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).
LITHUANIA
FY 1998 Assistance to Central Europe Request . . . . . . . . . . . . . . . . . $3,000,000 Introduction
Lithuania regained its independence in 1991 after more than 50 years of illegal Soviet occupation. The United States never recognized this forcible annexation and after independence was instrumental in persuading Russia to withdraw its troops. Since 1993, U.S. policy has been to support Lithuania's integration into Western institutions, bolster its fledgling free market economy, support continued democratic reforms, and promote U.S. trade and investment. Excellent bilateral relations are expected to remain closely cooperative. Regional security is important and the United States promotes closer ties with Baltic and Scandinavian countries, while cooperation with NATO is of direct and material interest to the United States. Close ties to the United States, in the form of an extensive, technically qualified, Lithuanian-American community have facilitated the success of bilateral assistance. An active U.S. program is necessary to reduce the potential for political insecurity, a further rise in criminal activity, and economic instability. A recent banking crisis has shaken confidence in economic reforms and the Government of Lithuania (GOL). Lithuania's successful transition to a market economy closely integrated with the European Union, based on democratic principles, is key to U.S. policy.The Development Challenge
The Baltic nations were among the most developed parts of the former Soviet Union and have made the greatest advances of any of the Soviet successor states. The GOL has continued on the complex path of transforming its centrally-planned economy into a market-oriented system. Reforms have been geared to Western models and, in most areas, are proceeding at a satisfactory pace, although Lithuania has not had the degree of development success of other Baltic states. Examples of the fragility of Lithuania's democracy are persistent cases of white collar and organized crime and corruption and attacks against independent institutions, such as the media. Use of the Baltics as transit countries has increased substantially since 1994 as illegal goods are smuggled in and out of Russia and other New Independent States. Law enforcement officials recognize the problem and rely on Western law enforcement agencies, including many U.S. agencies, for training. In addition, local governments, having seen an unexpectedly large turnover in new officials after the 1995 elections, view U.S. assistance as a key factor to help decentralize and strengthen their organizational structures and intergovernmental relationships.There are hopeful signs that economic activity is starting to increase. To sustain this momentum, the GOL will need to address imbalances in public finance, in the banking sector, and in the energy sector. Long-term economic reform will be needed to complete the transition to a market economy. This will include reforms that broaden the scope of private sector operations, a reduction in the scope and size of the public sector, price liberalization, a deepening of financial activity, trade and investment deregulation to create a non-distorting, enabling environment for private activity, improvements in the legal framework and the judiciary, creation of an affordable social safety net, and the use of market forces to restructure inefficient industrial and agricultural enterprises. Annual inflation for 1996 was relatively low at around 18%, compared to 183% just three years ago. Rising economic activity has led to increased electricity, gas and water consumption. Production levels have stabilized and are growing in some sectors. Agriculture and industry have gone through some much-needed restructuring, resulting in increased unemployment. Prices are more reflective of actual production costs. It is estimated that the private sector now employs two-thirds of the workforce and that the real wage rate continues to increase, however, the continuing areas of reform, such as a sound financial system and legal base, are crucial for future economic growth. In these sectors, the United States is seen as a model donor for technical assistance and training. While a recent banking crisis dampened recovery and shook national confidence, the economy expanded 3 to 5% in 1995 and is expected togrow moderately in 1996 and 1997. The World Bank projects that Lithuania's external debt will grow over the medium and long term, but remain moderate and manageable. The Bank classifies Lithuania as a less-indebted lower middle income country. Lithuania has canceled all claims and obligations to Russia as it does not consider itself a successor state of the USSR.
Other Donors
Major bilateral donors are Denmark, Sweden, Norway, Germany and Great Britain. USAID technical assistance to the Bank of Lithuania in the area of bank supervision is provided in close collaboration with the World Bank, International Monetary Fund, and the European Union's (EU) PHARE program. The development of a unified banker training program represents a substantial combined effort initiated by USAID with the EU PHARE Program and British Know-How Fund. In collaboration with the World Bank, SEED-funded advisors have made improvements in tax collection procedures as well as Central Bank supervision activities. USAID has also worked closely with the World Bank, the EU PHARE program, and other governments on the reform of the electric power sector. Monitoring and safety information regarding the Ignalina nuclear power plant is regularly exchanged among the Government of Sweden and other cooperating donors. USAID is currently the only major donor in this field, and consequently there is no notable coordination. USAID and the U.S. Environmental Protection Agency's (EPA) monitoring and policy advice to strengthen the Ministry's knowledge base complements work by the EU PHARE program in its development of a national environmental strategy, including environmental law. U.S. assistance for protection of the environment has included cooperation with the World Bank to support the drafting of environmental action plans; these plans now serve as a framework for country-level discussions.FY 1998 Program
Consolidation of reforms to create an effective market economy and a secure democracy remain the overriding objective of U.S. assistance. Setbacks experienced in the financial sector, including the banking crisis, underscore the need for a focus on policy issues and on improving the capacity of decision makers to make effective macroeconomic decisions. The FY 1998 program will focus on improving the framework within which banks operate. Bank supervision assistance will continue with on-site supervision assistance. Technical assistance will also be provided to the Governor of the Central bank on macroeconomic policy and related fields. In the area of capital markets, attention will be focused on developing laws and regulations, improving corporate disclosure and increasing transparency and investment options. There will be a new focus on strengthening fiscal management by focusing on tax policy and tax compliance. The FY 1998 program will focus on elimination of major price distortions, developing effective trade policy and on improving the legal framework for commercial activity. In the area of democratic initiatives, the FY 1998 program will focus on strengthening citizen participation through non-government organizations and local government. Institutional arrangements are being considered to develop public-private partnerships in target cities to achieve community objectives. Activities will be designed to address key business, political and social programs. The program will also focus on increased responsiveness to public participation among municipal government officials. The grants and training will be diversified and balanced by region, urban/rural context, gender and ethnicity. The United States will also continue training officials in applying law enforcement and legal reform methods. Current budget plans propose FY 1998 as the final year of funding. However, macroeconomic analysis suggests that Lithuania may require further assistance in the economic restructuring area. This need will be assessed during the next year.USAID economic efforts in Lithuania focus on crucial activities that do the following: strengthen fiscal management; forge a more stable financial environment; and improve the enabling policy environment conducive to sustained private sector growth.
Strategic Goal: Economic Restructuring
USAID's work on fiscal management has been achieved through the efforts of the U.S. Treasury program. Since 1992, the Office of the Fiscal Assistant Secretary has worked to implement a modern, well-functioning treasury system. Such a system is needed to ensure quick collection of government funds into a central account along with a payment-as-needed system for disbursements. Other Treasury advisors have focused primarily on tax administration. Through their efforts, the Tax Administration law was passed on 6/95, which clearly defined the rights and responsibilities of the tax payer and tax collector. Together with the reorganization of the State Tax Inspectorate along functional lines, this law, implemented on July 1, 1996, will provide the necessary framework for Lithuania to implement a modern tax administration system. Implementation of such a combined tax collection system will increase the efficiency of the tax administration system. Additional work has been done on developing implementation regulations, training tax inspectors and developing a public information service about the tax system. Whereas USAID's past focus has been on tax administration and tax enforcement, future activities will focus on tax policy and tax compliance. This will involve working with the newly created budget and tax policy division at the Ministry of Finance on their priority issues. This work will include reviewing draft tax laws, developing a tax code, and developing the capacity to determine the economic impact of alternative tax policies.
USAID has been in the banking sector since mid-1993, through work with commercial banks and the bank supervision department. After a year of training and daily guidance, the Central Bank was able to examine commercial banks, identify major problems in ten banks and close them down, thereby preventing further losses to depositors. An inspection manual, which will institutionalize the lessons learned, is over 85% completed. In addition to Central Bank assistance, USAID has worked to make the commercial banking sector more viable. This has been done in various ways, including increasing the skills of bankers through 23 one-week courses in major banking centers of Lithuania. Over 250 bankers improved their skills in credit management, asset-liability management, internal audit and other areas. Another area of effort has been to develop alternative financial institutions. The World Council for Credit Unions program has helped put in place legislation allowing for the establishment of credit unions and assisted six credit unions in starting operations. An Environmental Investment Fund is under development. In response to the needs of the Ministry of Finance, an advisor is assisting on corporate governance issues at the three large state-owned banks. These banks make up half the banking sector and need help not only in bank operations, but also in developing the appropriate role of share holders. USAID advisors are also working on improving banking legislation in the Commercial Bank law and the Central Bank law.
In developed economies, capital markets acts as an alternative to banks by providing capital to enterprises and accepting investments. In Lithuania, the role of the capital markets remains underdeveloped. Future USAID work will target the regulatory body, the stock exchange and market intermediaries to improve their types and quality of activity. This will include developing laws and regulations governing the capital markets, improving corporate disclosure and increasing transparency and investment options. As main capital markets participants work well together and are interested in following a U.S. model for their system, this multiple-segment approach will allow for balanced and effective development of the capital markets.
USAID has assisted over 150,000 companies in Lithuania, by improving the enabling environment conducive to sustained private sector growth. Efforts directed towards achievements of the strategic objective have focused on reform of the commercial legal system, GATT accession and institutional development of effective competition and consumer law.
Much of the foundation has been prepared for reducing major price and trade distortions and improving the legal framework. Future efforts will concentrate on elimination of major price distortions, particularly, setting up energy prices to reflect actual economic costs and setting up environmental charges to internalize cost to pollution. Together with the assistance provided by other donors in reducing inter-sectoral price distortions, this will lead to improved enabling policy environment for private sector.
The other important area for private sector growth will be effective trade policy development which will increase market assets. Assistance in this area will concentrate on enhancing trade policy development skills within the GOL. Together with the EU assistance on preparation work for EU membership as well as on entry into regional trade accords, this will lead to improved market access for private business and therefore will stimulate the business to grow.
The third area of assistance concentration will be on improvement of the legal framework, with focus on the development and implementation of key laws necessary for further business growth, strengthening professional skills of judiciary and bar, and the development and implementing of low-cost alternative resolution services.
The lack of investment capital in the Baltics has been lessened somewhat by the creation of the Baltic American Enterprise Fund (BALAEF), which began operations in mid-1995. It is the USG's largest single economic program in the three Baltic republics. BALAEF is helping to provide a more stable financial service, which will stimulate development of private sector enterprises through two avenues. One, its loans provide capital for expansion and improvement of small business. Two, it is acting as a model for other financial institutions on lending to small and medium enterprises.
In Lithuania, BALAEF has made 20 loans, totalling $5 million. Because of high interest rates and prevailing lack of desire to lend to smaller enterprises, these twenty borrowers would have had a difficult time obtaining loans from local banks. BALAEF expects to increase its deal flow to about $1,000,000 per month for the three Baltic countries.
Strategic Objective: Strengthened Fiscal Management
Strategic Objective: More Stable Financial Environment
Strategic Objective: Improved Enabling Policy Environment Conducive to Sustained Private Sector Growth Strategic Goal: Democratic Transition
In order to achieve the strategic objective of increased, sustained collaboration of NGOs and local government to develop policies and services which reflect community interest, USAID will emphasize increased NGO activism and increased responsiveness to public participation among municipal government officials.Establishment of enabling legislative framework for NGOs in Lithuania is critical to their development. During 1995-96, the International Center for Not-for profit Law (ICNL) worked with the legal departments of the Ministry of Economics and the Parliament to draft and pass Lithuanian's four cornerstone NGO laws. This legislative reform effectively introduces, regulates and integrates the legal experience of a non-profit NGO sector in Lithuania. Thus 100% of the required basic legislation is place. However, two additional steps will need to be taken over the next two-year period to assure that the appropriate legislation is in effect and utilized. First, numerous revisions to the legislation need to be drafted and passed. Secondly, the NGO community needs to be fully versed in the laws and their implementation.
The success of local NGO initiatives requires linkages to and support from the municipal government. The governmental relationship with the nonprofit sector is actually more collaborative than commonly believed and should be viewed in terms of a managed interdependence, combining the best of partnership and autonomy. We expect that fully 50% of participating municipal officials in mid-1998 will indicate increased responsiveness to public participation.
The National Democratic Institute (NDI) program can be expected to result in improved receptiveness of local government to public participation through building up the credibility of local governments, and reducing the physical, social and psychological barriers that citizens encounter when approaching the government.
The Democracy Network program has achieved a solid beginning in providing NGO support, through small grants and advocacy training. There will also be an ongoing NGO training program (conducted by NDI international trainers) that focuses on coalition-building, media relations, participation in local and national decision-making, and organizational sustainability.
Finally, through the U.S. Embassy's Democracy Commission Small Grants program, USAID is able to provide a flexible mechanism to award small sums of money for short-duration projects and initiatives that support democracy in Lithuania. Target recipients include native Lithuanian individuals, NGOs, municipal or national governments, and educational institutions whose purpose is to further the development of democracy. Of particular interest are projects relating to government reform, legal reform, civic education, media reform, the role of the military in a democratic society and inter-ethnic and political harmony. Maximum award for any one project is $24,000 but most grants are in the range of $1,000 to $10,000.
Strategic objective: Increased, sustained collaboration of NGOs and local government to develop policies and services which reflect community interests
Cross-cutting and Special Initiatives
There are three special initiatives which USAID will continue to support. The first initiative encompasses three targeted activities in the energy sector including support to the Ignalina Nuclear Power Plant to help strengthen nuclear safety and inspection capacities. Continued support to improve the early warning system and other nuclear safety measures is a very high priority, particularly in light of the potential risks from this reactor. Lithuania and the international donor community are working together to improve safety at the Ignalina Nuclear Power Plant (INPP) and to achieve internationally accepted nuclear safety standards. Although more work needs to be done in strengthening the operational and physical conditions of INPP, the plant is now significantly safer than at the onset of independence. Additional activities include self-evaluation program and INPP-specific inspection guidance.Energy efficiency activities will contribute to overall demand reduction and to price rationalization efforts. As part of the U.S.G policy to support cooperation among the three Baltic countries, USAID will continue to support a third energy sector activity, the development of regional energy planning and cooperation and one environment initiative, establishment of a regional environmental monitoring system, which is managed by the U.S. Environmental Protection Agency. Activities for the future are the completion of electricity demand forecast for all three countries and for the whole region; completion of least-cost generation and transmission plan for the region; and creation of re-formulated power pooling arrangement.
The third special initiative seeks to improve enterprise capacity through an existing series of technical assistance and training grants in the areas of small and medium enterprises, agriculture, investment and demonstrations related to environment, and business training. To the extent feasible these activities will be refocused in line with USAID's four strategic objectives, including policy concerns and issues of sustainability. Others will be rapidly phased out. USAID does not have the resources to continue a retail-level technical assistance and training program. The EU PHARE and the EBRD have started business advisory services which can provide commercially-based assistance at a much higher funding level.
Short-term training is a cross-cutting activity which provides support in each strategic objective area. Within training, efforts need to be made to ensure that training activities closely complement achievement of other strategic activities. Training-specific objectives will be fully integrated into other programs and projects. Training programs are planned, implemented and evaluated in the context of strategic objectives and specified results. Impact of training is necessarily defined in terms of results. Resources will be allocated to the needs of the demand driven model.
LITHUANIA
FY 1998 PROGRAM SUMMARY*
Strategic Objectives
Economic Restructuring Democratic Transition
Social Stabilization Cross-cutting / Special Initiatives Total Privatization -- -- -- -- -- Fiscal Reform 600,000 -- -- -- 600,000 Private Enterprise 250,000 -- -- -- 250,000 Financial Reform 1,200,000 -- -- -- 1,200,000 Energy -- -- -- -- -- Citizens' Participation -- 400,000 -- -- 400,000 Legal Systems -- -- -- -- -- Local Government -- -- -- -- -- Crises -- -- -- -- -- Social Benefits -- -- -- -- -- Environmental Health -- -- -- -- -- Cross-cutting / Special Initiatives -- -- -- 550,000 550,000 TOTAL 2,050,000 400,000 -- 550,000 3,000,000 *Support for East European (SEED) Act funds
USAID Representative: Ronald J. Greenberg
ACTIVITY DATA SHEET PROGRAM: LITHUANIA
TITLE: Tax Policy, 180-S001.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $600,000 SEED Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 1999
Purpose: To strengthen fiscal management
Background: Poor fiscal policy in Lithuania has resulted in low levels of revenue collection. Inadequate revenues relate back to an excessively complex tax system, which is unevenly enforced and which drives economic activity underground. The tax system is administratively complex and hard to understand by tax payers, and riddled with exemptions and preferential rates for priority branches of the economy. Tax evasion and avoidance are so widespread that an estimated 40% of economic activity takes place in the grey markets. In tax administration, there are already far too many collection offices, and a separate collection service has been established for VAT (value added tax).
USAID Role and Achievements to Date: In the past, new legislation in fiscal management, tax policy, tax administration, and budget policy has been devised and successfully implemented with the assistance of U.S.-funded advisors. Work on fiscal management has been achieved through the efforts of the U.S. Treasury program funded by USAID. U.S. Treasury advisors helped the Ministry of Finance formulate fiscal policy and upgrade tax collection efforts through regular training. Through efforts of Treasury advisors the Tax Administration Law was passed and came into force from July 1996. With the Treasury advisors' active participation, the State Tax Inspectorate recently reorganized along functional lines. The reorganization increased tax inspectors' responsibility and improved tax collection mechanisms. Also, a treasury system for cash collection and disbursement has been implemented. Future USAID fiscal policy work will enhance the GOL's capacity to analyze the fiscal and economic implications of alternative tax policies as well as simplify and make more transparent existing tax systems.
Description: USAID assistance to the Ministry of Finance will focus on recommendations on tax policy, such as tax system simplification, improvements in tax equity, and minimization of administrative and taxpayer compliance costs. In order for tax legislation to be more simple and transparent, special attention will be paid to improvements of specific draft laws and laws already passed.
Host Country and Other Donors: USAID works directly with the Ministry of Finance. Other donors involved in the area are IMF, EU PHARE and Denmark.
Beneficiaries: Primary beneficiaries of the program are the Ministry of Finance and the Government of Lithuania. Since more transparent and simplified tax systems will stimulate businesses to grow, all businesses will benefit as will the tax-paying public.
Principal Contractors, Grantees, or Agencies: USAID's efforts in tax policy will be conducted by advisors provided under a contract to Harvard Institute of International Development. Efforts to improve tax administration are being provided by Treasury advisors.
Major Results Indicators: Baseline (1995) Target (1998)Tax revenue as a percentage 24% 29% of official GDP
ACTIVITY DATA SHEET
PROGRAM: LITHUANIA
TITLE: Trade Policy, 180-S001.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $250,000 SEED Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 1999
Purpose: To develop effective trade policies which increase market access
Background: Although protectionism has recently been on the increase, the Government of Lithuania appears to recognize the advantages of international trade and of getting other countries to open their markets wider to Lithuania's exports, as well as the benefits of opening its own economy wider to international trade. It is therefore making efforts to join WTO/GATT, the European Union (EU), and to establish free trade agreements with neighboring Baltic states and countries of Central Europe. Bilateral trade accords have also been reached with close to 20 nations.
USAID Role and Achievements to Date: USAID has provided continuing assistance to the Government of Lithuania (GOL) on accession to WTO and on implementation of obligations arising under the GATT/WTO. Also, GOL benefited from short term assistance in the areas of antidumping, countervailing duties, food safety, animal and plant health issues.
Description: Work on trade policy will include providing policy-oriented analytical help to relevant ministries/institutions. Longer term macro-analyses on trade related questions will be developed such as a comprehensive study of subsidies, strategy of customs reform, and trade policy strategy leading to greater openness and less protection. Providing policy oriented analytical help to GOL will include such issues as antidumping and countervailing duty policy, phytosanitary standards, tariff rationalization and stabilization, and transition to freer trade in agriculture.
Host Country and Other Donors: USAID works directly with the Ministry of Foreign Affairs. Other ministries such as the Ministry of Economics, Ministry of Industry and Trade, and Ministry of Agriculture will be assisted on specific issues. The main other donor in this field is EU PHARE which is working on harmonization of trade legislation under EU requirements. Also, EU PHARE is providing assistance to recently established Export Promotion Agency.
Beneficiaries: Primary beneficiaries are the Ministry of Foreign Affairs and the Government of Lithuania.
Harmonization and liberalization of trade will stimulate business growth resulting in a positive influence on the society overall.
Principal Contractors, Grantees, or Agencies: USAID's efforts in trade policy are being conducted by advisors provided under a contract to Harvard Institute for International Development. Assistance on issues related to WTO accession are being accomplished by Commercial Law Development Program (CLDP).
Major Result Indicators Baseline (1995) Target (1998)Value of exports 2029 m 30% increase
Progress towards WTO 0% 100% general negotiations and legal reform accomplishments per WTO requirements
ACTIVITY DATA SHEET PROGRAM: LITHUANIA
TITLE: Financial Reform, 180-S001.4
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $1,200,000 SEED Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 1999
Purpose: To establish a more stable financial environment.
Background: The Soviet Union centralized all economic decision making in Moscow, such that Lithuania was only an implementor of financial decisions. An independent financial sector had to be created from the systems left behind and in some cases created anew. Properly operating systems are needed for the whole country to operate - manufacturing, retail, trade, etc. Lithuanians view the United States as a model for central bank structures, sound bank regulation, efficient capital markets, and financing of specific sectors (credit unions, environment funds, etc.). Efforts to reform the financial sector are hindered by the lack of financial knowledge, criminal and fraudulent activity, lack of transparency, lack of accurate financial disclosure and lack of capital pooling mechanisms. Also, the legal base continues to need improvements to safeguard the rights of creditors and investors.
USAID Role and Achievements to Date: USAID assistance has been instrumental in improving regulation of the banking sector, creating the Lithuanian bank training center, improving private financial sector services, improving the operations of the capital markets, and developing an environmental investment fund. The bank supervision department has improved the quality of its inspections by following the standardized examination practices and building the capability to identify problems before they become a crisis. Through the department's improved examinations and increased regulation, three banks were closed in 1995 and one was placed under limited operations. These actions helped the system to move through the banking crisis of December 1995 and rebuild the sector on a more solid foundation. A draft bank examiners manual is 85% completed through an iterative process of chapter preparation and field testing. USAID advisors have assisted in drafting the recently passed Securities Law, creating a Stock Exchange Index, increasing transparency in the trading system and ensuring the use of the Stock Exchange as the primary channel for privatization. This work has allowed the regulators to keep abreast of market developments and thus avoid structural problems and has led to increased turnover (50+%) at the Stock Exchange.
Description: Banking assistance will focus on the structure of the banking sector, with emphasis on improved regulation and improved Central Bank operations. Further technical assistance will be provided to the bank supervision department of the Central Bank for on-site training in examinations of banks, completion of an examiner's manual, closing failed banks, and addressing issues linked to foreign bank entry. New assistance will address the overall operations of the Central Bank, with a focus on internal structures, strategic development, and analytical capabilities. Efforts will also target improving banking laws and increasing transparency in operations of the Central Bank. By focusing on the structural level of the banking sector, the program will support a stronger and more transparent banking structure that provides for fair competition for all commercial banks.
In the capital markets area, USAID seeks to improve the regulation of the market, to increase liquidity and interest, and make the stock exchange a viable supplement to the banks for raising capital and attracting investments. This will be done through assistance to the Securities Commission on regulatory issues and the Stock Exchange on improving the trading system and marketing the Exchange. It is expected that as a result of USAID efforts, the privatization process will continue to use the Stock Exchange as its primary medium for sale of state-owned enterprises.
Host Country and Other Donors: USAID is the only donor working in the capital markets sector. The activities are building upon the foundation set by the French program in 1993-94. Activities in thebanking sector are coordinated among USAID, European Union (EU) PHARE, the World Bank, Great Britain, Denmark and Sweden. USAID has taken the lead in bank supervision activities with additional efforts coming from the Danish program. Together, these programs address the main needs of the bank supervision Department. Given USAID's past accomplishment through the U.S. Treasury program, USAID will be the lead donor in Central Bank policy concerns. Other donors may be asked to provide assistance in the future.
Beneficiaries: The immediate beneficiaries of USAID assistance are the main players in the financial services sector such as the Lithuanian Stock Exchange, the Securities Commission, the Central Bank and the commercial banking sector. The final beneficiaries will be people and enterprises with accounts in commercial banks and people investing in the stock exchange.
Principal Contractors, Grantees, or Agencies: USAID activities are implemented through a combination of contracts, grants and Interagency Agreements: International Business and Technical Consultants Inc. (IBTCI) and the U.S. Treasury on banking sector reform, Pragma on capital markets, and the Lithuanian Free Market Institute on policy and awareness building.
Major Results Indicators: Baseline (1996) Target (1998)Turnover at the Stock Exchange $38Mln $85Mln
Listed companies at the Stock Exchange 0 30
Share capital levels in banks $95Mln $175Mln
ACTIVITY DATA SHEET PROGRAM: LITHUANIA
TITLE: Citizens' Participation, 180-S002.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1998: $400,000 SEED Act
INITIAL OBLIGATION : FY 1995; ESTIMATED COMPLETION DATE: FY 1999
Purpose: Increased, sustained collaboration of NGOs and local government to develop policies and services which reflect community interests.
Background: During the Soviet occupation, the only legal party was the Communist Party, and decision-making was conducted only at the highest level of the Central Government. Individual initiatives and public participation outside of the Soviet system were not tolerated. The only way for special interest groups to have their concerns heard was to voice them in the Communist apparatus. In order to erase this totalitarian legacy, and to help Lithuanian citizens take the first steps in establishing a democratic civic society, USAID and other donors have encouraged the public to take part in local politics and government decision-making and to help the government to respond to citizens' concerns in its decision-making process. Fifty years of Soviet conditioning remains a formidable obstacle, however, and efforts to build a civil society in Lithuania with vigorous citizen participation need continued support.
USAID Role and Achievements to Date: During F 1994-96, USAID programs assisted in the development of diverse, issue-based political parties in Lithuania. Campaign and platform assistance contributed to the holding of free and fair parliamentary and local government elections during this period. During F 1994-95, an annual $100,000 in grants was disbursed by the interagency Democracy Commission to individuals and NGOs for one-time activities in areas which promoted democracy in Lithuania. Starting in F 1996, the USAID Democracy Network program strengthened indigenous NGOs through policy grants, training to strengthen capacity building skills, and building the legal framework surrounding NGOs. Mid-program results include increased NGO participation in public policy impact, improvements to the social safety net, an increase in public awareness of NGOs, and greater NGO effectiveness within the community. Finally, USAID advisors have improved the ability of three municipalities to responsively govern through the introduction of public hearings, a program of public education, improvement of general management of the municipalities, and introduction of strategic planning processes undertaken in conjunction with the public.
Description: The USAID program will result in a larger number of Lithuanian non-governmental organizations engaging in advocacy work; a not-for-profit sector made stronger through the development of Lithuanian expertise on not-for-profit law, fund-raising, and public advocacy skills; and more towns and cities in which local governments and local non-governmental organizations work together to solve community problems. Through the U.S. Embassy's Democracy Commission Small Grants program, USAID will continue to award small sums of money for short-duration projects and initiatives that support democracy in Lithuania. Target recipients include native Lithuanian individuals, NGOs, municipal or national governments, and educational institutions whose purpose is to further the development of democracy. USAID is also exploring establishment of a Foundation for Local Democracy, which would encourage the development of public-private partnerships by target cities to achieve community objectives. The foundation would attract private funding to continue local democracy work in Lithuania, and perhaps the Baltics, beyond the closeout of the USAID assistance program.
Host Country and Other Donors: USAID is coordinating its efforts with key donors in these areas, including the Open Society Fund-Lithuania and the United Nations Development Program (UNDP), which supported the creation of an NGO Support Center. In anticipation of further decentralization of power from the central government, the Danish Ministry of the Interior, which has dedicated $1.8million to a public administration reform program, and European Union PHARE are providing broad-based assistance to strengthen the capacity of local governments to govern responsibly.
Beneficiaries: USAID civic participation programs are targeted to benefit the citizens of Lithuania through the empowerment of the more than 1000 registered Lithuanian NGOs to enable them to successfully lobby the government on behalf of special interest groups, and through the training of local governments to incorporate citizens' concerns in their decision-making processes. It is estimated that over 700,000 citizens (almost 20% of the country's population) will benefit from current programming in three to five cities.
Principal Contractors, Grantees, or Agencies: Civic participation activities are being implemented through grants with the U.S.-Baltic Foundation, the National Democratic Institute, the International Republican Institute and a contract with Development Associates. The implementor of the proposed Democracy Foundation remains to be selected.
Major Results Indicators: Baseline (1996) Target (1998)Joint public-private projects 0 12 (in cities participating in program) NGO-sponsored public outreach fora 2 18 Hearings that allow citizen access 1 12 City budget documents available to public 1 6
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