COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 24.03.1998 
COM(1998) 178 final 
The Phare Programme 
Annual Report 1996 
(presented by the Commission) 

Contents 
Commissioner's statement 
The Phare Programme 
I Phare in 1996 
Developments in 
EU-central European relations 
Phare Programme activities in 1996 
Developments in operational management 
Financial overview and performance 
II Phare in the individual partner countries 
Albania 
Bosnia and Herzegovina 
Bulgaria 
Czech Republic 
Estonia 
FYROM 
Hungary 
Latvia 
Lithuania 
Poland 
Romania 
Slovakia 
Slovenia 
III Statistical overview 
Phare funding by country 
Phare funding by sector 
List of tables 
Europe Agreements 
Phare's grant contributions as a facilitator 
and multiplier for infrastructure co-financing 
Shift towards priority sectors of pre-accession strategy 
Funds committed, contracted and paid 1990-1996 
Cumulative funds committed, 
contracted and paid 1990-1996 
Contracts concluded by calendar year 
Payments in each budget year 
Cumulative contracts and payments 
1 
Commissioner's statement 
For the European Commission, 1996 was primarily a year of consolidation of its 
relations with the countries of Central and Eastern Europe (CEECs) in particular, 
through the instruments of the pre-accession strategy: the Europe Agreements, the 
Structured Dialogue and the Phare programme all of which are designed to assist the 
CEECs in their preparation for membership of the European Union. 
1996 was also a year of great challenge, as Phare, for the first time, was rapidly 
mobilised to provide essential aid to war-torn Bosnia-Herzegovina immediately after 
the signature of the Dayton Agreement. 
1996, was lastly, a year of reflection within the Commission on how to adapt the pre-
accession strategy and its constituent instruments to best meet the needs of the 
candidate countries as they prepare for membership of the European Union. 
This Annual Report describes the activities of the Phare programme in 1996. A 
particular effort has been made this year, to include descriptions of results achieved 
under programmes initiated in earlier years as well as the difficulties encountered in the 
implementation of a programme with such challenging objectives and high visibility. 
This new approach to the annual report aims to provide the reader with a clearer 
overview of the Phare programme, and responds to the comments received on the 
1995 Annual Report. 
I would, nevertheless, like to touch on the most recent developments in relations with 
the candidate countries and their impact on the Phare programme in particular. With 
regard to the Phare programme the Commission elaborated new orientations for the 
Phare programme in the candidate countries in March 1997. The main thrust of the 
orientations are to turn Phare into an "accession-driven" programme, focusing on the 
most pressing needs of the candidate countries in their preparation for accession. They 
will not affect the non-associated countries that have not applied to join the European 
Union and whose programmes, therefore, are not directed towards preparation for EU 
membership. 
Two priority areas are identified in these orientations, as a result of the Commission's 
analysis of the situation in the candidate countries, set out in the Commission's 
Opinions on each country's application for EU membership which were published in 
July 1997. First and foremost, Phare will henceforth focus on institution building, that 
is the strengthening of the administrative capacity of the candidates to implement and 
apply the acquis communautaire with the same guarantee of effectiveness as in the 
current Member States. Second, it will support investments needed in the candidate 
countries to address acquis-related sectoral, regional and structural imbalances in their 
economies, and help bring their industry and infrastructure up to EU standards. 
These new orientations for Phare form part of the re-inforced pre-accession strategy 
which the Commission has proposed to the European Council in uAgenda 2000" in 
order to offer practical support, irrespective of each candidate country's current state 
of preparation in introducing reforms entailed by accession according to the priorities 
identified in the Opinions. 
As well as this ongoing political process, the Commission has reviewed the manner in 
which Phare operates. In July 1997 the Commission issued an interim evaluation of 
the Phare programme which highlighted the strengths and weaknesses of the Phare 
programme since its creation in 1989. Whilst in its conclusions the overall contribution 
that the Phare programme has made was evaluated positively, shortcomings were 
identified, particularly in the construction of the programme. In order to address these 
problems, the Commission has taken decisions to improve the manageability and 
financial performance of the programme, in addition to the new policy orientations 
mentioned above. Phare will henceforth focus its efforts on precise objectives and on 
larger projects. This should enable Phare to avoid a multiplication of small projects and 
the fragmentation of its effectiveness. In addition, timetables for programme 
implementation will be closely monitored and respected. 
With enlargement set to profoundly reshape the European continent, the Phare 
programme, as the main financial instrument of the pre-accession strategy, will face 
new challenges in the years ahead. The new orientations elaborated by the Commission 
in 1997 will streamline and improve the efficiency of this instrument designed to meet 
the mutual objectives of the European Union and the candidate countries. As the 
European Commissioner responsible for the Phare Programme, I commend this Annual 
Report to you and hope that it will provide useful information to contribute to a better 
understanding of the Phare programme in general, its objectives and results. 
Hans van den Broek 
Member of the European Commission 
The Phare Programme 
The Phare Programme is the main channel for the European Community's 
financial and technical cooperation with the countries of central and eastern 
Europe. Set up in 1989 to support reform in Poland and Hungary, by 1996 Phare 
had been extended to include 13 partner countries from central and eastern Europe. 
Initially designed to support these countries in their transition towards democracy 
and a market economy, Phare's role has gradually evolved. At the Essen European 
Council of December 1994, it was decided that Phare would be the main financial 
instrument supporting the ten associated countries in their preparations for 
accession to the EU. In addition, for the non-associated countries in the region, 
Albania, the Former Yugoslav Republic of Macedonia (FYROM) and Bosnia-
Herzegovina, Phare provides support in their transition to democracy and a market 
economy. 
Originally allocated a budget which totalled ECU 4.2 billion for the 1990-1994 
period, the Phare budget was increased to ECU 6.693 billion for the 1995-1999 
period, following the European Council in Cannes in 1995. Phare assistance takes 
the form of grants rather than loans, and its work encompasses a wide range of 
activities, such as supporting partner countries as they adopt the 'acquis 
communautaire', inter-regional cooperation, nuclear safety, promotion of civil 
society, financing or co-financing of infrastructure investment, often in close co­
operation with IFIs. 
Throughout the 1989-1996 period, Phare has shown a continuing flexibility in 
adapting to the changing priorities and limitations of the economic and social 
reform process. The evolving distribution of funding by sector illustrates the way 
in which Phare has responded to changes in needs and political direction. In the 
period 1994-1996 Phare has increased its support for the approximation of EC 
legislation and administrative reform, as well as projects promoting 
démocratisation and civil society, and investment in infrastructure, including 
cross-border cooperation. 
Conceived as a technical assistance programme to provide direct support to the 
partner countries, Phare was organised on a demand-driven basis. This meant that 
the projects financed have generally been those put forward by the beneficiary 
country. As the objectives evolved, however, it became necessary to make a 
thorough appraisal of the Programme so as to re-direct Phare towards the essential 
task of the coming years, namely, preparing the candidate countries for accession. 
During 1996, the Commission carried out a review of Phare, which led to the 
elaboration of new orientations for the programme in March 1997. While the new 
orientations appeared in 1997, and thus outside the period covered by this Report, 
they are inseparable from the Phare Programme and its political context, and it 
was felt necessary to include them in the Report. The same reasoning applies to 
other developments that took place in 1997, but which have nonetheless been 
included in this Report in order that Phare's objectives can be properly understood. 
In July 1997, the Commission presented its Agenda 2000, together with its 
opinions on each of the applications for membership by ten associated countries of 
central and eastern Europe. In a single framework, the Commission outlined the 
broad perspective for the development of the European Union and its policies 
beyond the turn of the century, the impact of enlargement on the EU as a whole, 
and the future financial framework beyond 2000, taking into account the prospect 
of an enlarged Union. The Agenda 2000 documents, taken together, offer a clear 
and coherent vision of the EU as it enters the 21st century. 
Phare in 1996 
Developments in EU-central European relations 
In 1996 , the Phare partner countries continued their efforts to reform their political 
and economic structures in preparation for accession to the European Union. The pace 
of change was uneven across the applicant countries. The EU for its part continued its 
activities that assist these countries in their efforts, while at the same time 
concentrating on the reforms it has to undergo itself if it is to be able to welcome new 
members. 
Phare also provides support to Albania, Bosnia-Herzegovina, and the former 
Yugoslav Republic of Macedonia. As non-associated countries, they are not covered 
by the pre-accession strategy. During 1996, Phare supported these countries in their 
efforts to reform their economies and political structures, and to overcome the ravages 
of war and social upheaval. 
The EU's pre-accession strategy 
Phare is at the centre of the political and economic relations between the European 
Union and the countries of central and eastern Europe. Bulgaria, the Czech Republic, 
Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia have 
applied to join the European Union. The pre-accession strategy, adopted at the Essen 
Council in December 1994, is designed to help them align their political, economic 
and legal systems with those of the European Union. The pre-accession strategy has 
three main components: the Europe Agreements, the Structured Dialogue, and the 
Phare Programme. 
Europe Agreements 
The Europe Agreements set the framework for bilateral relations between the 
European Communities and their Member States on the one hand, and the individual 
candidate countries on the other. Developed by the European Community in 1990 
and signed with individual countries over subsequent years, the Europe Agreements 
cover trade-related issues, political, economic and cultural cooperation. 
Under the Agreements, the associated countries prepare for progressive convergence 
in a wide range of areas and commit themselves to approximating their legislation, 
particularly in the areas relevant to the internal market, to that of the European Union. 
In June 1996, Slovenia became the tenth country of central and eastern Europe to 
apply for accession to the EU. The signing of a Europe Agreement on 10 June 1996 
meant that Slovenia formally became part of the pre-accession process. An Interim 
Agreement, enabling the implementation of the trade chapter of the Europe 
Agreement prior to ratification of the Europe Agreement, was signed in November 
1996. 
Country 
Bulgaria 
Czech 
Republic 
Estonia 
Hungary 
Latvia 
Lithuania 
Poland 
Romania 
Slovakia 
Slovenia Europe Agreement 
signed 
March 1993 
October 1993 
June 1995 
December 1991 
June 1995 
June 1995 
December 1991 
February 1993 
October 1993 
June 1996 Europe 
Agreement came 
into force 
February 1995 
February 1995 
February 1994 
February 1994 
February 1995 
February 1995 Official 
application for EU 
membership 
December 1995 
January 1996 
November 1995 
March 1994 
October 1995 
December 1995 
April 1994 
June 1995 
June 1995 
June 1996 
Key instruments of the Europe Agreements are the Association Council, Association 
Committee meetings and Joint Parliamentary Committees. Association Councils are 
bilateral meetings at ministerial level between the European Union and an associated 
country, where progress in all areas of approximation towards the EU is discussed. 
The Association Councils are complemented by Association Committees at senior 
official level, which review in more detail all areas under the Europe Agreements. 
These are supported by a series of sub-committees, which allow for more regular and 
detailed in-depth technical discussions on all areas covered by the agreements. 
Furthermore, there are Joint Parliamentary Committees, which bring together 
parliamentarians of the national parliaments of the associated countries and members 
of the European Parliament. In 1996 a full cycle of Association Councils, Committees 
and sub-committees was completed with the countries with which Europe Agreements 
are in force, i.e. Bulgaria, the Czech Republic, Hungary, Poland, Romania and 
Slovakia. 
The Europe Agreements aim gradually to establish free trade in industrial products 
over a transition period, on the basis of asymmetry: the European Community opens 
its market more rapidly than the associated country. As a result, industrial products 
from the associated countries have had virtually free access to the European 
Community since the beginning of 1995, with certain restrictions in only a few 
sectors such as agriculture and textiles. 
Following the Uruguay Round and EU enlargement with Austria, Sweden and 
Finland, the Europe Agreements with Poland, Hungary, and the Czech and Slovak 
Republics were adapted to reflect institutional as well as commercial changes. Similar 
work is continuing in order to adapt the agreements with Romania and Bulgaria. 
Appropriate adjustments have also been made to the free trade agreements with the 
Baltic States. 
Structured dialogue 
The second instrument of the pre-accession strategy is the structured dialogue. Agreed 
at the European Council of Copenhagen in 1993, the structured dialogue provides for 
a multilateral framework of regular meetings between the institutions of the European 
Union and the associated countries. In the conclusions of the European Council of 
Essen in 1994, the structured dialogue was listed among the instruments of the pre-
accession strategy together with the bilateral Europe Agreements, the Phare 
Programme and the White Paper on the Internal Market. At Essen it was agreed to 
hold regular meetings at ministerial level in order to exchange views on issues of 
interest to both European Union Member States and the associated countries. 
The structured dialogue enables discussion of issues of common concern in areas 
where solutions require action at European level, ranging from cooperation in the 
fields of energy, environment, transport, science and technology through Justice and 
Home Affairs to the Common Foreign and Security Policy (CFSP). In February 1996, 
Foreign Affairs Ministers from Member States and from associated countries agreed 
to improve the structured dialogue by means of better preparation of the meetings, the 
establishment of annual programming of the work to be done over a period 
encompassing two presidencies, and by focusing on a reduced number of topics for 
discussion. In order to provide common information to all delegations, the 
Commission prepares the basic document for the dialogue at ministerial meetings and 
the Presidency of the European Union drafts the concluding remarks. 
Phare: deepening and widening 
Developed initially in response to the challenges of transition, the Phare Programme 
has become the main financial instrument of the pre-accession strategy. 
In 1996, the scope of Phare assistance was extended to include two more countries. 
The former Yugoslav Republic of Macedonia (FYROM) became the twelfth Phare 
partner country in March. Between 1992 and 1995, Phare had already operated under 
a Critical Aid Programme (ECU 85 million) with the aim of providing the country 
with essential raw materials, industrial spare parts and fuel for social institutions such 
as schools and hospitals. Since March, the recent relative economic and political 
stability in the country has allowed Phare to evolve in harmony with domestic 
developments. A country strategy was drawn up in 1996 that reflected government 
priorities and identified activities most appropriate to achieving market reforms, such 
as the strengthening of the enterprise sector, support of land reform and agriculture, 
the development of human resources and support for overall restructuring. 
In June, Bosnia and Herzegovina followed FYROM to become the 13th Phare partner 
country. In Bosnia-Herzegovina, the Phare Programme operates in coordination with 
other donor's activities, and programmes were drawn up in 1996 to reflect the 
country's priorities such as economic revitalisation, institution-building and 
démocratisation. As with FYROM, Phare was already providing assistance through an 
Essential Aid Programme worth ECU 125 million before the country officially 
became eligible for Phare assistance. 
During 1996, Albania's position as an established Phare partner country was further 
developed. Phare assistance worth a total of ECU 32.5 million in 1996 focused on 
support of the country's market reforms and the medium-term restructuring and 
modernisation of the Albanian economy as well as the strengthening of links with the 
European Union. 
10 
Phare Programme activities in 1996 
In 1996, the Phare Programme focused on programmes aimed at supporting the 
candidate countries in their efforts and strategies to prepare for membership. The 
reform efforts of the non-associated countries continued to receive support. The funds 
made available to the 13 Phare partner countries in 1996 amounted to ECU 1,223 
million of grant aid, i.e. 5 per cent more than in 1995, and this in a context where 
some other donors are phasing out their assistance. 
Facilitating the approximation of the EC acquis 
Approximation towards and eventually adoption of the 'acquis communautaire' is 
being pursued by all the associated countries. To assist with the adoption of the 
single market acquis, the Commission published a White Paper on the Internal Market 
in mid-1995; subsequently a large number of partner countries elaborated and 
adopted national strategies. 
Programmes providing support for the 'acquis' objective receive important 
allocations in the multi-annual programmes. In 1996, this priority was also included in 
national, horizontal and multi-country programmes. These programmes provide 
support not only for mechanisms to the legislative approximation process itself but 
also for the reinforcement of the administration and bodies necessary to ensure that 
this approximated legislation is effectively applied and enforced. 
A closer look at the 1996 Phare programmes in this area reveals activities in the 
following areas: 
• upgrading of the administrative and ministerial structures in charge of steering the 
European integration process 
raising public awareness of the integration process 
contributing to the development of university and professional knowledge of the 
wide body of European Community law 
rendering public procurement practices more stringent and compatible with the 
EC model 
facilitating adaptation to EC standards and norms through upgrading labs and 
services in charge of accreditation and certification 
particular programmes in areas such as the development and strengthening of anti-
monopoly and competition bodies, VAT administrations, customs, veterinary 
services. 
Of the many horizontal programmes addressing this area, the following received new 
budget allocations: Sigma (ECU 5 million) for the continuation of support to public 
administration upgrading and TAIEX (ECU 6 million) for the office in charge of 
technical assistance information exchange on internal market issues that became 
operational in early 1996. 
11 
Integration through linking upgraded infrastructures with Trans-European 
Networks 
A second important component of Phare's contribution to the pre-accession strategy 
involves the integration of the associated countries with the EU through the 
interconnection of the main communications infrastructure. Programmes in support of 
infrastructure investment in Trans-European Networks in transport, 
telecommunication and energy embody that objective. In the transport sector, nine 
main corridors that ensure the interconnection of the associated countries' transport 
infrastructure with that of the EU were identified (the Crete corridors) and supported 
through co-financing. 
A large amount of the 1996 budget (ECLT 424.4 million including cross-border 
infrastructure projects) was allocated to such infrastructure programmes. The relevant 
national programmes will be described under their respective country chapters. 
Significant funds were also provided under multi-country programmes, which covered 
notably: 
- Transit facilitation 
ECU 22 million, providing an integrated approach covering border-crossing 
infrastructure and customs services. 
- Transport 
ECU 9 million, for feasibility studies for rail and road infrastructure on the Crete 
corridors and activities for improving safety in the transport of hazardous materials. 
- Telecommunications and post 
ECU 7 million, notably to facilitate CEECs compliance with international standards 
and for the management of the frequency spectra crucial for radio and television 
broadcasting and mobile telephony. 
Although a large proportion of these sector programmes consists of physical 
investment, they also include funds for project management and supervision, policy, 
approximation of EC norms and feasibility studies on future investment. 
Where investment is concerned, Phare operates as a complement to the normal actors, 
i.e. the partner country governments, the International Financial Institutions and 
commercial lenders. The Phare contribution, however, is frequently the part that 
makes the whole project feasible by helping the country provide the input other 
lenders require before they engage their funds. 
A concrete example of Phare's leverage function is illustrated in the box below. It 
analyses a sample of seven transport infrastructure projects under the 1996 
programme. The analysis reveals that with an input of ECU 183 million of Phare grant 
funds, investment projects worth ECU 886 million were started, i.e. five times the 
Phare contribution. Loan finance by the International Financial Institutions (EIB, 
EBRD, and IBRD) accounted for ECU 489 million of total funding in these projects. 
12 
Phare's grant contributions as a facilitator and multiplier for infrastructure co-
financing 
Hungary: Budapest container terminal and intermodal logistics centre 
Romania: railway rehabilitation 
Romania: rehabilitation of Constanta port facilities 
Albania: Tirana-Durres road 
Bulgaria: road rehabilitation on transit roads II project 
Poland: modernisation of A4 motorway 
Poland: modernisation of E20 railway, Western part 
Contributors: ECU million % of total 
Phare 183 21 
IFIs (EIB, EBRD, IBRD) 489 55 
Partner government 214 24 
Total 886 100 
Phare leverage | | x 5 
Cross-border and intra-regional cooperation 
A key element of the pre-accession strategy therefore consists in promoting 
cooperation initiatives through different types of programmes. Regional cooperation, 
in particular in regions where obstacles to cooperation rooted in historical or cultural 
heritages have to be overcome, is of great importance. 
In 1996, cross-border cooperation (CBC) programmes between Phare countries and 
Member State border regions have again supported projects for an amount of ECU 
180 million under a specific budget line, with infrastructure projects continuing to 
have a large share in this programme. A number of these comprise environmental 
projects such as wastewater treatment projects. 
Investment at a local or municipal level in the regions around the Baltic Sea has a 
direct impact on the quality of life of the macro-region as a whole. The Baltic Sea 
region has further developed a specific cooperation framework and several Phare-
funded programmes underpin this effort. The cross-border programmes of the Baltic 
countries have been included in an integrated Poland/Baltic cross-border programme 
thereby creating more synergy and leverage than a bilateral approach. A similar 
development has occurred in the region encompassing the Czech Republic, Hungary, 
Poland, Slovakia, Slovenia where a cross-border cooperation programme provides 
support to multi-country projects involving at least two countries from central and 
eastern Europe and one EU Member State (ECU 11 million under the 1996 budget). 
In addition to the traditional cross-border programmes, 1996 also saw the extension of 
the cross-border cooperation concept to cooperation between the countries of central 
and eastern Europe and those to the east (NIS). The Credo programme made available 
ECU 12 million in 1996 (out of an indicative envelope of ECU 100 million) and aims 
13 
to improve good neighbourly relations, promote cooperation between 'East-East' 
border regions and communities and contribute to economic and community 
development in these border areas. It will fund small-scale activities both of a 'hard' 
(infrastructure) and 'soft' (people-to-people) nature. 
Phare also financed projects in collaboration with Tacis within the framework of 
Black Sea Economic Co-operation (BSEC), which comprises all Black Sea littoral 
states, as well as Greece and Albania. The Black Sea region being a future EU border 
region, is of growing importance for the EU, and the EU aims to strengthen both 
political stability and economic recovery in this region. The Commission contributed 
to the establishment of the Black Sea Trade and Development Bank and the 
International Centre for Black Sea Studies. Phare also provided financial assistance to 
the energy centre for the Black Sea in Sofia, Bulgaria. 
A new Ecos-Ouverture partnership programme (ECU 6 million) promotes good 
governance at local authority level in the countries of central and eastern Europe with 
a view to later decentralisation and devolution of some powers from central 
governments. 
Two special programmes have been launched to support the aims of good neighbourly 
relations and friendly cooperation. The first is the special programme for 'the 
reconstruction of the Danube bridge between the Slovak town of Sturovo and the 
Hungarian town of Esztergom destroyed in 1944 (ECU 5 million from Phare). The 
second is a special cross-border programme (ECU 10 million) between Romania and 
Hungary. 
Justice and home affairs 
The extension of this cooperation in the area of justice and home affairs to the current 
partner countries has been specifically included as a full priority of the pre-accession 
strategy. 
A horizontal programme on Justice and Home Affairs, funded with ECU 11 million, 
was launched in 1996 after extensive preparation with experts from the Member 
States and the associated countries. It will support activities in combating organised 
and trans-national crime, judicial cooperation, immigration as well as asylum policies 
and procedures. It will complement Phare support in related areas such as the multi-
country drug programme for which an additional ECU 5 million programme was 
made available in 1996. 
A Baltic Eastern Border Management programme was set up during 1996 with a 
budget of ECU 6 million. This cooperation programme aims at assisting Estonia, 
Latvia and Lithuania to solve the problems of a wide range of illegal border activities. 
This Phare Programme is complemented by a similar programme provided under the 
Tacis Programme for Russia. 
Democracy and civil society 
Equally important for all partner countries is the objective of developing the stability 
of the institutions guaranteeing democracy, the rule of law, human rights and the 
protection of minorities. For the candidate countries, this is one of the Copenhagen 
criteria against which readiness for the opening of accession negotiations is assessed 
14 
Programmes that operate in these areas include support for civil society, NGOs and 
local structures as well as cooperation among EU and partner country bodies outside 
the realm of central government. The Democracy programme (ECU 10 million) 
provides support for projects from non-profit organisations promoting a pluralistic 
and democratic society. The LIEN programme, (ECU 10.5 million) aims to support 
disadvantaged groups of the population. The Partnership programme (ECU 10 
million) focuses primarily on support for local economic development and 
cooperation between the private sector, local government and civil society. National 
programmes mobilised further support in this domain. Examples from 1996 include 
the Bulgarian civil society programme and language training for minorities in Latvia. 
Improving the environment 
Support to improve the environment has been present in the Phare Programme since 
the very beginning. Both the Inter-Ministerial Conference of Luzern in 1993 and Sofia 
in 1995, which brought together EU, EFT A, Phare, and European Tacis beneficiary 
countries, stressed the need for environmental investment. 
A major part of EC environmental legislation is not covered by the White Paper on 
the Internal Market, and help from TAIEX in this sector is currently limited by its 
mandate. Therefore in order to close this gap, the Commission decided to allocate 
ECU 10 million to the creation of an environmental apoproximation facility 
(Development of Implementation Strategies for Approximation in Environment) for 
small projects dealing with the implementation of legislation and enforcement. In 
addition, ECU 15 million has been allocated for the third environmental project 
preparation facility. 
The true extent of environmental support cannot be assessed in the sector tables at the 
end of this report, since direct and indirect environmental projects are also included in 
energy and cross-border programmes, and in regional development and local authority 
programmes. Projects tend to be classified under headings which reflect the nature of 
the largest component of the programme concerned. For example, the 1996 Czech-
German cross-border programme (ECU 25 million), although classified as 
infrastructure for its main purpose, also comprises environmental support worth ECU 
9 million, notably in sewage and wastewater treatment projects. A less typical 
example under the 1996 programmes is a comprehensive disposal programme for 
unwanted and dangerous pesticides (ECU 1.7 million) which forms part of an 
agricultural programme in Albania. Analysis of the sector classification reveals that 
within the 1996 budget more than ECU 100 million was mobilised to serve clear 
environmental purposes. 
Consolidating economic reform 
A functioning market economy capable of coping with global competitive pressures 
remains a fundamental objective for every Phare partner country. Therefore 
programmes aimed at consolidating economic reform and supporting restructuring 
and the creation of enterprises continued to receive full attention under the Phare 1996 
allocations (ECU 190 million approximately). 
Programmes supporting the privatisation and restructuring processes, helping the 
institutions for trade and investment promotion, maintaining or restoring sound 
banking and financial sectors and furthering SME development were all present in the 
15 
1996 programmes. 
They were completed with regionally focused development programmes that have the 
twin characteristic of being instruments for fostering economic development and key 
elements of current EC policies (cohesion and regional development). Such 
programmes help the associated countries programme for accession. 
Education, training, research and social policy 
Physical infrastructure networks facilitate the integration of the structures of the 
central and east European countries into those of the EU, as do networks in the fields 
of research and education. The Tempus programme supports links among universities 
and higher education institutions in the CEECs and in the EU through exchanges of 
teachers and students and common projects. It has maintained a strong presence 
within the Phare Programme. In 1996, ECU 83 million were made available for 
projects in this area. The network of economic research being supported by the ACE 
programme also received a new allocation of ECU 10 million. In 1996, the European 
Training Foundation managed 16 projects over ECU 50 million in the field of 
vocational education and training. 
The gradual opening up of Community programmes is an important aspect of the pre-
accession strategy and is expected to lead to the participation of the Phare countries in 
more than 10 Community programmes in the fields of human resources, audiovisual 
and culture, environment and energy saving. However, the process of enabling third 
countries, even associated countries, to participate legally and financially in 
Community programmes has proved administratively complex. 
A number of new programmes in support of social development and employment 
were launched. By their nature containing a high level of so-called 'soft' measures, 
their budgetary cost remains moderate. 
16 
Summary of the 1996 programme focus 
Sectors concerned primarily with EU integration and pre-accession have received 
most attention in the 1996 programme package, as illustrated in the table below. 
Shift towards priority sectors of pre-accession strategy in 1996 
(Sector allocations, as percentage of total Phare budgt 
SECTORS: it-commitments 
1990-94: ) 
1995: 1996: 
PROGRAMMES WITH PREDOMINANT EU INTEGRATION AND PRE-ACCESSION 
CONTENT: 
Public administration, EU integration, 
legislation (including consumer protection) 
Civil society and democratisation 
Infrastructure: energy, transport & telecom 
(of which under CBC) 
Integrated regional measures 
Environment and nuclear safety 
Subtotal: 5.1 
0.8 
13.7 
(3.5) 
0.8 
9.4 
29.8 2.6 
0.9 
39.6 
(13.4) 
4.0 
7.1 
54.2 12.9 
1.9 
34.7 
(13.1) 
6.4 
4.5 
60.4 
PROGRAMMES WITH PREDOMINANT TRANSITION AND REFORM CONTENT: 
Agriculture 
Private - and financial sector 
Social development and public health 
Education 
Subtotal: 9.1 
21.8 
5.3 
14 
50.2 3.5 
15 
4.2 
12.7 
35.4 2.2 
8.7 
1.4 
10.3 
22.6 
OTHER PROGRAMMES: 
Humanitarian and critical aid 
General technical assistance and 
miscellaneous 
Subtotal: 8.6 
10.6 
19.2 2.2 
7.4 
9.6 10.2 
6.3 
16.5 
There has been strong growth in the allocations for administrative reform (legislation 
and institutions). 
Infrastructure, either under direct programmes or under cross-border programmes, 
continued to feature strongly in budget allocations. There has been a common 
tendency towards front-loading in the infrastructure budgets, i.e. allocating already in 
1995-1996 most of the funds foreseen for infrastructure under the multi-annual 
framework up to 1999. This can be explained by the fact that Phare's grant 
contribution in public works is frequently that which unlocks the loan funds of the 
International Financial Institutions. 
The importance of the humanitarian aid component is mainly due to the Bosnia-
Herzegovina programme. 
Budgetary allocations are an indicator of the relative importance given to the various 
areas of support, albeit an imperfect one: the instrumental importance of an activity 
frequently bears no direct relationship with its budgetary costs. The sector allocations, 
17 
as used in this report, are also an imperfect indicator of the sector coverage of the 
programmes, although they are the best indicator available. Most of the programmes 
consist of integrated approaches and pursue multiple objectives. 
Over the second half of 1996 and in early 1997, the Commission developed, notably 
through the exercise of preparing the Opinions on the countries having applied for 
membership, a closer knowledge of the status of the partner countries in the various 
relevant areas. This exercise revealed that, although a change in direction had been 
initiated, there remained a number of problems in relation to Phare's capacity to 
function as an effective tool and help achieve its ambitious pre-accession objectives. 
Still operating under the 'demand-driven' principle, the Programme continued to 
disperse its efforts over too wide a range of subject areas and beneficiaries. The need 
to address the immediate and urgent needs of reform had also led to the mobilisation 
of a large variety of support mechanisms and operators. This dispersion of objectives 
and instruments, while unavoidable and necessary in the first phase of transition is 
now inappropriate to the new goal. It was therefore decided to strengthen the 
accession focus of the programme and new orientations were subsequently elaborated 
by the Commission in 1997. 
Multi-country programmes 
A large part of the work done in 1996 by Phare staff and officials, as well as by 
experts and consultants, concerned the implementation of pre-1996 programmes. The 
individual country sections below pay specific attention to progress and achievements 
made in 1996 in those earlier Phare national programmes. In this section, a brief 
overview is given of the most significant achievements of the three main sectors 
supported by the multi-country programmes. 
Phare multi-country support in the area of transport, worth ECU 86.5 million over the 
past few years, has produced a comprehensive training programme for the air-traffic 
controllers of all Phare countries, implemented by Eurocontrol. A substantial number 
of strategic and pre-investment studies have been prepared, now underpinning many 
of the effective investment projects under national programmes. The largest part of 
the budgets was spent on investment aimed at the elimination of border-crossing 
bottlenecks. Due to a number of difficulties related to the fact that authorities of 
different countries as well as various layers of government must coordinate and reach 
an agreement before a specific project can start, this component was faced with severe 
delays, which have now been addressed. 
In the energy sector, Phare has developed through its multi-country programmes 
(ECU 40 million) an overall integrated approach that addresses three crucial areas of 
action, namely energy policy, energy supply and energy efficiency. Capacity-building 
has been achieved through training and twinning arrangements. Strategies have been 
prepared for the gas and electricity sectors, which have led to concrete projects being 
implemented (UCPTE/CENTREL electricity grid connection and works initiated in 
south-east Europe). The study of an integrated approach to promote clean coal 
technology has been completed. 
Phare's multi-country assistance for the environment (ECU 56 million) has focused 
on a number of key programmes including the integrated environmental programme 
18 
for the Danube river basin, the Baltic Sea programme and the Black Sea 
environmental programme.The Danube programmehas provided for the development 
of an enhanced monitoring strategy and Accident Emergency Warning System, 
support to NGOs and the development of river-basin management techniques. Under 
the Black Sea programme, which has been funded jointly by Phare and Tacis, support 
has been provided to Romania and Bulgaria for the implementation of the Bucharest 
Convention and the Black Sea Action Plan, which is designed to adopt a unified 
approach to the control of pollution in this region. Finally, in the context of the Baltic 
Sea programme, activities are related to the implementation of the Helsinki 
Convention and address the 'hot spots' identified by the Helsinki Commission. They 
have led to improvements in wastewater treatment and, as a result, in the condition of 
the Baltic Sea in general. 
In addition, 1996 saw important progress in the area of statistical analysis in all Phare 
countries, with the exception of Bosnia-Herzegovina. The basic tools of the CEEC 
statistical systems, such as the adoption of international classifications, building of 
basic registers (population, businesses, etc.), were further developed. The general 
CEEC data processing capacity increased as a result of training provided by the multi-
country programmes, and investment in hardware and software through the national 
programmes. The quality of basic macro-economic data such as national accounts, 
prices and basic labour related data such as costs and employment much improved. 
Some very specialised surveys launched in areas of particular interest to EU policies, 
such as road transport, newly created enterprises, and the retail trade, revealed data 
that were of comparable quality to those produced by the Member States' statistical 
offices. 
19 
Developments in operational management 
Multi-annual programming 
The European Council in Essen of December 1994 asked that Phare should be 
developed "into an indicative medium-term financial instrument". During 1996, 
multi-annual indicative programming was completed for the majority of the Phare 
countries with the negotiation and signature of Multi-Annual Indicative Programmes. 
These included Albania, Estonia, Latvia, Lithuania, Romania, and Bulgaria with 
Multi-Annual Indicative Programmes covering the period 1996 to 1999. 
Multi-annual indicative programmes set out the basic objectives and strategy for 
reform in each country, establish the priority areas for Phare financial assistance and 
actions, and include broad sector allocations of funds for the period covered. 
The Multi-Annual Indicative Programme does not constitute an official budgetary 
commitment on behalf of the EC. The Multi-Annual Indicative Programmes are 
implemented through successive annual Country Operational Programmes which, 
through individual Financing Memoranda, constitute the formal EU financing 
commitment for a given budget year. The indicative nature of the Multi-Annual 
Indicative Programmes offers Phare the flexibility to vary annual allocations 
according to the countries' absorption capacity and sector requirements as they 
develop. 
Nevertheless, the Multi-Annual Indicative Programmes have increased the 
predictability of Phare assistance and resulted in improved programme design and 
preparedness of programmes when the commitments are made. 
Financial management 
In 1996 improvements in the financial management and operation of Phare were 
introduced in accordance with the overall objectives of the Commission's SEM 2000 
initiative (Sound & Efficient Management 2000). 
New Financial Directorate 
These improvements were characterised at the organisational level by the creation of 
an independent financial Directorate within DG IA responsible for the financial and 
human resources of all programmes managed by DG IA, including Phare. This meant 
the creation of a 'counterweight' to the operational Directorates on aspects related to 
the allocation of human resources, financial management and awarding of contracts. 
The main functions of the Financial Directorate, which came into operation in 
October 1996, are 
• human resources 
• global coordination of the management of the budget including budgetary 
performance and audits 
20 
• financial management 
• development of procedures and verification of their application 
• evaluation, notably ex-post 
• information. 
Increased transparency 
In 1996 the Commission launched a significant initiative to further improve the 
transparency and efficiency of tendering and contracting under Phare. This initiative 
was a response to a modification in October 1995 of the arrangements in the EC 
Financial Regulation relating to the award of service contracts. 
In a bid to make Phare more accountable to the taxpayer and more transparent to its 
partners, the European Commission decided to publish a notice on every upcoming 
Phare tender. While this did not affect the tendering for supply and work contracts, 
which have always been published in the Official Journal, it affected the award 
procedure for service contracts significantly. Service contracts will continue to be 
awarded following a restricted tendering procedure, but the way shortlists are 
compiled was changed. 
Information on all upcoming service tenders including a standardised expression of 
interest form was published from October 1996 on the Internet. This enabled 
companies and organisations to submit their expression of interest and thus be taken 
into consideration in a fully standardised and official pre-qualification procedure. 
Apart from announcing specific tenders on Internet, the procedure introduced during 
1996 also meant that general project and contract information (programme 
summaries, budgets still available for contracting, etc.) relating to services and 
technical cooperation is published in the Official Journal. Finally, the new procedure 
ensures that a list of awarded contracts will be published in the Official Journal on a 
regular basis. 
The new system implies that any company wishing to be short-listed for a particular 
tender will have to express interest in that tender using a standardised expression of 
interest form, also available on the Phare Internet site. On the basis of the expressions 
of interest submitted, the short list is established through a standardised pre-
qualification procedure. This has increased not only the transparency of this procedure 
but also ensured that only companies having indicated specific interest will be invited 
to tender. 
New standard procedures 
During 1996 the Commission undertook a detailed review of the tendering and 
contracting procedures used in Phare. The process included the introduction of new 
standard tender and contracting documents, new procedures for tender evaluation 
committees, clearer definition on the rules concerning the formation of consortia and 
strengthening of the rules stipulating that firms participating in project preparation and 
design cannot participate in the subsequent tender. These improvements, prepared in 
21 
1996, were decided by the Commission in early 1997. 
The objectives behind these initiatives go far beyond the simple issue of tendering. 
The Commission is now assisting the ten associated countries in their efforts to 
prepare for membership of the EU. This daunting task will only be feasible if the 
Commission and its programmes, such as Phare, rely on the two driving principles of 
maximising transparency and involvement and of striving for greater efficiency. 
Human Resources 
With the 1996 budget fully committed, the total volume of funds to be managed by the 
same level of staff increased by around 40 per cent and the ratio between human 
resources and commitments to be managed decreased. 
In response to this situation the budgetary authorities for the first time allowed that a 
small part of the Phare budget (2 per cent) be used by the Commission to supply 
technical support and cover relevant administrative expenditures for the mutual 
benefit of the Commission and the partner country. Following agreement with the 
partner countries, in 1996 these 2 per cent were allocated, amongst others, to the 
recruitment of external staff supporting the European Commission Delegations in the 
supervision of programme implementation for the total duration of the 1996 
programmes. Thus a direct link was introduced between the total size of a programme 
budget and the resources available for its implementation. 
This development, together with an internal redeployment of staff from Headquarters 
to the EC Delegations in the Phare partner countries, will make it possible gradually to 
increase the responsibility of the Delegations in supervising the implementation of 
Phare and thus simplify procedures. 
The new orientations will also lead to a significant increase in the average size of 
Phare contracts and, therefore, a reduction in the number of contracts to be managed 
and supervised. 
Some further organisational shifts in respect of the competence of the various 
Directorates within DG IA took place. Directorate B is now responsible for relations 
with the associated countries of central Europe, while Directorate D is in charge of co­
operation with Albania, Bosnia-Herzegovina and the former Yugoslav Republic of 
Macedonia, and a number of other European countries. At the same time, the 
democracy programmes have been brought under the aegis of the Human Rights and 
Democracy Unit within Directorate A. 
Monitoring and assessment 
During 1996 the chain of monitoring-assessment-evaluation structures and activities 
was rearranged with a view to reinforcing Phare's potential for ensuring qualitative 
performance, substantive achievements and impact. 
As part of the newly created financial department, an Evaluation Unit, independent of 
the Operational Directorate has been created. The Unit's remit covers all DG IA's 
programmes, of which Phare is, in terms of budget, the most important. The 
22 
Evaluation Unit establishes at the beginning of each year an evaluation plan which is 
part of the overall Commission's evaluation plan covering all internal and external 
policies with a budgetary impact. Evaluations under this plan will start in 1997. 
During 1996, a system was introduced through which all programmes are assessed 
regularly with the input of external assessors. This system aims to facilitate early 
corrective action and redirection of activities under ongoing programmes. Teams of 
external assessors have been recruited and took up their assignments between May 
and September. By the end of the year the systematic release of operational 
assessment reports became effective. Before that, a specific effort had been made by 
programme management to conduct individual ad hoc evaluations as and when 
needed for the operational progress of the programme and for the effective definition 
of new programmes. 
More than 40 such operational reviews and reports were produced in 1996. Their 
immediate and main outputs have consisted of operational conclusions fed back to the 
various relevant levels of programme management including the partner country. 
They have also influenced the updates of sector strategies, like those on the use of 
financial instruments in support of SME's or the environmental strategy. 
The Phare Programme has developed into the single largest source of donor financing 
of know-how transfer to the Phare partner countries. Its objectives and activities have 
been relevant in addressing important issues of the transition process. Its contribution, 
particularly in areas in which other donors have shown little interest and have devoted 
limited resources, such as democracy and civil society, has overall been positive. The 
Programme has shown remarkable flexibility in adapting to the rapidly changing 
political and economic environment of the Phare countries. 
The demand-driven nature of the Programme has been both a strength and a 
weakness; it may have enhanced ownership by the partners but it has also led to 
fragmentation of effort and dispersion of resources with adverse effects on 
programme performance. The Programme has realised less than its full potential: its 
effectiveness and impact have, to an extent, been diluted by lack of leverage to ensure 
good programme performance, by deficiencies in project cycle management and by a 
preoccupation with financial and procedural control to the detriment of substantive 
programme design and performance. 
23 
Information and communications activities 
The Phare Multi-Country Information Programme, providing finance for a total of 
ECU 8.7 million, was approved in July 1995. It comprised a foundation programme, 
covering a visual and written identity and including strategic counselling and advice, 
public opinion research, and database maintenance. It also provided for a publications 
programme comprising operational, financial, management and business information; 
promotional publications; an annual report; European Dialogue magazine; the 
Together in Europe newsletter; and one-off publications linked to themes or events. 
Also included in the programme were internal communications and training in 
Brussels for Delegations and PMUs; a media programme, including support to central 
European journalists; visits; audio-visual sponsoring and production of TV dossiers; a 
Parliamentary programme, including visits; and an in-country communications 
programme linked to partner countries' own efforts and those of Delegations. 
The principal achievement of 1996 was to put Phare information on-line, which came 
into effect at the beginning of April. All programme and contract information, as well 
as background information, news and general data are being transposed, as well as 
1995 and 1994 programme information. In addition, regular updates on programmes 
and contracting status are published on Internet. Information appears within one week 
of the Commission's decision. 
Another new service is the advance publication of tender opportunities. From mid-
July 1996, notices of upcoming service tenders were published on the Internet within 
24 hours of task managers issuing the relevant notice. This service, which helps 
companies to express their interest in participating in a tender, is a result of the 
Commission's strategy to introduce greater transparency into Phare and helps it satisfy 
the transparency requirements (of Article 118) of the Financial Regulation. First 
indications are that the service is in considerable demand, and this is likely to increase 
as the Internet gains momentum amongst central European countries. 
The Information Unit also produced brochures to explain wider policies, such as "The 
European Union's pre-accession strategy", a summary of the various pre-integration 
initiatives undertaken with the associated countries of central Europe, published in 
June 1996. The Unit carried out research into press reactions to the Second Donor 
Conference on Bosnia and Herzegovina, and made proposals to ensure more balanced 
and positive press coverage in future. It responded to over 60,000 external telephone 
calls, 5,000 visitors and well over 100 speaking engagements at conferences, 
workshops and visitors' programmes. 
The 1995 Financing Proposal set aside ECU 2 million for reinforcing the information 
capacity of EU Delegations. Research is underway to establish the exact information 
needs notably the establishment of European Information Centres in city-centre 
locations. These Centres would be under Delegation control. 
However, in July, the European Parliament approved the rectificatory and 
supplementary budget on the eve of the presentation of the 1996 Financing Proposal, 
which involved a temporary suspension of financing for information. This meant that 
in effect no funds were available vafter the 1995 budget had run out. From the end of 
24 
September 1996, no further activities involving the production of newsletters, 
brochures or material for events were undertaken either in Brussels or in the candidate 
countries, although essential services such as speeches and the reception of visitors 
were maintained until the framework contract expired in November. Since that time, a 
skeleton Internet service continued until approval was given for a 1997 budget at the 
end of November 1996. 
The Commission made several proposals, notably in October 1995 and May 1996, to 
increase MEPs' awareness of the information resources available and to research and 
monitor potential areas of conflict. A first high-level exchange took place at the end of 
October with a parliamentary audience of approximately 50 MEPs, staff and others. 
?s 
Financial overview and performance 
The financial performance of the Phare Programme is summarised by the level of the 
funds committed, contracted and paid, and by the relationship between these three 
over time. The box on page 27 explains the technical meaning of the terms 
'commitment', 'contracting' and 'payment'. 
Figure 1: Funds committed, contracted and paid 1990-1996 (in ECU million) 
• commitments 
• contracts 
D payments 
1990 1991 1992 1993 1994 1995 1996 
Figure 2: Cumulative funds committed, contracted and paid 1990-1996 (in ECU 
million) 
7000 
• commitments 
• contracts 
• payments 
1990 1991 1992 1993 1994 1995 1996 
26 
Funding procedure 
As part of the Phare Programme, there are three steps that take the annual budget 
approved by the Budgetary Authority through to the point where projects are 
implemented and funds disbursed. 
Phare has a financial management procedure that matches this process. 
Commitment 
Each year a Phare budget is agreed, indicating the funds which the Commission is 
prepared to commit through the Phare Programme in each country. Country 
operational programmes are then designed and financing proposals prepared. Once 
these financing proposals have been given a favourable opinion by the Phare 
Management Committee and decided by the Commission, the relevant funds 
associated with these proposals are said to have been 'committed'. Phare must 
commit its entire annual budget within the year to which that budget applies. 
Contracting 
Once funds have been committed, tenders are issued so that the activities outlined 
in the operational programmes can be put into practice. As soon as a tender has 
been successfully completed and a contract signed, the relevant funds are said to 
have been 'contracted'. Contracting is a key measure of the implementation of the 
Programme, as it is via the contracts that Phare funding is unlocked and real 
implementation on the ground can start. 
Payment 
Payment is the final stage of the funding process. It takes place over the period of 
each contract, reflecting the completion of each component of the project. As 
projects may take several years, payments are often spread over the same time. It is 
for this reason that payments always lag behind the committed and contracted 
amounts. 
Committed funds 
In 1996 the Phare Programme committed via various national, multi-country, 
horizontal and cross-border cooperation programmes a total of ECU 1,222. 9 million 
(including Budget line B7-7000) to its partner countries. This represents an overall 
record and an increase of 5.9 per cent on 1995. The commitment rate was 100 per 
cent. Total commitments cumulated over the life of the programme now equal ECU 
6,636.1 million. 
Contracted funds 
The sum of the contracts concluded in 1996, through the PMUs in the partner 
countries and via the Commission services, amounted to ECU 927.5 million. This is 
in Phare's history a very high total. However, the 1996 performance did not match the 
1995 record (ECU 1,142.9 million) and the total of new contracts initiated remained 
below that level needed to keep pace with the increase of funds coming from new 
1996 programme budgets (i.e. the total of new commitments). As a result, the 
stabilisation of the contracting backlog realised for the first time in 1995 could not be 
repeated in 1996. 
The contracting backlog, defined as the .difference between the programmes 
committed and the activities contracted, amounts over the period 1990-1996 to ECU 
2,335 million. Only 65% of the activities included in the programmes approved 
during that period actually had been contracted. This backlog originated mainly in the 
early years of the programme. It has its origin in the complication of the programming 
cycle, the time-consuming procedures and the large number of small projects. 
Additional factors having contributed to the persistence of the backlog are linked to 
the absorption capacity of the partner countries and to the comparatively low ratio of 
staff resources in relation to the programme portfolio. 
After a stabilisation in 1995, the contracting backlog grew again in 1996, thereby 
demonstrating that the cumulative effect of a number of programme measures taken 
have not been able to yield a sustainable improvement. This conclusion led the 
Commission in 1997 to propose a number of measures as part of the Phare 
reorientation to clear the past backlog and prevent the development of a new backlog 
in the future. 
Figure 3 allocates the contracting activity deployed during each calendar year to the 
year of origin of the funds. It appears that in 1996 ECU 351 million, or 38 per cent of 
the total contracted, related to 1990-1993 programmes. This indicator of relatively 
slow implementation progress is largely explained by delays incurred in the reform 
process itself (as can be seen from the sector composition of those programmes, i.e. 
mainly programmes supporting reform) and by limits on the absorption capacity of 
the partner countries. Being aware of the impact of this overhang on the performance 
of the programme, the Commission decided in the new Orientations that it 
elaboratedfor Phare not to continue with extending systematically the slower 
programmes and to close 1990-93 programmes. 
Paid funds 
Payments reached ECU 829.9 million, which is an overall record and an increase of 
8.9 per cent compared with 1995. The initial budgeted amount of ECU 1,139.1 was 
subsequently reduced during the budget year to ECU 1,002.4 million. The payments 
effectively executed were 82.8 per cent of this budget appropriation. Figure 4 relates 
the payments made in each calendar year to the year of origin of the programme. In 
1996, ECU 297 million, or 36% of the total payments, related to activities undertaken 
under 1990-1993 programmes. 
28 
Figure 3: Contracts concluded by calendar year (in ECU million) 
1.300,00-
1.200,00-
1.100,00-
1.000,00-
900,00 -
800,00 -
700,00 
600,00 
500,00 
400,00 
300,00 
200,00 
100,00 
0,00 
1990 budget 1991 budget 1992 budget 1993 budget 1994 budget 1995 budget 1996 budget 
• contracted in 1990 D contracted in 1991 • contracted in 1992 D contracted in 1993 
•contracted in 1994 • contracted in 1995 • contracted in 1996 • not yet contracted 
?Q 
Figure 4: Payments in each budget year (in ECU million) 
1300 
1200 
1100 
1000 
900 
800 
700 
600 
500 
400 
300 
200 
100 
0 IE 
=*i£ 
1990 budget 1991 budget 1992 budget 1993 budget 1994 budget 1995 budget 1996 budget 
• paid in 1990 
il paid in 1994 • paid in 1991 
• paid in 1995 •paid in 1992 
• paid in 1996 • paid in 1993 
• not yet paid 
30 
Figure 5: Cumulative contracts and payments 1990-1996 (%) 
1990 1991 1992 1993 1994 1995 1996 
Cumulative contracts 
as percentage of 31.0 36.0 44.0 48.0 52.0 62.0 64.8 
cumulative 
commitments 
Cumulative payments 
as percentage of 35.0 36.0 39.0 43.0 50,0 53.0 56.2 
cumulative 
commitments 
31 
II Phare in the individual partner countries 
32 
Albania 
Year in review 
Albania has generally made considerable progress in its transformation to a market 
economy since 1992. Implementing a series of reforms under the guidance of the 
International Monetary Fund, Albania had annual growth rates of about 9 per cent 
during the period 1993-1995. However in 1996 there was slippage. Inflation rose from 
8 per cent (1995) to 18 per cent (1996) and due to slippages in budgetary and 
monetary policies in the pre-election period. The crisis, which occurred in late 1996, 
can be traced back to two particular developments. 
The first involved a setback in the process of démocratisation. There were serious 
irregularities during parliamentary elections in May 1996 and although the local 
elections which took place in October 1996 were generally considered by the 
international community to have been fair, they did not lead to a normalisation of the 
political process (continued boycott of the new parliament by main opposition parties 
and continuing controversy over the drafting of a new constitution). 
The second trigger was the collapse of a number of "pyramid" savings schemes which 
had worked on a speculative basis with remittances from emigrant workers reflecting 
the absence of a reliable banks. Following the collapse of several schemes in 
November 1996 the situation in Albania was marked by major unrest and the break­
down of additional schemes at later stage brought the country into a major state crisis 
during early 1997. 
Phare 1996 Programme in Albania 
Phare assistance for the period 1996-1999 is provided under the Multi-annual 
Indicative Programme, which allocates ECU 145 million for Phare national 
programmes. These programmes will focus on developing 
• closer links with the European Union (including the modernisation of the 
structures of state and society and the approximation of standards, legislation and 
regulations) 
• the domestic productive base (including infrastructure development) 
• human and natural resources. 
From these broad strategy areas, a number of priority areas of assistance can be 
identified. 
33 
European dimension 
The development of an EU dimension to the reform process in Albania had so far 
been approached on an ad hoc basis, as elements of individual programmes or 
activities. There was therefore a need for a more structured and strategic approach. In 
this respect, the development and implementation of a sector strategy will need to take 
into account the need to establish an institutional framework, the definition of tasks to 
be accomplished together with an indicative calendar. The main area of concentration 
will be the approximation of legislation and technical standards, with emphasis also 
on public administration reform, at central and local level, which will provide the 
effective means to implement and enforce legislation. 
Development of the domestic productive base 
It will not be possible in the medium term to maintain the progress achieved so far in 
macroeconomic stabilisation unless Albania can develop a viable productive base. 
Phare projects in a number of key economic sectors are being developed. 
Agriculture 
Since more than half of Albania's GDP comes from the agricultural sector, Albania's 
economic growth in the short and medium-term will depend critically on the 
performance of this sector. Since 1991, the Government has been pursuing a policy 
of privatisation and price reform. The challenge is to devise a sector policy that 
creates the conditions for the development of a competitive and viable agricultural 
sector based on a large number of very small family farms. 
SME Support, Trade Development, Investment Promotion and Tourism 
In parallel with Government actions to create conditions for successful private sector 
development, Phare is seeking to develop appropriate facilities and services aimed at 
overcoming any existing constraints for developing the private sector. 
Banking and Finance 
In supporting the development of the productive sector, the financial system is of 
crucial importance since it should be able to service the credit needs of SMEs. Phare 
support to this sector contributes to the creation of a modern and efficient market-
oriented banking sector capable of inducing financial discipline and mobilising long-
term financial resources. 
Transport 
The poor state of the transport infrastructure has acted as a constraint on private 
sector development. The upgrading and improvement of the country's transport 
infrastructure is a key priority of the Albanian Government and this is reflected in the 
Phare allocation of financial resources to this sector. To date, most Phare assistance 
has concentrated on the rehabilitation of the east-west and north-south corridors which 
are of primary importance to Albania in terms of its national transport infrastructure. 
Human and Natural Resources 
This core area relates to interventions in the spheres of the labour market and 
education; health, water infrastructure and environment; and local community and 
regional development. In terms of the proposed indicative allocations for the period 
1996-1999, the water/environment sectors receive most resources given the urgent 
34 
requirements in this area, including the rehabilitation of the drinking water and sewer 
networks, the construction of sewage treatment plants and the development of the 
legal and institutional frameworks for environmental protection. 
Within the framework of the Multi-annual Indicative Programme, Phare approved the 
1996 Country Operational Programme, which provided ECU 30.5 million of 
assistance. An additional ECU 2.5 million were allocated under a separate financing 
proposal for the Tempus Programme. 
The 1996 Country Operational Programme devoted more than half of its allocation to 
the transport sector (the rehabilitation of the Durres to Vore section) in recognition 
of the significant deficiencies in infrastructure which Albania faces and which 
constrain its potential for economic development. 
Funding was also approved for actions relating to the approximation of legislation, 
the restructuring of public agencies (customs and statistics), the provision of practical 
support to the various authorities involved in the justice sector, the strengthening of 
the capacities of three administrative units in the Department of Economic 
Development and Aid Co-ordination: ACU, responsible for aid co-ordination; EDU, 
responsible for Public Investment Planning, and the Project Management Unit to be 
established for the European Dimension. 
As part of the development of the domestic productive base, support was also 
approved for the agricultural sector. Small allocations were also approved for 
education and vocational training and water and environment (development of human 
and natural resources). 
In addition to the national programme, ECU 20 million of assistance were approved 
under the 1996 cross-border cooperation programmes designed to improve Albania's 
links with its EU neighbours, Greece and Italy. These cross-border funds were 
devoted mainly to the transport sector, and the rehabilitation of the country's main 
road axes. 
Phare achievements 
Albania has become an established partner of the Phare Programme and the Albanian 
authorities are familiar with the programming and implementation procedures. 
Moreover, increasingly Phare programmes of assistance are being managed through 
the Decentralised Implementation System. This requires the involvement of local 
Programme Management Units, which serves to develop Albania's capacities to make 
proposals, manage and implement Phare programmes and strengthen its institutions. It 
also eases the implementation of new programmes in each programming cycle. 
Phare assistance in 1996, in line with the wider objectives of the 1996-1999 Multi-
annual Indicative Programme, supported the country's market reforms and the 
medium-term restructuring and modernisation of the Albanian economy as well as the 
strengthening of links with the European Union. There was a strong emphasis on 
addressing the country's deficiencies in transport and infrastructure and strengthening 
institutions in key areas. Phare investment in transport infrastructure represents by far 
the most significant contribution of overall Phare investment to date, with 
35 
considerable impact on employment and incomes as well as secondary investment 
effects. 
Overall implementation of Phare assistance remains satisfactory: 69 per cent of total 
funds allocated in the period 1991-1996 have been contracted. This figure surpasses 
80 per cent if only national programmes are included. 
36 
Bosnia and Herzegovina 
Year in review 
In 1996, Bosnia and Herzegovina showed some signs of social and economic 
recovery. Wages and costs remained relatively low, offering the short-term possibility 
of competitive prices, and a number of companies have expressed interest in 
establishing or re-establishing trade and investment links. 
Following the national elections in September 1996, state institutions were 
reorganised and new appointments made. However, much effort is required from them 
to recreate a stable and integrated socio-economic environment. 
The efforts of the new Government of Bosnia and Herzegovina will focus not only on 
economic and social reconstruction and the reintegration of refugees and displaced 
persons, but the overall regeneration of a viable economic fabric in an open and 
integrated economy, different from the one that existed before the war. It will be 
necessary to strengthen common institutions to support the economic reforms and 
reinforce the Dayton-Paris Peace Agreement. The conduct of economic policy will be 
of critical importance to the future reintegration of the country, as well as to the 
stability of the domestic political and social environment during the next few years. 
In July 1996, the Commission opened a Delegation in Sarajevo. 
Phare 1996 Programme in Bosnia and Herzegovina 
The overall allocation for the Country Operational Programme in 1996 was ECU 14.2 
million. A financing proposal of ECU 12 million in the form of a Country Operational 
Programme (COP) for economic regeneration and institution-building was confirmed 
by the new, democratically elected Government. The balance of ECU 2.2 million was 
the subject of already-approved financing proposals under Phare Democracy (ECU 
700,000), Lien (ECU 500,000) and Pre-Tempus (ECU 1 million) programmes. 
The projects chosen in the 1996 Country Operational Programme remain in line with 
the priorities put forward by the donor community under the coordination of the High 
Representative and are 
• support to SMEs and economic recovery 
• support to the banking system and the establishment of a Central Bank 
• strengthening institutions and public administration. 
A component of the Pre-Tempus programme has the objective of preparing the 
restructuring of the higher education system in order to provide students with a variety 
of specialisations such as the teaching of European languages, law, engineering and 
technology in order to give students an education adapted to local and international 
37 
job markets. 
Funds were allocated to the Democracy and Lien programmes with the objectives of 
contributing to the development of a democratic civil society and providing health and 
social assistance to war victims and the most disadvantaged people, such as the 
elderly, the homeless and street children). 
Phare achievements 
Before Bosnia and Herzegovina became a fully eligible partner country in June 1996, 
the Phare Programme was operating in the country through an Essential Aid 
Programme worth ECU 125 million and allocated in two equal tranches. The 
objective of the programme was rapidly to provide the country with supplies of 
essential items such as medicine and medical equipment, animal feed, tractors, water 
pipes, electrical cables, mining equipment, buses, spare parts, building material for 
housing, computers, etc. Phare's Essential Aid has been the first step in a major 
reconstruction programme, and has acted as a stabilising factor in the implementation 
of the peace process. 
The relative political stability in the country has allowed the Phare Programme to 
evolve in coordination with the donor community's actions. Different programmes 
were drawn up in 1996 which reflected the country's priorities. 
Support to the reconstruction process 
The European Commission programmes funded out of the 1996 budget have aimed 
primarily to foster the reconstruction process, encourage reconciliation and regional 
economic cooperation, and create the institutional, economic and social conditions 
which will facilitate the development of Bosnia and Herzegovina and encourage the 
return of refugees and displaced persons. 
These actions have aimed to 
• revive the local economy and provide large numbers of families with an economic 
basis during the present transition period 
• provide the population made jobless by the war (demobilised soldiers, refugees 
and displaced persons) with a minimum income through labour-intensive projects 
• restore basic physical and social infrastructure to improve the living environment 
and the lines of communication damaged during the conflict 
• reinforce inter-entity relations. 
Ten projects for rehabilitation in eight major areas of activity (telecommunications, 
agriculture, water, housing/return of refugees, energy, transport, health and 
institutions) have been developed under the Essential Aid Programme. 
Support to economic revitalisation 
This programme aims to promote the regeneration of economic activity in Bosnia and 
Herzegovina on a sustainable basis through the development of market-oriented 
38 
systems of restored economic management, promotion of entrepreneurship, and 
employment generation. 
Institution-building 
The objective of this programme is to provide support to a comprehensive 
Government reform programme for the transformation to a democratic society based 
on a market economy and the reinforcement of the Dayton-Paris Peace Agreement 
principles. 
Support to education, human rights and démocratisation 
Programmes in these areas support non-governmental initiatives in the reconstruction 
of a civil society, as well as in the reconciliation process between the different 
national and ethnic groups living in the country. At the same time, programmes 
promote social cohesion by assisting the most underprivileged sections of the 
population and increasing the education level of young people in adapting the 
curricula to new market demands. Higher education reforms will be tackled by the 
Pre-Tempus programme, human rights and démocratisation by the Democracy 
programme and support to the disadvantaged by the Lien programme. 
In August 1996, the Commission contributed ECU 2 million to support the Open 
Broadcast Network (OBN) Project. The main objective of the project was to promote 
the development of pluralist, professional and multicultural media in the country 
through the setting up of an independent, multi-ethnic TV network (TV-IN). TV-IN 
has been broadcasting on a regular basis since 7 September 1996. 
The implementation of the Essential Aid Programme (EAP) has been faced with 
considerable difficulties of a political, technical and organisational nature, as well as 
absorption constraints on the part of the counterparts. The conditionality and the 
temporary suspension of this programme in Republika Srpska, the absence of real 
counterparts, the slippage of scheduled deliveries, the difficulties in controlling the 
distribution and final destination of deliveries - these have all raised doubts about the 
suitability of import programmes in the light of current needs. The consolidated 
figures on contracting and delivery reflect these difficulties: only ECU 83 million (66 
per cent of the EAP) were contractually engaged. 
Consequently, a consolidated readjustment of ECU 42 million into integrated projects 
has been approved, with improved implementation mechanisms, and tailor-made 
measures to meet implementation needs, thereby increasing control over the 
efficiency, visibility and transparency of the aid delivery process. 
39 
Democracy programme 
Given that the country has only recently become eligible for support from the Phare 
Programme, it is too early in the implementation phase to be able to make any reliable 
evaluation the 1996 programme's success. Nonetheless, it should be noted that the 
Phare Democracy programme has so far been contracted at a rate of 100 per cent and 
enabled some 100 micro-projects to promote social and democratic activity in Bosnia 
and Herzegovina in the following areas: 
transparency of public administration 
development of non-profit organisations 
independent and pluralist media 
confidence-building measures 
human rights and minority rights 
equal opportunities and non-discrimination 
social reintegration 
sustainable health and social support. 
40 
Bulgaria 
Year in review 
In 1996, the Bulgarian economy sharply declined resulting in a major economic, 
financial and social crisis. This in turn led to the resignation of the Government in 
December 1996, and elections in April 1997. The crisis, rooted in the inability of 
successive governments to implement coherent and fundamental structural reforms, 
was characterised by a fall of almost 11 per cent in GDP; inflation at over 310 per 
cent over the year; a nine-fold devaluation of the lev; a virtual collapse of the banking 
sector; and temporary grain and fuel shortages. A steep fall in living standards led to 
social deprivation for a large part of the population. 
Bulgaria's economic transformation has been slow and difficult. While the private 
sector generated 17% of value added in 1991, , increasing to 47 % in 1996, the share 
of industrial value added generated by the private sector was 9% in 1996. 
Despite a relatively liberal legislative framework, Bulgaria has fallen behind its 
neighbours in terms of foreign direct investment. In addition to political instability 
and slow reforms, institutional weakness and arbitrary decision-making have also 
played a role. 
While agriculture has traditionally been a mainstay of the economy, value-added has 
nevertheless fallen from 18 per cent of GDP in 1990 to 12 per cent in 1996. This has 
been caused by a number of factors, including the collapse of the Comecon trading 
bloc and recent unfavourable weather conditions, as well as by policy-induced 
distortions including the slow process of land restitution, and a non-market-based 
pricing regime. Export restrictions, other restrictions hindering the development of a 
market in private land sales and prevailing state ownership in the food processing 
industry, were also contributory factors. 
Closely linked to the strengthening of the Bulgarian pre-accession process was the 
Government's adoption in March 1996 of a strategy for the reform of public 
administration. A reform department under the Council of Ministers as well as an 
inter-departmental group chaired by a Deputy Prime Minister were established. 
In May 1996 the Bulgarian Government presented a strategy for the implementation 
of the EU White Paper on adopting the Internal Market 'acquis'. 
41 
Phare 1996 Programme in Bulgaria 
The 1996 Country Operational Programme for Bulgaria embodied the objectives of 
the 1996-1999 Multi-annual Indicative Programme which foresees a total budget of 
ECU 240 million. The overall objective of this Programme is to support Bulgaria's 
preparations for accession to the EU. The early signature of the 1996 programme 
meant that the programming cycle was brought forward by six months. 
The 1996 Country Operational Programme allocated ECU 62.5 million to the 
following areas: 
The development of transport infrastructure received a budget of ECU 30 million. 
Supported by co-financing from the European Investment Bank, this will provide for 
the rehabilitation of major transit roads. A total of 900 km of international transit 
roads will be brought up to European standards. This will be a significant contribution 
to the completion of Trans-European Network corridors IV, VIII and IX which pass 
through Bulgaria. 
The energy programme provides for critical coal imports to secure energy 
replacement capacity during the testing period of the closedown of Unit 1 of the 
Kozloduy nuclear power plant. 
In the area of nuclear safety, Phare is continuing support for vital programmes 
relating to safety studies, management and accident information systems, on-site 
assistance and twinning, and support to the Bulgarian Nuclear Safety Regulator 
involving a consortium of EU nuclear safety authorities in support of the 1993 NSA 
agreement. 
In education, support is provided for the Tempus programme for the reform of higher 
education. A programme was launched to complete the establishment of the National 
Assessment and Accreditation Agency for higher educational institutions and to create 
a project for the re-integration of drop-outs from secondary education. 
Closely linked to the European integration process, a programme worth ECU 2 
million was launched to promote the alignment of the Bulgarian standardisation and 
certification system with that of the EU. This includes approximation of legislation, 
streamlining of structures and institution-building. 
To enhance export performance, assistance was provided to the establishment of an 
independent Centre for Export Promotion as the nucleus for export promotional 
activities at sectoral and enterprise level. 
The civil society component aimed at creating the conditions for the activities of 
NGOs through policy development, project grants and management support. Cultural 
cooperation was encouraged through institutional strengthening of the Ministry of 
Culture and support to decentralised cultural institutions and initiatives. 
42 
Phare achievements 
To assist with the practical implementation of the Government's strategy of 
preparation for the Internal Market, an ECU 2 million programme was launched in 
July 1996, providing for legal translations, preparation of Bulgarian draft legislation, 
technical transposition of the 'acquis communautaire', training of officials, computer 
upgrading and a Documentation Centre for all Ministries concerned. Under the 1995 
Phare transport programme, legal expertise was also provided for the preparation of 
seven draft laws now awaiting adoption by the National Assembly and which cover a 
major part of EC transport legislation. 
In the area of nuclear safety, the Commission negotiated an agreement with the 
Bulgarian authorities under which Unit 1 of the Kozloduy Nuclear Power Plant was 
closed for testing in May 1996. The whole testing programme included removal of 
samples from the interior of the reactor pressure vessel. Subsequent analysis was 
financed under the Phare nuclear safety programme, while the Phare conventional 
energy programme covered the costs for coal imports to help replace the electricity 
generation capacity that otherwise would have been generated by Unit 1 during the 
winter 1996-1997. Furthermore, under the Phare nuclear programme, core monitoring 
equipment was installed and put into operation for Unit 4 and a national strategy for 
nuclear waste management completed. 
Strengthening of private ownership has been the main focus of Phare assistance in 
agriculture, a sector which is now dominated by private farms (85 per cent of total 
agricultural area), although the legal nature of much private land occupancy is still 
uncertain. Agricultural value added (including forestry) generated in the private sector 
was 9% in 1996. Support has been provided for the land restitution process and 
privatisation of the food processing industry. Furthermore, given private farmers' lack 
of access to credits from the financial system, Phare has successfully promoted the 
establishment of Private Rural Mutual Credit Associations of which 32 were licensed 
by November 1996. They are the main vehicle for the decentralised management of 
an ECU 7 million Phare credit line under which more than 730 loan applications have 
been made and 475 approved within 3 months of the scheme coming into operation. 
The programme of cross-border cooperation with Greece continued to make little 
progress. More than ECU 46 million from the 1994 and 1995 budgets totalling ECU 
48 million have not been contracted. Consequently, no new budget was allocated in 
1996. The significant implementation delays have been caused by a number of factors 
including the lack of Bulgarian capacity to fulfil the original co-financing 
requirements; lack of management capacity and expertise; insufficient cooperation 
between the central government implementation unit and final beneficiaries; and 
overly complex programme design involving a large number of sectors and projects. 
Towards the end of 1996, the Commission agreed to a substantial reduction of the 
original Bulgarian co-financing requirements and has taken steps towards programme 
simplification and streamlining of implementation. 
Overall Phare programme implementation was not significantly affected by the 
worsening socio-economic situation, not least since the crisis evolved primarily in the 
latter half of the year. Good progress has been maintained in most sector programmes. 
43 
As a result, the backlog of uncommitted funds from previous years was substantially 
reduced: the overall contracting rate increased from 56 per cent in 1995 to 67 per cent 
in 1996. Thus, 1996 was the second consecutive year in which Bulgaria's absorption 
rate exceeded the rate of new allocations. 
Mass privatisation programme 
The Bulgarian mass privatisation programme was announced in 1993, legally 
formalised in 1994 and effectively launched in January 1996. The programme has 
since become the biggest and most comprehensive privatisation initiative to date in 
Bulgaria. The programme has gained momentum in a difficult operational 
environment and succeeded in obtaining wide political and popular support. Its 
sustainability has been remarkable, respecting a tight time schedule and withstanding 
the recent economic crisis. 
The programme involves 1,050 state-owned enterprises accounting for some 13 per 
cent of total state-owned assets. Of these, 75 per cent are to be fully privatised, 
meaning that the state will no longer retain a blocking minority. 
The voucher distribution campaign started in January 1996 and lasted for five months. 
Some 50 per cent of the six million eligible citizens eventually bought vouchers at a 
symbolic fee. 
At the completion of the first auction in December 1996, involving individuals and 
Investment Funds, 41 per cent of the total capital on offer was bought. As a result, 341 
enterprises have been fully privatised. In a further 190 enterprises, more than 50 per 
cent of their share capital was sold. 
The success of the programme to date has relied on substantial and timely Phare 
support, provided since mid-1994 with a total budget of ECU 4.5 million. Assistance 
has included 
• ongoing expertise for the Centre for Mass Privatisation, the institution established 
for the programme's implementation 
• legal advice 
• information technology established at the central and regional levels, including 230 
post offices performing the functions of a registration bureau. 
The mass privatisation programme constitutes a first important step towards the 
transfer of enterprise ownership and responsibility from the state. An important 
challenge remains in ensuring that the evolving ownership situation will indeed result 
in improved management and much-needed enterprise restructuring. Stabilisation and 
development of the financial sector and the embryonic Bulgarian capital markets will 
be important elements facilitating this process. 
44 
Czech Republic 
Year in review 
The macroeconomic performance of the Czech Republic in 1996 was generally 
regarded as positive. Growth proved solid; foreign investment remained relatively 
high; the unemployment rate, at 3.1 per cent in 1996, continued to be the lowest in the 
region; and monetary and fiscal policy both showed restraint. However, the relative 
downturn that has recently weighed on a number of these trends suggests that the 
microeconomic problems of restructuring, productivity and technological 
development now demand greater attention. In 1996, growth was slower than in the 
previous year (down to 4.1 per cent from 4.8 per cent); the national budget showed a 
very small deficit ; the trade deficit soared to 10.9 per cent of GDP; and inflation was 
persistent, averaging 8.8 per cent over the year, compared with 9.1 per cent in 1995). 
During 1996, events in the banking sector were a cause for concern. The collapse of 
Kreditni banka, one of the largest regional private banks, and the imposed supervision 
by the Czech National Bank of Agrobanka, the largest Czech private bank, exposed 
the fragility of the banking system's structures. 
On the political front, parliamentary elections were held on 31 May-1 June 1996. 
They resulted in a minority coalition government headed by Prime Minister Vaclav 
Klaus. 
In relations with the EU, the Czech Republic officially applied for membership on 23 
January 1996. 
Phare 1996 Programme in the Czech Republic 
In the context of the EU's pre-accession strategy, a Multi-annual Indicative 
Programme had already agreed between the European Commission and the Czech 
Republic in 1995. The Programme, which covers the 1995-1999 period, focuses Phare 
assistance on the specific needs of the Czech Republic as it prepares for accession. 
The main objective of support within this framework, and within the EU's pre-
accession strategy, is to facilitate the Czech Republic's integration by providing 
funding for 
• institutional integration (approximation of legislation, institution-building) 
• infrastructure co-financing 
• continuing support for the process of socio-economic transformation. 
45 
The Czech Republic's pre-accession priorities were addressed in its 1996 Country 
Operational Programme (COP), which concentrates on support for the process of 
socio-economic transformation. The EU thereby committed a total of ECU 54 million, 
which also includes ECU 7.5 million for the Tempus programme, as well as cross-
border cooperation with Germany (ECU 25 million) and Austria (ECU 9 million). 
On the national level, the 1996 COP included an ECU 5 million commitment to the 
creation of a Business Environmental Programme (BEP), establishing a loan facility 
for environmental investment by SME's and providing technical assistance. ECU 7.5 
million were provided for regional development, which includes the creation of a 
Regional Development Fund, worth ECU 5 million, to support municipality 
investment in the local infrastructure and thus promote private industrial investment. 
Funds were also committed to the continuation of support to the development of 
northern Moravia and Silesia (ECU 2 million) and Czechlnvest regional investment 
promotion (ECU 500,000) for the strengthening of the regional information network 
in order to attract foreign investors. 
Phare achievements 
In 1996, Phare produced particularly positive results in the following areas: 
• privatisation and' restructuring; and support to the development of small and 
medium-sized enterprises 
• regional development 
• foreign direct investment 
• approximation of legislation 
• human resource development. 
In the area of privatisation and restructuring, support for land registry offices has 
made a crucial contribution to the privatisation process. The JOP programme has helped 
more than 100 projects to create joint ventures between EU and Czech firms. In support 
of SME development, an extensive regional network of 23 counselling and information 
centres has been set up, while around 400 Czech SMEs were able to participate in trade 
fairs and make direct contact with their EU counterparts. Under the small loans 
programme, 800 loans have been granted, facilitating the creation of more than 1500 
jobs. 
The regional development programme launched by Phare in northern Moravia (the 
Ostrava region) has improved conditions for regional regeneration, while the 
investment fund set up under the programme is providing much-needed venture capital. 
The success of the programme has provided a model for the new Government as it sets 
out the principles of a modern, effective regional policy comparable with EU practice. 
The attraction of foreign direct investment plays a pivotal role in the transition 
process. The agency promoting foreign investment in the Czech Republic, Czechlnvest, 
was established in late 1992. In 1996, Phare support amounted to 60 per cent of the 
organisation's budget. Czechlnvest has developed into a highly professional institution 
that has enjoyed considerable success. Since 1993 Czechlnvest has facilitated the start 
of 262 projects, arranged 815 contacts with Czech companies, performed more than 400 
46 
activities in the Czech Republic and abroad and successfully completed 23 projects 
itself. As a result of these activities, more than 6,000 jobs have been created or 
maintained. The Agency has expanded its activities both locally, with 10 official 
regional representatives, and abroad through its foreign office representations (London, 
Paris and Diisseldorf). In 1996, Phare support focused on the integration of 
Czechlnvest's activities in regional development, helping the organisation strengthen 
the regional information network in order to attract foreign investors. 
Legal assistance, including access to information on European Community law, the 
organisation of seminars and study visits, and the translation of documents, is being 
provided through a consortium of EU law firms which continued its work in 1996. 
During the first phase of the project, over 50 legal consultations took place; more than 
40 consortium experts were called upon for their assistance; and more than a dozen 
Czech legal experts were involved in the approximation of legislation. Over 11,000 
pages of European Community or Czech legislation have been translated, while good 
working relations have been established between the consortium experts and their 
Czech counterparts. 
Human resource development has become a long-term priority for the Phare 
Programme. In 1996, substantial assistance was provided for the development of 
management training for the private sector through the National Training Fund. A 
pilot project for the reform of the vocational and training sector was successfully 
implemented in 19 pilot schools; it is now expected to lead to policy and legislative 
reform. Labour market reform was supported by assistance to the Labour Offices, and 
Tempus successfully supported cooperation between Czech and EU universities. 
To support the Czech banking system in its difficult period, the European Commission 
and the Czech National Bank (CNB) rapidly agreed a strategy in the autumn of 1996 
enabling Phare to support the development of this crucial sector. Technical assistance is 
being provided in the field of banking supervision, the privatisation of major banks, the 
prevention of money laundering, and bad loans management. 
Phare's management performance 
The performance of the Phare Programme in the Czech Republic, as measured by the 
contracting rate, improved in 1996. By the end of December 1996, the contracting rate 
for 1990-1994 programmes had exceeded 90 per cent. 
Certain problems in implementation appeared at the beginning of 1996. A number of 
1993 programmes, which expired by the end of 1996, showed a poor implementation 
rate. This problem was resolved through implementation review meetings in Prague 
held directly with the Centre for Foreign Assistance (CFA) and the Programme 
Management Units (PMUs) concerned. By 31 December 1996, all funds relating to 
programmes which had expired by the end of 1996, had been contracted nonetheless. 
47 
Civil Society Development Foundation 
The Civil Society Development Foundation (CSDF) was established in May 1993 to 
administer funds from the Phare Programme for the strengthening of non­
governmental organisations in the Czech Republic. More precisely, CSDF provides 
information services, specialised training for NGO employees and volunteers, and 
grants for projects run by individual civic organisations. 
Phare funding for the CSDF initially amounted to ECU 2.6 million; it was then 
extended until 1997 by a further allocation of ECU 2 million. By the end of 1996, 82 
per cent of the budget had been contracted and 74.6 per cent disbursed. 
By the end of 1995, 397 grants totalling ECU 2.33 million had been made to NGOs 
(750 applications were received). Grants ranged from ECU 300 to 25,000. 
In 1996, 248 grants worth ECU 1.13 million were awarded to NGO's (546 
applications were received). 75 per cent of funds were allocated to projects by 
individual organisations in the social, health, human rights, ethnic minorities and 
ecological spheres. The remainder was allocated to the support of information 
activities and training. Overall, Phare support in this sector has started to enhance 
legislation in the area of NGO activity and increased the role of the public in solving 
a wide range of social and ecological issues. 
48 
Estonia 
Year in review 
Following a severe contraction of the economy between 1989 and 1994, national 
output started to grow again in 1994 and continued to do so in 1996 with an estimated 
growth rate of 4 per cent. Some sectors performed particularly well, in particular 
construction, transport, financial services, fishing, and wholesale and retail. Inflation 
has continued to fall, with the annual rate for 1996 at 15 per cent, considerably lower 
than the 29 per cent recorded in 1995. 
Progress in structural reform has been substantial, and privatisation has advanced 
rapidly. The majority of state-owned enterprises were sold through competitive 
tenders and direct sales, thus favouring strategic investors rather than management 
and employees. By 1996, more than 1,100 small and 400 large enterprises had been 
sold for a combined total of over ECU 220 million. In 1996, the privatisation 
programme focused on utilities and infrastructure companies. In many cases, 
restructuring has been left to investors, mostly through plans submitted at the time of 
bidding. Privatisation of housing has also proceeded, but the privatisation of land has 
been less successful mainly as a result of the long restitution process. 
The overall objective of Estonia's fiscal policy is to achieve a balanced state budget. 
However, in 1996 the general government budget recorded a deficit which amounted 
to 1.5 per cent of GDP. The Estonian kroon has been pegged to the German mark 
since 1992 and the Government intends to pursue this fixed exchange rate policy. This 
has led to an appreciation of the real exchange rate. The widening gap between 
savings and investments is mirrored in a large current account deficit, which 
approached 10% of GDP in 1996. The trade deficit has grown each year since 
independence and reached a level of 24 per cent of GDP in 1996. The solid monetary 
and fiscal framework in Estonia, combined with a liberal foreign trade and payments 
regime, has nonetheless proved to be very attractive to foreign investors, so that for 
the time being the large trade deficit is being financed by important capital inflows. 
Foreign direct investment has been increasing rapidly to a cumulative total of around 
ECU 360 million for the period 1992-1996. 
The Europe Agreement with Estonia had already been signed in 1995 and ratified by 
the Estonian Parliament later in the same year. A European Integration Office was 
established in 1996 and is responsible for the monitoring and implementation of the 
White Paper and the Europe Agreement. In June 1996, Estonia published a National 
Activity Plan in response to the Commission's White Paper. The Government 
estimates that all parts of the legislation essential for the adoption of the acquis 
communautaire will be in place by the year 2001. A Ministerial Commission is also 
being chaired by the Prime Minister to formulate general policy and to submit 
proposals to the Government in this respect. 
49 
Phare 1996 Programme in Estonia 
Estonia's Multi-annual Indicative Programme for the period 1996-1999 was allocated 
ECU 84 million. The main objective of Phare support within this framework is to 
support the country's socio-economic transformation in order to facilitate the future 
integration of Estonia into the EU. 
The Community, through the Phare Programme, provided ECU 61.8 million of grant 
aid to Estonia in 1996, of which ECU 5 million were committed to cross-border 
cooperation. In fact, the 1996 programme constitutes a relatively high commitment 
and implied front-loading, following the generally high absorption capacity of 
previous years. 
In 1996, a total of ECU 6.5 million was provided by Phare for European integration, 
i.e. approximation of Estonian legislation with that of the EU, including assistance to 
the Parliament in strengthening procedures for the approximation process. Additional 
funding will also be provided to advise on policy-making and implement a national 
training strategy. Funding will also be available to support the legal translation centre 
and strengthen enforcement bodies. 
In 1996, Phare also focused on institution-building and strengthening of the public 
sector bodies responsible for the management of a market economy, as illustrated by 
the special public administration programme put in place in 1996. This provides 
further training for civil servants, development of fiscal and budgetary management, 
and assistance for the social sector ministries. 
Export and investment promotion continue to play a dominant role in Phare 
funding. Technical assistance is being provided for institution-building, promotion 
campaigns and further development of the Estonian Investment Agency, which was 
established in 1994. Regional development also featured prominently in the 1996 
programme, with the emphasis on the establishment of a regional development 
strategy and a Regional Development Fund. In addition, Phare funding is being 
provided for the further development and strengthening of the Business Advisory 
Centres network and the fostering of the SME Development Fund. 
In the field of agriculture, Phare focused on institutional strengthening of the State 
Veterinary Department and the Food Board in order to ensure food safety and quality 
control and to permit the export of animal products to the EU. Regarding land reform, 
Phare concentrated on institution-building in the public sector agencies responsible 
for the restitution and privatisation of land. 
Phare continued to fund infrastructure development. In particular, funds were 
committed to improve the road administration and the aviation sector, and to assist the 
Ministry of Transport in its restructuring. Regarding energy, activities centred on 
policy and strategy advice, development of legislation and standards, pre-investment 
feasibility studies and training. As for the environment, funding is being provided for 
approximation of legislation and co-financing of large environment projects. 
50 
The 1996 cross-border cooperation concentrated on transport, environment (Pandivere 
water protection), and regional and economic development (e.g. development of 
tourism). Implementation is currently being strengthened following the establishment 
of a programme implementation unit in 1996 and this should remedy the delays 
experienced in 1994 and 1995. 
Phare achievements 
In 1996, in the banking sector, Phare completed the general assistance that it had been 
providing since 1993. This included the co-financing of a core advisors group along 
with Danish and Swedish bilateral assistance, whose main aim was to provide advice 
and training on credit and internal controls within the banking sector. As a result, 
skills in the banking sector have significantly improved and the bad debt ratio has 
been brought down from 9 per cent of the total loan portfolio in 1994 to 3 per cent in 
1996. 
Phare has been one of the main donors to the privatisation process. The Programme 
has concentrated on technical expertise for the Privatisation Agency, and the 
restructuring of large state-owned enterprises. Also, thanks to public share offers, 
many of those enterprises are now being traded on the stock exchange. Phare is also 
providing important funding for preparatory work in the current wave of utilities 
privatisations. 
Regarding SME development, four Business Advisory Centres were established with 
Phare funding and an SME policy has been developed. In the meantime, the Business 
Advisory Centres have already been able to serve over 500 clients and have reached 
70 per cent self-sustainability. In the area of investment promotion, the Estonian 
Investment Agency has been established with Phare funding, and has now developed 
a reputation as the national focal point for foreign direct investment into the country. 
Phare was instrumental in the establishment of the Tourism Board, the introduction of 
standards for hotels and restaurants, the introduction of information systems and the 
privatisation of major hotels. 
Tallinn water supply and sewage rehabilitation 
Water supply and sewage treatment in Tallinn required major capital investment. The 
Tallinn Water Company did not dispose of the expertise required to conduct the 
necessary feasibility studies on leakage detection and control, or to carry out the 
inspection and rehabilitation works required. 
The Phare Programme gave ECU 2 million to improve the sanitation facilities of the 
capital city, providing 
• leakage detection equipment and training 
• pipeline rehabilitation, including the acquisition of modern equipment for sewer 
inspection and cleaning. 
51 
The former Yugoslav Republic of Macedonia 
Year in review 
In recent years, the economic policy and reform efforts of the former Yugoslav 
Republic of Macedonia have aimed at establishing a fully-fledged market economy. 
Thanks to the authorities' commitment, many obstacles have now been overcome. 
However, several challenges remain ahead. In the past as in the future, the 
strengthening of relations between the former Yugoslav Republic of Macedonia and 
the EU will help the country move towards a sustainable path of long-term growth 
and development. 
The last couple of years have seen a generally positive trend in the country. The 
Republic has managed to complete a successful stand-by arrangement with the IMF, 
brought down the inflation rate from 2,000 per cent per annum in 1993 to under 3 per 
cent in 1996 and begun a privatisation campaign encouraging foreign investors. In 
Spring 1997, it embarked on a 3-year programme that is supported by the IMF 
Enhanced Structural Adjustment Facility and by other multilateral and bilateral 
donors, including the Community (up to 40 MECU) in macro-financial assistance. 
Social tension has diminished and comparative political stability has been maintained 
inside the country and in its international relations. 
On the 15th March 1996, the former Yugoslav Republic of Macedonia became the 
12th Phare partner country. 
Before this, Phare was already operating in the former Yugoslav Republic of 
Macedonia under a Critical Aid Programme (ECU 85 million) between 1992 and 
1995. The purpose of this was to provide the country with essential raw materials, 
industrial spare parts and fuel for social institutions such as schools and hospitals. 
This programme softened the blow caused to the country by the dissolution of the 
former Yugoslav Federation and ensuing economic sanctions on its borders despite its 
peaceful emergence as an independent state. 
Phare 1996 Programme in FYROM 
The recent relative economic and political stability in the country has allowed the 
Phare Programme to evolve in harmony with domestic developments. A country 
strategy was drawn up in 1996 that reflected government priorities and identified the 
sectors of support most appropriate to achieving true market reforms after the critical 
phase was over. 
Strengthening and expanding the enterprise sector 
This is to be achieved by launching an integrated SME Development programme to 
enhance the long-term sustainable growth and development of the SME sector. This 
will be coupled with targeted assistance for bank restructuring so as to develop the 
ability of the entire commercial banking sector to manage the disbursement of the 
specific credit lines made available by international donors. 
Land reform and the development of the agricultural sector 
Land reform is a prerequisite to the establishment of a successful private agricultural 
sector. This will be combined with an agricultural aid package with a view to adopting 
an agricultural policy based progressively on non-market-distorting instruments and 
improving access to European markets. 
Development of human resources and the restructuring of social policy 
The emphasis here will be placed particularly on public administration reforms with a 
restructuring of the social insurance sector. This should be done whilst strengthening 
the capacity of the Ministry of Labour and Social Protection to develop an active 
labour market intervention strategy. Higher education reforms will be tackled by the 
Tempus programme. 
Support to the overall growth and restructuring strategy 
This general technical assistance facility aims at consolidating the sustainability of the 
reform process by strengthening economic and social institutions. 
On this basis, Phare launched the 1996 Country Operational Programme (ECU 13 
million) approved in September 1996. The projects chosen keep in line with the 
medium- and long-term priorities as put forward by the Government and they focus 
on support to SMEs, support to the financial sector, land reform, agricultural aid, 
support to thé statistical office, approximation of law and an Aid Coordination Unit to 
help manage the influx of aid into the country. 
A component of the Tempus programme, worth ECU 2 million, has the objective of 
restructuring the higher education system in order to provide students with a variety of 
specialisations such as the teaching of European languages, law, engineering and 
technology to give students an education adapted to local and international job 
markets. 
In addition to the national programme, the 1996 cross-border programme with Greece 
(ECU 10 million) is designed to promote further regional cooperation in particular 
through the development of infrastructure. 
53 
Phare Critical Aid 
Due to the country's recent eligibility for the Phare Programme, it is too early in the 
implementation phase to be able to make any evaluation of the 1996 programme's 
success. However, the Phare Critical Aid Programme has to date been contracted at a 
rate of 99 per cent and disbursed at 90 per cent, which has enabled some 50 industrial 
companies to survive the worst of the country's very difficult economic period and 
provide heating and nutrition to the most vulnerable members of the country's 
population. 
54 
Hungary 
Year in review 
In terms of EU-Hungary relations, a significant development was the entry into force 
of the supplementary protocol to the Europe Agreement on 1 February 1996. This 
allows Hungary to participate in Community programmes, in particular training and 
education programmes, such as Youth for Europe II, Socrates, and Leonardo. Access 
to Community programmes should facilitate Hungary's integration into the social 
fabric of the EU. 
(Check with Hungary desk on economic section, as with previous chapters) A Basic 
Treaty was signed between Hungary and Romania in 1996. As well as recognising 
fundamental minority rights and the inviolability of borders, the Treaty provides the 
legal basis and practical framework for enhanced cooperation between the two 
countries at the governmental, regional and sub-regional levels. A tangible result of 
this growing friendship was the agreement in September 1996 of a Hungarian-
Romanian cross border cooperation programme. In addition, a Basic Treaty between 
Hungary and Slovakia entered into force in May 1996. 
Phare 1996 Programme in Hungary 
Hungary's Multi-annual Indicative Programme (1995-1999) provides for 
approximately ECU 425 million support and is designed to help the country's 
preparations for accession to the EU. Assistance will largely go to financing 
investments linked to the adoption of the 'acquis communautaire' as well as bringing 
industry and infrastructure up to Community standards. 
The 1996 Country Operational Programme is worth ECU 90 million. It was decided 
to concentrate on three broad areas: the specific needs of accession, economic 
restructuring, and infrastructure development. Thus, greater emphasis than in previous 
years was placed on issues relating to accession, with a programme dedicated to EU 
integration being allocated ECU 18.5 million. This programme is designed to 
continue and expand upon the work of the ECU 5 million Euro-GTAF programme 
(General Technical Assistance Facility for the implementation of the Europe 
Agreement) which expired at the end of 1996. The EU Integration Programme will 
principally help finance projects designed to prepare the public sector for the 
accession negotiations themselves (including language training), to help approximate 
legislation, to improve the dissemination of information regarding general EU issues 
and create a European information network. 
ECU 46.5 million have been allocated to a programme dedicated to economic 
restructuring, which will further assist the privatisation process, as well as promoting 
trade and investment, and regional development. Infrastructure support received ECU 
55 
15 million to be divided between the transport sector (to help with the modernisation 
of the Hungarian railway system) and the energy sector .In addition, ECU 10 million 
was allocated for Hungarian participation in the Tempus programme. 
As a sign of the improving relations between Hungary and Romania, a cross-border 
cooperation programme was agreed between the two countries in September 1996 to 
which Phare has contributed a total of ECU 10 million (ECU 5 million each from the 
Hungarian and Romanian national programmes). The immediate objectives of this 
programme are to enhance regional planning and development, improve 
infrastructure, and protect the ecology and the environment in the eligible border 
regions. Following the signing of a similar agreement with Slovakia, the EU also 
agreed to provide ECU 5 million towards a project to reconstruct the Esztergom 
Bridge between Hungary and Slovakia; this project will be co-financed by the two 
governments. 
For the 1995-1999 period, ECU 35 million have been allocated to cross-border 
cooperation projects aimed at increasing local and regional structural links that 
straddle frontiers. As part of this, Phare is currently financing two programmes to 
strengthen ties between Hungary and Austria. Hungary's first cross-border 
cooperation project was agreed in 1995 and came on-line during 1996 with the 
creation of a dedicated Programme Management Unit (PMU) on 2 May 1996. 
Following on from this programme, in 1996 a further ECU 11 million were allocated 
to the Austro-Hungarian cross-border cooperation programme, which concentrates on 
local development planning in Sopron and the surrounding area. The 1996 programme 
aims to increase traffic flow in the border region, while reducing the levels of 
pollution in the cities of Sopron, Szombathely, and Zalaegerszeg. 
Phare achievements 
Phare has already made a significant contribution to the accession process in Hungary. 
A recent independent evaluation report on a programme for regional development 
which finished at the end of 1996 rated the overall programme implementation as 
highly satisfactory. Among the many achievements of this ECU 10 million 
programme are a new law on Regional Development and Physical Planning, which 
came into force in June 1996 and is based on the principles of EC regional policy. 
There has also been a significant decentralisation of regional policy planning and 
implementation. 
The development of appropriate Trans-European Networks have been identified as a 
prerequisite to Hungary's integration into the EU. Implementation began of a 1995 
programme worth ECU 16 million to support the transport sector and assist its 
integration with Trans-European Networks, concentrating on a major road 
rehabilitation programme. This programme covers the 30,000 km national highway 
network which carries over 70 per cent of vehicular traffic; more than half of this 
network is deemed to be in poor or unsatisfactory condition. The total estimated cost 
for the programme is ECU 65 million, of which 50 per cent will be covered by the 
EIB, 25 per cent by the Hungarian Road Fund, and 25 per cent by Phare. 
In the field of higher education, Phare funded a programme worth ECU 8 million to 
strengthen the links between education and the economy by funding joint projects 
56 
between industry and higher education, developing new post-secondary education 
programmes and distance learning systems, and promoting the development of special 
post-elementary schools with a view to providing specialised training for those who 
opt not to follow regular secondary education. Although work in this area is by no 
means complete, Phare has been able to set education programmes like these ones in 
motion. 
The impact of Phare support upon Hungary's future accession to the EU is harder to 
quantify. Harmonisation with EC internal market regulations is well advanced, thanks 
in part to the support of the Euro-GTAF programme; and a strategy for public 
administration reform is being developed with the assistance of the mainly Phare-
funded SIGMA programme. Phare-funded expertise and training courses are 
contributing to the process. 
Generally, Phare support to Hungary has been without significant management 
problems. Nevertheless, there have been some difficulties. At the end of 1996, the 
Phare contracts backlog for Hungary stood at almost ECU 219 million (around 32 per 
cent of the total), and the payments backlog at nearly ECU 224 million (slightly under 
33 per cent of the total). 
The 1995 Austro-Hungarian cross-border cooperation programme is extremely 
ambitious, including 41 individual interventions which range in value from ECU 
3,500 to ECU 700,000, and in content from improving teaching facilities in local 
colleges, to improving cross-border air links by upgrading the airport at Gyôr-Per, to 
constructing bicycle paths between the two countries along the Danube. Since this 
was Hungary's first cross-border cooperation programme, the background experience 
was simply not available, nor were the administrative structures in place to deal with 
such a complicated programme. The timing of the programme has slipped by about 
six months. However, the PMU and the Delegation have worked together to address 
the problems constructively, and there should be no further delays. 
More generally, problems have been caused by lack of experience (over-optimistic 
programme design or lack of focus can manifest themselves as a contracting rate 
backlog), and low staffing levels in the PMUs. Technical assistance has often been 
used to overcome these weaknesses, but this has sometimes had an undesirable side-
effect: the experts are almost inevitably used simply as substitutes for government 
employees, which does not encourage the training of new local staff, and renders the 
administration dependent on outside assistance. 
Public administration reform has not been as effective as might have been hoped. The 
reason for this appears to be the lack of management skills and qualified personnel in 
some areas, and this has a large knock-on effect on the implementation of government 
policy, including Phare implementation. Although Phare is trying to rectify this, 
through targeted training courses such as the aforementioned EU Integration 
Programme, more needs to be done. Inevitably, projects designed to improve public 
administration have been hampered by the existing administrative structures. 
57 
Rural Credit Guarantee Fund 
Agriculture and forestry contribute 6.3 per cent of GDP, and around 8.6 per cent of 
total employment. The main characteristic of the Hungarian farming structure is the 
predominance of large-scale farms (occupying close to 80 per cent of the agricultural 
land), even though 90 per cent of the farm land is privately owned. 
The Hungarian Rural Credit Guarantee Fund has been created with a Phare 
contribution worth ECU 20 million. The aim of the Fund is to provide guarantees for 
medium- and long-term loans to small and medium-sized enterprises which otherwise 
lack the collateral for the development of basic agricultural, commercial, industrial or 
service activities. The guarantees provided by the Fund cover 50 per cent of the losses 
on each guaranteed loan, while the other 50 per cent is covered by six participating 
banks. In January 1996 the project was evaluated: over 1,200 small and medium 
business operations, which otherwise would have struggled to survive, have been 
granted guarantees by the Rural Credit Guarantee Foundation, which manages the 
Fund. The impact of such a project on employment, infrastructure, and local 
development, has been substantial. 
58 
Latvia 
Year in review 
In 1996, the Latvian economy recovered from the banking crisis of 1995 and showed a 
modest economic growth of 2.8 per cent. This has however not been sufficient to prevent a 
rise in registered unemployment, which stood slightly higher at just over 7.2 per cent in 
December 1996. According to ILO definitions, however, the unemployment rate in Latvia is 
much higher. A more positive development has been the decline of inflation from an average 
of 25 per cent in 1995 to less than 18 per cent in 1996, following a much tighter fiscal and 
monetary policy in the aftermath of the banking crisis. The deficit on the general government 
balance has also been significantly reduced, from 3.4 per cent of GDP in 1995 to 1.9 per cent 
in 1996. This has been helped by disciplined government expenditure and the proceeds of an 
accelerated programme of privatisation. 
Foreign direct investment remains modest. In addition, while the trade turnover is growing 
impressively, imports are rapidly running ahead of exports, leading to a large and growing 
trade deficit, in part as a result of the strong currency. 
In 1996, amidst the domestic turmoil caused firstly by the banking crisis and secondly by the 
political difficulties experienced after the elections of late 1995, the Government was able to 
reduce the budget deficit significantly and to continue structural reforms. In particular, the 
privatisation process became more transparent to potential foreign and domestic investors and 
is now entirely piloted by the Latvian Privatisation Agency. It is now expected that the 
privatisation of small and medium-sized state-owned enterprises will be completed by the end 
of 1997, and the Government intends to complete the entire privatisation process in 1998, 
including privatisation of state assets in the banking, energy and transport sectors. However, 
there are still major constraints in this respect, notably the poor financial status of state-owned 
enterprises, a lack of investors and the slow pace of property restitution. Sustaining progress 
in privatisation and creating a favourable business environment will, however, be crucial for 
the diversification and strengthening of economic activity, attracting foreign direct investment 
and addressing current imbalances on the external side. 
European integration continues to be the main policy objective of the Government. The 
Europe Agreement had already been ratified by the Latvian Parliament in 1995. In early 1996, 
a Minister for European Union Affairs was appointed to lead the internal process of 
transformation and to take political responsibility for the European Integration Bureau. In this 
context, the ministerial European Integration Council, chaired by the Prime Minister, develops 
and coordinates EU policy at ministerial level. Furthermore, 23 working groups of technical 
experts monitor the compliance of new Latvian laws with EU legislation in various sectors. 
In December 1996, the Latvian government, in accordance with the recommendations of the 
Commission White Paper, presented a National Programme for Integration into the 
Community, which outlines the principles, the measures and timetable of legal approximation 
with the acquis communautaire. 
>>•) 
Phare 1996 Programme in Latvia 
This is the first year of the Latvia's Multi-annual Indicative Programme, which amounts to 
ECU 108 million for the 1996-1999 period. The EU committed ECU 37 million to Latvia in 
1996, of which ECU 5 million will go to cross-border cooperation. The 1996 programme 
constitutes a relatively high commitment and implied front-loading, following the generally 
high absorption capacity seen in previous years. The main objective of Phare support within 
this multi-annual framework is to foster socio-economic transformation so as to facilitate 
Latvia's future accession to the European Union, as part of the pre-accession strategy. 
More than ECU 6 million were allocated to European integration, focusing mainly on legal 
approximation with the EU and harmonisation in agriculture. Technical assistance is being 
provided to ministries in order to facilitate the legislative process as well as training to 
strengthen law enforcement in the country. This includes substantial assistance for the legal 
translation centre. 
The 1996 programme is also providing nearly ECU 10 million for institution-building, human 
resources and social sector development, including public administration reform, reform of 
higher vocational education, and reform of the social security system and health services. 
Private sector development continued to constitute the major area of Phare funding and aims 
to contribute further to the transition process. In particular, assistance for the restructuring of 
state-owned enterprises and support to the Latvian Privatisation Agency remained a high 
priority. Support also centred on the banking sector, entailing credit advice, twinning 
arrangements, audits and legal expertise for the Central Bank and several commercial banks. 
With regard to SMEs, funds were allocated to the six Business Advisory Support Centres 
established across Latvia and to a programme designed to develop product quality control. 
Funds in the area of foreign investment and trade promotion were assigned to the 
development of tourism. Regarding agriculture, Phare focused on the development of rural 
economic diversification strategies, European integration, and institution building. 
In the field of fiscal policy, continued support aimed at implementing modern management 
techniques, and strengthening of budget and treasury management, and providing training in 
accountancy and auditing to the Ministry of Finance. 
Funds were committed to the transport sector in order to harmonise transport law with that of 
the EU; to train ministry officials; to develop a railway network strategy; and to improve the 
road network. Phare is also funding the development of Trans-European Networks, notably 
along the 'Via Baltica' (Helsinki-Tallinn-Riga-Kaunas-Warsaw). In the energy sector, 
technical assistance mainly focused on energy legislation, energy planning and on efficient 
energy utilisation. Finally, funds were allocated for the environment in order to support the 
modernisation of the environmental protection service and an environmental water protection 
plan. 
In addition, the 1996 cross-border cooperation programme focused on transport (e.g. marine 
safety measures; 'Via Baltica') and the environment (e.g. Cesis waste water treatment). 
Implementation has been strengthened with the establishment of the programme 
implementation unit (PIU) in 1996 and this should remedy the delays experienced in 1994 and 
1995. 
60 
Phare achievements 
A major project for the strengthening of economic legislation was completed in September 
1996. This provided expertise for financial law (securities, bankruptcy, commercial banks), 
commercial law (standardisation and certification, company law), labour law (draft labour 
code), and constitutional and administrative law. 
In the transport sector, restructuring of the Latvia railways is ongoing as a result of the Phare-
funded preparatory studies in this respect. The Government has also decided to implement the 
Phare-funded plan for road passenger transport. The World Bank, the EIB and EBRD are 
already financing infrastructure projects on the 'Via Baltica' corridor and in the ports of 
Ventspils and Liepaja. 
In the banking sector, Phare provided significant on-site support for the Bank of Latvia to help 
stabilise the banking sector following the crisis in 1995. 
In the field of investment and export promotion, Phare helped establish the Latvian 
Development Agency and developed its operations, including export development and 
investment promotion campaigns. 
In the agricultural sector, Phare supported land reform, the reorganisation of the land registry 
services, and the establishment of an advisory service for farmers, including food quality 
control. 
SME development 
As in the other Baltic republics, the development of small and medium-sized 
enterprises will be of crucial importance for the future economic growth of Latvia. 
Phare support was provided to the Ministry of Economy for the development of a 
policy framework and the development of an institutional development programme 
for SME support organisations. The first phase has now been completed and produced 
the following results: 
• establishment of Business Advisory Services Centres in 6 locations as part of a 
national network 
• 23 local advisers trained to provide services to SMEs though the BASCs network 
• the BASC provides training and other support services to an average client base of 
3000 SMEs per year 
• additional expert services in the area of productivity, quality, technology and 
innovation via the network. 
61 
Lithuania 
Year in review 
The Lithuanian economy has finally emerged from a deep recession caused primarily 
by the dissolution of the Soviet Union. Economic development gained momentum in 
1995 and accelerated in 1996 with GDP growth reaching 3.6 per cent. Growth is now 
also more broadly based on construction and services. An important positive 
development has been the sharp fall in year-on-year inflation, from 36 per cent at the 
end of 1995 to 13 per cent at the end of 1996. Unemployment has, however, only 
slightly decreased and stood at 6.2 per cent in December 1996. On the external side, 
available figures point towards only a slight deterioration of the trade balance. 
Economic policy in the first half of 1996 was dominated by the aftermath of the 
banking crisis.. Following the elections of October 1996, the newly formed 
Government is trying to cut the government deficit; review the monetary policy and 
exchange rate framework; fight corruption and reduce bureaucracy; and accelerate 
structural reforms in order to attract more foreign direct investment. In this context, 
the Bank of Lithuania is pursuing a medium-term strategy (1997-1999) that would 
allow a more active exchange rate and monetary policy and peg the litas to the 
German mark or the future Euro. 
It appears that the economic reform process is gaining momentum following the 
election of the new Government. In earlier years, during the first stage of voucher 
privatisation, a large number of small and medium-sized enterprises were privatised. 
However, large enterprises remained under state control. Because voucher 
privatisation did not generate sufficient enterprise restructuring, a second stage of 
cash privatisation started in June 1996. This time, shares are being sold rather than 
distributed free of charge, and the authorities aim to attract the participation of foreign 
investors. The scope of this second wave of privatisation initially looked modest, but 
the new Government has announced lately that it is prepared to sell stakes in 
important enterprises in the telecommunications and transport sectors, as well as in 
energy and utilities. Such an extension of the privatisation process seems essential if 
Lithuania is to attract more foreign investment and modernise its economy. 
Foreign direct investment (FDI) flows were low, with an average annual inflow of 
approximately 1% of GDP (SOURCE/EBRD). This was due to several factors, 
including macroeconomic instability and the slow pace of cash privatisation and other 
structural reforms. 
62 
European integration continues to be the main policy objective of the new 
Government. In June 1996, the Lithuanian Parliament ratified the Europe Agreement 
by an almost unanimous vote. The Government has nominated a new Minister of 
European Affairs, whose role, in close cooperation with the Ministry of Foreign 
Affairs, will concentrate on seeking compliance of Lithuanian legislation with internal 
market regulations. In this respect, the European Integration Commission, an inter-
ministerial committee chaired by the Prime Minister, established in 1995, is expected 
to be strengthened and to play a more prominent role than before. 
Following the Commission's White Paper on the Internal Market, the Government has 
also drafted a national programme for approximation of legislation and this National 
Legislation Harmonisation Programme was adopted by the Lithuanian Parliament in 
September 1996, specifying for each Ministry the timetable for harmonisation. 
Public Administration Reform is now an important priority on the agenda of the 
Government which, as a first step, reduced the number of ministries and created wage 
incentives for highly qualified civil servants. There are ambitious plans for the 
overhaul of the administration and the redefinition of the functions of central and local 
government. 
Phare 1996 Programme in Lithuania 
The main objective of Phare support is to promote socio-economic transformation, so 
as to prepare the future integration of Lithuania into the EU as part of the pre-
accession strategy. In 1996, the Phare Programme committed ECU 53 million to 
Lithuania, of which ECU 3.5 million is for Tempus and ECU 6 million for cross-
border cooperation. The 1996 programme constitutes a relatively high commitment 
and implied front-loading, following the generally high absorption capacity seen in 
previous years. 1996 was the first year of the country's Multi-annual Indicative 
Programme, which amounts to ECU 152 million of grant funds for the 1996-1999 
period. 
An important part of the 1996 programme has been oriented towards the core areas of 
the pre-accession process, notably internal market measures, i.e. legal advice, 
training, documentation and translation. Legal advice is funded by Phare for the 
legislative process through ten sectoral drafting working groups established in line 
ministries. 
Under infrastructure development, particular attention is being paid to energy 
efficiency measures, energy sector restructuring, rehabilitation of existing 
infrastructure and training for personnel at the Ignalina nuclear power plant. Funding 
is provided for the co-financing of the gas pipeline from Ukmergé to Utena (close to 
Vilnius), the construction of heavy fuel oil storage and the Klaipeda geothermal plant. 
Phare is also contributing to the Kaunas waste-water treatment plant. In the area of 
transport, support is being provided to develop road and railway infrastructure in 
order to improve physical integration into the EU as part of the Trans-European 
Networks. 
63 
Support for market restructuring and economic development constitutes the most 
important part of Phare funding in 1996. An important part will contribute to 
strengthening the banking system. Assistance in the field of agriculture continued to 
build upon farm-level initiatives, but focused increasingly on marketing, finance and 
quality issues in food processing. Regarding the privatisation and restructuring 
process, the Phare programme is providing legal advice and support to the 
Privatisation Agency and to the newly created Ministry of Economy for policy 
formulation and institution building. 
In the SME sector, Phare is providing operational and training support to the six 
Business Advisory Centres, which assist the business community in different regions 
of the country. In addition, it extended assistance to the Lithuanian SME 
Development Agency, which was established at the end of 1995. The introduction of a 
Phare SME credit scheme in 1993 which was renewed in 1996 also facilitated access 
to capital for small and medium-sized enterprises. 
Phare assistance will also be provided under the 1996 programme to further improve 
the tax regime and treasury and budgeting function, and increase the efficiency and 
effectiveness of the customs administration. 
The 1996 cross-border cooperation programme centred on transport (Klaipeda oil 
terminal & rail/port interface), environment (hazardous waste storage), and regional 
and economic development (Nida tourism development). Implementation has been 
strengthened with the establishment of the Programme Implementation Unit in 1996 
and this will remedy the delays experienced in 1994 and 1995. 
Phare achievements 
A number of Phare programmes were completed in the course of 1996. Particularly 
important projects and achievements in this respect were the following. 
In the energy sector, Phare helped complete the analysis and recommendations for 
establishing an Energy Efficiency Fund, as well as pilot drilling for an underground 
gas storage facility in Vaskai in the northern part of the country. 
As a result of Phare assistance in the transport sector, a restructuring and business 
plan for the Lithuanian railways was completed and adopted. Similarly, the Klaipeda 
Port Master Plan, prepared with Phare funding, is being implemented. Finally, 
construction works at the Polish-Lithuanian border crossing of Kalvaria were 
completed and have been co-financed by the Lithuanian government. 
Regarding privatisation, Phare supported the establishment of the Lithuanian 
Privatisation Agency in 1996. Phare has also provided considerable support for the 
implementation of legislation, training of privatisation officials, and preparatory 
studies for the privatisation of selected state-owned enterprises. 
In the banking sector, Phare funded expertise for on-site support and supervision for 
the Bank of Lithuania to deal with the banking crisis. Additional twinning 
programmes with foreign banks were also established, through which a large majority 
of Lithuanian banks (82 per cent in asset terms) receive major technical support. 
64 
SME development 
Small and medium-sized enterprises contribute enormously to the development of the 
private sector and economic growth. Although Lithuania was late in recognising this, 
Phare supported SME development from the beginning and has provided funding for 
an SME credit line, expertise for policy implementation, funding for the establishment 
of six Business Advisory Centres and support to the launching and initial operations 
of the SME Development Agency. 
Bank credit is often a major obstacle for the development of SMEs. In transition 
countries, banks tend to lend either to large companies or to invest in financial 
instruments, i.e. generally transactions that are secure and carry minimal 
administration costs. As a result, SMEs find it difficult to borrow, and this hampers 
the development of the private sector. 
To remedy this, Phare has established a credit line to support SMEs. Managed by the 
Central Bank and channelled through commercial banks, it provides credit at more 
favourable rates than in the domestic market and is destined for enterprises employing 
up to 200 employees. Companies can borrow up to ECU 125,000 for long-term 
investments. More than 200 loans have been provided so far. 
Moreover, specific training related to the credit line is being provided to the Central 
Bank, the commercial banks and the SMEs. The network of Business Advisory 
Centres has been used for the training of client companies in this respect. 
65 
Poland 
Year in review 
The Polish economy has performed well since the transition process began. In 1996, 
real GDP increased by 6 per cent and thus, for the fifth consecutive year, the country 
experienced strong economic growth. In 1995, real GDP for the first time exceeded 
the level recorded in 1989. Inflation and unemployment remained relatively high but 
are falling, at 18.6 per cent and 13.6 per cent respectively at the end of 1996. 
As in previous years, Poland made progress along the road of economic reform. The 
private sector now accounts for nearly 60 per cent of GDP and 62 per cent of 
employment. The Mass Privatisation Programme, after a long preparatory period, 
was finally launched in November 1995 and became very successful in 1996, with 
over 26.5 million vouchers taken up by the population and their price now trading on 
the secondary market of the Warsaw Stock Exchange at seven times their original 
value. 
In spite of the international appreciation for the Polish shock therapy approach, 
foreign direct investment (FDI) was off to a slow start during the initial stages of 
transition. FDI inflows have begun to pick up considerably since 1994. In 1996, the 
inflow was about 1.8% of GDP. The cumulative FDI inflow since 1989 reached a 
level of ECU 4.0 billion (source. EBRD), which corresponds to slightly more than 
ECU 100 per inhabitant (the Polish Government Agency for Foreign Investment 
(PAIZ) reports that the FDI inflow in 1996 alone has reached more than ECU 4.0 
billion. The PAIZ estimates that the cumulative inflow of FDI since 1990 has been 
about ECU 11 billion). 
Poland's economic performance and the increasing confidence of international 
investors are also the result of considerable improvements in the Government's public 
finances over recent years. Total public debt now stands at 54 per cent of GDP and the 
Central Government's budget deficit attained 2.9 per cent of GDP in 1996. In April 
1996, the Government adopted "Package 2000", a set of medium-term policy 
guidelines around a programme of cuts in personal and corporate income tax, and, at 
the end of 1996, the Government also unveiled plans to make Poland meet the 
Maastricht criteria for EMU by the year 2006 by further reducing the general 
government budget deficit and, notably, the high inflation rate. 
Poland also continued along the path of pre-accession and approximation to the 
European Community's's 'acquis communautaire'. In October 1996, the Government 
started an ambitious central government and civil service reform programme, whereby 
a Committee for European Integration, a new Ministry of State Treasury, the Ministry 
of Economy, and the Ministry of Internal Affairs were established as a result of the 
merger or reorganisation of a number of ministries and government agencies. The new 
66 
Civil Service Law, adopted by Parliament in August 1996, was introduced and is 
currently being implemented. These reforms constituted important steps for Poland on 
the way towards good governance and in fact constitute a prerequisite for future 
integration with the European Union. 
As part of the pre-accession strategy, the Committee for European Integration was 
established in October 1996, chaired by the Prime Minister. This Committee has a 
policy coordination and steering function with decision making power on EU 
integration issues and foreign assistance, including the Phare programme. In late 
1996, the Committee prepared and the Government adopted a National Strategy for 
EU Integration. The Government, in 1996, also issued a White Paper with a 
systematic analysis of implied legal and economic adjustments in the context of EU 
integration. In November 1996, the Parliament also adopted the Customs Code. 
Phare 1996 Programme in Poland 
Under its Phare programme for Poland in 1996, the European Union committed ECU 
203 million. This was the second year of the Multi-annual Indicative Programme for 
Poland, whose budget for 1995 to 1999 totals ECU 1.015 billion of grant funds. As in 
the previous year, the main objective of the 1996 programme was to facilitate 
Poland's gradual integration into the European Union by providing funding for 
approximation of EU legislation, institution building, infrastructure co-financing and 
continuing support for the process of socio-economic transformation. In this respect, 
the 1996 Phare programme continues to contribute to the EU's pre-accession strategy. 
The Phare programme in 1996 therefore concentrated further on the gradual 
integration of Poland from the legislative, physical and human resources point of 
view. A total of ECU 64 million, or nearly 32 per cent of the funds committed in 
1996, were earmarked for the development of the country's transport infrastructure 
within the Trans-European Networks programme. These funds were attributed for 
cofinancing with the European Investment Bank, the European Bank for 
Reconstruction and Development, and the Polish Government, notably for the 
construction of the first part of the A4 Motorway from Wroclaw to Katowice (part of 
TEN Corridor 3 Berlin-Katowice-Kiev) and the renovation of the first part of the E20 
Railway from the German border to Warsaw (part of TEN Corridor 2 Berlin-Warsaw-
Minsk-Moscow), including upgrading of border crossings with Germany. 
As in previous years, ECU 53 million were also committed for the cross-border 
cooperation programme, whereby funds are provided in a concentrated manner mainly 
for transport and environment infrastructure projects in eight regions on the border 
with Germany and the Baltic Sea. In the course of 1996, further efforts were 
undertaken to strengthen the implementation capacity of the Polish authorities dealing 
with the cross-border programme and this is beginning to show results in terms of an 
accelerating contracting rates in this respect. 
In 1996, the Phare Programme provided additional funding for private sector 
development, especially through continued support for the Government's municipal 
and provincial privatisation programme, the development of SMEs, regional 
development of lagging regions, and agricultural and rural development. For the 
latter, as well as for the transport and environment sectors, special funds were also set 
67 
aside for harmonisation and implementation of the acquis communautaire as part of 
the Government's pre-accession strategy. 
Phare achievements 
Several Phare programmes were successfully completed in the course of 1996, 
notably the following: 
first phase of the public administration reform programme 
Struder regional development programme 
customs programme 
mass privatisation programme 
foreign investment promotion programme. 
In addition, the first part of the Phare-financed environment programme was also 
completed, as well as the Bad Debt Work Out programme and the Phare agricultural 
credit line. In general, these programmes were committed in 1992, except for the 
agricultural credit line, which dated back to 1990. Following a slow start, the latter 
was able to provide more than 1,000 small loans through co-operating banks mainly 
destined for farmers and agricultural SMEs wishing to acquire modern farming and 
food processing equipment, thereby effectively contributing to the modernisation of 
the sector. In general, experience to date indicates that most Phare programmes 
initiated in the early years of transition required long gestation periods, often due to 
the absence of viable delivery mechanisms or because of the need for important policy 
decisions, before any concrete results became available. 
The Bad Debt Work Out project, funded by Phare, in consultation with the EBRD, 
was largely completed in 1996 and has seen the percentage of bad debts in 
participating banks fall from 53 per cent in 1993 to under 10 per cent in 1996. This 
project has been particularly effective in that it not only worked with the banks 
concerned but also with their debtor enterprises. This project has therefore 
contributed importantly to enterprise restructuring in Poland, while preparing major 
banks for the skills needed in subsequent privatisation. 
Phare funding for the environment in Poland amounted to a cumulative 9.6 per cent of 
total Phare funding for Poland in the period 1990-1996, i.e. close to the 10 per cent 
recommended by the European Parliament. It should however be noted that these 
figures do not include energy saving measures or environmental projects funded 
through the regional development programme. The Phare environment programme in 
Poland contributed to the development of the National Fund for Environmental 
Protection, i.e. the main investment instrument of the government for funding of 
environment projects, by the private and public sector alike. Particularly important 
Phare-financed projects in this respect were the Nun Moth campaign to eradicate this 
pest in forests, the Geothermia project in Zakopane, and waste water treatment plants 
in the Oder basin. The Geothermia project, funded by Phare initially in 1992, is 
providing district heating to the village of Zakopane, and, when completed (with 
World Bank funding), will provide heating to 75,000 people in the Zakopane valley, 
thereby considerably reducing air emission from traditional coal burning. 
As mentioned above, the Mass Privatisation Programme, after a long preparatory 
68 
period, was finally launched in November 1995. In this programme, 512 state-owned 
enterprises were assigned to 15 National Investment Funds. Phare was one of the 
major donors to this programme and provided, as early as 1992, considerable support 
by financing the public awareness campaign, training of over 5,000 officials, 
preparatory studies, and the printing and distribution of the privatisation vouchers, 
which can now be exchanged for share certificates in the National Investment Funds. 
The promotion of foreign investment has also been facilitated since 1993 with the 
establishment of the Foreign Investment Promotion Agency (PAIZ), with 
considerable support from the Phare programme. This Phare programme was 
successfully completed in 1996, and PAIZ, solely on the basis of Government 
support, continues to play a major role in the promotion of inward private foreign 
investment to Poland. 
In October 1996, the Government started an ambitious central government and civil 
service reform programme. The new Civil Service Law, adopted by Parliament in 
August 1996, was also introduced and is currently being implemented. The 1992 
Phare-funded public administration reform programme provided considerable support 
in this respect, in particular with preparatory reform and organisation studies, training 
programmes for civil servants, strategic advice, and expertise for the preparation of 
the public procurement law, the civil service law, and the organic laws needed for the 
reorganisation of ministerial departments and the creation of new government 
agencies. In addition, since several years, the Phare programme has also provided 
support for approximation of legislation, In November 1996, the Polish Parliament 
adopted the Customs Code. In this context, the Phare programme funded preparatory 
work with training and expertise and also funded a Data Entry Management system 
that should render the customs services more efficient. 
In February 1996, the Government/Donor Task Force on Regional Development in 
Poland, again with funding from the Phare programme, accomplished its work and its 
recommendations were adopted by the Council of Ministers in December 1996. The 
first Phare-funded regional development programme (Struder) in Poland was also 
successfully completed. 
As indicated, in the early years, the Phare programme experienced implementation 
difficulties in Poland, partly due to organisational problems in the responsible 
ministries and lack of viable delivery mechanisms. Implementation in 1995 however 
accelerated considerably. In 1996, performance was encouraging, albeit at a lower 
level than in 1995, in the sense that contracting slightly exceeded commitments and 
the funding backlog did not increase. 
69 
Struder: a regional development programme 
Regional disparities in Poland are important and unemployment is unevenly 
distributed. In 1992, Poland had no regional policy, no legal framework, no 
institutions for regional development. The Government requested funding by Phare of 
a regional development programme - Struder - that subsequently was slow to start. A 
total of ECU 76 million was provided by Phare in 1992 for structural development 
measures in six provinces lagging behind, i.e. with high unemployment, high 
agricultural GDP or subject to heavy industrial restructuring. 
The programme was completed in 1996 and provided valuable operational experience 
of regional development measures to Polish municipalities and provincial 
administrators. This programme is now being continued, following the 
recommendations of the Task Force on Regional Development in Poland, adopted by 
the Council of Ministers in December 1996, and has given an important impetus to the 
Government's emerging regional and rural development policy, taking into account 
important elements of programmes similar to those financed by the EU Structural 
Funds. 
In concrete terms, the Phare-funded Struder programme 
• cofinanced 1,051 SME investment projects through a grant scheme (ECU 30 
million) along with commercial bank loans and SME own resources. This created 
ECU 130 million investment and 11,500 jobs in the regions concerned 
• Cofunded 188 Municipal Small Infrastructure Projects worth ECU 18 million out 
of total project cost of ECU 36 million in the regions concerned 
• was instrumental in the creation of Regional Development Agencies and two 
Regional Investment Companies in Poland 
• Provided training and retraining schemes for the unemployed, for local banks and 
for SME entrepreneurs. 
70 
Romania 
Year in review 
1996 was an electoral year for Romania. Municipal and local elections took place in 
June 1996, parliamentary and presidential elections in November. In all cases, a 
centre-right coalition, composed mainly of Christian and Social Democrats, prevailed. 
The new centre-right government is composed of Christian Democrats (CDR), Social 
Democrats (USD) and representatives of the Hungarian minority (UDMR). Thirteen 
recognised minorities are each represented by one deputy in the Chamber. This is 
allowed for by the Constitution and applies to minorities' political groups which do 
not attain the 3 per cent threshold. Emil Constantinescu (CDR-Christian Democrat) 
was elected president on 17 November 1996 in the second round of presidential 
elections. 
The Government programme aims mainly at economic reform (re-alignment of 
energy prices, monetary policy, reform of public utilities, financial markets, reform of 
agricultural support programmes), accompanying social measures and the fight 
against poverty. 
Gross domestic product increased by 4.1 per cent in 1996, the fourth consecutive 
annual increase. Inflation, after a sustained slowing down since 1993, accelerated 
from an average of 32 per cent in 1995 to approximately 57 per cent at the end of 
1996. This was the result of a very loose monetary policy, as well as numerous tariff 
increases in the run up to the elections. 
The deficit on the general government balance, as a percentage of nominal GDP, was 
1.9 per cent in 1994, 2.6 per cent in 1995 and 3.9 per cent in 1996. The law on public 
finance provided for a 2.9 per cent budget deficit. The wider public sector deficit, 
which for instance includes quasi-fiscal subsidies, was of the order of 8 per cent. 
The current account deficit increased sharply in 1996, reaching 7.3 per cent of GDP, 
with the trade deficit amounting to 2.5 billion dollars. FDI inflows have been 
relatively small, in relation to the size of the country. In 1996 foreign reserves 
declined, as foreign investors maintained a prudent stance and domestic investors took 
funds abroad. 
In June 1995, the government launched a Mass Privatisation Programme targeting 
3,900 companies. This was based on a procedure which awarded vouchers to all adult 
Romanians above the age of 18. The slow pace of privatisation is one of the main 
reasons for the low level of foreign direct investment in the country. The banking 
sector, for example, remains dominated by the state banks. Restructuring and 
privatisation are key priorities of the new government. 
71 
In terms of foreign policy, the country's two main objectives are accession to the EU 
and NATO. A Basic Treaty with Hungary was signed on 16 September 1996. This 
deals with minority issues and is an important step towards improving relations with 
neighbouring countries. A similar agreement is under negotiation with Ukraine 
regarding territorial differences. 
Phare 1996 Programme in Romania 
A four-year Multi-Annual Indicative Programme for Phare assistance to Romania was 
signed in September 1996. Covering the period 1996-1999, it provides ECU 440 
million of grant aid to Romania. Infrastructure for European integration and 
implementation of the 'acquis communautaire' are the key objectives in terms of 
preparation for accession. 
Co-operation will be further enhanced through the participation of Romania in 
Community programmes in conformity with the decisions of the European Council of 
Copenhagen. The additional protocol to the Europe Agreement, which allows for the 
opening of the programmes, has already entered into force. Thus, the Association 
Council is able to decide the terms and conditions of Romania's participation in 
particular programmes, on the basis of the country's priorities. Work has progressed 
satisfactorily in view of Romania's participation in four Community programmes: 
Youth for Europe III, Socrates, Leonardo and Media II. 
In addition, a cross-border co-operation programme with Hungary has been 
approved1. This follows the signature by Romania and Hungary of a Basic Treaty on 
16 September 1996. The programme allocates ECU 10 million to Romania and 
Hungary (ECU 5 million each) for projects which rely on cooperation between 
Romania and Hungary to improve living conditions on both sides of the border. 
Phare achievements 
Although there have been some difficulties, partly due to organisational problems in 
the responsible ministries, implementation improved in 1996 when the contracting 
rate more than doubled. The Phare Programme has made a positive contribution to 
the transition process in Romania and its integration with the EU. 
Phare assistance has been instrumental in ensuring that the privatisation process has 
become irreversible, and handled with a significant level of transparency, even though 
lack of long term planning and co-ordination did not allow for optimum use of 
technical assistance. Future programming should concentrate now on providing an 
enabling environment for the private sector (including strengthening of policy making 
capacities). 
Romania is the only associated country that shares no common borders, either terrestrial or 
maritime, with any of the 15 Member States; therefore, no Romanian region is eligible for cross-
border programmes between CEECs and Member States as provided for in Commission Regulation 
(CE) N° 1628/94 of 4/7/1994 for financing of projects in accordance with Union's structural 
policies, in particular Interreg II. 
72 
Impact of Phare has been" significant in terms of institution-building, and 
transformation of the role of the state vis-à-vis companies. Slight concerns resulting 
from a structure with split political responsibility for restructuring have still to be 
dealt with. 
The Romania Post Privatisation Fund was set up in 1996. It is an equity investment 
fund, providing venture capital, managed by a private company and supervised by 
EBRD. The fund has a ten-year life at the end of which period it is supposed to have 
liquidated all investments. Phare has contributed ECU 10 million for technical 
assistance and ECU 15 million for investment; the EBRD, ECU 25 million for 
investment. All necessary agreements were signed in October 1996. 
Romania made modest progress in the approximation of legislation. Steps have been 
taken mainly in the areas of agriculture, transport, competition, professional 
qualifications, health and safety at work and environment. The overall current 
situation should be evaluated and the way ahead defined, taking on board the new 
government priorities. 
In the area of public administration reform, the main areas of action for Phare 
programmes have been policy development, modernisation and development of 
management capacity, and public service ethic. On all three accounts, there remains 
much to be done. 
The Phare programme has been a leader in the establishment of programmes of active 
employment measures throughout Romania through it highly successful PAEM 
programme. 
73 
Programme for Active Employment Measures 
The Programme for Active Employment Measures started in 1994 with a total budget 
allocation of ECU 10 million and a duration of four years. The main objective of the 
programme is to support the government in the development and implementation of 
labour market policy and reform, balancing the local initiative and innovation with the 
design of national policy guidelines and active employment measures with 
institutional development. 
The programme is relying upon the principles of decentralised actions and enhanced 
local partnership. Examples of active employment measures still under 
implementation are: information and documentation centres, mediation centres, 
business incubators, business consultancy centres, centres for the promotion of agro-
tourism, job clubs, vocational training, entrepreneurial development in schools, job 
placement centres, temporary labour centres, employment services for disadvantaged 
people, etc. 
The results to date are 
228 Active Employment Measures operational 
53 local consortia institutionalised and operational 
49 local development agents trained 
35,000 clients assisted in the information centres 
20,000 received counselling in Mediation Centres 
10,500 people were employed as a result of mediation 
3,100 people attended vocational training courses 
1,500 people attended training in Job Clubs 
1000 people attended entrepreneurial training courses. 
In Medgidia, a less developed part of Romania, the Programme for Active 
Employment Measures was instrumental in the setting up of a Mediation Centre, a 
Business Consultancy Centre and a Vocational Training Centre. The Foundation for 
the Support of Disadvantaged Groups became self-sustainable by providing good 
quality feasibility studies for bank loan applications; the Mediation Centre was taken 
over by the labour directorate in the Constanta county, who will support the 
operational costs above and beyond the financing under the Programme for Active 
Employment Measures. 1,837 people have been assisted, of which 274 were placed in 
jobs in 170 companies. 
In Tirga Neamt, one of the regions in Romania worst affected by unemployment, the 
Programme for Active Employment Measures supported the establishment of several 
community services. The key of the success was the choice of the services based on a 
survey conducted in the community. The County Directorate took over the operational 
costs of the Mediation Centre only after the first eight months, encouraged by the very 
positive results (2,200 people placed in jobs). The Vocational Training Centre is 
making promising progress (112 people trained) and the newspaper proved to be an 
effective tool for the delivery of information to the unemployed. 
74 
Slovakia 
Year in review 
After its impressive macroeconomic performance in 1995, the Slovak economy 
continued to grow at almost 7 % in 1996, while inflation decelerated to 5.4 % at the 
end of the year. Growth was fully generated by domestic demand. Rapidly rising real 
wages and some increase in employment pushed up private consumption, while real 
investment grew by more than 30%. The external balance, on the other hand, has 
turned sharply negative. Slow export growth and sharply rising imports have resutled 
in a current account deficit of more than 10% of GDP, compared to a surplus of 2.3% 
in 1995. The fast economic growth had a beneficial impact on unemployment. The 
unemployment rate declined from a peak of 15.2% in January 1995 to 12.8% in 
December 1996. Nevertheless, unemployment remained unevenly spread over the 
country, and the proportion of long-term unemployment was rising. 
The conduct of monetary and fiscal policy has played a vital role in the stabilization 
process in Slovakia after its independence. Nevertheless, in 1996 economic policy 
became more expansionary, leading to higher domestic demand and the ensuing 
deficit on the the current account. Only in the second half of the year, monetary policy 
was restricted in an effort to curb excessive demand growth. 
The National Bank Supervision Department has made substantial progress in 
establishing prudential regulations producing or clarifying legal frameworks, building 
up its staff capacity and its independence, and in developing a comprehensive 
information system. Phare has supported the restructuring of the three largest state-
owned banks, which represent more than 60 per cent of total banking assets. 
The Ministry of Finance is presently implementing a more coherent tax and 
accounting reform programme including assistance to the Union of Accountants and 
Chamber of Auditors. 
Phare 1996 Programme in Slovakia 
Programming discussions were held in the framework of the Multi-annual Indicative 
Programme. The programming of the 1996 Country Operational Programme was 
delayed in part because of institutional and staff changes (shifting of coordination 
responsibilities from the Slovak Ministry of Foreign Affairs to the Office of the 
Government). Under the multi-annual financial perspective, given that it is possible to 
modulate annual allocations on the basis of needs, absorption capacity and past 
programme performance, it was eventually decided to postpone the 1996 
commitment. Therefore, in 1996, Slovakia only received an allocation for Tempus 
(ECU 4.5 million) in support of the educational sector. 
75 
Phare achievements 
In 1995 a Council of European Integration was set up as an inter-ministerial forum for 
questions relating to' integration issues. All newly prepared legislation has to be 
examined as to its compliance with EC legislation by the Institute for Approximation 
of Legislation, which has been set up in June 1995 and integrated in 1996 into the 
Office of the Government. The Slovak Government has issued a general strategy on 
approximation of legislation on the occasion of the Association Committee in 
December 1996. Phare supports the Slovak Institute for Legislative Approximation, 
through extensive technical assistance. 
The reconstruction of the bridge on the Danube, between the cities of Esztergom and 
Sturovo is a project (ECU 5 million) sponsored by the EU and the two beneficiary 
countries in the framework of the Conference of the Pact on Stability in Europe. This 
project is a demonstration of the commitment of both Hungary and Slovakia to pursue 
good neighbourly relations, as stated in the Basic Treaty on Good Neighbourliness 
and Friendly Cooperation ratified on May 15, 1996. The reconstruction of this bridge 
is particularly aimed at promoting good relations in questions relating to minorities, 
frontiers and regional cooperation. 
Today, the majority of companies have been privatised either through the voucher 
scheme or since 1995 through MEBO (Management Employment Buy-Out). Phare 
has supported the restructuring of a wide range of companies. More than 40 individual 
enterprise studies provided assistance to a range of ten industry sectors, including 
armaments, engineering, metal products, chemicals and textiles. The average cost of 
each project was ECU 250,000 for technical assistance in operational restructuring, 
production, organisation and the preparation of strategic plans. 
Capital inflows have been small compared with other countries in the region. After 
almost no increase in foreign investment in the first half of 1995, the capital inflows 
expanded to a total amount of $ 845 million at the end of December 1996. The main 
investors, by country of origin, are from Austria, Germany, the Czech Republic and 
the USA. A more positive sign is the increase in the number of enterprises with 
foreign capital participation to 9,717 companies in 1996 compared to 5,100 in 1993. 
These investments are mainly directed towards the retail trade, industry, banking and 
insurance. Phare has been supporting SNAFID (Slovak National Agency for Foreign 
Investment Development), responsible for promoting foreign investment into Slovakia 
and has made a major contribution in attracting 'greenfield* investment to Slovakia. 
Over the past three years, the Slovak National Agency for Foreign Investment has 
been involved in 17 projects, worth $ 144 million and providing jobs for 6,000 
employees. 
SMEs are now a major engine for growth in the Slovak Republic accounting for 35 
per cent of the GDP. SMEs have gained recognition as an important sector for the 
transformation of the economy, the development of market mechanisms, the 
promotion of enterpreneurship and as providers of employment. It is a key sector for 
Phare support, which has in the past contributed to the development of Business 
Support Centres and will in the future concentrate its funds on the policy, services and 
regulatory framework. Phare has made an important contribution by providing direct 
assistance to SMEs and establishing institutions to support SMEs. 
76 
The Slovak Government decided in 1993 to create an independent agency for the 
development of the sector. The SME programme executed by the agency and co-
financed by the Slovak Government is now fully implemented with the various 
financial instruments launched, particularly the small loans fund, being well 
subscribed. This financial assistance, together with business counselling through a 
network of assistance centres set up with Phare funds, is seen as providing a valuable 
service to SMEs. In particular, the subsidised loan scheme which combines a unique 
blend of Phare, government and commercial funding, has provided much-needed 
capital for SMEs to expand their operations. The loan scheme has provided up to 459 
loans to enterprises employing on average 45 people for an average loan size of 
approximately ECU 76,000. 
In 1996 Phare, the Slovak Government and the EBRD signed the agreement setting up 
the Slovak Post Privatisation Fund, a restructuring vehicle capable of bringing both 
know-how and capital to medium-sized Slovak enterprises. The Phare grant 
contribution is in the amount of ECU 12 million in equity and ECU 8 million in 
technical assistance. The Slovak Post Privatisation Fund will provide equity, effective 
governance and management assistance to enterprises that are presently unable to 
raise private equity capital. 
The Policy Advisory Unit assisted the Ministry of Agriculture in reviewing and 
formulating agricultural policy and in the establishment of working groups looking at 
the adoption of the full 'acquis communautaire' (structural issues, veterinary and 
phytosanitary matters, forestry, water management, etc.). 
Phare has also provided assistance to the continued modernisation and reconstruction 
of land registration and integrated cadastral information services in support of the 
restitution and land consolidation process, land market development, privatisation of 
rural and urban areas, thus meeting the socio-economic and environmental needs of 
the country. 
The assistance also contributed to community development taking into consideration 
essential democratic principles, by improving the security of ownership rights related 
to land and its assets and supporting local governments in their tasks related to land 
registry and mapping. Phare has also provided assistance to improve the availability 
of geographic information systems; to develop digital and similar products (aerial 
photography of 6.000 km2 of Slovak territory); to stimulate and support public, 
governmental and private sector users, such as local authorities, regional authorities 
(physical planning, environmental protection), banks (land market, mortgaging), etc. 
Other tangible contributions have been made in the educational sector, where Phare 
supported a short-cycle higher education programme for language teachers at the 
pedagogical faculties of Slovak universities, involving more than 1,300 students. 
Civil society in Slovakia plays a very important role in the process of further 
application of democratic principles in the country. These principles can be seen in 
action in the quantity and quality of existing non-governmental organisations. In this 
respect, Phare has supported over 300 NGO projects through the Civic Society 
Development Foundation. The CSDF is currently one of the largest and most 
77 
influential NGO grant-giving organisations in Slovakia. 
Cross-border cooperation with Austria experienced certain implementation delays in 
1996 due mainly to a change in institutional responsibility and staff. The institution 
responsible for regional development and cross-border cooperation up to October 
1995, the Centre for Strategic Studies, was replaced by a new Office for the Strategy 
Development of Society, Science & Technology of Slovakia. 
The performance of the Phare Programme, as measured in contracting and 
disbursement rates, has slowly but steadily improved. By the end of 1996, the 
contracting rate of the 1990-1994 programmes had reached a rate of over 80 per cent. 
The contracting rate of the 1995 programmes reached almost 50 per cent of the 
overall allocation by the end of 1996. 
With a view to rationalising and streamlining the implementation of Phare assistance, 
preparatory work has been undertaken to set up a Central Financial and Procurement 
Unit during 1997 to administer the Phare programme in Slovakia. This will allow the 
development of effective financial management ensuring appropriate tendering and 
accounting procedures to speed up Phare implementation. 
78 
SME development 
Since 1991 the Phare programme has supported the SME sector with a total amount of 
ECU 23.4 million of which ECU 22 million have been fully contracted. This support 
has focused on a range of activities including policy research, advisory support to 
SMEs, institution building and financial support to SMEs. 
Policy and research worth ECU 700,000 has focused on studies, international 
conferences, and research which are used as a basis for the Ministry of Economy to 
develop a strategy and policy towards SMEs. 
Information and counselling totalling ECU 5.7 million has supported the 
establishment of a network of Business Innovation Centres and Regional Advisory 
and Information Centres which provide a range of advisory services directly to SMEs. 
In addition, Phare supports the National Agency for Development of SMEs which has 
overall responsibility for promoting SMEs in Slovakia by co-financing its operational 
costs and providing technical assistance (training, expertise and equipment). 
Phare has also initiated a number of different financial instruments worth a total of 
ECU 17 million to support SMEs: 
Guarantee Scheme ECU 3 million 
Small loan scheme ECU 1 million 
Support loan ECU 10.4 million 
Seed Capital ECU 1.3 million 
Micro Credit ECU 300,000 
Technical Assistance ECU 1 million 
The SME programme overall has provided a catalyst to stimulating the growth of 
SMEs in Slovakia and developing institutions to service SMEs. Since 1991, the 
number of SMEs has grown from 201,470 in 1991 to 298,363 in 1995; they now 
account for no less than 35 per cent of gross output in the industrial sector. 
In particular, the subsidised loan scheme which combines a unique blend of Phare, 
government and commercial funding, has provided much-needed capital for SMEs to 
expand their operations. The loan scheme has provided up to 250 loans averaging 
ECU 60 000 to enterprises employing on average 45 people. The present default rate 
is less than 1 per cent. 
79 
Slovenia 
Year in review 
On the economic front, activity began to recover after the initial decline which had 
begun in the second half of 1995. However, for the first time since 1993, there was a 
decline in exports in 1996 of around 5 per cent, while industrial production increased 
by 1 per cent. This helped annual inflation to fall to 9.7 per cent from 12.1 per cent in 
1995. In 1996, the rate of unemployment fell to 8 per cent according to international 
measures. Since independence, macroeconomic stability has been maintained through 
tight monetary policies, with budgets in surplus or low deficits. Preliminary figures 
for 1996 indicate a small budget deficit of 0.2 per cent of GDP. 
At the microeconomic level, the privatisation process based on a voucher scheme is 
nearing completion. However, medium term restructuring of key sectors of the 
economy, including industry and the financial sector still has to be carried through. 
Foreign investment flows have been relatively low. 
Slovenia and the European Union signed the Europe Agreement in June 1996. The 
final ratification of the Agreement by all Member States is expected during 1998. 
Also in June 1996, Slovenia officially applied for full EU membership. 
Phare 1996 Programme in Slovenia 
In the context of the pre-accession strategy, there has been a general reorientation of 
Phare assistance in Slovenia towards preparation of its future integration into the EU. 
In March 1996, the European Commission agreed a Multi-annual Indicative 
Programme with the Slovenian Government for the period 1996-1999. The 
Programme reflects the country's priorities as it prepares for accession and has four 
main objectives 
• coordination and monitoring of the Slovenian Government's pre-accession strategy 
• adoption of the 'acquis communautaire' 
• support for continued economic and social reforms 
• infrastructure integration. 
The Multi-annual Indicative Programme foresees an overall allocation of ECU 100 
million which is to be distributed both to the Phare national budget (ECU 76 million) 
and the cross-border programmes with Austria and Italy (ECU 24 million). 
The Country Operational Programme for 1996 set out the concrete measures that will 
ensure the fulfilment of the objectives set out in the Multi-annual Indicative 
Programme. 
80 
The pre-accession strategy programme (ECU 2.85 million) provides financing for 
additional local staff and long-term technical assistance that focuses on developing 
institutional expertise in the coordination and monitoring of projects. Practical 
management tools are being introduced, such as the European integration technical 
support unit and a translation unit at the Ministry of Foreign Affairs. The 1996 
programme was also drawn up to help design and launch the National Plan for 
Accession, while a national awareness campaign will enable the population to 
measure the progress towards accession. 
The programme to support the adoption of the 'acquis communautaire' was 
allocated ECU 5.4 million. The Office for Legislation will act in close cooperation 
with the Ministry of Foreign Affairs in the implementation of the project which 
provides legal and management expertise to the National Plan for Approximation. The 
reform of public administration will prove a particularly complex undertaking because 
of the scale of the changes necessary and the need to include many different 
ministries. Key reforms, such as a new Civil Service Act, are required. 
The 1996 programme to promote the sustainability of socio-economic 
developments and strengthen the competitiveness of the enterprise sector will 
focus on three main areas: 
• support to public finance and financial sector reform (ECU 3.1 million) 
• support to enterprise sector development (ECU 3.1 million) 
• support to human resources and social development (ECU 2 million). 
The programmes supporting intra-European networks and infrastructure 
integration are a response to the relatively scarce financial resources available. The 
1996 programme covers the priority needs in technical assistance of the Ministry of 
Transport and Communication and will focus on the design of the national transport 
policy. In the pre-accession context, the broader goal is to prepare institutions, 
organisations and infrastructure for eventual EU membership. Phare assistance in the 
transport sector will therefore be oriented towards three specific objectives: assistance 
for the elaboration of the national transport policy; approximation of legislation, 
regulations and standards; restructuring the sector to improve compatibility with 
European norms. 
Finally, the cross-border cooperation programme with Italy for the period 1995-
1999 concentrates on improvement in transport and cross-border infrastructure (18 per 
cent), economic development in border regions (33 per cent), environment protection 
(30 per cent), human resources development and networking (10 per cent), cultural 
cooperation (4 per cent) and programme management (5 per cent). With Austria the 
priorities are economic development (40 per cent), infrastructure and transport (25 per 
cent), environment (26 per cent), human resources development (3 per cent) and 
technical assistance (6 per cent). 
Phare achievements 
The concentration of effort and funding has been on restructuring the productive 
sector by assisting in the privatisation and enterprise restructuring process and the 
rehabilitation of the financial sector. ECU 69 million have been allocated over this 
period in the process of economic transformation. Substantial amounts were also 
allocated to the Tempus Programme which facilitated the Slovenian research, science 
and technology to intensify cooperation with EU universities. This is important for a 
small open society in which overall economic growth is export-led and which has its 
comparative advantage in low labour cost high-tech production lines. 
Phare played a significant role in supporting private sector development, including 
the privatisation process, investment and export promotion and restructuring. This 
process continued in 1996. 
Phare allocations for SME development have provided support to small and medium-
sized companies in the regions; technical assistance to the Ministry to support the 
setting up of guarantee funds for SMEs; a regional development project in the Zasavje 
region, including cooperation between the five main municipalities in the area. 
Activities have now been initiated to develop SMEs in the field of tourism. A pilot 
regional development project in the area of Maribor, encompassing assistance to the 
Maribor Regional Development Agency and to the Maribor Chamber of Economy, is 
ongoing. 
Phare supported the organisation of tax reform which allowed the Slovene 
Government in March 1996 to create a unified tax administration as part of the 
Ministry of Finance. A new bank payment system is being supported as well as the 
adoption and introduction in January 1996 of a customs code compatible with that of 
the European Union. 
82 
Privatisation programme 
In the context of the above-mentioned support to the privatisation process, Phare 
provided assistance in different areas, including 
• Assistance to the National Privatisation Agency. Initially, assistance was aimed 
at the search for foreign investors. However, in a move which reflected the 
Government's preference for voucher-based privatisation, the accent was then 
placed on the identification and assessment of the 1,500 firms covered by the 
Government's voucher scheme. This was a major task given the uncertainty of 
company registers and existing information on these firms. 
• Public awareness campaign, which proved invaluable given that the voucher 
scheme involved a large part of the Slovenian public. This was followed by a 
shareholder education campaign in which a series of nine television programmes 
explained their rights and obligations. The campaign also established a telephone 
information service, which dealt with over 400 calls a day, and a monthly 
newsletter available to 640,000 readers. The newsletter is now self-financing and 
provides a useful source of information to the public on stock market 
developments and privatisation. The results of opinion polls and the population's 
increased use of privatisation vouchers gave an accurate measure of the value of 
the awareness campaign. 
In the restructuring process, Phare has also given support by 
• helping define policy through sector studies which have been the basis for 
concrete proposals used by the Government industrial development agency 
(SKLAD) 
• financing, with the EBRD, a Turn-Around Management programme which 
assisted companies to increase efficiency and ensure viability in a competitive 
market system 
• training local management consultants and tourist operators 
• promoting local development initiatives in troubled mining and industrial areas 
most affected by the restructuring process. 
Phare financed a number of sector studies (wood, steel, textile, leather, chemical, 
paper, machine tool) that provided a useful measure of current practice and 
performance in relation to western standards. The studies became a basis for policy 
formulation in those sectors and were used by the Government in November 1996 in 
its national strategy for industrial development. 
83 
Ill Statistical overview 
In this chapter, the activity of the Phare Programme, in terms of funds committed, is 
broken down by country and sector. 
The majority of Phare programmes are of an integrated nature, i.e. they address 
various complementary sectors or functions. This represents a specific difficulty 
when introducing sector classifications. Where the programmes are of a highly mixed 
nature (as was the case with General Technical Facilities, in the early years), they 
have been included under 'Other' programmes. In the other cases, the sector 
classification has been carried out according to the major sector included in the 
programme. While this does not always reflect the true budgetary importance of each 
individual sector (e.g. environment is underestimated in this classification, as 
explained earlier in this report), it is the best alternative available for comprehensive 
time series. 
The funds allocated by country are those committed under specific national 
programmes. They underestimate the support received by an individual country as 
Phare addresses the needs of the various partner countries via horizontal and multi-
country programmes as well. 
84 
Albania 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 0 
15 
0 
60 
1.2 
0 
4.4 
35 
0 
4.4 
120 1.2 
10 
0 
10 
2.5 
3.3 
0 
42 
6 
0 
75 4.6 
5 
0 
7 
2.4 
0 
23 
0 
7 
0 
49 0 
0 
0 
0 
3.5 
0 
34 
43.5 
0 
7 
88 8.8 
1.7 
0 
0 
4 
1.5 
37 
0 
0 
0 
53 14.6 
31.7 
0 
77 
13.6 
4.8 
98.4 
120.5 
13 
11.4 
385 
Bosnia and Herzegovina 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of taws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training, and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 0 
0 
0 
37.3 
0 
0 
0 
0 
0 
0 
37.3 0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 9 
0 
0 
125 
1 
0 
0 
3 
0 
2 
140 9 
0 
0 
162.3 
1 
0 
0 
3 
0 
2 
177.3 
Bulgaria 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 0 
51 
0 
25 
13 
38.3 -
26 
52.5 
17.5 
0 
223.3 16 
0 
0 
0 
17.5 
10.8 
13.9 
11 
14.5 
1.5 
85.2 1.2 
0 
1.2 
0 
12 
5 
62.6 
3 
0 
0 
85 2 
5 
0 
0 
21 
7 
48 
0 
0 
0 
83 2 
0 
1.5 
0 
12 
6 
40 
1 
0 
0 
62.5 21.2 
56 
2.7 
25 
75.5 
67.1 
190.5 
67.5 
32 
1.5 
539 
*>v Czech Republic 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 0 
0 
0 
0 
8 
0 
9 
27 
8 
8 
60 11 
4.5 
0 
0 
5.5 
0 
25 
0 
14 
0 
60 7 
0 
0 
0 
8 
0 
91 
1 
2 
1 
110 0 
0 
0 
0 
7.5 
5 
34 
7.5 
0 
0 
54 18 
4.5 
0 
0 
29 
5 
159 
35.5 
24 
9 
284 
Estonia 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
'X Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 0 
0 
0 
0 
1 
0 
0 
0 
0 
9 
10 0 
0 
0 
0 
1.5 
0 
0 
0 
0 
10.5 
12 0 
0 
0 
0 
4.5 
2.5 
6 
8 
0 
1.5 
22.5 2.8 
0 
0 
0 
4.2 
0 
5 
9.1 
2.9 
0 
24 25.3 
3 
0 
0 
4 
1 
18.3 
9 
0 
1.2 
61.8 28.1 
3 
0 
0 
15.2 
3.5 
29.3 
26.1 
2.9 
22.2 
130.3 
FYROM 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 0 
0 
0 
10 
0 
0 
0 
0 
0 
0 
10 0 
0 
0 
25 
0 
0 
0 
0 
0 
0 
25 2 
0 
0 
23 
0 
0 
0 
0 
0 
0 
25 0 
0 
0 
25 
0 
0 
0 
0 
0 
0 
25 4.1 
3.9 
0 
0 
2 
0 
10 
4.8 
0 
0.2 
25 6.1 
3.9 
0 
83 
2 
0 
10 
4.8 
0 
0.2 
110 
Hungary 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 22.5 
38 
0 
0 
45.5 
47 
8.3 
111.5 
29 
5 
306.8 1.5 
30.5 
0 
0 
26 
0 
0 
31 
10 
0 
99 0 
0 
0 
0 
24 
15.5 
29 
16.5 
0 
0 
85 3 
10 
0 
0 
16 
12 
36 
11 
2 
2 
92 18.5 
0 
0 
0 
10 
0 
26 
46.5 
0 
0 
101 45.5 
78.5 
0 
0 
121.5 
74.5 
99.3 
216.5 
41 
7 
683.8 
(SJ Latvia 
O- Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 0 
0 
0 
0 
1.5 
0 
0 
0 
0 
13.5 
15 0 
0 
0 
0 
2 
0 
0 
0 
0 
16 
18 0 
0 
0 
0 
5 
5.5 
0 
14.5 
0 
4.5 
29.5 1.3 
0 
0 
0 * 
2 
0 
9.2 
10.8 
9.2 
0 
32.5 16 
0.8 
0 
0 
3.6 
1.1 
7.1 
6.1 
2.4 
0 
37 17.3 
0.8 
0 
0 
14.1 
6.6 
16.3 
31.4 
11.6 
34 
132 
Lithuania 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 0 
0 
0 
0 
1.5 
0 
0 
9.5 
0 
9 
20 0 
0 
0 
0 
2.5 
0 
0 
0 
0 
22.5 
25 0 
0 
0 
0 
6 
1 
16.5 
14.5 
0 
1 
39 5.5 
0 
0 
0 
3.5 
0 
19 
9.6 
4.4 
0 
42 12.8 
4.5 
0.5 
0 
5.7 
2.5 
16.6 
7.7 
2.8 
0 
53 18.3 
4.5 
0.5 
0 
19.2 
3.5 
52.1 
41.3 
7.2 
32.5 
179 
Poland 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 26.7 
135 
0 
0 
59.3 
75 
42.4 
191.2 
45.2 
3 
577.8 32 
30 
0 
0 
45 
0 
63 
28 
0 
27 
225 21.5 
2.5 
0 
0 
39 
12 
93.8 
31 
9 
0 
208.8 2 
13 
0 
0 
37 
22 
91 
9 
0 
0 
174 0 
14 
0 
0 
30 
5 
117 
37 
0 
0 
203 82.2 
194.5 
0 
0 
210.3 
114 
407.2 
296.2 
54.2 
30 
1388.5 
Romania 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 0 
66 
0 
71.8 
23 
5 
9 
45 
40 
42 
301.8 10 
5 
0 
9.9 
18 
0 
0 
70 
0 
27 
139.9 9.6 
0 
5 
0 
37 
0 
25 
23.4 
0 
0 
100 0 
10 
0 
0 
18 
0 
38 
0 
0 
0 
66 0 
0 
0 
0 
23 
8.4 
75.5 
8 
0 
3.5 
118.4 19.6 
81 
5 
81.7 
119 
13.4 
147.5 
146.4 
40 
72.5 
726.1 
Slovakia 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 0 
3 
0 
0 
5 
0 
5 
19 
3 
5 
40 4 
5 
0 
0 
9 
0 
6.5 
5 
5.5 
5 
40 5 
2.6 
0.5 
0 
5 
1 
8.2 
18.7 
4.4 
0.6 
46 0 
0 
0 
0 
4.5 
0 
0 
0 
0 
0 
4.5 9 
10.6 
0.5 
0 
23.5 
1 
19.7 
42.7 
•12.9 
10.6 
130.5 
Slovenia 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 0 
0 
0 
0 
2.3 
0 
0 
0 
0 
6.7 
9 0 
0 
0 
0 
3.5 
0 
0 
0 
0 
7.5 
11 0 
0 
0 
0 
5.5 
0 
6 
12.5 
0 
0 
24 0 
0 
0 
0 
2.6 
0 
7.4 
3 
4.4 
7.6 
25 8.3 
0 
0 
0 
1.3 
0 
3.9 
6.6 
2 
0 
22 8.3 
0 
0 
0 
15.2 
0 
17.3 
22.1 
6.4 
21.8 
91 
vj 
Multi-country programmes 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 12.5 
0 
0 
51 
73.4 
69.5 
35 
33.8 
0 
1.5 
276.7 10 
0 
0 
0 
20.8 
20 
24 
37.3 
0 
0 
112 25 
0 
0 
0 
13 
13 
31 
4 
0 
0 
86 0 
0 
0 
0 
8.5 
20 
70.5 
5 
0 
0 
104 22 
0 
0 
0 
5 
10 
39 
49 
0 
0.5 
125.5 69.5 
0 
0 
51 
120.7 
132.5 
199.5 
129.1 
0 
2 
704.2 
Other programmes 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 0 
0 
5 
37.7 
7.3 
20 
0 
0 
0 
73.8 
143.8 0 
0 
10 
0 
9.9 
0 
0 
0 
0 
54.4 
74.3 7 
0 
10 
0 
7 
23 
2 
21 
6 
43.1 
119.1 2 
0 
10 
0 
17.8 
20 
0 
106 
20 
67.4 
243.2 32 
0 
21.7 
0 
12.9 
15 
0 
0 
10.5 
70.1 
162.2 41 
0 
56.7 
37.7 
54.9 
78 
2 
127 
36.5 
308.8 
742.6 
Czechoslovakia 
Funds allocated by sector 1990-1996 (ECU million) 1990-1992 1993 1994 1995 1996 Total 
Admin, reform, public institutions, approximation of laws, consumer protection 
Agricultural restructuring 
Civil society and democratisation 
Critical aid 
Education, training and research 
Environment and nuclear safety 
Infrastructure (energy, transport, telecommunications) 
Private sector, financial sector, integrated regional measures 
Social development, employment and public health 
Other (Multidisciplinary, general technical assistance, etc.) 
Total 0 
0 
4 
0 
38 
35 
21 
70 
15 
50 
233 0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 0 
0 
4 
0 
38 
35 
21 
70 
15 
50 
233 
KJ Admin, reform, public institutions, 
approximation of laws, consumer 
protection 
Funds allocated by country 1990-1996 
(ECU million) 1990-1992 1993 1994 1995 1996 Total 
Albania 
Bosnia and Herzegovina 
Bulgaria 
Czech Republic 
Estonia 
FYROM 
Hungary 
Latvia 
Lithuania 
Poland 
Romania 
Slovakia 
Slovenia 
Multi-country programmes 
Other 
Total 0 
0 
0 
0 
0 
0 
22.5 
0 
0 
26.7 
0 
0 
0 
12.5 
0 
61.6 1.2 
0 
16 
0 
0 
0 
1.5 
0 
0 
32 
10 
0 
0 
10 
0 
70.7 4.6 
0 
1.2 
11 
0 
2 
0 
0 
0 
21.5 
9.6 
4 
0 
25 
7 
85.9 0 
0 
2 
7 
2.8 
0 
3 
1.3 
5.5 
2 
0 
5 
0 
0 
2 
30.6 8.8 
9 
2 
0 
25.3 
4.1 
18.5 
16 
12.8 
0 
0 
0 
8.3 
22 
32 
125.2 14.6 
9 
21.2 
18 
28.1 
6.1 
45.5 
17.3 
18.3 
82.2 
19.6 
9 
8.3 
69.5 
41 
407.7 
Agricultural restructuring 
Funds allocated by country 1990-1996 
(ECU million) 1990-1992 1993 1994 1995 1996 Total 
u; 
r* Albania 
Bosnia and 
Bulgaria Herzegovina 
Czech Republic 
Estonia 
FYROM 
Hungary 
Latvia 
Lithuania 
Poland 
Romania 
Slovakia 
Slovenia 
Multi-country programmes 
Other 
Total 15 
0 
51 
0 
0 
0 
38 
0 
0 
135 
66 
0 
0 
0 
0 
305 10 
0 
0 
0 
0 
0 
30.5 
0 
0 
30 
5 
3 
0 
0 
0 
78.5 5 
0 
0 
4.5 
0 
0 
0 
0 
0 
2.5 
0 
5 
0 
0 
0 
17 0 
0 
5 
0 
0 
0 
10 
0 
0 
13 
10 
2.6 
0 
0 
0 
40.6 1.7 
0 
0 
0 
3 
3.9 
0 
0.8 
4.5 
14 
0 
0 
0 
0 
0 
27.9 31.7 
0 
56 
4.5 
3 
3.9 
78.5 
0.8 
4.5 
194.5 
81 
10.6 
0 
0 
0 
469 
Civil society and démocratisation 
Funds allocated by country 1990-1996 
(ECU million) 1990-1992 1993 1994 1995 1996 Total 
Albania 
Bosnia and Herzegovina 
Bulgaria 
Czech Republic 
Estonia 
FYROM 
Hungary 
Latvia 
Lithuania 
Poland 
Romania 
Slovakia 
Slovenia 
Multi-country programmes 
Other 
Total 0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
5 
5 0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
10 
10 0 
0 
1.2 
0 
0 
0 
0 
0 
0 
0 
5 
0 
0 
0 
10 
16.2 0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0.5 
0 
0 
10 
10.5 0 
0 
1.5 
0 
0 
0 
0 
0 
0.5 
0 
0 
0 
0 
0 
21.7 
23.7 0 
0 
2.7 
0 
0 
0 
0 
0 
0.5 
0 
5 
0.5 
0 
0 
56.7 
65.4 
Critical aid 
Funds allocated by country 1990-1996 
(ECU million) 1990-1992 1993 1994 1995 1996 Total 
Albania 
Bosnia and Herzegovina 
Bulgaria 
Czech Republic 
Estonia 
j FYROM 
-^ Hungary 
Latvia 
Lithuania 
Poland 
Romania 
Slovakia 
Slovenia 
Multi-country programmes 
Other 
Total 60 
37.3 
25 
0 
0 
10 
0 
0 
0 
0 
71.8 
0 
0 
51 
37.7 
292.8 10 
0 
0 
0 
0 
25 
0 
0 
0 
0 
9.9 
0 
0 
0 
0 
44.9 7 
0 
0 
0 
0 
23 
0 
0 
0 
0 
0 
0 
0 
0 
0 
30 0 
0 
0 
0 
0 
25 
0 
0 
0 
0 
0 
0 
0 
0 
0 
25 0 
125 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
125 77 
162.3 
25 
0 
0 
83 
0 
0 
0 
0 
81.7 
0 
0 
51 
37.7 
517.7 
Education, training and research 
Funds allocated by country 1990-1996 
(ECU million) 1990-1992 1993 1994 1995 1996 Total 
Albania 
Bosnia and Herzegovina 
Bulgaria 
Czech Republic 
Estonia 
FYROM 
Hungary 
Latvia 
Lithuania 
Poland 
Romania 
Slovakia 
Slovenia 
Multi-country programmes 
Other 
Total 1.2 
0 
13 
0 
1 
0 
45.5 
1.5 
1.5 
59.3 
23 
0 
2.3 
73.4 
7.3 
229 2.5 
0 
17.5 
8 
1.5 
0 
26 
2 
2.5 
45 
18 
5 
3.5 
20.8 
9.9 
162.2 2.4 
0 
12 
5.5 
4.5 
0 
24 
5 
6 
39 
37 
9 
5.5 
13 
7 
169.9 3.5 
0 
21 
8 
4.2 
0 
16 
2 
3.5 
37 
18 
5 
2.6 
8,5 
17.8 
147.1 4 
1 
12 
7.5 
4 
2 
10 
3.6 
5.7 
30 
23 
4.5 
1.3 
5 
12.9 
126.4 13.6 
1 
75.5 
29 
15.2 
2 
121.5 
14.1 
19.2 
210.3 
119 
23.5 
15.2 
120.7 
54.9 
834.7 
Environment and nuclear safety 
Funds allocated by country 1990-1996 
(ECU million) 1990-1992 1993 1994 1995 1996 Total 
Albania 
Bosnia and Herzegovina 
Bulgaria 
Czech Republic 
Estonia 
FYROM 
Hungary 
(- Latvia 
V^ Lithuania 
nC Poland 
Romania 
Slovakia 
Slovenia 
Multi-country programmes 
Other 
Total 0 
0 
38.3 
0 
0 
0 
47 
0 
0 
75 
5 
0 
0 
69.5 
20 
254.8 3.3 
0 
10.8 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
20 
0 
34.1 0 
0 
5 
0 
2.5 
0 
15.5 
5.5 
1 
12 
0 
0 
0 
13 
23 
77.5 0 
0 
7 
0 
0 
0 
12 
0 
0 
22 
0 
1 
0 
20 
20 
82 1.5 
0 
6 
5 
1 
0 
0 
1.1 
2.5 
5 
8.4 
0 
0 
10 
15 
55.5 4.8 
0 
67.1 
5 
3.5 
0 
74.5 
6.6 
3.5 
114 
13.4 
1 
0 
132.5 
78 
503.9 
Infrastructure (energy, transport, 
telecommunications) 
Funds allocated by country 1990-1996 
(ECU million) 1990-1992 1993 1994 1995 1996 Total 
Albania 
Bosnia and Herzegovina 
Bulgaria 
Czech Republic 
Estonia 
FYROM 
Hungary 
Latvia 
Lithuania 
Poland 
Romania 
Slovakia 
Slovenia 
Multi-country programmes 
Other 
Total 4.4 
0 
26 
0 
0 
0 
8.3 
0 
0 
42.4 
9 
0 
0 
35 
0 
125.1 0 
0 
13.9 
9 
0 
0 
0 
0 
0 
63 
0 
5 
0 
24 
0 
114.9 23 
0 
62.6 
25 
6 
0 
29 
0 
16.5 
93.8 
25 
6.5 
6 
31 
2 
326.4 34 
0 
48 
91 
5 
0 
36 
9.2 
19 
91 
38 
8.2 
7.4 
70.5 
0 
457.3 37 
0 
40 
34 
18.3 
10 
26 
7.1 
16.6 
117 
75.5 
0 
3.9 
39 
0 
424.4 98.4 
0 
190.5 
159 
29.3 
10 
99.3 
16.3 
52.1 
407.2 
147.5 
19.7 
17.3 
199.5 
2 
1448 
Private sector, financial sector, 
integrated regional measures 
Funds allocated by country 1990-1996 
(ECU million) 1990-1992 1993 1994 1995 1996 Total 
Albania 
Bosnia and Herzegovina 
"^ Bulgaria 
•) Czech Republic 
r) Estonia 
FYROM 
Hungary 
Latvia 
Lithuania 
Poland 
Romania 
Slovakia 
Slovenia 
Multi-country programmes 
Other 
Total 35 
0 
52.5 
0 
0 
0 
111.5 
0 
9.5 
191.2 
45 
0 
0 
33.8 
0 
478.5 42 
0 
11 
27 
0 
0 
31 
0 
0 
28 
70 
19 
0 
37.3 
0 
265.3 0 
0 
3 
0 
8 
0 
16.5 
14.5 
14.5 
31 
23.4 
5 
12.5 
4 
21 
153.4 43.5 
0 
0 
1 
9.1 
0 
11 
10.8 
9.6 
9 
0 
18.7 
3 
5 
106 
226.7 0 
3 
1 
7.5 
9 
4.8 
46.5 
6.1 
7.7 
37 
8 
0 
6.6 
49 
0 
186.2 120.5 
3 
67.5 
35.5 
26.1 
4.8 
216.5 
31.4 
41.3 
296.2 
146.4 
42.7 
22.1 
129.1 
127 
1310 
Social development, employment and 
public health 
Funds allocated by country 1990-1996 
(ECU million) 1990-1992 1993 1994 1995 1996 Total 
Albania 
^ Bosnia and Herzegovina 
""* Bulgaria 
•) Czech Republic 
_^ Estonia 
FYROM 
Hungary 
Latvia 
Lithuania 
Poland 
Romania 
Slovakia 
Slovenia 
Multncountry programmes 
Other 
Total 0 
0 
17.5 
0 
0 
0 
29 
0 
0 
45.2 
40 
0 
0 
0 
0 
131.7 6 
0 
14.5 
8 
0 
0 
10 
0 
0 
0 
0 
3 
0 
0 
0 
41.5 7 
0 
0 
14 
0 
0 
0 
0 
0 
9 
0 
5.5 
0 
0 
6 
41.5 0 
0 
0 
2 
2.9 
0 
2 
9.2 
4.4 
0 
0 
4.4 
4.4 
0 
20 
49.3 0 
0 
0 
0 
0 
0 
0 
2.4 
2.8 
0 
0 
0 
2 
0 
10.5 
17.7 13 
0 
32 
24 
2.9 
0 
41 
11.6 
7.2 
54.2 
40 
12.9 
6.4 
0 
36.5 
281.7 
V Other sectors 
Funds allocated by country 1990-1996 
(ECU million) 1990-1992 1993 1994 1995 1996 Total 
Albania 
Bosnia and Herzegovina 
Bulgaria 
Czech Republic 
Estonia 
FYROM 
Hungary 
Latvia 
Lithuania 
Poland 
Romania 
Slovakia 
Slovenia 
Multi-country programmes 
Other 
Total 4.4 
0 
0 
0 
9 
0 
5 
13.5 
9 
3 
42 
0 
6.7 
1.5 
73.8 
167.9 0 
0 
1.5 
8 
10.5 
0 
0 
16 
22.5 
27 
27 
5 
7.5 
0 
54.4 
179.4 0 
0 
0 
0 
1.5 
0 
0 
4.5 
1 
0 
0 
5 
0 
0 
43.1 
55.1 7 
0 
0 
1 
0 
0 
2 
0 
0 
0 
0 
0.6 
7.6 
0 
67.4 
85.6 0 
2 
0 
0 
1.2 
0.2 
0 
0 
0 
0 
3.5 
0 
0 
0.5 
70.1 
77.5 11.4 
2 
1.5 
9 
22.2 
0.2 
7 
34 
32.5 
30 
72.5 
10.6 
21.8 
2 
308.8 
565.5 

ISSN 0254-1475 
COM(98) 178 final 
DOCUMENTS 
EN 11 17 
Catalogue number : CB-CO-98-178-EN-C 
ISBN 92-78-32355-1 
Office for Official Publications of the European Communities 
L-2985 Luxembourg 
/)o2>