, Industry and Commerce, Agriculture, and Health; the private sector Exporters' Association (ADEX) and Businessmen's Association (CONFIEP); U.S. PVOs Cooperative for American Relief Everywhere (CARE), Catholic Relief Service (CRS), TechnoServe, Agricultural Cooperative Development International (ACDI), Private Agencies Cooperating Together (PACT), Adventist Development and Relief Agency, International (ADRA); and the local NGOs, CARITAS and Projects in Health, Medicine and Agriculture (PRISMA).

Selected Performance Measures:

	Baseline	Target (2000)	Target (2001)2
Value of expenditures per capita of the poor3	$447 (1994)	$570	$592
Percent of extremely poor in the population	18.9 (1996)	12.5	11.2
Value of exports of selected non- traditional export products ($million)	$354 (1995)	$681	$800
Chronic malnutrition rates in rural areas (percent)	40 (1996)	31	28
2 Targets represent the last year of Mission's current five year strategy. Due to El Niņo and global economic crisis, targets will be revised during FY 2001 R4. 3 Average annual per capita expenditures of the poor. The poor are those whose annual per capita expenditures are below $639, which is the cost of a basic food nutritional basket plus the cost of other necessary goods and services (based on 1994 US$ prices).

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ACTIVITY DATA SHEET

PROGRAM: Peru
TITLE AND NUMBER: Improved Health, including Family Planning, of High-Risk Populations, 527-SOO3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $13,500,000 DA; $6,500,000 CSD
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2003

Summary: Though notable declines have occurred in infant mortality (the first year of life) and under-five mortality at the national level, dramatic gaps exist between the cities and the interior of Peru. Infant mortality is 43 deaths (per 1,000 births) nationwide, but reaches 109 in some rural areas. Further, maternal mortality and perinatal mortality (around the time of birth) are still unacceptably high, even at the national level. Half of births in Peru occur at home, and maternal mortality is estimated at 265 deaths per 100,000 live births. Thus, USAID helps distribute the benefits of development more equally by combatting mortality in rural and peri-urban areas. Beyond sheer survival, USAID supports health and nutrition actions that improve the quality of life for children and families. In Peru 26% of children under five are chronically malnourished, which means they are short for their age. Emerging and re-emerging infectious diseases such as malaria, yellow fever and dengue represent a significant challenge to public health; a project begun in FY 1998 combats such diseases through research, community education and other public health measures.

USAID supports family planning so that citizens can voluntarily exercise their right to voluntary family planning without coercion, and because of the health benefits that family planning can confer on child survival, nutrition status and maternal health. Though on average Peruvian women want 2-3 children each, currently they are having 3-4 children. In rural areas, women want just over three children on average, but are having 5-6 children. And 69% of women and 68% of men declare that they don't want any more children. USAID support helps low-income Peruvians, particularly children and women, enjoy longer lives and a higher quality of life. Children under age five number 3.5 million--four percent of the population, while women of child-bearing age total 6.6 million--26% of the population. Four of every ten Peruvians are in one of these two target groups. Some USAID projects benefit the entire Peruvian population of 24.8 million.

Key Results: USAID seeks to achieve the following results: 1) People take appropriate preventive actions, that is, measures such as immunization, which prevent disease, and have access to information and family planning services, which can reduce undesired pregnancies; 2) People take appropriate promotive actions, that is, measures such as good breastfeeding and weaning practices (for 55% of children under 6 months) which help avoid disease and contribute to good nutrition; 3) People take appropriate curative actions, that is, measures such as oral rehydration therapy and referral of high-risk pregnancies; and 4) Sustainable institutions and operations are in place, such as 102 certified model health centers, to carry on programs when donor investments end.

Performance and Prospects: The past year was marked by scrutiny of the GOP family planning program, which had complaints lodged against it for overly aggressive tactics and poor quality of care, particularly regarding tubal ligation and vasectomy. A series of reforms in its program was announced by the Government of Peru in February-March 1998. USAID has been providing technical and financial assistance to help implement and monitor the reforms through the Peruvian Medical Association and the Ombudsman's Office, among other ways.

In 1998, the government embarked on far-reaching reforms in its family planning program to ensure voluntary informed consent and other indispensable aspects of quality of care; these include new requirements regarding counseling, a waiting period, and qualification processes for health establishments and physicians. The government authorized its first large-scale ($1.6 million) purchase of temporary methods of contraception with its own funds. As a result, the USAID share of the contraceptive budget declined from 84% to 50%, surpassing targets for both 1997 and 1998. USAID is working with the women members of over 100 community-based organizations in the interior of Peru on rights to voluntary family planning without coercion and reproductive health. Agreements were signed with eight NGOs to provide reproductive health care in underserved areas in the interior.

A manual was developed for health workers on sexually-transmitted disease, and several studies were completed on behavior, the economic impact of AIDS and related topics. Key work is moving ahead in drug-resistant malaria and insecticide-resistant vectors, as well as in hospital-based infections. The large in-service training program for Ministry of Health staff to improve the quality of child survival programs exceeded its target, certifying 58 health establishments as meeting the improved standards, compared to the target of 35. The Ministry of Health has reformed overall health-sector policy by establishing the legal framework for new private-sector entities to compete with social security facilities in services for workers in the formal sector, and two new USAID-supported clinics that offer private-sector alternatives opened their doors. Data through September 1998 suggest that, as in past years, immunization rates for six childhood diseases will meet the targets of 95% coverage of children under age one, and 58% of women will receive the intended two doses of tetanus-toxoid vaccine. USAID embarked on a joint initiative with UNICEF to combat childhood malnutrition.

Possible Adjustments to Plans: Because of the extent of needed reforms in the GOP family planning program and the loss of confidence by the citizenry, the number of couple-years of protection was lower in calendar year 1998 than in 1997. The total figure, some 1.867 million couple-years of protection, represents two-thirds of that of 1997; 1998 was a year of setting the foundation for a program that can continue to mature and regain the confidence of its intended beneficiaries. For these reasons, expected results for 1999 and beyond may have to be adjusted.

Other Donor Programs: USAID conducted a comprehensive study of other donor investments in health, and is currently analyzing technical and financial data on more than 70 projects. In 1998, total donor assistance in the health sector amounted to $87.6 million. USAID investment under this activity, at $21 million, represented the largest investment and 24% of the total. Some of the other major donor investments are through international financial institutions and represent low-interest loans, rather than grant funds. USAID coordinates its activities closely with such agencies as UNICEF, with which USAID has had two joint programs, the Pan American Health Organization and UNFPA. USAID is also a close partner of such other bilateral agencies active in health in Peru as the Department for International Development of the United Kingdom, the Dutch Embassy, the Canadian International Development Agency (CIDA), Germany's Technical Assistance Agency (GTZ) and the Japan International Cooperation Agency (JICA). USAID is also a member of a number of special multi-institutional coordinating bodies in such areas as immunization, family planning and wider reproductive health, infectious diseases and gender.

Principal Contractors, Grantees or Agencies: USAID implements activities through several U.S. firms, U.S.-based private voluntary and other not-for-profit organizations, and U.S. universities, including: Association for Voluntary & Safe Contraception (AVSC); CARE; The Futures Group, International; University of North Carolina; Johns Hopkins University (Program for International Education in Reproductive Health and Center for Communications Programs); John Snow, International (JSI); MACRO International, Inc.; Management Sciences for Health (MSH); Pathfinder, International; The Population Council; Tulane University; and University Research Corporation. USAID also implements activities through Peruvian NGOs, universities and the Peruvian Ministry of Health. Grants have been made to UNICEF in the area of nutrition.

Selected Performance Measures:

	Baseline (1991)	Target (2000)	Target (2001)4
Infant mortality per 1,000 live births	57	40	39
Mortality per 1,000 children under five years	78	50	48
Percent of infants fully vaccinated by age one	85	95	95
Total fertility rate	3.9	3.1	3
Couple-years of protection (000s)	598 (1993)	2,500	2,600
4Targets represent the last year of Mission's current five year strategy. Due to El Niņo and global economic crisis, targets will be revised during FY 2001 R4.

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ACTIVITY DATA SHEET

PROGRAM: Peru
TITLE AND NUMBER: Improved Environmental Management in Targeted Sectors, 527-SO04
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $4,500,000 DA
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2004

Summary: Peru has an abundance of natural resources and its biodiversity is one of the richest in the world. However, Peru's environment is threatened by uncontrolled urbanization growth, industrial pollution and widespread poverty which frequently leads the poor to use environmentally destructive practices to survive. The purpose of this activity is to improve protection of the natural resource base, fragile ecosystems and biodiversity and to prevent or reduce urban and industrial pollution. Large segments of the Peruvian population will ultimately benefit from enhanced conditions in the environmental and natural resource (ENR) sector resulting from an improved ENR legal, regulatory and policy framework; private sector participation; and validated innovative practices. In addition, pilot activities will directly benefit low-income populations where these programs will be implemented.

Key Results: Five key results are considered necessary to achieve this objective: 1) institutional capacity of the GOP and private sector strengthened; 2) 25% of the public support environmental improvements; 3) 15 innovative technologies tested and validated through pilot projects; 4) sustainable practices adopted; and, 5) sound policies established and effective legislation enacted.

Performance and Prospects: Overall, the activity has met expectations and continues to show significant positive trends in the ENR sector. Sustainable Environmental and Natural Resource Management (SENREM), the first major activity under the current ENR strategy, is strengthening the National Environmental Council (CONAM), the GOP's leading agency for environmental policy making and SENREM's main counterpart institution. It is also strengthening the environmental policy and regulatory framework, promoting private sector participation, and implementing pilot interventions in biodiversity, pollution prevention, and environmental health. With SENREM's support, Peru's first environmental policy framework for the manufacturing industry was approved in October 1997, emphasizing best practices for pollution prevention. In 1998, a similar framework was developed for the fisheries industry. The first two pilot demonstration activities completed under SENREM are serving as the basis for further initiatives in the field. The solid waste management pilot, which demonstrated highly effective and profitable new technologies using women-owned microenterprises to manage solid waste in peri-urban areas, is now being replicated in a much broader area of Lima. The other pilot, a comparative risk assessment of Lima, is being used in the design of a new major environmental health activity. The Paracas pilot activity, completed in 1998, is showing an impact in the fishmeal industry with seven plants having switched to the use of more efficient pumping equipment, two plants having reduced pollution by more than 10%, and a large number of other plants beginning to adopt more efficient technologies. In 1998, the International Standard Organization (ISO) 14000 regulation was approved, setting the procedures for the adoption and use of sound environmental policies and practices. Two plants in Peru have already received ISO 14000 certification. SENREM is also supporting GOP's efforts towards decentralization for ENR management. The first multisectoral regional environmental committees have already been established.

The Peruvian Society for Environmental Law (SPDA), the contractor for SENREM's Private Sector Advocacy and Pilot Projects components, has also made satisfactory progress during the year. One research study with proposed legislation for oil drilling in protected areas has been completed and another one has been initiated on the adoption of individual transferable quotas for fishing catches; work is underway on the preparation of the first annual independent State of the Environment Report; and an "umbrella" organization of environmental networks and NGOs has been established to promote the participation of the independent sector in environmental policy making. Eleven new pilot projects were started in 1998 and at least fifteen new projects will be initiated in 1999. These will test and validate results-oriented, sustainable practices with strong likelihood of replication by the GOP, the private sector and other donors.

At the end of FY 1998, the new Biodiversity and Fragile Ecosystem Conservation and Management (BIOFOR) activity was approved and began implementation. In FY 1999, the Mission is planning a new activity in the area of environmental health to help low-income Peruvians in high-risk urban communities enjoy longer and higher quality lives by reducing risks associated with exposure to urban and industrial pollutants. USAID also plans to expand SENREM activities in the area of industrial pollution prevention to increase the capacity of public institutions and the industrial sector to identify and remedy the negative effects of industry on Peru's resources, including people.

Possible Adjustments to Plans: USAID is planning to negotiate an umbrella agreement with the GOP to consolidate ENR activities in the country. This will include the on-going SENREM and BIOFOR and other proposed new activities. Negotiations have already been started with the National Environmental Council (CONAM).

Other Donor Programs: In support of CONAM, a $1.8 million IDB program for institutional strengthening concluded in FY 1998. A small UNDP program, Agenda 21, is assisting CONAM in the organization of Regional Environmental Committees. The Food and Agriculture Organization supports several forest management and re-forestation activities, mostly in the highlands, which will contribute to climate change mitigation. The International Tropical Timber Organization is currently supporting nine forestry projects in Peru through the Natural Resources Institute and the National Program for Watershed Management. Other biodiversity funding sources include the World Bank, through its Global Environmental Facility, which supports the protected areas fiduciary fund, National Fund for Natural Protected Areas (PROFONANPE), that pays park guard salaries and covers infrastructure investment, as well as site-specific programs. The principal bilateral donors for biodiversity conservation are the Germans, through its technical assistance (GTZ) and development loan (KFW) agencies, and the Dutch. Others include the Canadians, the Finns, and the Swiss. U.S. PVO donors for biodiversity conservation interventions in Peru include the World Wildlife Fund, The Nature Conservancy, Conservation International and Wildlife Conservation International. The World Bank and Japan's International Cooperation Agency (JICA) continue to provide support for the rehabilitation of Lima's water and sewage systems and the IDB for the improvement of basic sanitation services in 36 cities throughout the country.

Principal Contractors, Grantees or Agencies: The main GOP counterpart agency for SENREM is CONAM. Main contractors are the technical assistance provider, Abt Associates, and SPDA. The U.S. firm International Resources Group is the main contractor for BIOFOR, while the GOP coordinating agency is INRENA.

Selected Performance Measures:

	Baseline (1996)	Target (2000)	Target (2001)5
Number of biologically important national parks that have achieved management improvements.	0	3	5
Percentage of solid waste properly disposed of in sanitary landfills in Lima.	24.4	63	67
Number of industrial plants in targeted sectors that have adopted new pollution prevention practices.	0	24	45
5Targets represent the last year of Mission's current five year strategy. Due to El Niņo and the global economic crisis, targets will be revised during the FY 2001 R4.

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ACTIVITY DATA SHEET

PROGRAM: Peru
TITLE AND NUMBER: Alternative Development, 527-Sp01
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $26,000,000 INC
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2004

Summary: Despite its unparalleled performance in stemming the flow of illegal drugs to consumer countries in the past three years, Peru remains one of the world's leading producers of coca leaf. Production and trafficking of coca leaf continue to cause serious political, economic, and social harm, while domestic drug abuse is expanding at a high rate to further compound Peru's social problems. Deforestation, erosion and disposal of toxic chemicals resulting from processing coca are causing ecological damage as well. In response to this development challenge, USAID's Alternative Development Program (ADP) is being implemented with the goal of reducing illicit coca leaf cultivation in target areas of Peru. To achieve this goal, the ADP purpose is to increase employment and income from licit economic activities of farmers that reside in the program areas. The ADP is part of a two-pronged, long-term and integrated counternarcotics strategy that promotes interdiction and law enforcement to disrupt narcotics trafficking and lower the farm-gate price of coca leaf ⁶; and implements alternative development interventions to allow farmers to engage in licit economic activities leading to reduced coca leaf cultivation and production. The strategy is premised on the development hypothesis that offering farmers alternative licit sources of income and employment, coupled with improved living conditions and physical security, will lead the majority of them to voluntarily abandon coca cultivation. The ADP is benefitting over 337,000 people residing in approximately 1,600 communities within five of the nine coca-growing areas where most of the coca leaf is produced.

Key Results: The ADP's progress and success is being measured by the net reductions in coca cultivation areas and coca leaf production, and achievement of the following Intermediate Results: (1) Increased commitment to voluntarily reduce hectares devoted to coca production; (2) Increased availability and access to basic services for 1,436 communities; (3) Increased public participation in local decision-making; and (4) Increased awareness of social and ecological damage caused by drug production and use.

Performance and Prospects: The ADP is being implemented through a number of public and private-sector partners in five major coca-growing areas of Peru: the Central Huallaga, Upper Huallaga, Aguaytia, Pichis-Palcazu, and Apurímac River Valleys. The ADP interventions focus on development activities aimed at strengthening local governments, increasing income and employment opportunities, improving infrastructure (e.g., road rehabilitation, bridge construction, small electricity-generating facilities, schools, health posts, etc.), protecting natural resources, and increasing people's awareness of the harmful effects of coca cultivation and use of drugs. In addition, the ADP seeks to strengthen CONTRADROGAS, the primary GOP agency responsible for providing policy guidance and operational coordination to multi-donor alternative development initiatives, in support of its Comprehensive Alternative Development and Prevention and Rehabilitation Program for the period 1999-2003.

During 1998, the successful combination of effective interdiction and alternative development resulted in a net reduction of 26% (18,000 hectares) in coca cultivation and a decrease of over 34,000 metric tons in coca leaf production. During 1995-1998, the cumulative coca reduction of 64,000 hectares represents a 56% decrease in coca area from the 1995 baseline level. This reduction caused a drop in potential coca leaf production of 87,000 metric tons, and reduced potential cocaine hydrochloride production of 220 metric tons. These coca reductions are decreasing the potential flow of harmful drugs to the United States and elsewhere. Currently, a total of 51,000 hectares remain devoted to coca cultivation, which is expected to be further reduced by the year 2001. These successes are based on the community agreements to reduce coca hectares voluntarily, while committing not to plan any new coca in ADP areas. By January 1999, around 580 ADP-supported communities will have signed coca reduction agreements, including the 239 communities with agreements signed in previous years. Other ADP achievements include the completion of around 800 social infrastructure projects (schools, health clinics, potable water systems, etc.); rehabilitation of about 630 kilometers of farm-to-market roads and 16 key bridges; increased production and marketing of nearly 22,000 hectares of licit crops (coffee, cacao, palm heart, pineapple, etc.); establishment of a $10 million rural credit system with a private bank, resulting in the approval of over 1000 small loans; and strengthening the capacity of 103 local governments to assist communities to carry out and sustain ADP efforts.

Prospects for future ADP success are excellent as evidenced by: the GOP's political will in addressing the problem of illicit coca cultivation, production and trafficking; the international support recently pledged by the donor community at the Consultative Group on Alternative Development (held in Brussels) to the GOP's Comprehensive Alternative Development and Prevention and Rehabilitation Programs for 1999-2003; the ongoing effort to streamline the management of increased U.S. Government support; and the increasing commitment and performance of the ADP-implementing institutions, especially the private-sector entities under USAID agreements.

Possible Adjustments to Plans: Given the key results achieved to date, the ADP's current challenge is two-fold: (1) to sustain previous successes and further reduce coca cultivation; and (2) to make these successes permanent over time by creating a sustainable licit economy within an improved environment for the participating communities and farmers. Toward this end, the ADP will be amended to conform with annual goals and targets of the GOP's ADP Program, reflecting the $150 million for the FY 1999-FY 2003 period that was pledged by the USG at the Consultative Group Meeting in November 1998.

Other Donor Programs: Currently, USAID is regarded as the leader in alternative development, both in terms of strategy and in funding. Other donors include the UN Drug Control Program (UNDCP), Japan, Germany and Canada. Currently, other donor assistance in the coca-growing areas is estimated at $24 million. Additionally, the IDB has recently approved loans for $239 million for construction of national main roads that will facilitate access to the coca-growing areas and to markets for licit crops. In recognition of Peru's alternative development success, other donor pledges at the November 1998 Consultative Group totalled approximately $127 million for six coca-growing areas not supported by the ADP. Major donors are the European Union, Spain, Netherlands, Switzerland, UNDCP and the United Kingdom. In addition, the GOP has committed equivalent of $33 million through 2001.

Principal Contractors, Grantees, or Agencies: The ADP is being implemented by Special Projects of the GOP's National Development Institute (INADE); the GOP's Ministry of Transport and Communications; the San Martin Region Local Governments Association; the U.S. PVO Winrock International; the Center for Drug Education and Information; the Peruvian private bank BANEX; the private-sector Exporters Association; and a Peruvian NGO, PRISMA.

Selected Performance Measures:

	Baseline (1995)	Target (2000)	Target (2001)
Hectares devoted to coca production	115,300	68,300 *	60,000 *
Coca leaf production (metric tons)	183,600	126,355 *	111,700 *
Community coca reduction agreements	0	706	1,006
Licit jobs generated in target areas	0	15,810	19,540
* Since actual reductions in coca cultivation and coca leaf production have exceeded planned targets, USAID is in the process of revising the ADP annual targets for the 1999-2001 period.

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⁶ Implementation of this part of the strategy is the responsibility of the GoP and other U.S. Government law enforcement agencies, and is not within USAID's management control.
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ACTIVITY DATA SHEET

PROGRAM: Peru
TITLE AND NUMBER: Expanded Opportunities for Girls' Basic Education in Target Areas, 527-SpO2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $500,000 CSD
INITIAL OBLIGATION: FY 1998 ESTIMATED COMPLETION DATE: FY 2003

Summary: Girls in Peru--particularly rural girls--face three daunting challenges in completing primary school. First, they tend to enroll late, rather than beginning school at the expected age of six. A large proportion of girls do not enter school until some years later. Some 53% of primary students are over-aged, and 70% of those reside in rural areas. Second, girls in rural areas are more likely than boys not to be promoted from grade to grade on an annual basis. This puts them even further behind. Nationally, 15.5% of primary school students repeat grades. Third, a constellation of geographic, socio-cultural, economic and academic factors makes it harder for girls to stay in school through the years. Educational quality is also an issue for children and families, especially in rural areas. Dated materials with themes that are irrelevant and even contradictory to students' experiences, failure to address language barriers, and unequal treatment of girls in the classroom all affect girls' ability to learn and their motivation to stay and progress in school. Consequently, the drop-out rate for girls is higher than the rate for boys, with the national rate hovering around 10%. Though total enrollment rates for primary school in Peru are strong for both girls and boys (net enrollment of 92%), this statistic does not convey the difficulties rural girls have in getting into, progressing through, and finishing primary school.

Rural boys face similar problems, though to a lesser extent; therefore the urban/rural disparities between primary school-aged children are greater than gender disparities. By the same token, experience has shown that measures taken to improve girls' chances for completing primary education also help improve boys' chances. Accordingly, USAID's support in primary education in Peru is focused on rural girls as the category of student most at-risk of not completing primary school. Among the many rural areas that are in need of support, USAID has chosen to work in three of the poorest departments (Ayacucho, Huancavelica and Apurímac) that were hard hit by terrorism over the past two decades. In those departments, children--particularly girls--have the least educational development. For example, the illiteracy rate among girls aged 15-17 is 13%, three times higher than that for boys, reflecting the exclusion that over 150,000 school-aged girls face in those areas.

Key Results: The following key results are required to achieve this objective: 1) Increased consciousness of the importance of girls' education, particularly among rural girls, and the constraints affecting it; this calls for building a national constituency on the topic that can provide the national and local support needed to develop sustainable policies and the required commitment to implement them. 2) Pilot programs that address barriers to girls' education are successfully tested in target areas; USAID is supporting pilot interventions in the geographic areas mentioned above. 3) Improved local capacity to implement appropriate policies and programs for girls' education; USAID is supporting key institutional actors in their efforts to improve educational opportunities for girls, transferring USAID's considerable experience in this area.

Performance and Prospects: This SpO was approved in May 1998 and is just beginning implementation. Nonetheless, a national network on girls' education has been established with the participation of Peru's First Lady, congresswomen, and vice-ministers of social sectors, as well as NGOs, the Catholic Church, universities, the private business sector and donors. This multi-sectoral network coordinates activities and mobilizes resources. Through the network, pamphlets to inform and motivate the public about girls' education issues have been disseminated, targeting the business and social services communities in greater Lima and Ayacucho. A radio campaign has been launched in Ayacucho to disseminate information to the public about the educational needs of girls and the USAID project. Community outreach workshops were conducted in Ayacucho to dialogue with parents and community-based organizations about girls' educational experiences.

Two assessments are nearing completion: a national assessment of the status of girls' education, and a local evaluation in Ayacucho of girls' school participation and barriers affecting girls' school attendance, performance and completion. A study on the relationship between puberty and school drop-out is likewise almost done. The results will help develop strategies and implement pilot activities over the next two years to make the school and community environment more supportive of girls.

Prior to the development of this activity, USAID also provided some support in basic education through a collaborative effort with UNICEF. As a result, during 1997-1998, some 70,000 school-aged girls and boys were brought into the school system through special efforts in timely enrollment; estimates indicate that these children account for about 20% of those who should be in grades 1-3 but are not. At the first grade level, 30% of classrooms are now working with children to develop their writing skills, rather than relying solely on rote classroom teaching. Corporal punishment has declined by about 40%. Through a program in which high school students mentor grade school children at risk, 880 monitors and 3,780 promoters were trained in 77 educational centers.

Possible Adjustments to Plans: Since the activity is just getting underway, no adjustments are called for at the present time.

Other Donor Programs: UNICEF is very active in education in Peru, both through its own resources and through grants from the governments of Canada and Japan, in addition to the support provided by USAID. UNICEF projects address rural education in general, but not girls' education in particular. The World Bank and the IDB are assisting the Ministry of Education with educational reform that seeks to address both substantive issues of curriculum and teaching methodology and administrative reform of the system. With the exception of the Dutch, no other donor is working in the area of girls' education. USAID coordinates actively with UNICEF and other major institutional actors through the girls' education network mentioned above.

Principal Contractors, Grantees or Agencies: CARE is the implementing entity for the girls' education activity in Peru, under a sub-contract with the American Institute for Research. World Education is the contractor for the research on puberty and school participation. Field work is being done through the Peruvian NGO-National Network for Women's Promotion. USAID support in basic education before the development of this activity was through UNICEF and CARE.

Selected Performance Measures: ⁷

	Baseline (1998)	Target (2000)	Target (2001)
Departmental networks established to promote policies and programs that support girls' education	0	1	3
National girls' education strategy in place	0	0	1
Girls' age-appropriate enrollment for grade in primary schools in Ayacucho	20%	22%	30%
7 To be refined once the assessments are completed.

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