Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
BULGARIA
FY 1998 Assistance to Central Europe Request . . . . . . . . . . . . . . . . . $25,000,000 Introduction
The successful transition of Bulgaria from a communist to a democratic society is very important to U.S. political, economic, and security interests. Success in establishing democracy and a free market economy in Bulgaria will help to ensure a stable Balkan region and build a peaceful, democratic Europe that assures security at a lower cost to U.S. citizens. Such success can demonstrate to other reformers further East that democracy and economic prosperity can be built from the rubble of failed communism. A peaceful, stable and prosperous Bulgaria can serve as a model for its neighbors, some of whom remain dogged by ethnic tension and social unrest.During the early years of post-Communist Bulgaria, the Government of Bulgaria (GOB) undertook a number of political and democratic reforms, updating over 200 laws in the first few years after Bulgaria's 1989 political changes. Along with other donors, the United States Government (USG) broadly assisted the GOB to establish the underpinnings of a free market economy, helping with initial measures for liberalized pricing structures, expanded trade measures, right to private property, land restitution and liberal laws on privatization, and a legal framework for competition and foreign investment.
The Development Challenge
In September 1994, Bulgaria reached agreement with commercial bank creditors on debt and debt service reduction to reduce gross external debt by some seventeen percent; the up front cost of the buy-back option of the debt agreement was funded by foreign currency reserves as well as loans from the International Monetary Fund (IMF) and World Bank. A third rescheduling of official obligations with the Paris Club also was completed in 1994, easing the country's external liquidity problem. However, in the following two years Bulgaria's economy has deteriorated substantially, as loss-making state-owned enterprises consumed an ever-greater proportion of the budget. Internal debt has risen dramatically. Fed by credit from state-owned banks, the downward trend has accelerated since the Spring of 1996; by late 1996 the country's currency had depreciated more than 80% against the dollar from 65 at the beginning of the year, to more than 400 at the close. Despite intense efforts on the part of the multilateral financial institutions to help reverse the economic slide, Bulgaria's leaders have neither implemented agreements with the IMF and World Bank nor reached a consensus on macroeconomic policies. As foreign exchange drains from the system, it is possible that Bulgaria may become the first country to default on its Brady Bonds. International financial institutions continue to stand ready to provide substantial assistance, but supportive national policies are neither articulated nor implemented. Rapid, comprehensive privatization, which could significantly reduce economic imbalances, is not being pursued aggressively.Unevenness in reform implementation has always characterized Bulgaria's post-Communist transition. Since 1992, change has been all too slow in critical economic areas, e.g., public services pricing (education and health), industrial and agricultural privatization, and banking sector supervision and restructuring. Hesitancy led to a re-evaluation of the USG program thrust. Even in the current crisis atmosphere, the central government's commitment to increase the pace of reforms remains unclear. Nevertheless, the Government of the Bulgarian Socialist Party has demonstrated some resolve to continue support for cash and mass privatization. To help optimize the impact of our assistance, the USG has targeted assistance to local level partners such as reform-minded municipalities and non-governmental groups, and to support of reforms at the central level which assist private sector initiatives where impact is probable. On an interim basis, USAID has temporarily increased allocations to social sector programs, both to assist Bulgaria cope with the pervasive effects of many mass layoffsfrom the work force and (possibly) to help key organizations cope with severe, localized shortages of essential medicines and medical equipment.
USAID expects that, over time, Bulgaria will put in place the institutional and other resources to continue its own transition. Although present plans are to phase out Support for East European Democracy (SEED) Act assistance during the next several years, USAID will monitor this target given current macroeconomic performance.
Other Donors
Collaborating with other donors has enabled USAID/Bulgaria to leverage more funds for USAID-related activities. The IMF, World Bank, European Bank for Reconstruction and Development Bank, Organization for Economic Cooperation and Development, and the European Union work in the areas of macroeconomic policy, bank restructuring, budget development and tax policy. Programs supporting Bulgaria's Mass Privatization Program (MPP) by the Assistance Program of the European Union (EU PHARE) and the French government complement USAID's efforts in helping the GOB implement the MPP. The Dutch government has indicated a strong interest in developing a program to further strengthen the capacity of local governments. EU PHARE and the Swiss government have been instrumental in providing assistance effectively supplementing USAID's environmental and humanitarian activities in Bulgaria.FY 1998 Program
It is expected that the humanitarian crisis will have passed, so that the Bulgaria program will continue to focus upon private sector growth in a free enterprise system and grassroots democracy, the fundamental forces driving the transition process. These areas will continue to be supported by limited work to restructure the social safety net system to one appropriate to a free market. Under private sector growth, direct provision of debt and equity finance and technical assistance to small and medium enterprises will continue to lead the program. Supporting initiatives in the legal and regulatory environment, technical skills transfer and financial sector restructuring will supplement the main effort. In grass roots democracy-building, the program focus will continue to be on local governance and building popular participation in public policy decision-making.
Strategic Goal: Economic Restructuring
The Bulgarian economy is falling farther and farther behind its Eastern European competitors in the competition for foreign private investment and international markets. Although the private sector now contributes more than 40% to the GDP, this is largely due to the collapse of the public sector. While per capita incomes increased slightly in 1995, a sharp decline occurred in 1996, led by a collapse in public sector financial institutions. Key laws related to finance and banking, the environment, non-governmental organizations (NGOs) and social programs have not been passed by the GOB. Private foreign investment is severely hampered by bureaucratic lethargy or opposition and endemic corruption. Massive bad debt, incompetence and venality in the banking sector and slow progress in privatizing costly and inefficient state-owned enterprises certainly constrain new investment. Bulgaria's industrial capital stock is all but worn out. However, with strong USAID and other donor support, leaders are emerging on the national level, and some local government leaders have emerged as catalysts both for local privatization and more general private sector reform. Broad public support and a few well-placed, progressive leaders have underpinned good progress on mass (national) and municipal privatization programs, both programs where USAID played a critical role. The Bulgarian Securities and Stock Exchange Commission, appointed in early 1996, is in the process of developing the legal and regulatory framework for emerging domestic capital markets. With legal support from American Bar Association's Central and East European Law Initiative (ABA/CEELI), the Central Depository for Securities was established in September 1996 as the centerpiece of the fledgling capital market, which will be boosted in 1997 by shares of 1,050 enterprises, varying proportions of which are to be sold to thepublic under the MPP. These initiatives have been seminal in sustaining national-level progress towards creating free markets. After FY 1997, USAID will tightly focus economic restructuring efforts upon increasing growth of private firms in a competitive environment, which involves specific technical assistance as well as policy-related work in the area of corporate governance.
Strategic Objective: Increased growth of private firms in a competitive environment Strategic Goal: Democratic Transition
USAID's programs are designed to help build Bulgaria's democracy through improved popular participation in decision-making and strengthened local government. The successful conduct of several elections (including a regional-first presidential primary where the incumbent was not the victor), and the growth of the private sector are good first steps for acceptance of democratic principles. The Democracy Network Program (DNP) develops grass roots organizations' abilities to facilitate popular participation in public policy-making and improve the enabling legal and regulatory environment for them. Through the Local Government Initiative (LGI), USAID seeks to build local government's ability to carry forward the process of decentralization by: (a) increasing the membership and organizational capacity of municipal associations, especially strengthening their abilities to lobby the central government; (b) increasing local governments' responsiveness to citizenry; (c) building successful models for civic participation; and (d) improving the quality of municipal services. Smaller efforts seek to assist the growth of a professional media, as well as key capacities within the judiciary. USAID/Bulgaria currently serves as one of the pilot missions for agency grass roots programming. The focus will continue to be on non-governmental groups and local government, to enhance participatory democracy.
Strategic Objective: Increased, better informed citizens' participation in public policy decision-making
Strategic Objective: More effective and accountable local government Strategic Goal: Social Stabilization
The dismantling of the centrally planned economy, the very high rate of inflation and financial collapse have undermined severely the living standards of the Bulgarian population since 1989. The government appears committed to changing public insurance practices and introducing new services, with recent legislative steps in social insurance and pending, major health and environmental laws before Parliament. The USG program has targeted high impact activities to demonstrate new ways of delivering services or perform important social functions. The USG has assisted the GOB to put in place nationwide market-oriented procedures and organizational modes to guide local and regional labor offices, assist national and local governments and social partners cope with massive layoffs from the work force, and also help organized labor to improve work place industrial relations. USAID/Bulgaria is also participating in a multilateral effort to develop and implement a viable strategy for social insurance reform. USAID's support will focus on strengthening actuarial forecasting to ensure reliable projections of individual revenues and expenditures.
Strategic Objective: Improved fiscal sustainability of social benefits and services Cross Cutting and Special Initiatives.
On an interim basis, USAID is engaged in contingency planning for a possible, very limited program targeted through NGOs, to assist Bulgaria cope with severe, localized shortages of essential medicines and medical equipment. The shortages, which may be life-threatening, are one outcome of the very sharp decline in local purchasing power.
On a continuing basis, the American University in Bulgaria is providing a U.S.-style liberal arts education for students throughout the region; through parallel financing of the Global Environmental Fund, USAID and the GOB work to preserve the nation's rich biodiversity for all the world's citizens; and USAID's training activity provides cross-cutting training in the U.S. and the region.
Bulgaria
FY 1998 PROGRAM SUMMARY*
Strategic Objectives
Economic Restructuring Democratic Transition
Social Stabilization Cross-cutting / Special Initiatives Total Privatization -- -- -- -- -- Fiscal Reform -- -- -- -- -- Private Enterprise 8,270,000 -- -- -- 8,270,000 Financial Reform -- -- -- -- -- Energy -- -- -- -- -- Citizens' Participation -- 2,000,000 -- -- 2,000,000 Legal Systems -- -- -- -- -- Local Government -- 4,200,000 -- -- 4,200,000 Crises -- -- -- -- -- Social Benefits -- -- 500,000 -- 500,000 Environmental Health -- -- -- -- -- Cross-cutting / Special Initiatives -- -- -- 10,030,000 10,030,000 TOTAL 8,270,000 6,200,000 500,000 10,030,000 25,000,000 *Support for East European Democracy (SEED) Act funds
USAID Representative: John Tennant
ACTIVITY DATA SHEET
PROGRAM: BULGARIA
TITLE: Private Enterprise, 180-S001.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $8,270,000 SEED Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Increased growth of private firms in a competitive environment.
Background: The transition to a market-oriented economy in Bulgaria has been slow. Notably, all initial steps for a comprehensive, national voucher or "mass" privatization program have been implemented, and market privatization has been pushed strongly by the GOB during 1996. Many larger enterprises attempt to operate as oligopolies; privatization's effects upon this behavior will be mixed. Increased competition and competitiveness are viewed by USAID as keys to rational private sector growth. Firm level assistance must strengthen private firms' competitiveness, while policy, legal and regulatory environment assistance must work to strengthen competition in the system (and thus also competitiveness among firms), helping to create a more level and transparent playing field. The lack of an environmentally sound framework for private sector growth further contributes to investor uncertainty. Finally, access to capital is a key constraint affecting all enterprises, but particularly small and medium enterprises (SMEs). Financial resources in the form of debt and equity funds must be made available to the emerging private sector, even in the absence of an efficient and well functioning domestic banking sector, if private enterprises are to continue to grow and expand on a sound basis.
USAID Role and Achievements to Date: USAID's strongest advantage, vis-a-vis other donors, is its well-established preference for and track record in working directly with the private sector. While most donors have suffered from the frequent changes of governments and the heavy bureaucratic burden of having to work through government ministries and institutions, USAID for several years has delivered well-targeted and cost efficient assistance to SMEs in urban as well as rural areas. The marketing of the firm level assistance has been established as a strategic team effort of all USAID-financed business assistance providers; it is targeted at assisting firms or entrepreneurs selected on the basis of their potential to grow and compete in a market environment. A diagnostic process also provides a link to Bulgarian consulting firms in order to more effectively market, target and deliver services. In order to deliver services expeditiously and efficiently to SMEs, USAID/Bulgaria has developed the Firm Level Assistance Group (FLAG) which is comprised of seven leading organizations delivering operations-level (production, marketing, audit/accounting, corporate finance) assistance, as well as training. The results have been laudable. For example, as a result of a recent FLAG intervention, the food processing firm "Agrita" adopted new technologies and imported equipment from the U.S. which fueled an eight-fold increase in its production and processing of sweet corn in 1996. Another example is the KEN-4 meat processing company which received technical assistance through Volunteers in Overseas Cooperative Assistance (VOCA) and sent managers to the U.S. for training under Agricultural Cooperatives Development International (ACDI). Subsequent to training, Ken-4 improved the quality of its product, diversified and sharply increased sales. As a result, it attracted funding from CARESBAC-Bulgaria which as an equity partner has helped support investment in the construction of a new modern meat processing plant which will begin operation in early 1997.
In the absence of an efficient and well-functioning financial sector, USAID addresses the private sector's debt and equity capital needs through the Bulgarian American Enterprise Fund (BAEF) and CARESBAC. For the longer term, USAID/Bulgaria is assessing the prospects to support the development of construction, trade and mortgage finance facilities, as well as the creation of credit cooperatives targeting the needs of predominantly rural borrowers, including farmers and their associations which have received technical support under the FLAG program.
As a result of the technical assistance delivered to SMEs, and due to the wave of newly privatized companies, USAID/Sofia initiated work in enterprise restructuring focused principally on the area of corporate governance. As the number of private sector firms continues to swell in the wake of the mass and cash privatization schemes, companies will be increasingly accountable to shareholders. As such, companies must develop and refine their management, administration, and operations, which includes their corporate governance practices and procedures. Assisting corporations in this regard is a necessary successor to the work in capital markets development.
At the policy, legal and regulatory level, assistance is being provided to business associations both as a means of improving membership services and as a means of developing them into sustainable reform advocates which also promote, along with policy think tanks, reviews of policies, laws and regulations. Under strategic objective (SO) 1.3, USAID recently launched a new initiative called the Implementing Policy Change (IPC) Program. Under IPC, a long-term resident advisor will work with government, the private sector, private voluntary organizations (PVOs) and NGOs to formulate a policy agenda for SMEs. Three conferences have already been sponsored, with senior Bulgarian officials including the president-elect in attendance, and resulted in a draft SME paper which will influence the parliamentary discussions on the final text of the Law on SMEs.
The drafting and implementation of key laws which foster competition and private sector growth are also critical to the reform process. In conjunction with the IPC agenda, U.S. consultants will help to draft needed legislation and policies, supplementing well-established programs of ABA/CEELI and the Institute for Reform in the Informal Sector (IRIS). In the past year, the IRIS Center helped draft a much needed Collateral Law which was adopted in the fall of 1996. IRIS is now working to establish a collateral registry which is critical for borrowers and lenders. USAID has helped train the implementors of the Bankruptcy Law, such as judges and trustees, and the law is being implemented. The U.S. Treasury Department has been promoting the equitable and transparent implementation and administration of taxes. Currently, Treasury is working with the Ministry of Finance to completely reorganize local tax departments to cut costs and increase collections.
In order to facilitate organizational communication, an electronic network was established and now a web page is being developed to further enhance cooperation among the various elements of USAID's private-sector program. An expanded network for countries in the region is also being developed which will focus initially on USAID-sponsored associations and think tanks, but will also have links into the existing local area network. Ultimately, these computer links will help local producers to procure factor inputs more easily, and to tap foreign markets to which they currently do not have access.
Description: The recently completed SME strategy for Bulgaria, which is facilitating integration of private sector programs, forms the basis for much of SO 1.3 which focuses on three key intermediate results: (1) increased debt and equity funding for private firms; (2) strengthening of private firms' business operations; and (3) key laws, policies and regulations which foster competition and private- sector growth. The marketing of firm-level assistance was formally established as a team effort comprising all assistance providers. Under this SO, USAID is assisting the most promising high growth firms in the private sector, which currently employs approximately 30% of the work force and accounts for more than 40% of the GDP
Host Country and Other Donors: Bulgarian host country contributions to USAID-funded private sector development programs are limited to municipal support to the Peace Corps Business Development Centers and cooperation with the planned municipal economic development agencies. Most other major donors in Bulgaria also have programs to support enterprise growth, but must work through government agencies. The World Bank currently has two credit lines: (1) Private Investment and Export Finance, which covers private projects in all fields but agriculture; and, (2) the Agricultural Development project, which is intended for private sector agricultural projects. World Bank funds for these programs are intermediated primarily by eligible private banks. The European Union, which operates through governmental institutions only, has two programs - one for financial support (twocredit lines have already been launched) and one for structural support and consultancy, under which business centers are established to support the SMEs, and independent consultants at the Ministry of Industry propose policy and legislative changes. German assistance is concentrated on staff and management training, direct consulting services to selected enterprises, and assistance to the chambers of commerce. Germany also has a project for the establishment of a development bank. The United Nations Development Program (UNDP) is providing support to the modernization of the intellectual property system in the country.
Beneficiaries: The direct and primary beneficiary is the private sector. All citizens are, in effect, secondary beneficiaries, as a result of the overall improvements in the economy, the increased availability of jobs, and the increased quality, quantity and availability of consumer goods.
Principal Contractors, Grantees, or Agencies: USAID implements activities through numerous intermediaries; GOB ministries and courts; U.S. and local associations; U.S. PVOs; U.S. and local universities; U.S. and local consultants; U.S. and local NGOs; other USG departments; local business centers and economic development offices.
Major Results Indicators: Baseline TargetPercentage of GDP provided by private firms 7.2% (1989) 55% (2000)
Number of laws, policies or regulations 1 (1990) 91 (2000) implemented
ACTIVITY DATA SHEET
PROGRAM: BULGARIA
TITLE: Citizens' Participation, 180-S002.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $2,000,000 SEED Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Increased, better informed citizens' participation in public policy decision-making. This will be accomplished by building the capacity of NGOs in playing a key role in facilitating popular participation in public policy decision-making. The objective is to develop grass roots organizations and the enabling legal regulatory environment for them, as well as promote information sharing and improve the credibility of information available through the media.
Background: Bulgaria's initial steps in the transition to democracy and a free market economy were impressive. By 1990 - 1991, Bulgaria's first democratically elected parliament in 50 years adopted a democratic constitution guaranteeing rights to individuals and passed many economic reforms. However, a highly centralized political and economic structure remains as a holdover of the past, discouraging citizen involvement and creating a sense of powerlessness. Political party machinery, like the central government itself, is highly centralized. The media, with new freedoms and difficult challenges, is highly influenced by partisan politics and lacks professionalism and ethics. NGOs and professional associations are growing in strength and number, and they hold a key to empowering people to work together. However, there is no national law which legitimizes or regulates NGOs, which continue to operate under a loosely-interpreted clause of the basic Family Law. Furthermore, popular receptiveness to this "third sector" is cautious, as voluntarism was construed quite negatively under the Communist regime. Given the difficult operating environment for this emerging sector, the NGO community is still quite small and fragile for the most part, with a few well-heeled exceptions.
USAID Role and Achievements to Date: USAID programs to date have promoted free and fair elections, citizens involvement, and political accountability and transparency. USAID/Bulgaria serves as a pilot program for the agency's efforts to strongly emphasize grassroots development. Prominently, the DNP provides a broad range of assistance (technical assistance, training and grants) to indigenous NGOs to strengthen participatory democracy. To date, the DNP has issued 18 grants and delivered over 20 training sessions in various areas, e.g., Project Management, Proposal Writing, Grant Management, Governance and Media Relations. The Bulgarian Association for Fair Elections and Civil Rights (BAFECR), has become a model election-monitoring organization and is assisting similar organizations in Central Europe and the world. Its non-election period activities focus on increasing citizens' awareness of and interest in the democratic process and on empowering local leaders and transferring organizational skills. The International Republican Institute (IRI) program has supported the development of a multiparty political system. Together with BAFECR, IRI guided the Bulgarian opposition parties in the conceptualization and organization of a highly successful presidential primary vote. The ABA/CEELI program has helped develop the first independent NGO for training and support of the legal profession in Bulgaria.
Description: Public participation will be increased through: (1) strengthening capacity of NGOs to provide a voice for individuals working together, supported through grants, technical assistance and training; (2) strengthening linkages between local organizations and local government through supporting activities that demonstrate that individuals can make a difference for their community; (3) increasing the public's access to fair and reliable information through a more professional and responsible media; and (4) seeking means to support legislative reform (especially for NGOs) and providing training in implementation of supportive legislation.
Host Country and Other Donors: EU PHARE promotes strengthening the Bulgarian "third sector" through its democracy program, administrated by the Civil Society Development Foundation. TheEuropean Union and USAID are committed to support grass roots organizations' activities in drafting new media law/regulations. The British Know How Fund, Charities Aid Fund, as well as the Open Society Fund are complementing their efforts in providing funds, technical assistance and training to indigenous organizations advocating democratic changes in Bulgaria.
Beneficiaries: Indigenous grass roots organizations and, more generally, the Bulgarian populace will benefit from these activities at the community level.
Principal Contractors, Grantees, or Agencies: USAID implements activities through U.S.-based NGOs, Bulgarian local government, and indigenous NGOs including The Institute for Sustainable Communities, the National Forum Foundation, and the International Center for Not-For-Profit Law.
Major Results Indicators: Baseline TargetIncreased rate of voter turn-out 55% (1995) 60% (2000)
Projects involving partnerships 5 (1994) 50 (2000)
USG-assisted community-level information 1 (1990) 60 (2000) systems
Increased public credibility 0 (1996) 25% (2000)
ACTIVITY DATA SHEET
PROGRAM: BULGARIA
TITLE: Local Government, 180-S002.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $4,200,000 SEED Act
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 1999
Purpose: More effective and accountable local government. This will be achieved by supporting the transition to transparent and accountable governance and increased decentralization and local autonomy through: building the capacity of local officials to better (more effectively and responsibly) manage municipal resources and be responsive to citizen needs and demands; facilitating local economic development as a means of empowering citizens as well as supporting the emergence of market forces; supporting associations of municipalities so that they better serve their members and begin to lobby effectively at the national level.
Background: More than 50 years of monolithic, undemocratic rule has left Bulgaria with a highly centralized framework of governance. Great progress towards free elections has not been paralleled by increased governmental ability to respond to the needs of the people. There is only limited decentralization of central government authority at the regional level. U.S. assistance to date has revealed that building the capacity and citizen involvement in local governments is crucial to support the efforts of reform-minded, innovative local officials who are striving to make government more responsive to the people.
USAID Role and Achievements to Date: In 1995, the LGI was launched in 10 change-oriented municipalities, to accelerate and concentrate USAID assistance for strengthening both the capacity and accountability of local governance. The LGI also facilitated formation of several regional associations and a national association of reform mayors, helping them to overcome strong barriers to working together and sharing information, and to take the first steps at creating a unified voice for local government. The association has already demonstrated its importance by providing inputs to the drafting of amendments to the local government law.
USAID's efforts have led to results such as adoption of municipal plans with clear development priorities; development and strengthening of municipal associations and the Foundation for Local Government Reform (FLGR) in supporting local self-government; development of joint support from the Swiss, German, British and Dutch governments for the FLGR's programs which bring together municipal governments, municipal associations, and citizens groups; establishing model financial and administrative systems; assisting in the institutionalization of transparent and open bidding processes (for municipal development sites) in three municipalities and disseminating the process to several dozen others; and establishing a municipal data exchange network facilitating communications among the municipalities. The activities will increase the capacities of local governments and local government associations to represent themselves on a national level, to act independently, to manage their own affairs, and to meet the needs and demands of their citizens.
Description: Local governments are being strengthened through: (1) capacity building by implementing LGI municipal development plans with the newly-elected local government officials; (2) further developing public participation and involving the citizenry in improving the quality of municipal services; (3) increasing the membership and organizational capacity of municipal associations, especially to lobby the central government; and (4) institutionalizing training in local public administration. Parallel national efforts are required as well, such as training provided to central government ministries (as sustainable decentralization cannot occur without support and legislation from this level), improving the legislative framework, and replicating principles and experience gained in decentralized government.
Host Country and Other Donors: The British Know How Fund is providing assistance to the municipal administration in several cities in the country, following the demand-driven approach. The focus is on the establishment of a Municipal Development (Investment) fund, tourism, housing development and agriculture. A resident advisor is working at the Ministry of Regional Development and Construction coordinating the assistance. At the specific request of the Bourgas municipality experts from Netherlands are reviewing the legislation on solid waste. The Dutch plan to further work at the local level following an initial needs assessment, and the Swiss have a program much like elements of ours with different municipalities. USAID and other donors are jointly building the capacity of municipal associations, particularly their continuing efforts to pursue legislative changes supporting decentralization and strengthening of local government.
Beneficiaries: The LGI will directly benefit the people and the local officials of the 10 target municipalities. The rest of the populace will benefit through replication of successful models developed in the target municipalities as well as through the strengthening of democracy at the local level.
Principle Contractors, Grantees, or Agencies: USAID implements activities through U.S. and local organizations, including The Urban Institute, The International City Managers' Association, Chemonics, KPMG, and other private firms and NGOs.
Major Results Indicators: Baseline TargetProportion of budget over which targeted 0% (1995) 30% (2000) municipalities have discretionary control
Law on municipal finance adopted None (1995) Adopted (1998)
Improved processing time for 3 months (1995) 50% reduction (1998) land transfer permits
ACTIVITY DATA SHEET PROGRAM: BULGARIA
TITLE: Social Benefits, 180-S003.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $500,000 SEED Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Improved fiscal sustainability of social benefits and services. This will be achieved by strengthening the capacity to manage the human dimension of the transition to democracy and a market economy and to help achieve sustainable development of social benefits and services.
Background: Since the dismantling of the centrally planned economy in 1989, the very high rate of inflation and the absence of a modern legal framework undermined severely the living standards of the population. The existing social benefit system is critically in need of reform, as the system is inefficient, regressive and too costly under current budget realities. Bulgaria is struggling to achieve greater sustainability, changing administrative practices, and seeks to improve services to better reach those in need. Prominent among recent improvements has been the establishment of the National Social Security Institute (NSSI) and movement of social insurance funds off-budget.
USAID Role and Achievements to Date: With USAID's support, three health programs have been completed in Bulgaria to improve capacity to deal with cardio-vascular diseases, pediatric trauma and ophthalmic care. Up-to-date coding practices are laying the basis for movement towards broad reform in hospital finance. As jobs-for-all policies were relinquished, the U.S. was able to help the GOB put in place effective regional employment services nationwide, and an early intervention mechanism was developed for quick response to mass layoffs. A community approach to the work force needs of socially disadvantaged groups is being put into practice. USAID programs have also improved worker access to social benefits and services through collective bargaining.
Description: USAID is focusing on the following activity areas in FY 1998 and beyond: support for social insurance reform, continuing to improve dislocated worker programs, and helping strengthen community capacity to deal with issues generated by unemployment.
Host Country and Other Donors: The World Bank and NSSI are implementing an investment loan incorporating USAID-funded technical assistance, keyed to supporting social insurance reform. EU PHARE provides assistance and commodities for the preparation and establishment of an automation system for the social assistance system. UNDP/International Labor Organization supports social insurance staff at the central and the regional levels, the British Know How Fund finances advisors to the NSSI, and other European donors provide social insurance assistance. Good working relations have been established with the Bulgarian Ministry of Labor and Social Welfare and the GOB has been successful in submitting important social legislation to Parliament.
Beneficiaries: Unemployed, ethnic minorities and other disadvantaged groups of the population, pensioners.
Principal Contractors, Grantees, or Agencies: USAID implements activities through the U.S. Department of Health and Human Services, the U.S. Department of Labor, the 3M Corporation and the Free Trade Union Institute of AFL-CIO.
Major Results Indicators: Baseline TargetIntegrated fiscal information system in place None (1996) Operational (1998)
Actuarial capacity increased None (1996) Operational (2000)
Number of municipalities directly affected by 1 (1995) 50 (2000) hospital budgetary innovations
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