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 1997 FY 1998 FY 1999 Actuals Estimate Request Support for East European Democracy $34,000,000 $31,000,000 $30,000,000 P.L. 480 Title II........................... $4,692,819 -- --
Introduction
A peaceful, democratic and economically prosperous Bulgaria will help to ensure a stable Balkan region, parts of which remain dogged by ethnic tension and social unrest. Bulgaria is strategically located between the oil and gas reserves of the Caspian basin and Western markets, and can play an important role toward facilitating the transit as well as the processing of these energy resources. Bulgaria is in good position to help with efforts to combat terrorism, arms proliferation and narcotics trafficking.
The Development Challenge
In early 1997, Bulgarians forced out their socialist (ex-Communist) government. The new majority party, ousted in parliamentary maneuvers in 1992 after less than a year in power, renewed Bulgaria's commitment to fundamental economic reforms and established accession to the European Union (EU) and NATO as national policy priorities. It was able to build upon significant economic and political reforms enacted in 1990-92. Programs with the World Bank and the International Monetary Fund (IMF) were negotiated in mid-1997, have been adhered to, and major new initiatives are in process.
Bulgaria appears to recognize the historical opportunity to break with socialist patterns. The new parliament in May 1997 endorsed the introduction of a currency board, anti-corruption measures, EU membership, deep social sector reforms, and a medium-term program of economic revival emphasizing acceleration of structural reforms and the promotion of foreign investment. On July 1, the currency board was introduced to link the domestic money supply to the level of foreign currency reserves at a fixed exchange rate to the D-mark. Closure or isolation of state-owned enterprises (SOEs) responsible for 28% of budgetary losses was accomplished in 1997, and two-thirds of state-owned banks should be privatized by the end of 1998.
Bulgarian financial indicators have responded dramatically to reforms. Inflation, 579% in 1997, was down to a monthly rate of 1.5% in December. The 1997 budget deficit, 3.6% of GDP, was only 58% of the mid-year projection. The base interest rate has been around 6% for several months. Preliminary estimates are that the decline in GDP in 1997 slowed to a stop in the fourth quarter. The government's target is for 4% growth in 1998, with yearly inflation of 16.4%. The fiscal deficit for 1998 is targeted at 2%.
With financial stabilization, the government has turned to economic restructuring and a sustained fight against corruption. Prior to the recent political changes, cross-country comparisons showed Bulgaria lagging behind all other CEE countries in economic reforms. There was also little measurable progress in democracy between 1991 and 1997. There was even some backsliding in civil liberties, a reflection of corruption and the prior government's indifference and ineptness. By Freedom House assessments, rule of law and governance and public administration are least developed in Bulgaria; political process and media are most advanced; and civil society is somewhere in between. The new Bulgarian Government welcomes U.S. Government assistance in the area of crime and corruption. USAID's work is addressing the underlying causes of crime and corruption (e.g., judicial reform, development of an unambiguous legal framework for market reform), complementing efforts of other U.S. agencies, such as the DOJ, who address specific crime and law enforcement needs.
Responding to the complex challenges and opportunities afforded by Bulgaria's renewed reform effort, USAID adopted a new country strategy in late 1997 designed to accelerate the country's transition to "graduate" it from U.S. assistance over the five-year period, 1998-2002. Bulgaria's strong commitment to the EU influenced the graduation objective. The strategy strives to ensure maximum impact from current reform opportunities while building on successfully evolving programs. A key concept is that USAID assistance must establish self-sustaining local capacity by building intermediary support institutions which can assist local level constituents.
Other Donors
Overall support to Bulgaria from the international community is substantial, with gross disbursements projected at more than $1 billion in both 1997 and 1998. led by the IMF, EU and the World Bank. The U.S. manages the largest bilateral assistance program, and close coordination with other donors enables USAID to increase program impact. Bulgaria's commitment to institutional integration with the West, and accession to the EU in particular, is underlined by an EU program close to $100 million in both 1998 and 1999, and roughly $200 million a year thereafter. As the EU shifts towards targeting accession "gaps" and key infrastructure weaknesses, the potential for complementarities between the U.S. and EU programs grows. The EBRD prioritizes banking and capital markets, including a $55 million post-privatization fund for long-term lending to small and medium enterprises (SMEs). The World Bank and IMF often sustain the impact of USAID programs, and USAID assistance can front-end Bulgaria's progress towards meeting multilateral conditionality. Collaborators in the NGO sector include U.S., British and German foundations. USAID's work with the judiciary is complemented by State Department and other donor assistance on criminal law enforcement, primarily by the EU and the German and Italian Governments. The Dutch, UK and Swiss provide local government capacity building assistance. The United Nations Development Program (UNDP) focuses on the development of SMEs and governance decentralization.
FY 1999 Program
Under the economic restructuring goal, USAID will help Bulgaria modernize and strengthen its financial system, in particular key banking and capital markets institutions. USAID will strengthen a network of private business support institutions; further improve the policy, legal, and regulatory framework for business development; and support public-private dialogue on strategies for private enterprise growth. Strategic objectives in this area include: accelerated development and growth of private firms in a competitive environment, and a more competitive and market-responsive private financial sector.
Under the democratic transition goal, USAID is requesting funding for three strategic objectives: increased, better informed citizens' participation in public policy decision-making, an improved judicial system that better supports democratic processes and market reforms, and more effective, responsive, and accountable local governments.
The increasing willingness on the part of Bulgarians to form partnerships to address commonly-recognized issues is being matched by the growing competence of local government support organizations. USAID will continue assistance to local capacity-building, helping to produce grass-roots democratic structures that transcend political changes at the center and, with increasing effectiveness, mobilize citizens to speak out policy issues and act on their own problems. USAID programs will target key constraints to media development, the judicial system, and combatting corruption.
In FY 1999, funding to the Bulgarian American Enterprise fund will be completed. Other cross-cutting activities include support to American labor's international programs and to training in the U.S. and the region.
BULGARIA
FY 1999 PROGRAM SUMMARY*
(in Thousands of Dollars)
Strategic ObjectivesEconomic Restructuring Democratic
TransitionSocial Stabilization Cross-cutting / Special Initiatives Total Privatization -- -- -- -- -- Fiscal Reform -- -- -- -- -- Private Enterprise 5,000 -- -- -- 5,000 Financial Reform 5,550 -- -- -- 5,550 Environmental Management -- -- -- -- -- Energy -- -- -- -- -- Citizens' Participation -- 3,950 -- -- 3,950 Legal Systems -- 2,500 -- -- 2,500 Local Government -- 5,000 -- -- 5,000 Crises -- -- -- -- -- Social Benefits -- -- -- -- -- Environmental Health -- -- -- -- -- Cross-cutting / Special Initiatives -- -- -- 8,000 8,000 TOTAL 10,550 11,450 -- 8,000 30,000
*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: $5,000,000 SEED Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Accelerated development and growth of private firms in a competitive environment.
USAID Role and Achievements to Date: In April 1996, seven USAID-financed providers of assistance organized themselves into the Firm Level Assistance Group (FLAG) to coordinate service delivery to Bulgarian enterprises. FLAG members collaborate in marketing advisory and training services to clients, conducting analysis of client needs through standardized diagnostic techniques, matching clients with providers most appropriate to their needs, and delivering integrated service packages. Working in seven sectors, including agriculture and light manufacturing, FLAG provided technical assistance to 538 clients and trained managers of 651 companies in FY 1997 alone. The resulting number of improved business practices and new business linkages surpassed USAID targets. Flexibly responding to changing requirements as Bulgaria initiated a structural adjustment program in 1997, some FLAG members began advisory/training assistance to banks and members of the broker/dealer association, thereby paving the way for a comprehensive USAID strategic objective to strengthen the financial sector.
Bulgarian business people trained under a USAID program formed the Bulgarian Association of Partnerships (BAP) in May 1996. BAP has since become the lead lobbying and advocacy organization for SMEs, and its ten-point SME policy agenda was presented to the Bulgarian Government in March 1997. BAP, in turn, organized the National Forum, a policy-oriented umbrella group of associations representing 66,000 employees, that is working closely with National Assembly committees on legislative improvements favoring SME development.
Other business support organizations with significant leadership potential include the regional Chambers of Commerce. During the summer of 1997, USAID advisors organized a U.S. exchange program to familiarize chamber leaders with the marketing and business planning operations of U.S. counterpart organizations. An important theme was the potential for public-private partnerships of local government and business associations to stimulate local economic growth. One early result is that a participating chamber from eastern Bulgaria is establishing an SME business center and will collaborate more closely with small local businesses to address economic development needs.
In addition, three FLAG-assisted agricultural producer associations are providing leadership and services to their members. The Meat Producers Association, established with USAID assistance, has organized four annual meat products shows and now publishes a newsletter for its forty dues-paying members. The National Dairy Association has held three national dairy policy conferences, and the Fruit and Vegetable Processors Association is helping its membership improve quality standards to boost exports.
FLAG has also supported development of Bulgarian consulting firms. FLAG teams its U.S. experts with local consultants; uses them to analyze client firms; sends them to the U.S. for internships and training; and mentors local firms in their own service efforts. To date, one-quarter of FLAG assistance has involved the consulting industry as recipients or providers.
USAID advisors helped develop Bulgaria's Collateral Law which was ratified in 1996, and subsequently helped establish a collateral registry. USAID contractors have also coordinated public participation in review of legislation conducive to private enterprise growth, including amendments to laws on concessions, privatization, and foreign investment. BAP board members, with USAID assistance, participate on nine legislative drafting committees. In order to further public participation in the
legislative process, USAID advisors and BAP recently helped the Economic Committee of the National Assembly organize town hall meetings on SME development and legislative needs.
Description: The objective will be achieved through increased emphasis on strengthening business associations and other intermediate support organizations. USAID will make increasing investments in the associations, consulting firms, think tanks, and other business support institutions that will broaden the base for sustainable private enterprise growth. Working in partnership with Intermediate Support Organizations (ISOs) expands the reach and impact of firm level assistance and institutionalizes the processes by which the private sector can lobby, influence, and sustain policy change and legal reform long after USAID has departed. Progressively, FLAG will intensify direct assistance to ISOs and channel firm-level assistance through ISOs until U.S. providers can be phased out, with outyear assistance managed by ISOs. There will also be increased focus of firm-level assistance on priority sectors. The first phase of FLAG assistance concentrated on seven business sectors with apparent comparative advantage, including agribusiness, light manufacturing, tourism, and construction. Within these target sectors, 50-60% of FLAG clients have been in agribusiness and light manufacturing. In response to the current government's structural reforms, FLAG more narrowly focused its training and advisory efforts towards export prospects in agribusiness, light manufacturing, and tourism, while maintaining a broad range of services to the all-important agricultural sector and leading sub-sectors of meat production, fruits and vegetables, and grain/flour/baked products. Activities will also emphasize institutionalization of sustainable processes for policy, legal, and regulatory reform. High on the reform agenda are legislative and regulatory improvements related to land ownership, competition, customs, and taxation. To reinforce these actions, USAID advisors will also help Bulgaria define a longer-term reform agenda, beginning with identifying priorities with the SME community and improving skills in legislative drafting. Complementary efforts will be directed to improving ISO capabilities in advocacy and lobbying and organization of a public education series on small business. In the energy sector, USAID advisors will assist in drafting an energy law which is a precondition to energy sector restructuring, privatization, and regulation. As an extension of energy sector restructuring, USAID may assist in privatization, with the USAID role viewed as catalytic, leading to broader support for reforms by other donors, especially the World Bank and EBRD. USAID will also make selective interventions to improve the government's capacity to support sustained private enterprise growth. It will also help strengthen indigenous capabilities in economic policy analysis and formulation on a selective basis. A limited-scope advisory/training effort on macro-economic policy is contemplated. The Ron Brown Fellowship Program will assist the development of economic policy-makers, particularly fast-rising professionals within government, through one-year training at U.S. universities.
Host Country and Other Donors: Among other donors, USAID has the most significant assistance program for private enterprise growth and development. Multilateral agencies have not played an important role at the enterprise level, although their support for growth-oriented macro-economic policies is crucial. EU's assistance to management training for business and civil service executives and support of a new SME Agency in the Ministry of Industries are the most complementary ongoing programs. In addition, the British Know How Fund, the Dutch and the Swiss have provided some limited assistance to SMEs.
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; the International Executive Services Corps (IESC); University of Delaware; World Learning, Agriculture Cooperative Development International/Volunteers Oversees Cooperative Assistance (ACDI/VOCA); Land O' Lakes; and MBA Enterprise Corps.
Major Results Indicators: Baseline Target Percentage of GDP provided by the private 45% (1996) 70% (2002) sector Exports as percent of GDP 19% (1995) 45 (2002) implemented
ACTIVITY DATA SHEET
PROGRAM: BULGARIA
TITLE: Financial Reform, 180-S001.4
STATUS: New
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $5,550,000 SEED Act
INITIAL OBLIGATION: FY 1997; ESTIMATED COMPLETION DATE: FY 2001
Purpose: A more competitive and market responsive private financial sector.
USAID Role and Achievements to Date: Since April 1997, in response to requests from the International Finance Institutions (IFIs) and the GOB, USAID has been working to stabilize the banking system by assisting in the privatization of the remaining state-owned banks. USAID advisors provide policy guidance and have been instrumental in developing marketing strategies and in preparing banks for sale. Recently, USAID initiated assistance to the Bulgaria National Bank to develop bank supervision functions focused on building on-site inspection capability and strengthening prudential regulations and their enforcement. In late 1996, USAID launched its Capital Markets Initiative to support the development of a Central Securities Depository (CDAD) and strengthen the relevant regulatory bodies. These efforts were focused on increasing confidence in market integrity and stimulating secondary market trading in securities generated by the mass privatization program. Much of this work targeting the CDAD and the broker/dealer association is in early stages. USAID recently supported a training effort to inform the policy debate on advantages of a two-tiered social security system including a mandatory supplementary savings scheme through private pension funds and a top-tier voluntary scheme through private funds.
Description: USAID's strategy for the banking system relies on a three-pronged approach: (1) stabilizing the banking system including privatization of state-owned banks; (2) strengthening banking supervision and the supporting legal/regulatory framework; and, (3) improving commercial bank operations and training bankers. In this way, the strategy works from top down and bottom up to promote systemic change. These mutually-reinforcing technical assistance elements will remedy past errors and develop the regulatory institutions and community of professional bankers necessary to future stability. All are key in restoring public confidence in the banking system and in accelerating the development of a sound, functioning banking sector.
USAID assigns top priority to Securities and Stock Exchange Commission (SSEC) assistance in order to help that organization become a strong regulator and advance the laws and rules necessary for transparency and integrity in the marketplace. USAID also plans follow-on assistance to strengthen CDAD's clearance, settlement, depository, and registry operations, with emphasis on advisory assistance and automation equipment. Training for all market participants will complement and reinforce institutional improvements. Portfolio managers and financial intermediaries need to be trained to analyze and trade securities and evaluate risk. Of particular importance is the development of an ongoing training and certification program for the brokers/dealers association and its members. Public awareness and education are also essential to broaden participation and support for the capital market.
The current government has acknowledged the shortfalls of the public pension system, and expressed strong interest in creating the policy, legal and regulatory framework conducive to private pension funds. USAID plans to assist in drafting new legislation to allow further development of private pension funds, and creating a regulatory environment to protect investors and pensioners from fraud. The technical assistance program will focus on capacity-building of the regulatory bodies and pension fund managers. Public awareness efforts will increase understanding of the benefits of a private pension system and build interest/confidence among investors.
Host Country and Other Donors: The World Bank's Financial and Enterprise Sector Adjustment Loan (FESAL) reinforces USAID's efforts through conditionality related to an improved banking/credit legal
and regulatory framework, bank supervision, and bank privatization. Early start-up of USAID assistance in these areas has advanced Bulgaria's progress on FESAL conditionality. EU is mobilizing assistance to the financial sector linked to EU accession standards. Its assistance to off-site bank supervision will closely complement USAID's work on prudential regulations and on-site supervision. Additionally, an EU program will help Bulgaria implement international accounting standards, a necessary condition to improving the soundness and transparency of financial information. Finally, the French Government plans assistance to the Bulgaria Stock Exchange - Sofia.
Beneficiaries: The Bulgarian population at large will have access to a much improved financial system.
Principal Contractors, Grantees or Agencies: Since this a new strategic objective for FY 1999, principal contractors and grantees have not been determined.
Major Results Indicators: Baseline Target Private bank assets as % of 22.73 (1997) 85 (2002) total bank assets Market capitalization as % of GDP 0 (1997) 25 (2002)
ACTIVITY DATA SHEET
PROGRAM: BULGARIA
TITLE: Citizens' Participation, 180-S002.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $3,950,000 SEED Act
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DAT E: FY 2001
Purpose: Increased, better informed citizens' participation in public policy decision-making. This will be accomplished by building the capacity of non-governmental organizations (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.
USAID Role and Achievements to Date: Through Democracy Network and Democracy Commission small grants, more than 100 Civil Society Organizations (CSOs) are receiving assistance to strengthen organizational skills and program activities. All have attended CSO training courses and continue to have in-house training scheduled upon request. Additional outreach was made to more than 40 CSOs to participate in the training program, even though they did not qualify for financial assistance. In the latest grant round, more than 500 CSOs submitted over 800 concept papers. Of these, 75% entail partnership projects where NGOs/local government authorities/media outlets/SMEs are equal partners in carrying out activities. Nearly 30 CSOs received special awards to deliver training to other CSOs. They will go through intensive instructions to develop appropriate curricula and training materials. Finally, providing feedback to local CSOs on their proposals coupled with specific training, e.g. proposal writing, tremendously increased the quality of submissions.
Progress in the area of mass media assistance was mediocre through the end of 1996, as efforts to strengthen media associations faltered in the midst of economic collapse and political turmoil. The ruling majority (at that time the Bulgarian Socialist Party) passed an electronic media law over strong U.S.G. and EU technical objections. The Constitutional Court declared 15 articles of the Electronic Media Law to be unconstitutional as a result of a grassroots protest voiced before President Zhelev. Furthermore, a major breakthrough on legislative reform occurred after the public protest in February 1997: a broad-based grassroots initiative, supported by the USAID-funded ProMedia program, drafted a new broadcast media draft law. It is awaiting committee review before being submitted to the full Parliament. Other signs of progress include court registration and revitalization of Association of Bulgarian Broadcasters (ABBRO) as an organization and establishment of a media assistance coordination group to ensure that information on donor programs is regularly exchanged.
Description: The major activities are focusing on: (1) institutionalization within Bulgarian civil society organizations (CSOs) capabilities to obtain political access, services, and funds; (2) building the professional capacity of broadcast media; (3) assisting the GOB in its campaign to combat corruption through a special CSO program, planned to build public awareness about the impact of corruption on the economic well-being of individuals and the need to focus public disapproval on corruption; and (4) modest complementary democracy initiative to strengthen the Parliament's ability to engage in public dialogue and enhance the institutional capacity of the Parliament.
Host Country and Other Donors: There are numerous foreign donors in the CSO sector. A few work to some degree through networks of intermediaries which they have helped to create (e.g., Soros Open Society Fund and Open Society Clubs), while other donors provide funding and assistance to individual NGOs (e.g. the EU Democracy-funded Civil Society Development Foundation). EU's support for public administration reform will provide critical reinforcement to USAID-financed CSO efforts to reduce public tolerance of corruption and press for corrective action. Among other things, civil service reform will seek to overcome poor working conditions and low salaries which contribute to corruption of government officials and strengthen oversight mechanisms such as the Government Accounting Office
and inspector general functions.
The variety of players in the country and diversified nature of the CSO sector have led many donors and CSOs to conclude that closer coordination and information sharing is needed. However, while this problem is recognized and meetings have taken place, there is no consensus on an appropriate mechanism for pulling the CSOs and donors together to discuss their activities, share experiences and develop a sense of community needed to work together on common problems. The mission anticipates that the Democratic National Party will act as a facilitator for improved in-country donor coordination in the not-for-profit sector.
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 NGOs including The Institute for Sustainable Communities, Freedom House, and the International Center for Not-For-Profit Law; and the Bulgarian local government.
Major Results Indicators: Baseline Target NGO Sustainability Stage 2 (1997) Stage 3 (2002) (Stages 1 (lowest through 3 (highest) Law adopted providing regulatory No (1997) Yes (1998) framework for NGOs Cases per year of policy change 3 (1995) 20 (2000) attributable to CSO actions
ACTIVITY DATA SHEET
PROGRAM: BULGARIA
TITLE: Legal Systems, 180-S002.2
STATUS: New
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $2,500,000 SEED Act
INITIAL OBLIGATION: FY 1999; ESTIMATED COMPLETION DATE: FY 2001
Purpose: An improved judicial system that better supports democratic processes and market reforms.
USAID Role and Achievements to Date: USAID regards an improved judicial system as critical to advancing the government's declared campaign against corruption, both to enhance integrity within the judiciary and to realize more expeditious prosecution of corrupt practices by government officials. Uncurbed corruption threatens to stunt economic growth by draining away limited state resources, e.g., state enterprises that operate in an environment of corrupt practices or by providing incentives to investment ranging from excessive/unclear regulations for "doing business" to payment of protection money. In part, corruption has become pervasive because of the lack of professional esteem within the civil service, including the judiciary, reinforced by low pay and limited career development opportunities. Judges, who are the weakest link in the judicial "chain", will be the primary customers of this program.
Description: Together with the Association of Bulgarian Judges and the Ministry of Justice, USAID will help establish the curriculum and training activities of a Judicial Training Institute to provide continuing education for judges. The Institute will give priority to: 1) educating judges about their rights and responsibilities, including a code of ethics to upgrade integrity of the system; 2) informing judges about new laws (especially those that contribute to the reform agenda) and related adjudication procedures; and 3) advising judges of new legal developments, e.g. seminars on alternative dispute resolution. Continuing education will serve both to elevate professional standards and provide an incentive for judges to work for extended periods in the system and pursue their own self-improvement. USAID will also provide assistance to improved curricula and teaching methods at Bulgarian law schools to further enhance the educational preparation of prospective judges.
Host Country and Other Donors: At present, very little donor activity is focused on the judiciary. Although the GOB requested the World Bank to provide assistance to the judicial system, no plans have been developed. The EU program has listed judiciary reform as a high priority within its public administration reform agenda. USAID anticipates that once a framework for continuing education and career development of judges has been established with USAID's support, other donors will help fund the continued strengthening effort.
The Government of Bulgaria is actively pursuing accession to the EU, which requires a demonstration that public sector corruption is being addressed. Bulgaria is also a participant in the Council of Europe's regional Octopus program which is developing strategies to combat crime and corruption. Council of Europe experts have helped Bulgaria develop guidelines for legislative initiatives which have led to amendments in the penal code.
USAID's work with the judiciary is complemented by other donor assistance on criminal law enforcement, primarily by other U.S. agencies, the EU, and the Governments of Germany and Italy. Considerable assistance has been provided and being planned on anti-crime legislation and technical assistance, training, and equipment for law enforcement activities of the Interior Ministry, Customs Administration, and to a lesser extent, the Prosecutor's Office and National Investigative Service.
Beneficiaries: The direct beneficiaries of these activities are a significant percentage of the Bulgarian judiciary, including judges, lawyers, prosecutors and law students, and indirectly every member of the public who comes in contact with the legal system.
Principal Contractors, Grantees, or Agencies: Since this a new strategic objective for FY 1999, principal contractors and grantees have not been determined.
Major Results Indicators: Baseline Targets Cases brought to trial and completed 10 (1997) TBD (2002) Average experience of judges 3 years in TBD (2002) court (1997)
ACTIVITY DATA SHEET
PROGRAM: BULGARIA
TITLE: Local Government, 180-S002.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $5,000,000 SEED Act
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2001
Purpose: The strategic objective envisions Bulgarian local governments that make choices responding to citizen expectations; act on those choices effectively, and increase accountability for their choices and actions. Local governments that exercise well-informed choice in partnership with citizens and community-based organizations can solve problems, identify and maximize opportunities, narrow the gap between resources and responsibilities, and successfully engage the central government on policies and laws to encourage local initiative.
USAID Role and Achievements to Date: During 1995-96, Local Government Initiative (LGI) made substantial gains in energizing local governments despite the generally inhospitable environment of a centrist government, blurred authorities, and limited financial resources. The ten pilot cities program and municipal association building program strengthened capacities of reform-minded local governments to improve operations, increased citizens' interest and participation, and (through associations) created an effective national policy dialogue.
Since elections in 1997, relations between central and municipal government have improved. Formed less than a year ago, the National Association of Municipalities is providing leadership to local governments in shaping the national reform and legislative agenda. Among other things, the Association has submitted recommendations on legislation affecting municipal finance and organized an unprecedented session with the Prime Minister in September 1997 to present its agenda. Follow-up consultations between the Association and the Finance Ministry to work on the 1998 Government Budget resulted in a greater proportion of the business tax going to municipalities (10% vs. the traditional 6.5%). Five regional associations of municipalities have made impressive strides towards organizing capacity-building services for local governments, disseminating information, and coordinating regional action on development problems. A recent example is the establishment of a municipal energy efficiency network to promulgate the results of USAID-supported energy efficiency work with regional hospitals.
Through a small grants program, LGI has helped ten target cities put in place numerous reform practices designed to improve service delivery, strengthen governance, and facilitate the local government role in economic development. Examples include a local economic development agency, automated management information system, streamlined system for issuing property permits, improved expenditure control system, and new processes to facilitate citizens' participation with local governments. Successful reform practices are progressively upgrading the service performance of target cities and providing models for replication. To support these efforts, LGI also organized training courses in municipal administration and finance that have been well-attended, laying the foundation for an institutionalized training program.
Overall the LGI has facilitated development of local-level institutions which are providing effective input to the central government on policy reform. Their increased effectiveness through periods of centrist pressure and political turnover is the cornerstone of a strong foundation for grassroots democracy in Bulgaria.
Description: Despite progress to date of the USAID-supported Local Government Initiative (LGI) in introducing innovative practices to target municipalities, most local governments still lack the knowledge and skills to apply improved management and service delivery techniques. Further, the instruments for disseminating the most successful practices are still being developed. Increasing public
participation in local government affairs remains a challenge because of local government inexperience with genuine public involvement, coupled with only partially developed NGO advocacy skills. On the other hand, the LGI has many assets to build on:
. Budding political will to examine and act on complex issues of fiscal decentralization,
. Increasingly competent and professional municipal leadership and front line workers,
. Slowly strengthening local government systems, practices, and structures;
. Clear, albeit lengthy, local government reform agenda, and
. Most importantly, an increasingly able set of institutions committed to advocacy, training, technical assistance and dissemination of best practices.
USAID is already implementing the second phase of LGI that works towards sustainability of the local government reform effort by placing major emphasis on building up local support capabilities and progressively shifting the lead role in upgrading local government operations to indigenous institutions. Principal program activities include: (1) increased reliance on associations and other intermediate support organizations (ISOs) to provide leadership on the reform agenda, training and advisory services on improved practices, support to municipal/regional planning, and advancing public awareness; (2) formation of public-private Partnerships to address community-based needs and reinforce the role/effectiveness of local government; (3) support for regional planning/development initiatives by groups of municipalities under the leadership of their regional associations; (4) parallel efforts on central government reforms essential to strengthening local government; and (5) increased people's participation.
Host Country and Other Donors: Several bilateral donors and EU provide assistance to various associations and municipalities in ways that complement USAID's efforts. The Dutch provide capacity building assistance to the National Association of Municipalities through the Foundation for Local Government Reform. The Swiss helped establish a regional municipal association in central Bulgaria and support community action projects through this association. The British Know How Fund provides technical assistance to four Bulgarian municipalities and supports twinning relationships between Bulgarian and UK municipalities. EU's Local Democracy Program supports citizens' participation in community partnerships and sustainable regional development.
Currently USAID is the only donor organization carrying out a comprehensive program of local government improvement. However, EU contemplates a major support program for regional development, and the World Bank is considering a community-level job creation fund. USAID will coordinate closely with these development partners to enhance prospects for replication of successful LGI approaches to regional planning.
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.
Principal Contractors, Grantees, or Agencies: USAID implements activities through U.S. and local organizations, including The Research Triangle Institute, The International City Managers' Association, Development Alternatives International, KPMG, and other private firms and NGOs.
Major Results Indicators: Baseline Target Citizen satisfaction with the decisions, TBD (1997) TBD (2002) actions and services Public goods and services over which 8% (1997) TBD (2002) local governments have control
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