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![[Congressional Presentation]](/images/cp00bnnr.gif)
GEORGIA
FY 1998
ActualFY 1999
EstimateFY 2000
RequestFREEDOM Support Act $92,500,000 $84,360,000 $83,500,000 Introduction.
A democratic, prosperous and independent Georgia advances U.S. long-term geo-political, economic and humanitarian interests. Georgia is a strategically-located country, sharing a border with Russia and offering Black Sea ports for the transportation of energy and other crucial commodities. As a vibrant, free-market democracy, Georgia can become a stabilizing force in a region that is likely to be an important alternative source of oil supplies to the West. The consolidation of democratic order, introduction of market-oriented reforms, and the privatization of important industries under the leadership of President Eduard Shevardnadze and a progressive parliament are helping Georgia to recover the momentum lost during the years of civil strife. Despite slower-than-expected reform, lingering secessionist threats, and the effects of the Russian economic crisis, Georgia's direction is clear, and the country and her people continue to look West for partnership and assistance.
The Development Challenge.
Since independence, Georgia's economic and political stability has been hampered by internal conflicts (civil war, the Abkhazian revolt, and the South Ossetian separatist movement) and the dissolution of regional trade links caused by the break-up of the former Soviet Union. Compounding the effects of those problems, the recent Russian economic crisis is placing additional stress on Georgia's transition to a market economy. While there have been notable economic and democratic successes, such as a progressive and market-friendly urban-industrial land privatization law and the use of qualifying examinations as a basis for determining judgeships, Georgia still faces formidable challenges in its transition. The Georgian public is also increasingly anxious to see improvements in the quality of their life as the result of legal and regulatory reform, judicial reform, and privatization.
Georgia must resolve a number of problems in order to ensure a strong market economy and democracy. While improving, financial markets remain weak, privatization and economic restructuring moves slowly, and a heavy per capita debt (largely the result of the purchase of energy) is a drag on the economy. Corruption is endemic and tax collection rates remain low. Georgia has successfully privatized the largest electrical distribution company in the country, but the system needs additional reform and investment to eliminate the power outages which cause suffering among the population and hamper industry. Unemployment, under-employment, and constraints on credit conspire to keep living standards low, while social programs are unable to keep pace with the population's needs. Political parties, independent media and the non-governmental organization (NGO) sector continue to mature, but are not yet sustainable.
Despite these obstacles, Georgia has made encouraging headway since 1995, and its leadership is determined to continue the reform process. With backing from the International Monetary Fund (IMF), World Bank, the U.S. and other donors, Georgia has cut inflation, imposed fiscal discipline, liberalized prices, set up a functioning banking system, and pushed ahead with privatizing state-owned enterprises. The result has been four straight years of GDP growth. Georgia also held its first-ever local government election in 1998, highlighting the importance of effective and responsive local government. USAID works closely with the Government of Georgia (GOG) in the areas of legal and regulatory reform, economic and energy sector restructuring, and tax and fiscal reform and is the lead donor in democracy-related assistance. USAID food and fuel assistance has been credited by the GOG with the survival of Georgia as an independent country. Immunization levels have been restored to minimally acceptable levels, and the needs of internally displaced persons for shelter and other basics have been addressed. USAID's program strives to eliminate corruption by working with the GOG and private and NGO sectors to establish checks and balances such as fair, transparent, and widely disseminated "rules of the game", independent regulatory bodies, and a transparent budgeting system.
Other Donors.
The four largest donors to Georgia are: the World Bank, the United States, The European Bank for Reconstruction and Development (EBRD), and the European Union (EU). To date the World Bank has provided approximately $375 million to Georgia. Since 1993, U.S. assistance has totaled approximately $357 million. World bank assistance includes structural adjustment credits, agricultural development loans, assistance to the health and power sectors and technical assistance to strengthen the private sector. USAID works closely with the World Bank and supports its economic reform conditionalities. EBRD provides direct funding for the power and transport sectors and in support of private sector development. The EU's technical assistance program for the NIS (EU-TACIS) has focused on the rehabilitation of transportation infrastructure, strengthening the private sector and food security. Since joining the IMF in 1992, Georgia has borrowed about $250 million through annual structural adjustment loans. USAID provides technical assistance to the Ministry of Finance and works closely with the IMF to address fiscal policy issues.
FY 2000 Program.
USAID-Implemented Programs: The Georgia program integrates institutional and policy reform at the national level with local and grass-roots capacity-building. FY 2000 funding is requested to support economic and energy sector restructuring; strengthen the private sector; bolster civil society; develop democratic local governance; and promote the rule of law. Funding also is sought to advance social, economic and political reform at the community level and reduce human suffering among victims of the Abkhazia conflict. In the economic sphere, USAID will build on past progress in privatizing state-owned firms, creating a legal and regulatory framework to help stimulate the growth of small and medium enterprises, and fostering the development of a competitive capital market to increase access to credit, all with a continued emphasis on accountability and transparency. FY 2000 funding will support strategic objectives in privatization, enterprise growth and development, fiscal reform, private financial sector development, and energy restructuring. In the area of democracy and governance, FY 2000 funding will continue to support strategic objectives in citizens' participation (including efforts to strengthen NGOs, political parties and independent media), legal and judicial reform, and effective local government. In the social sector, efforts will continue to meet the basic needs of the most vulnerable segments of the population -- particularly among victims of the Abkhaz conflict -- while working at the community level to increase household self-sufficiency and provision of basic services. In expanding its support for grassroots programs that tangibly improve people's lives, USAID will build on the World Bank's successful Social Investment Fund which was established to support community-level projects that stimulate local employment and income generation while fostering citizen participation in decisions that directly affect their lives. These programs, which boost the capacity of local actors to work together to solve community problems, also support economic development and democracy-strengthening goals.
Under Cross-cutting and Special Initiatives, USAID's principal activity is a large training program (including U.S.-based) focused on developing Georgia's human resource base. Training programs advance USAID strategic goals across the entire portfolio. USAID also will contribute to the GOG's health reform efforts through institutional partnerships, strengthening of national health information systems, and technical assistance in the area of women's reproductive health. In addition, USAID will provide vaccines, medicines and equipment to help combat health problems such as infectious diseases, including tuberculosis.
Other U.S. Agency Programs: Included also with this request are programs implemented by other U.S. Government agencies. The request for cross-cutting and special initiatives, in particular, reflects expanded emphasis on the need to reduce the risks of proliferation of weapons of mass destruction through programs which enhance our mutual security, such as export controls, science centers and efforts designed to employ scientists in non-military areas. In addition, other USG agencies participating in technical cooperation programs with Georgia through inter-agency transfers from USAID include the Departments of Justice, Treasury, State, and the United States Information Agency.
GEORGIA
FY 2000 PROGRAM SUMMARY*
(in Thousands of Dollars)
Strategic Objectives Economic Restructuring Democratic Transition Social Stabilization Cross-cutting / Special Initiatives Total Privatization 3,500 -- -- -- 3,500 Fiscal Reform 1,500 -- -- -- 1,500 Private Enterprise 8,150 -- -- -- 8,150 Financial Reform 4,930 -- -- -- 4,930 Energy 6,150 -- -- -- 6,150 Environmental Management -- -- -- -- -- Citizens' Participation -- 4,350 -- -- 4,350 Legal Systems -- 1,600 -- -- 1,600 Local Government -- 2,000 -- -- 2,000 Crises -- -- 7,000 -- 7,000 Social Benefits -- -- -- -- -- Environmental Health -- -- -- -- -- Cross-cutting/Special Initiatives -- -- -- 44,320 44,320 TOTAL 24,230 7,950 7,000 44,320 83,500 *FREEDOM Support Act (FSA) funds USAID Mission Director: Michael Farbman
ACTIVITY DATA SHEET
PROGRAM: GEORGIA
TITLE: Increased Transfer of State-Owned Assets to the Private Sector, 110-SO01.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $3,500,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1998; ESTIMATED COMPLETION DATE: FY 2002Summary: This strategic objective will help facilitate the transfer of state-owned assets to the private sector. The privatization of land and general assistance to the Government of Georgia (GOG) in privatizing remaining state-owned enterprises are major pieces of the broad multi-year market reform program recently initiated by USAID. In one element of the program, USAID assists the GOG in its efforts to privatize land, especially the land under and adjacent to privatized enterprises. USAID technical advisors have begun working with the State Department of Land Management and Parliament to introduce a favorable legal and regulatory environment for urban and industrial land privatization. Land privatization will convey ownership and title of the land in use by privatized enterprises to those enterprises so that they can sell or otherwise use that land as collateral. USAID funded a Phase I of a project to privatize Poti Port. In FY 99 USAID will provide a privatization advisor to the Ministry of State Property Management and stands ready to assist the GOG in the privatization of state-owned assets. Privatization of state-owned assets will reduce the fiscal and management burden on the state and improve the delivery of services to the average user. It also will support the development of capital markets and the recovery of the industrial sector. The beneficiaries of this SO are Georgian private enterprises.
Key Results: USAID currently is focused on completion of the land title registration process. Without title, registration is considered incomplete and the land cannot be used as collateral for much-needed credit. This objective is also being redesigned to expand its scope to include the titling and registration of the rural small holdings in the agricultural sector.
Performance and Prospects: With USAID assistance, Parliament has passed what USAID believes to be the most progressive and market-friendly urban-industrial land privatization law in the CIS. Within 60 days of promulgation of this law over 2000 enterprises had satisfied the requirements to receive and register the ownership of the land associated with their enterprises. The GOG appears to have selected a plan for the privatization of Poti Port which reflects a less market-oriented approach than that recommended by USAID. Accordingly, USAID's continued participation in the privatization of Poti Port is unclear at this point.
Possible Adjustments to Plans: Continued assistance in the privatization of Poti Port is in question. USAID's interest in strategic privatization is now focused on other key state enterprises. USAID will be preparing a new program strategy for assistance to Georgia during Spring 1999, at which time the scope of this objective will be expanded to include rural land privatization.
Other Donor Programs: USAID land markets advisors work with the State Department of Land Management and Parliament. Both the World Bank and the German Organization for Technical Assistance have activities addressing land privatization. The activities of these two donors are monitored by USAID with the objective of avoiding duplication and promoting better donor coordination. The European Union TRACECA project, World Bank, EBRD, U.S. Trade Development Agency, and United Nations Development Program all have programs affecting privatization.
Principal Contractors, Grantees, or Agencies: The privatization of urban and industrial land is being implemented by Booz-Allen & Hamilton. International Business and Technical Consultants was responsible for the restructuring of Poti Port. The Privatization Advisor will be provided by Barents Group.
Selected Performance Measures:*
Baseline Target Land titling and registration system established No (1998) Yes (2000) Urban land registered with owners of
associated enterprisesNo (1998) Yes (2000) Percentage of Small farm holdings registered/titled 0 (1998) 50% (2000) * These are illustrative indicators. Performance measures will be established as part of the new program strategy for assistance to Georgia during Spring 1999.
ACTIVITY DATA SHEET
PROGRAM: GEORGIA
TITLE: Increased Soundness of Fiscal Policies and Management Practices, 110-SO01.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $1,500,00 FREEDOM Support Act
INITIAL OBLIGATION: FY 1993; ESTIMATED COMPLETION DATE: FY 2002Summary: This strategic objective will help improve fiscal policies and fiscal management practices in Georgia. During the past two years, the Government of Georgia (GOG) made some headway in strengthening the fiscal system. However, low revenue collections in the past year have complicated the fiscal reform effort and undermined it's fragile infrastructure. During the fall of 1998, Georgia's relationship with the IMF was complicated by the GOG's difficulties in meeting its commitments to the Fund with respect to increasing tax revenues, levying excise taxes, and developing realistic budgets to operate within existing income. Georgia (mainly in the areas of trade and foreign income repatriation) also has been adversely impacted by the Russian economic collapse last fall. Beneficiaries of this objective are the citizens of Georgia, who will be able to see how their government allocates tax revenues for public expenditures.
Key Results: At present, USAID-funded activities focus on three key intermediate results: (1) Budget/Financial Systems: the development of market-oriented budget and financial systems for national and regional governments; (2) Taxes: the establishment of open and transparent tax codes which are conducive to accelerated legitimate business activities; and (3) Government Securities: the establishment of a Treasury Securities System. In order to upgrade GOG budget planning and analysis capacity, a Budget Analysis office was established at the Parliament, and fiscal reform apparatus established at the Ministry of Finance.
Performance and Prospects: This objective may undergo some redesign during upcoming strategy development in order to ensure maximum tax collection coordination and efficiency vis-a-vis U.S. Treasury activities and maximum impact of all USAID fiscal reform activities. The tax and budget activity includes a comprehensive training program on the new tax law and regulations, business and accounting practices, collection and audit techniques, and general management. This training program will be operated in conjunction with the training program provided under the accounting reform element of the overall market reform program. USAID expects to have completed new regulations pertaining to the Tax Code soon, and in cooperation with the US Treasury Tax Advisor will provide training for the tax inspectorate to improve tax administration and collection and professionalize the tax department. These actions will lead to reduced corruption, and enhanced revenue collection. The Mission will also include leadership training as an integral part of its fiscal policy and management portfolio.
Possible Adjustments to Plans: Within the framework of USAID's existing fiscal reform projects, a joint U.S. Treasury/USAID Tax Assistance Program is being prepared in close coordination with other donors and the GOG. The new program will highlight revenue mobilization as its strategic goal, by focusing on tax administration and collection and reducing emphasis on tax policy.
Other Donor Programs: USAID assistance in budget formulation augments IMF support to develop a Treasury Department and to establish a primary securities market. This program also complements World Bank assistance in fiscal reform.
Principal Contractors, Grantees, or Agencies: U.S. Department of Treasury, and the Barents Group.
Selected Performance Measures:
Baseline Target Fiscal balance as percent of GDP,
excluding grants-7.5% (1995) -3.0% (2000) % of GOG budget deficit financed
by government securitiesless than 1% -20% (2000)
ACTIVITY DATA SHEET
PROGRAM: GEORGIA
TITLE: Accelerated Development and Growth of Private Enterprises, 110-SO01.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $8,150,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1993 ESTIMATED COMPLETION DATE: FY 2000Summary: Georgia's positive economic growth rate over the past four years attests to the success of its macroeconomic stabilization policies, as well as the depth to which its economy had sunk in the wake of the collapse of the former Soviet Union. While much of the country's Soviet-era industry has remained largely idle or at low capacity, economic growth has been driven by the nascent private sector, particularly agriculture and new small businesses. This strategic objective will help accelerate development and growth of private enterprise in Georgia. USAID is undertaking a broad, multi-year economic reform programa, which includes comprehensive accounting reform, commercial law, market development for Georgian products. The direct beneficiary of this objective are private enterprises, although Georgians in general stand to gain from an active, growing private sector.
Key Results: At present, USAID-funded activities focus on five intermediate results: (1) increased foreign investment; (2) increased transfer of technology; (3) increased access to credit by domestic enterprises; (4) increased access to export markets and development of domestic markets; and (5) development of an improved framework for economic policies, commercial laws and regulations for economic activities.
Performance and Prospects: The USAID-funded Institutional Reform in the Informal Sector (IRIS) Caucasus Center replaced the Center for Economic Policy and Reform (CEPAR) in developing a legal and regulatory framework supportive of foreign investment under this objective. Membership in the World Trade Organization (WTO) will be a major benchmark in terms of making Georgia attractive to foreign investors, over the long-term. This activity is on track; USAID and GOG anticipate that WTO accession will be accomplished by the end of 1999. In addition to this WTO work, IRIS provides both legal and technical assistance in the areas of commercial law reform and macroeconomic indicators. ACDI/VOCA has been successful in developing appropriate new technologies for the Georgian seed industry and has an excellent record in recovering loans to farmers.
With respect to accounting reform, the Georgian State Chancellery and Parliament signed an MOU establishing the Georgian Association of Professional Accountants and Auditors. Mass conversion to International Accounting Standards will commence in early 1999, due in part to provisions of the Securities Law passed in December 1998.
The Shorebank/FINCA Small and Medium Enterprise Finance Program provides credit, in the range of $50 to $500,000, to small and medium entrepreneurs. Initial efforts have focused on establishing basic microfinance and small business lending capabilities. Future effort will focus on expansion, and on creating permanent and sustainable capacities within indigenous institutions to lend to and invest in small and medium enterprises.
Possible Adjustments to Plans: The current IRIS contract expires on March 27, 1999; a follow-on contract is being designed. In its second year, ACDI/VOCA will focus on the commercialization of its seed production efforts. In accounting reform, the contractor is currently identifying a list of 300 private enterprises to be targeted for mass conversion by the end of the project in October 1999. In addition, USAID will be preparing a new program strategy for assistance to Georgia during Spring, 1999.
Other Donor Programs: The World Bank, EBRD, EU TACIS, and UNDP are supporting Small and Medium Enterprise development with various projects including access to financing, technical assistance, grants, and institutional development.
Principal Contractors, Grantees, or Agencies: USAID activities are implemented by IRIS, Shorebank/FINCA, and PVOs such as the International Executive Service Corps, ACDI/VOCA and the Eurasia Foundation.
Selected Performance Measures:
Baseline Target Private sector share
of employment28% (1995) 70% (2000) Private sector share of GDP 50% (1996) 65% (2000) Foreign direct investment
(US$ Millions)$6m (1995) $80m(2000) WTO Accession No (1998) Yes (1999)
ACTIVITY DATA SHEET
PROGRAM: GEORGIA
TITLE: A Competitive Private Financial Sector that is More Responsive to the Needs of a Market-Oriented Economy, 110-SO01.4
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $4,930,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1993 ESTIMATED COMPLETION DATE: FY 2000Summary: This strategic objective contributes to the development of a more competitive and market-responsive private financial sector. During the past year, USAID technical assistance has helped establish a bank training center in a joint effort with the National Bank of Georgia (NBG) and a consortium of leading local commercial banks; installed an electronic payments system for expediting international and domestic financial transactions; and spearheaded a legal and regulatory base for the establishment of a capital markets infrastructure.
USAID is financing technical assistance to implement electronic payment and integrated accounting systems that will permit real-time financial transactions to take place among domestic banks and between the central bank and its seven regional clearing branches. The systems will also facilitate international transactions from the NBG platform provided to commercial banks. USAID will continue to provide a resident advisor and short-term technical assistance to train commercial bank managers and officers. The focus of this training is credit analysis, portfolio management, asset and liability management, international accounting standards, and internal audit.
Key Results: USAID-funded activities focus on two major aspects of the financial sector: banking and capital markets development. Under banking, there are 3 intermediate results: (1) transaction efficiency aimed at increased technical efficiency of financial sector transactions in commercial banks; (2) increasing increased public confidence in the banking system; and (3) financial services aimed at increased availability of financial services. The capital markets program is designed to (1) establish an independent securities and exchange authority; (2) develop a mechanism for securities trading; (3) create a centralized clearing, settlement and depository system; (4) properly train broker-dealers, investment funds managers and other members of the securities community; and (5) assist newly-privatized enterprises to improve corporate governance and shareholder rights, and compliance with securities regulations pertaining to disclosure and reporting.
Performance and Prospects: An Integrated Accounting System and Electronic Interbank Payments System is now being established, implemented in National Bank of Georgia through Montran. The Montran system will provide the technical capacity for real-time settlements and payments in Georgia for the first time ever. The implementation of the new accounting and payments systems for the NBG is a major change impacting almost every part of the organization. USAID's technical assistance to NBG will improve the capacity of the Bank to implement and maintain a Local Area Network, Bank Supervision Database, and Data Security systems.
The Shorebank/FINCA Small and Medium Enterprise Finance Program will establish locally independent financial and non-financial intermediaries by approximately 2001. An important element of USAID's comprehensive market reform program is its capital markets development program. This two year program was initiated in FY 1998, and plans to achieve the following results by 2000: the establishment of a Securities and Stock Exchange State Inspection Board regulatory capacity; the development of a securities trading mechanism; the development of a centralized clearance, settlement and depository system; the creation of a network of trained market professionals (particularly broker-dealers and investment funds); and corporate governance, promotion of shareholder rights, and improved participation and compliance with regulations by newly-privatized enterprises.
As noted above, Barents has been working on a banker training center called the Banking Finance Academy of Georgia. This Academy will be self-sustaining financially, as well as programmatically, by the end of 1999 or mid-2000. Local courses now are being developed and local instructors trained. Five additional training courses are expected to be completed by September 1999, including a series of seminars on International Accounting Standards for bankers.
In addition, a new program for the institutional development of bank supervision capacity at the National Bank of Georgia (NBG) will be implemented over the next three years. In the framework of its Bank Supervision and Enforcement program, USAID will focus on implementation of international accounting standards for the financial sector and development of a risk-based, off-site supervisory capacity and related early regulatory intervention and problem bank resolution mechanisms. Improving the framework and procedures for legal enforcement of prudential banking regulations and institutional development of the NBG legal department also will be a goal of the program.
Possible Adjustments to Plans: USAID will be preparing a new program strategy for assistance to Georgia during Spring, 1999. In light of Georgia's current financial difficulties, the timing of the Capital Markets Development Program will be examined during Strategy preparation.
Other Donor Programs: USAID is coordinating its assistance activities with the NBG, the Ministry of Finance, the Securities and Stock Exchange Inspection Board, the World Bank, the IMF, and the EU.
Principal Contractors, Grantees, or Agencies: USAID's investments in the electronic payments system are managed directly by USAID; the Barents Group manages both the bankers training and capital markets activities.
Selected Performance Measures:
Baseline Target Percentage of banks adapting international accounting standards None (1995) 50% (2000) Percentage of banks offering basic set of financial services 8% (1996) 50% (2000) Independent securities & exchange authority No (1997) Yes (2000) Commercially viable securities trading system No (1997) Yes (2000)
ACTIVITY DATA SHEET
PROGRAM: GEORGIA
TITLE: A More Economically Sustainable and Environmentally Sound Energy Sector, 110-SO01.5
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $6,150,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1996; ESTIMATED COMPLETION DATE: FY 2001Summary: This strategic objective is a more economically sustainable energy sector. USAID's emphasis is two-fold: (a) to create a climate that will attract private sector participation and ownership, with subsequent improvements in the management of resources and provision of services; and (b) to improve energy sector efficiency in economic terms, with subsequent increases in capital and operating resources. Beneficiaries of this objective are the approximately 1.3 million residential household and commercial consumers of electricity and potentially an equal number of natural gas customers.
Key Results: At present, USAID-funded activities focus on 2 intermediate results: (1) privatization of the energy sector aimed at increasing private sector investment in the energy sector; and (2) energy efficiency aimed at more efficient use of resources and conservation.
Performance and Prospects: The successful privatization of Telasi, the Tbilisi-area local electric distribution enterprise, through a transparent international tender process has been the greatest success in promoting private enterprise in the Georgian energy sector. Telasi was successfully sold to AES, an American electric distribution and generation company, in January 1998. This privatization is the first step in providing reliable, efficient electric energy services to Georgia. Another key USAID-funded accomplishment was the successful development of a pilot project in the Rustavi Electric Distribution Enterprise service area. This project has been successful in rewiring electric meters and developing new meter reading, billing and collection systems to improve revenue collection to 100%. USAID also funded development of a Least Cost Plan for the Ministry of Fuel and Energy to assist them in planning for new or to refurbish old electric generation sources in a least cost way. USAID will continue to provide technical assistance to the Ministry to assure that staff is fully trained to operate and maintain this planning model.
Another important success was the completion of the Tbilisi District Heating System assessment and the examination of the Zugdidi geothermal heating potential for industrial applications. USAID is investigating the possibility of implementing a natural gas demonstration project in the Tbilisi area.
USAID provided technical, legal and regulatory assistance to the Georgia National Electric Regulatory Commission (GENERC) staff and provided training and skills building in the areas of rate setting, cost analysis, hearings procedures and policy implementation. USAID has prepared amendments to the Georgian Electricity Law to expand the authority of GENERC to regulate gas supply, transmission and distribution. USAID is also providing technical assistance in the establishment of of a Wholesale Electric Market, including development of wholesale market rules and training for the Wholesale Market group's staff.
In the gas sector, USAID purchased four electronic "SuperFlo" high pressure gas transmission pipeline meters at Sioni, Saguramoi, Rustavi and Red Bridge. These meters enable Saktransgasmretsvi, the state-owned gas transmission enterprise, to meter gas flows from Russia into Georgia and, from Georgia to Armenia. The installation of these meters has practically eliminated the disputes between these countries related to gas deliveries.
Possible Adjustments to Plan: USAID will be preparing a new program strategy for assistance to Georgia during the Spring of 1999 and any needed adjustments to plans will be made at that time.
Other Donor Programs: The European Union has undertaken comprehensive assessments in tariff structure, accounting, billing, and metering practices, while the World Bank is conducting a loan appraisal of maintenance and rehabilitation work in electric generation, transmission, and distribution systems. USAID complemented other donor activities with a pre-loan analysis of the Inguri Hydroelectric Station. The European Bank for Reconstruction and Development (EBRD) approved a loan to a local power company to rehabilitate the Rioni hydro station and improve operations and water treatment. The EBRD also is also developing loan packages to repair the Inguri Hydroelectric Station, the largest hydropower station in the country, and to rehabilitate the Zugdidi geothermal field to provide heat to light industries and households in the region.
Principal Contractors, Grantees, or Agencies: There are currently two institutional contractors: Hagler Bailly (restructuring, privatization and legal assistance) and the US Energy Association (training in all energy areas).
Selected Performance Measures:
Baseline Target Oil-Gas pipeline legislation passed No (1996) Yes ( 2000) Independent regulated utilities with
meaningful financial statements
established0 (1996) 6 (2000) Percent of power generation companies
that are privately-owned0 (1996) 70 (2000)
ACTIVITY DATA SHEET
PROGRAM: GEORGIA
TITLE: Increased Citizens' Participation in Political and Economic Decision-Making, 110-SO02.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $4,350,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1993; ESTIMATED COMPLETION DATE: FY 2000Summary: This strategic objective fosters the growth of civil society and grassroots democratic reforms in Georgia. The National Democratic Institute (NDI) provides tailored assistance to parliamentarians and staff to reform the committee system and improve monitoring and constituent outreach, through consultations on policy and management issues, conferences and workshops on draft laws, and performance evaluation and parliamentary oversight of the executive branch. NDI also provides training to political parties and parliamentary factions, on organization, effective management of parliamentary factions inside the legislature, upgrading parliamentary skills, strengthening party-constituency linkages, and building substantive political platforms. The International Republican Institute works with regional chapters of the political parties, concentrating on message development, election monitoring and procedures to file election complaints. The International Foundation for Electoral Systems (IFES) provides technical assistance and training to the Central Election Commission, support for electoral reform and voter education. ISAR (the Initiative for Social Action and Renewal) and the Eurasia Foundation provide assistance to indigenous NGOs, working to improve management and communications capacity, and their ability to participate effectively in the development of democratic legislative and social reforms. NDI provides technical assistance and training to community-based organizations, fostering dialogue with local officials. Working with Georgian independent television media, Internews provides training programs to bolster TV reporters' capacity to produce high-quality daily news reports on political and economic developments. Media assistance also focuses on developing media associations and networks, providing training in management, advertising, and journalists' rights and responsibilities.
Key Results: At present, USAID-funded activities focus on four intermediate results: (1) improved availability of and access to information; (2) human rights institutions established to ensure fair enforcement; (3) increased public confidence in citizens' ability to effect change; and (4) sustained public confidence in the political process.
Performance and Prospects: USAID continues to support and encourage the passage of legislation appropriate to and supportive of citizen participation in decision-making. IFES will conduct expanded activities, including a voter registration campaign and voter list updates, in preparation for the parliamentary elections in 1999, and the presidential election in 2000. In NGO development, Horizonti (ISAR subgrantee) will continue to build up its regional (Caucasus) outreach and integration efforts as well as further expanding to the provinces, concentrating more on work with human rights NGOs and development of community-based organizations, and increasing NGO strengthening efforts within the Caucasus. As part of this effort, Horizonti will start a regional cooperative grants program. In addition, Horizonti will provide assistance in developing effective strategies for communicating NGO interests/positions to the press and general public. Internews will continue to work on increasing the professionalism of journalism, through new TV programs and on-the-ground assistance. Internews will reorient its focus from standard technical training to tailored topics, e.g. investigative reporting, campaign and election coverage, judicial reform. Similar activities, and assistance with the development of a Media Law and Freedom of Information Act, will continue in FY 2000, and evolve based on the changing needs and growth of Georgian civil society. In FY 1998, the program concept embodied in the weekly news programs, produced in conjunction with the Georgian Television Network (TNG), was expanded to include the entire South Caucasus. The news program -- Zakavkazie -- involved member stations in all three republics and focused on news, conflict resolution, local stories and other issues of common interest. In 2000, USAID will initiate a new-start for print media activities. To improve Parliament's technical capacities, in FY 1998 USAID donated significant computer equipment to the Parliament through the National Academy for Public Administration, which is currently finalizing the development of a local area network and a legislative database.
Possible Adjustments to Plans: USAID will be preparing a new program strategy for assistance to Georgia during Spring 1999.
Other Donor Programs: In addition to general donor coordination, in 1998 USAID initiated a series of donor meetings in advance of the local council elections, involving the United Nations Development Program (UNDP), European Union (EU), Organization for Security and Cooperation in Europe (OSCE), the British Government, the German government, and others that fund and/or implement democracy assistance programs. This coordination mechanism was extremely successful, not only in avoiding duplicative investments, but in adding value to USAID-funded election-related programs through cooperative efforts.
Principal Contractors, Grantees, or Agencies: USAID-sponsored activities are implemented by the NDI, the International Republican Institute, the International Foundation for Electoral Systems, Internews, the United Nations High Commission for Human Rights, Eurasia Foundation, Initiative for Social Action and Renewal , Horizonti and the National Academy for Public Administration.
Selected Performance Measures:
Baseline Target Number of NGOs advocating for legal
and policy changes0 (1993) 65 (2000) Number of NGOs rated as sustainable
(based on NGO sustainability index)1 (1995) 3 (2000) % of national legislation passed that
is published/covered in media5% (1996) 35% (2000) Number of media outlets with access to
international/national independent sources12 (1998) 20 (2000) Number of weekly news and information
programs37 (1998) 50 (2000) Revised election law No (1998) Yes (2000)
ACTIVITY DATA SHEET
PROGRAM: GEORGIA
TITLE: Legal Systems that Better Support Democratic Processes and Market Reforms, 110-SO02.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $1,600,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1996; ESTIMATED COMPLETION DATE: FY 2000Summary: This Strategic Objective supports the creation of legal systems that better support democratic processes and market reforms. Whereas Judges are immediate beneficiaries of activities under this objective, the Georgian population stands to benefit from an legal system administering the rule of law During FY 1999, USAID continues to provide assistance in drafting key pieces of legislation, including the Administrative Code, the Law on Enforcement of Judgements, the Criminal Code, major amendments to the Law on the General Courts, and the Law on the Bar.
Key Results: At present, USAID-funded activities focus on two intermediate results: (1) increased citizen respect for legal systems; and (2) increased capacity and independence of the judicial branch.
Performance and Prospects: USAID programs have provided technical and financial support to the Georgian Young Lawyers Association, Georgia’s most progressive and only independent lawyers' association, in the provision of training, including a focus on commercial law. USAID assistance is being provided for the development and implementation of a judicial certification system, as well as limited support in the initial planning and development of judicial training programs. Significant impact can be seen in the comprehensive judicial staffing of the entire appellate court system with judges who have passed the qualification exam and received specialized training in judicial skills, ethics and demeanor.
Citizen respect and support for judicial reform was demonstrated with the extensive and positive media coverage that occurred during the administration of judicial certification exams. To date, almost one-third of the judiciary has passed the qualification examination, a first in the NIS region. While the GOG is putting in place a core of competent judges, corruption remains a pervasive problem. If the GOG fails to provide the significant pay raises mandated by law, judicial reform will be hampered. After passage of the Administrative Code, private citizens will have an important mechanism to contest over-intrusive government regulations.
The program will also provide training and materials to Georgian legal practitioners, focused on the commercial law section of the new Civil Code. USAID will fund practical how-to manuals written by the Code’s drafters, and will support their dissemination throughout the country.
Possible Adjustments to Plans: Assistance with preparing and printing the judicial examinations in the United States has been a significant component of USAID’s judicial reform activities. In 1999, the Georgians will play a larger role in preparation and printing of the exams. After the major new pieces of reform legislation are passed, the focus of USAID's efforts will shift to implementation of the new laws. USAID plans to add a significant new component to its legal and judicial reform activities which will provide legal advocacy NGOs opportunities to monitor the courts. This new component will be reflected in a new assistance strategy being prepared during Spring 1999.
Other Donor Programs: USAID works in close coordination with a newly established Government of Georgia (GOG) Council of Justice, comprised of representatives of the legislative, executive, and judicial branches. In addition, USAID has established excellent working relationships with both the German and Dutch bilateral assistance providers, and cooperates with the European Union and the Council of Europe. USAID is working in partnership with the World Bank as they begin the process of implementing a judicial reform loan to the GOG to streamline and strengthen its judicial infrastructure. The European Union is also contributing to this effort.
Principal Contractors, Grantees, or Agencies: USAID-sponsored activities are implemented by the American Bar Association’s Central and East European Law Initiative (ABA/CEELI), AMEX International, Inc., National Academy of Public Administration, Georgian Young Lawyers Association and other NGOs. USAID will work with the US Department of Justice, which plans to send a prosecutor to provide technical assistance to the Procuracy.
Selected Performance Measures:
Baseline Target Number of major legal reform laws enacted 0 (1996) 6 (2000) Percentage of judges certified None (1997) 50 (2000)
ACTIVITY DATA SHEET
PROGRAM: GEORGIA
TITLE: More Effective, Responsive and Accountable Local Government, 110-SO02.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $2,000,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1996 (?); ESTIMATED COMPLETION DATE: FY 2000Summary: Though a de-facto decentralization occurred prior to the election of President Shevardnadze in 1995, consolidation of the ruling party’s power under Shevardnadze has led to the establishment of a system of regional governor appointments, which has effectively "re-centralized" the system. The constitution of Georgia includes a clause relating to the establishment of a decentralized local government system only after the resolution of the issue of territorial integrity, i.e., the re-integration of South Ossetia and Abkhazia. However, in early 1996, the Government of Georgia (GOG) determined that despite lack of resolution on these issues, it was critical for the development of the nation as a whole, particularly in light of conditionalities for accession to European conventions, to move forward in establishing a legal framework for a local government system, as well as scheduling as quickly as possible local government elections. This Strategic Objective supports more effective, responsive, and accountable local government. Local council elections were held in November 1998, following a two-year delay.
Key Results: At present, USAID-funded activities focus on two intermediate results: (1) increased citizen participation in local government; and (2) free and fair local government elections held.
Performance and Prospects: With USAID technical assistance, the GOG finally passed a local government law in 1997, followed by a local election law in 1998. Though not a fully decentralized system, this effort was a step in the right direction, and the elections took place in November 1998. To date, USAID has not undertaken a major program in local government, although it has provided opportunities for local and municipal officials to attend workshops on local government issues in the NIS region. In FYs 1999 and 2000, USAID will work with elected officials, senior municipal staff and community leaders in selected cities and communities to provide training and technical assistance in key areas such as budget, municipal finance, taxation, city management, constituent outreach, and service delivery. Contractors/grantees also will work to develop a mayors’ association, which will aid in the dissemination of lessons learned and best practices among municipal officials and local council members, to help create an effective mechanism for lobbying the central government on issues of concern to local governments and their constituents.
Possible Adjustments to Plans: USAID will be preparing a new strategy for assistance to Georgia in Spring, 1999. USAID will closely coordinate in this sector with other donors, including the World Bank and the European Union, to maximize impact and preclude duplication. This could affect the selection criteria for USAID local government support target communities.
Other Donor Programs: USAID coordinates its efforts with World Bank municipal development activities and with the European Union, which is working with the GOG on civil service reform at the central government level.
Principal Contractors, Grantees, or Agencies: Since activities to date have only been in training and exchanges, principal implementors are yet to be determined.
Selected Performance Measures:
Baseline Target Legislation passed favoring local
government autonomyNo (1996) Yes (2000) Local government elections held No (1996) Yes (2000) Local budget law passed No (1998) Yes (2000) Fiscal decentralization policies in place No (1996) Yes (2000) Fiscal decentralization policies implemented No (1996) Yes (2000)
ACTIVITY DATA SHEET
PROGRAM: GEORGIA
TITLE: Human Suffering and Crisis Impact Reduced, 110-SO03.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $7,000,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1993 ESTIMATED COMPLETION DATE: FY 2002Summary: This Strategic Objective helps to meet basic human needs, while emphasizing local self-help and conflict resolution activities. Activities under this objective contribute to political and social stability and assist in the peace process. Since 1993, USAID has provided humanitarian assistance to the Government of Georgia (GOG) and through U.S. Non-Governmental Organizations (NGOs) and international organizations. This assistance met vital human needs and was a key component in the political and social stabilization of Georgia, allowing the GOG to embark upon democratic and economic reforms. The beneficiaries are internally displaced persons (IDPs) and other socially vulnerable groups throughout the country, but with areas of emphasis in the Samegrelo region. Although the immediate crisis has passed, ethnic conflict has not been resolved and economic progress remains slow. As recently as May 1998, armed conflict has caused 35,000 persons to be displaced from the Gali district of Abkhazia. Ethnic tension remains an area of concern in the Armenian-populated district of Samtske-Javakheti, and Adjara continues to be nearly independent of the central government in Tbilisi.
Key Results: At present, USAID-funded activities focus on 3 intermediate results: (1) meeting immediate human needs through food, shelter, heating and immunization assistance programs; (2) responding to the needs of the victims of the Abkhazia conflict; and (3) creating a capacity within the GOG to better identify the truly vulnerable within its population.
Performance and Prospects: USAID food and fuel assistance has been credited by the GOG with the survival of Georgia as an independent country. Additionally, USAID-funded immunization programs through UNICEF have halted a severe diphtheria epidemic and restored immunization levels within Georgia to minimally acceptable levels. Recent programs have provided shelter and water/sanitation for the recent IDPs from Gali region, while initiating self-help projects conceived and implemented by local communities. Two youth houses have been opened -- one in Abkhazia and one in Tbilisi -- which offer services to children effected by the Abkhazia conflict and which also seek to improve mutual understanding between Abkhaz and Georgian children. The first steps have recently been taken to establish a computer database of vulnerable households in Tbilisi.
Throughout 1998, the security situation in Abkhazia and Western Georgia has remained volatile and has hindered the development and implementation of programs in those regions.
Possible Adjustments to Plans: A peace settlement for Abkhazia would necessitate a rapid deployment of resources to assist the resettlement of displaced persons.
Other Donor Programs: Humanitarian and transition assistance is provided in close coordination with the European Commission and other bilateral, primarily European, donors. The EC is particularly active in supporting programs in Abkhazia, where it is more difficult for USAID to operate.
Principal Contractors, Grantees, or Agencies: USAID-sponsored activities are implemented by the United Nations High Commissioner for Refugees, the United Nations Children’s Fund, the International Federation of the Red Cross, the United Methodist Committee on Relief, and the Adventist Relief and Development Agency .
Selected Performance Measure:
Baseline Target Number of IDPs participating in USAID
income-generating projects58,600 (1997) 75,000 (2000) % drop in estimated vulnerable population 700,000 (1997) 35% (2000)
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Last Updated on: July 14, 1999 |
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