COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(95) 13 final 
Brussels, 20.02.1995 
THIRD AND FOURTH ANNUAL REPORTS FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 
on the implementation of Community assistance to the countries 
of East and Central Europe (PHARE) in 1992 and 1993 
THIRD ANNUAL REPORT FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 
ON 
THE IMPLEMENTATION OF COMMUNITY ASSISTANCE 
TO THE COUNTRIES OF EAST AND CENTRAL EUROPE (PHARE) 
IN 1992 
Contents 
PREAMBLE 
I - GENERAL CONTEXT FOR EC ASSISTANCE IN J 992 
1.1 Legal basis 
1.2 Financial framework 
1.3 Policy orientations 
1.4 Programming 
II- 1992 MEASURES 
2.1 Preparation and decision making 
2.2 National Programmes and Sectors 
2.3 Multidisciplinary measures 
2.4 Regional Cooperation 
III - HUMANITARIAN AID 1992 
\W - IMPLEMENTATION OF 1990 - 1992 MEASURES 
4.1 Tenders and contracts 
4.2 Payments 
4.3 Monitoring and Evaluation 
4.4 Counterpart funds 
V.- SPECIFIC ISSUES 
5.1 Assessment of the reform efforts in PHARE countries in 1992 
5.2 Impact of PHARE : achievements and problems 
VI - COMMISSION ORGANISA TION 
VII - PHARE Guidelines 1993-199? 
Tables 
1. Synthesis of National Indicative Programme 1992 
2. Breakdown by sector of major Programmes 1992 
3. Scheduling of Financing Proposals on 1992 budget 
4. Sector breakdown of 1992 commitments 
5. Regional Programmes 1992 
6. Humanitarian aid 1992 
7. International Tenders 1992 
8. Disbursements as of 31.12.92 
9. Macroeconomic Indicators of Phare Countries 1990-1992 
PREAMBLE 
This is the third report on Community assistance under the PHARE Programme to the 
Central and Eastern European Countries, which was extended in 1992 to Albania, Estonia, 
Latvia, Lithuania and Slovenia. It deals with the general context of the assistance in 1992. It 
covers economic aid measures including regional co-operation aid and describes 
humanitarian aid. It reviews the 1990-1992 measures in addition to two specific issues of 
particular interest : the progress of reform in PHARE countries in 1992 and the impact of 
PHARE. Finally It describes the new guidelines which were adopted in 1992 and which 
constitute the framework for future PHARE support. 
I - GENERAL CONTEXT FOR EC ASSISTANCE IN 1992 
1.1 Legal basis 
Council Regulations n" 3906/89 of 18 September 1989 (1) as amended in 1990 and in 
1991(2) represent the legal basis for PHARE assistance. Following the recognition by the 
Community and the Member States of Slovenia and Croatia as independent republics, the 
Commission presented a proposition to the Council in order to formally include these 
republics amongst the beneficiary countries of the "PHARE Regulation". The European 
Parliament having given a negative opinion in respect of Croatia, the Council finally adopted 
a Regulation including only Slovenia (3). 
1.2 Financial framework 
The initial allocation foresaw a budget of 1.000 MECU for 1992 (budget line B7-600-Aid for 
economic restructuring of the countries of Central and Eastern Europe -CEEC's -). 
During the year the Commission asked for the transfer of 25 MECU in order to finance the 
incorporation of Estonia, Latvia and Lithuania in the PHARE programme, in addition to the 
reconstitution of the appropriations used for the balance of payments grant to Albania. 
Following the Budgetary Authority's approval of a transfer of 15.5 MECU, the final budget 
amounted to 1.015.5 MECU, of which 1.015,3 MECU was committed. 
The breakdown of the commitments was : 
National Programmes(4) 
Regional Programmes 
Multidisciplinary measures 
Humanitarian Aid 733.0 MECU 
116.0 MECU 
44.8 MECU 
121.5 MECU 
TOTAL 1.015.3 MECU 
Under budget line B8-760 "mini-budget" appropriations of 15 MECU appeared. This was used 
to cover administrative expenditure in support of the PHARE operations. 
L 375 of 23.12.89. p. 11 
Second Annual Report on the implementation of Community assistance to the countries of East and Central 
Europe, p.4 
L 277 of 11.8.92. p. 1 
Including balance of payments (MECU 35) to Albania 
1.3 Policy Orientations 
The Commission's approach to programming for the period 1991-1992 was defined at the 
beginning of 1991 and was applied for the first time during that year's programming exercise. 
A synthesis of the developing ideas on programming in the form of draft guidelines 
1991/1992 was discussed and given a favourable opinion by the PHARE management 
Committee on 21.02.1991, and formally adopted by the Commission on 15.05.1991. 
In addition to the extension of the aid programme to Albania. Estonia. Latvia, Lithuania and 
Slovenia the Commission therefore intended in 1992. as in 1991. to focus PHARE assistance 
on its fundamental objective which is to support the transformation of a market economy to 
one based on market forces. In order to increase the efficiency of the assistance, the 
emphasis was on concentrating on key sectors of the reform process. The "core areas" 
identified in this transformation process were notably the restructuring of public enterprises, 
the modernisation of financial services, the promotion of the private sector and the 
development of the labour market and the social sector. Assistance in the core areas would 
be complemented by support in related priority areas such as energy, environment, 
telecommunications, transport, health, housing, training and agriculture. In addition 
programming would also make due allowance for ongoing schemes of co-operation in the 
domain of human resources development such as TEMPUS and ACE, as well as supporting 
institution building efforts. 
Assistance which would focus on technical assistance, training and studies as well as 
financial assistance within the framework of sectoral programmes aimed at supporting the 
development of a market economy. 
While the bulk of the PHARE resources (75 -80 %) would be used for national programmes 
in accordance with the above mentioned orientations. 10-15% would be used to encourage 
programmes of a regional significance which can only be implemented on a regional basis or 
enable economies of scale if implemented on a regional basis. In addition, 5-10% would be 
reserved for humanitarian aid in response to the increasing economic difficulties and critical 
hardships experienced in some central and eastern European countries. 
1.4 Programming 
The core areas were identified in the context of programming dialogues with the beneficiary 
states on the basis of country priorities related to the objective of transformation and 
sustainable development as well as the emerging economic strategies. Attention was paid to 
the evolving or often transitional nature of many of the beneficiary governments and the 
need for flexibility to be supported under the PHARE assistance for 1992. 
Following from this phase, Indicative Programmes were signed with the relevant authorities 
of the beneficiary countries during the first half of 1992 : CSFR 14.02.1992. Estonia 
31.03.1992, Hungary 31.01.1992, Latvia 02.04.1992. Lithuania 03.04.1992. Poland 
28..05.1992, Romania 31.01.1992. Slovenia 26.03.1992. The Indicative Programme for. 
Albania was approved in the form of an exchange of letters on the 26.03.1992. Bulgaria had 
already signed a multiannual Indicative Programme on the 08.02.1991 covering the period 
1991/1992. In that context the allocation of the indicative amount for 1992 to projects and 
other operations was therefore agreed upon on 29.01.92 
The Indicative Programmes while not being formal binding agreements with the Commission 
are working documents indicating priorities and providing a tramework lor the identification, 
formulation and appraisal of projects to be financed. They are summarised in tables 1 and 2 
The priority area identified as requiring most assistance in the majority of beneficiary 
countries was economic restructuring covering notably enterprise restructuring and 
privatisation, private sector development, and modernisation of the financial system. In 
addition human resources, particularly the social and health sectors, as well as agriculture 
and infrastructure were figuring as areas requiring assistance. Education, notably in the form 
of support for the TEMPUS programme figured also prominently among the key areas. 
In several countries a general technical assistance facility was identified as being a flexible 
multidisciplinary instrument which would allow the beneficiary countries to respond relatively 
quickly to urgent need for TA with a view to develop reform policies and provide institutional 
support across a wide range of areas. In three countries, Estonia, Latvia and Lithuania, the 
bulk of the assistance was provided in the form of this facility, thus reflecting the early phase 
of the transformation of these countries. A fundamental characteristic of this is that basic 
technical assistance is required for a multitude of core areas. 
Il-1992 MEASURES 
2.1 Preparation and decision making 
The total number of PHARE financing decisions on the 1992 budget was 96. These included 
11 decisions under the heading of humanitarian aid in addition to 64 national sector 
programmes and 15 regional cooperation programmes, and also four global authorisations for 
small scale multidisciplinary actions. 
The PHARE Management Committee met on ten occasions and gave a favourable opinion 
on all financing proposals except for an import support guarantee programme for Albania of 
40 MECU which was discussed at an extraordinary meeting of the Committee. The 
proposal was then converted to an humanitarian aid programme of smaller size and 
approved by the Committee. 
The draft general guidelines for PHARE 1993/97 were discussed in detail at various meetings 
of the Committee. 
2.2 National Programmes 
During 1992 the number of PHARE programmes grew to ten with the addition of Slovenia and 
Albania and the transfer to PHARE of Estonia, Latvia and Lithuania which had previously 
received Community assistance under the CIS programme. Total assistance on national 
programmes - that is, excluding humanitarian assistance and regional programmes -
amounted to nearly 698 MECU (see Table). The largest PHARE recipient was Poland with 
200 MECU. equivalent to 28.6% of total national allocations, followed by Romania (130 
MECU, 18.6%). Hungary (101.5 MECU, 14.5%) and Czechoslovakia (100 MECU, 14.3%). 
Table 4 shows the broad sectoral pattern of assistance by country. The figures should be 
treated with a little caution mainly because for some general technical assistance 
programmes not all the assistance is allocable by sector. Subject to this, roughly a quarter of 
total national allocations (167 MECU. 23,5%); was committed to enterprise development 
covering privatisation, enterprise restructuring, assistance to small and medium enterprises 
(SMEs), investment promotion and export development; this may understate somewhat the 
true extent of support since regional development programmes also include components 
designed to stimulate local enterprise. The ratio compares with approximately 28% in 1991 
and underscores the continuing primacy of this area of activity for PHARE assistance. 
Agriculture continued to receive substantial support (85 MECU or 12% of national allocations) 
reflecting the importance of this sector in the economies of Eastern Europe; this compares 
with approx. 15% in 1991. Although agricultural supplies continued to make up a proportion of 
such assistance, there was more emphasis during 1992 on assistance for agricultural strategy 
development and transformation including farm privatisation, agro-industrial restructuring, 
advisory services and the development of credit channels for the new private farmers. 
Allocations to the social sectors and education (including the TEMPUS programme) which 
absorbed about 27% of national programmes, represent a relative increase as compared to 
1991. The growing importance of the social dimension in the reform programmes of CEECs, 
including the need to restructure social security and health budgets, has been evident in the 
growing number of PHARE programmes addressing social policy and social sector 
reorganisational issues. These include support for labour market development to cope with 
the inevitable rise in unemployment resulting from restructuring measures. There was 
somewhat less emphasis on the environment in 1992 national programmes although 
significant commitments continued to be made to this area in Poland and Hungary. 
Although technical assistance remained a central plank of PHARE support, particularly for 
countries at a relatively early stage of the reform process, other forms of assistance during 
1992 continued to draw on the range of instruments available. These include: training, 
manpower development, equipment supply, the provision of essential inputs in exceptional 
cases (mainly in agriculture and health), and - increasingly - support for investment. The latter 
has included PHARE contributions, typically on a cost-sharing basis with the Government or 
local institutions, to developing financing mechanisms for newly emerging private agents 
including loans and credit guarantee schemes for SMEs and private farmers, as well as 
concessional financing schemes to promote environmental and/or regional development 
goals. 
Finally the PHARE Programme contributed 35 MECU for balance of payments support to 
Albania. 
2.3 Multidisciplinary measures 
In addition to the sectoral programmes several operations were financed under the heading 
Miiltirii^rinlinarv Mpa<;iirp<; Multidisciplinary Measures. 
First of all a commitment of 18.8 MECU for "multidisciplinary technical assistance" was 
agreed in several successive tranches as in 1990 and 1991. This is the enabling device 
giving a global authorisation to finance, within given parameters, small-scale operations such 
as feasibility studies and technical assistance without requiring a specific Management 
Committee opinion and Commission decision on each operation. 
As in previous years, in 1992 the multidisiplinary facility was used to finance much of the 
identification, appraisal and auditing work for sector programmes. Planning studies were also 
financed for instance for telecommunications and infrastructure. 
After the so-called "Bangkok Agreement" between the EBRD and the EC in 1992, a new 
cooperation was established between both institutions. This enabled the implementation of 
measures in the beneficiary countries, which are approved and financed by the Commission 
and are technically managed by the EBRD. This collaboration is considered to be successful 
and spent up to 18.5 MECU, in actions mainly related to the financial sector. 
Two complementary activities started in 1992 under the multidisciplinary heading. The first 
one is PHARE Information Action, the objective of which is to inform the business and 
political milieux of the EC Member States about the Community's relations with, and 
assistance for the countries of Central and Eastern Europe The amount committed for this 
programme was 2.5 MECU. 
iClO 
The other activity concerns the PHARE Democracy Programme, to which 5 MECU was 
allocated for the first time in 1992. The Commission followed in accordance with the budget 
line B7-600 comment of the European Parliament, which states that "An appropriation of 
ECU 5 million must be earmarked for the continuation of the démocratisation process in 
Central and Eastern Europe. It must enable financial and technical aid to be provided on a 
non-party basis, through parliamentary institutions, for general civic education and 
democratic principles to be stabilised and reinforced in countries with close or developing 
links with the European Community". 
The multidisciplinary measures amount to 44.8 MECU, for which the breakdown is as follows: 
Multidisciplinary technical assistance 18.8 MECU 
EBRD 18.5 MECU 
Information Action 2.5 MECU 
Democracy Programme 5.0 MECU 
TOTAL 44.8 MECU 
2.4 - Regional Cooperation 
During the course of 1992, increasing emphasis was placed on developing regional 
cooperation amongst the five PHARE beneficiary countries (Bulgaria, Czechoslovakia, 
Hungary, Poland and Romania) on issues of common concern and interest. Thus 116 MECU 
was allocated for regional programmes. 
In 1992, considerable progress was made in strengthening the demand driven approach to 
programme/project formulation with much greater participation by the beneficiary countries. 
In December 1991, following a meeting of the 6 National Aid Coordinators in Brussels, a 
Regional Coordination Group was established with a rotating annual Presidency commencing 
with Bulgaria. This group was provided with technical assistance by the Commission and 
became responsible for defining the core areas for assistance, for evaluating proposals 
submitted by the beneficiary countries and by PHOS. and for achieving a consensus on the 
sectoral allocation of the budget which was then agreed with the Commission. In this respect 
detailed discussions were held in each of the countries with the National Aid Coordinators 
and sectoral ministries. 
Furthermore, to ensure participation in the implementation of programmes, Sectoral 
Coordinators were nominated by the Group with the role of ensuring coordination and 
programme monitoring amongst the sectoral ministries and between PHOS and the Regional 
Coordination Group. The sectoral Coordinators are: Bulgaria (Telecommunications), 
Czechoslovakia (Transport), Hungary (Environment). Poland (Nuclear Safety/Ace) and 
Romania (Energy and industrial Property) 
For the 1992 Regional programme, there were effectively 3 principal areas of assistance. 
Infrastructure (35 MECU), Environment/Nuclear Safety (46 MECU), and Education/Training 
(24 MECU) together with a number of Miscellaneous Programmes amounting to 11 MECU. 
Within the Infrastructure Sector, by far the largest component was allocated to Transport 
(21 MECU) of which the major proportion (15 MECU) was directed to the alleviation of acute 
bottlenecks at border crossings on key transit routes between the Community and the 
CEECs. This was in response to requests from the CEECs to reduce extensive delays which 
were hampering trade. A crucial element in the assistance provided was the allocation of 
funds for direct investment for the improvement of border crossings using local contractors. 
11 
Other components in the Infrastructure Sector included Telecommunications (7 MECU) with 
the emphasis on training and Energy (7 MECU). The latter involved a wide range of 
initiatives to study the potential for improving electricity and natural gas interconnections 
between the Community and the CEECs, to rationalise oil refining and transportation 
facilities as well as to develop management twinning and improve the regulatory 
environment in accordance with the European Energy Charter. 
For the Environment/Nuclear Safety component, 26 MECU was allocated to the Regional 
Environmental Programme reflecting the CEECs' increasing concern with issues of a truly 
regional nature which could only be addressed by concerted action. Whilst some elements 
involved extensions to existing 1991 programmes (Danube River Basin, Black Triangle, 
CORINE/Remote Sensing), others addressed environmental issues in the Baltic Sea and the 
Black Sea, for which the latter involved coordination with the TACIS Programme and with the 
Global Environment Facility being organised by the UNDP, UNEP and the World Bank. A 
crucial element in this programme is the Post-Dobris Environmental Action Programme for 
which 10 MECU has been allocated to form part of an overall fund supported by other donors 
to target specific projects for investment support. 
The allocation of 20 MECU for Nuclear Safety was in response to the increasing pressure to 
provide assistance to improve safety standards for the Soviet designed nuclear reactors and 
to develop alternative waste management facilities and explore decommissioning 
possibilities. 
For Education/Training, 24 MECU was allocated for ACE and TEMPUS. For ACE. substantial 
improvements have been made in developing much more transparent selection and 
evaluation procedures with participation by representatives from all PHARE beneficiary 
countries as well as in the management of the programme with a consultancy firm appointed 
to support DG II. For TEMPUS, a major proportion of the funding was allocated to a 
continuation of support for JEPs (Joint European Projects) and for the operational costs for 
managing the programme. 
Finally, a number of miscellaneous programmes have been supported including the 
extension of the 1991 Statistics, Customs and Standards programmes to Estonia, Latvia, 
Lithuania, Albania and Slovenia as well as the Statistics programme to Poland. Additionally, 
a pilot programme for the Fight Against Drugs was launched in response to the growing 
concern at illicit drug trafficking in the CEECs ; and a Regional Industrial Property 
Programme jointly funded by the European Patent Office designed to harmonise legislation 
and upgrade facilities to protect industrial property rights. 
In general terms, 1992 saw a strengthening of the coordination of regional programmes with 
much greater participation by the beneficiary countries 
^ 12 
III. - PHARE HUMANITARIAN AID 
PHARE Humanitarian aid in 1992 was dominated by the situation in Albania as well as by the 
conflict in the former Yugoslavia. Preparations for a follow-up programme to complement the 
1990-1991 operation for children in Romania were made.in addition to the implementation of 
the food aid programme. The total PHARE budget of 121.5 MECU necessitated an increase 
of the budget reserved for humanitarian aid. This increase was approved by the Council on 
October 30, 1992. 
10 MECU was reimbursed to FEOGA for the food aid provided to Albania. The Commission 
also decided exceptionally to finance a critical industrial import programme to help the 
Albanian industries to re-start production and so contribute to reduce the very high rate of 
unemployment. This programme totalling 30 MECU was decided in two stages : the first one 
in March for 10 MECU and the second one in June for 20 MECU. Counterpart funds deriving 
from the sale of the imported spare parts and raw materials were generated in accordance 
with the general protocol agreed with the Commission. A further allocation of 10 MECU was 
decided in July mainly for the rehabilitation of hospitals and dispensaries throughout Albania, 
the supply of basic medical equipment and for the building of houses for ex-political 
prisoners. The humanitarian aid provided to Albania has to be set in the context of support 
for the reform programme as the supplies provided were a necessary condition for starting up 
the transformation process. 
PHARE contributed 39 MECU to emergency aid for refugees in the Former Yugoslavia. This 
operation was complemented by an additional 35 MECU mobilised from the 1990 PHARE 
Yugoslavia financial sector programme which had never started. PHARE also contributed 0.5 
MECU for the financing of the Peace Monitoring missions. At the end of the year, the 
European Council in Edinburgh decided on a 100 MECU support programme for the Former 
Yugoslav Republic of Macedonia to assist in coping with the consequences of the blockade 
against Serbia. Thus, the Former Yugoslav Republic of Macedonia received an initial grant 
of 10 MECU from PHARE for an import programme of medicines, raw material and basic 
medial equipment which was complemented by a 15 MECU emergency grant provided by 
the European Office for Humanitarian Aid (ECHO.) 
Concerning ROMANIA, a medium term humanitarian aid programme of 12 MECU was 
decided in December to complement 1990-91 actions for the rehabilitation of the orphanage 
and the training of the personnel in charge of the orphanages. The 1992 programme consists 
of the establishment and implementation of a global policy for the protection of children in 
liaison with the Romanian Government. In addition PHARE also financed food aid to 
Romania for an amount of 10 MECU. 
13 
IV.-IMPLEMENTATION OF 1990-1992 MEASURES 
Once the financing decision has been taken, the normal procedure as explained in the 1990 
Annual Report is for a financing memorandum to be signed by both the Commission and the 
Implementing Authority, usually the line ministry in the country concerned, specifying the 
respective responsibilities for management of both parties. As a general rule the use of 
decentralised implementation systems continued in 1992 with line ministries being required 
to set up Programme Management Units, designate an authorising officer, open a bank 
account and draw up a detailed work plan and cost estimates for the first six months. 
4.1 Tenders and contracts 
In accordance with Commission Regulations Technical Assistance contracts are normally 
awarded after restricted invitation to tender, i.e. on the basis of a selection of a limited 
number of firms (shortlis) which are asked to submit a proposal. The criteria for the final 
choice rely strongly on quality and to a lesser extent on price. For smaller TA contracts and 
for non profit organisations the contract can be negotiated by direct agreement. For supply 
contracts an open invitation to tender is published in the Official Journal of the EC. 
All contracts can be awarded under either of two implementation systems used by PHARE : 
• the direct implementation where contracts are awarded and managed from Brussels on 
behalf of the recipient countries 
• the decentralised implementation system where contracts are approved and managed 
under a "work programme/advance payment " system by the recipient country. 
Under both systems the same procedures have to be used, and under the decentralised 
implementation system the Commission monitors the respect of these procedures by the 
recipient institutions. 
In late 1992 the Commission started the creation of procedural manuals, giving a complete 
new set of standard texts and guidelines for contracts (supply as well as services contract) 
and tenders (international as well as restricted). 
Since data on contracts awarded under decentralised implementation reach the Commission 
only with some delay, the information given in the table below is still essentially based on 
contracts awarded under the direct implementation system. They show that 672 contracts 
have been awarded in 1992 of which 155 were awarded after tendering (total tendered 
amount of circa 70 MECU, i.e. 60% of the overall contracted total of circa 117 MECU) 
The table below attempts to give a breakdown by nationality for contracts awarded from 
Brussels. This breakdown does not include those awarded under the decentralised 
implementation system. Information on these contracts will be available later 
CONTRACTS SIGNED DURING 1992 14 
1. No. of cases 
2. Total volume of contracts 
3. National % in terms of volume 672 contracts 
117 MECU 
COUNTRY x1000 ECU in% 
Belgium 16.117 
Germany 10.528 
Denmark 7.501 
Spain 2.114 
France 16.527 
Greece 734 
Ireland 7.395 
Italy 2.227 
Luxembourg 27 
Netherlands 5.350 
Portugal 50 
United Kingdom 15.878 
PHARE countries 8.449 
International Organisations & Others 24.430 
Unclassified 53 13.7 
9.0 
6.4 
1.8 
14.1 
0.6 
6.3 
1.9 
4.6 
13.5 
7.2 
20.9 
TOTAL 117.380 
4.2 Payments 
In 1992 a total amount of 434 MECU was disbursed under the budget line B7-600. This is 
almost the same amount that was paid during the two previous years (454.9 MÈCU). The 
breakdown by programme is the following : 
Programmes of 1990 
Programmes of 1991 
Programmes of 1992 48.9 MECU 
169.4 MECU 
215.7 MECU 
TOTAL 434.0 MECU 
Together with the disbursements made in 1990 and 1991, the total amount effectively 
disbursed by the PHARE programme at the end of 1992 was 888.9 MECU, or 38.81% of the 
total commitments taken with the beneficiary countries. An overall view of disbursements is 
given in Table 8. 
Out of disbursements made in 1992, 311.7 MECU were paid directly to the contractors by the 
Commission in Brussels, and 122.3 MECU were advanced to the PIU's (Programme 
Implementation Units) in the beneficiary countries. The total amount advanced to the PIU 
since 1990 until the end of 1992 was 259.9 MECU representing 29.3% of the total 888.9 
MECU disbursed. 
15 
The advances to the PIU reflect the particular aspect of the PHARE implementation system. 
They refer to the decentralised implementation procedure, under which the recipient 
countries are given a share of responsibility for execution. The recipient institution in charge 
(PIU) receives an advance payment based on an estimated work plan and budget allocation 
for the six month period ahead. This advance enables the PIU to conclude contracts and to 
make payments provided certain Commission approvals are given. 
While this implementation system is very desirable because it shifts responsibility 
increasingly to the PHARE recipients, it also takes more time to set up the local units. 
However, it allows the acceleration of disbursements once the local institutional capacity has 
been established, which is usually in the second year of the programme cycle. 
4.3 Monitoring and Evaluation 
The major part of the programme is implemented under the decentralised management 
system. There are now more than 60 PMUs in place in PHARE recipient countries. Given 
this situation monitoring and evaluation have become an essential management tool. 
While financial monitoring is being done through a standardised financial accounting and 
reporting system (PHACSY) technical and operational monitoring is done through an 
established planning and reporting system. Regular six monthly work programmes setting out 
targets, activities, contacts, payments, etc. provide the basis for a regularly comparing the 
plan with the achievements in the progress reports. This internal monitoring is being 
supplemented by audits and missions if necessary. 
Technical monitoring will further be improved by integrating the logical framework into all 
planning and reporting documents (i.e. financial proposal, plan of operations, work 
programme, progress report, end of programme report). The logical framework method will 
allow the monitoring of achievements based on objectively verifiable indicators. Furthermore 
it will provide a sound basis for evaluation of programme objectives and assessment of 
impact. 
While the monitoring is primarily geared towards an improvement of programme operations, 
evaluation is meant to provide information which allows improving the programme through 
better selection and design. 
At the end of 1992 a first evaluation was prepared for the environmental sector in Poland and 
Hungary. More sector and programme evaluations will follow. Evaluations will be either 
undertaken during programme implementation or at the end of a programme. The 
evaluations will be undertaken by outside experts based on clear terms of reference and 
evaluation criteria in order to limit the bias. 
In 1991 agreements on the use and generation of counterparts funds were drawn up with 
Albania, Bulgaria and Romania. In 1992 agreements were drawn up with the governments of 
F^tnnia I atvia and I ithuania 
16 
The legal basis for the utilisation and the management of the PHARE Counterpart Funds 
(CPF) is the Memorandum of Understanding which was signed between the Romanian 
Government and the Commission of the European Communities in September 1991 and the 
Government Decision 470/1992. This decision transfers the financial administration of the 
Counterpart Funds in Romania from the Romanian Development Agency to the Ministry of 
Finance and the Department for European Integration of the Council for Co-ordination, 
Strategy and Economic Reform. On October 29 1992 a Protocol was signed between the 
Ministry of Finance and the R.D.A. to this effect. A programme for the use of Counterpart 
Funds was approved by the Romanian Government and was presented for agreement by the 
Commission of the European Communities in February 1992. The breakdown of the use of 
Counterpart Funds was agreed through an exchange of letters between the Commission and 
the Government of Romania. Counterpart Funds were generated by the sale of food-aid and 
commodity supplies provided in the context of the PHARE Programmes for transport, 
agriculture and humanitarian aid (médecines). Following agreement, part of the funds have, 
however, been used inter alia for humanitarian aid programmes, directed specifically to 
orphanages and children in care. 
In Albania Counterpart Funds were generated by the sale of food-aid, industrial supplies and 
agricultural equipment. As a result of the large budget deficit and in accordance with the 
recommendations of the IMF, the Commission decided -in concertation with the major 
donors- to use the Counterpart Funds for budgetary support. 
Poland's Counterpart Funds have mainly come from the sale of animal feed and 
agrichemicals. The funds were generated within the context of 1990 PHARE National 
Programme, and their use was set on an annual basis according to the Indicative 
Programme. The task of management of the counterpart funds has been assigned to the Co­
operation Fund, an institution separated from the government. Part of the funds have been 
used for the pre-financing of PHARE programmes and the promotion of the opening of the 
new branch of the College of Europe in Natolin. Funds have also been allocated to training 
programmes and in support of economic/legal research in the context of the Europe 
Agreement. 
Bulgarian Counterpart Funds were generated by the sale of agriculture, medical and energy 
supplies delivered as from the end of 1990. The funds are managed on behalf of the 
Government by a state Fund for Reconstruction and Development. Awaiting the agreement 
on an Indicative programme some of the funds have been used for health care programmes. 
Estonia, Latvia and Lithuania agreed on Counterpart Funds in December 1991. Prior to the 
first deliveries, memoranda of understanding, setting out general principles for receipt and 
distribution of EC supply programme assistance, and aides mémoires, setting out details 
specific to the cereals supply programmes, were negotiated and signed with each republic. 
All funds generated from the first tranche of sales have been allocated to income supplement 
schemes targeted at the most needy socially deprived groups. An exception was made in 
Latvia where the funds were allocated to agricultural reform and development measures. 
17 
V - SPECIFIC ISSUES 
5.1 Assessment of the reform efforts in PHARE countries in 1992 
In the transition to a market economy, whereas liberalisation and stabilisation can be 
accomplished quite quickly, structural reform takes much longer to achieve. This draws a 
clear line between those PHARE countries that have already dealt with liberalisation and its 
repercussions before 1992, and those that were still struggling with the price and exchange 
rate shocks and were launching structural reform in an unstable macroeconomic 
environment. The group of early starters included Poland, Hungary, GSFR, Bulgaria, and 
Slovenia. 
5.1.1 Economic performance in 1992 
In 1991, the collapse of the CMEA generated large losses of external markets for PHARE 
countries, which aggravated the recession throughout the region. 1992 was still a depressed 
year, except for Poland, which achieved slight GDP growth. However, there was a sharp 
contrast between the two groups of PHARE countries. In the advanced countries, GDP 
growth, though still negative, indicated a bottoming out of the recession: growth rates lay 
between 1% for Poland and -8% for Bulgaria, against a range of -8% and -17% in 1991. 
Except in Albania, the less advanced countries experienced a sharpening of the recession in 
1992 with GDP declines of between -6% (Albania) and -35% (Lithuania) against a range of -
3.5% and -27% in 1991. The macroeconomic dynamics and imbalances underlying this 
growth performance reflect the different stages in reform reached by the various countries. 
For the early starters, the relatively better performance in 1992 over 1991 was mainly driven 
by the successful reorientation of exports towards western markets which had started in 
1991, and the correlated export growth. All countries ended the year with a trade surplus. 
Investment, however, still has shown no sign of recovery. One of the positive features of the 
advanced countries is the slowdown in inflation after the completion of price liberalisation. 
Except Slovenia, all countries in the group had two-digit inflation in 1992. However, the 
combined effects of the prolonged recession and the impact of the restructuring reform are 
generating new macroeconomic imbalances, which risk becoming medium-term features for 
these economies and which present major challenges for governments. Unemployment was 
increasing very rapidly, exceeding 10% of the work force at the end of 1992. This increased 
the burden of social protection in public expenditures Simultaneously the tax base was 
shrinking. In some countries, such as Hungary. Bulgaria and Poland, this has already 
resulted in an open fiscal crisis with public deficits repeatedly exceeding 5% of GDP 
In the less advanced countries, the macroeconomic environment did not stabilise or began to 
do so only late in the year. Inflation was still a three or four digit figure in 1992, and during 
the year anti-inflationary policies relying on instruments such as excess wage tax were 
implemented. The current account was in deficit, or if there was a constraint on the 
availability of foreign exchange, the external balance was achieved through drastic import 
restrictions. The current account imbalances were particularly acute for Estonia, Latvia and 
Lithuania which only became independent in late 1991 and suffered acutely from the 
disintegration of the Soviet Union and subsequent collapse of the Soviet internal market. In 
these countries, unemployment and public deficits have not yet become an issue, except in 
Albania and in Romania which experienced serious fiscal imbalances in 1992. 
The progress in structural reform in 1992 was highly dependent on the initial macroeconomic 
conditions described above. There are. however, two areas where the implementation of 
reform encountered difficulties throughout the region: launching large scale privatisation and 
the financial sector reform. 
18 
5.1.2 Stabilisation, liberalisation and legislative framework 
The wide liberalisation and deregulation of the PHARE economies encompassed 
liberalisation of prices, a new legal and regulatory framework, an opening up of the 
economies to international markets and a switch to convertible currencies. 
For all PHARE countries, the liberalisation of prices, the removal of administrative allocation 
mechanisms and subsidies were largely completed within two to three years. The early 
starters had already achieved this by the end of 1991, and in 1992 most of the less 
advanced countries caught up, although Romania kept price controls on a number of goods. 
Most of the remaining price controls and consumer subsidies in PHARE countries are on 
household energy, utilities or transport services, and can be considered as compatible with 
market economy standards. 
Simultaneously, PHARE countries undertook the major task of adjusting their legislation to 
the standards and requirements of a market economy. New company, accountancy and 
auditing laws, together with competition legislation, were in place at a very early stage of the 
reform process. Estonia, Latvia and Lithuania adjusted their legislation during 1992, and 
Albania is lagging behind. The legislative and regulatory framework being put in place is 
broadly adequate. The main deficiencies and challenges for the future lie in the enforcement 
of the laws and the capacity of administration in charge of implementation and supervision. 
The dispute resolution mechanisms are also often very weak. This may be a source of 
confusion in practice, which becomes a serious deterrent to investment. 
One of the priorities in setting up the legal framework was to lay down a clear basis for the 
acquisition and protection of property rights. Although this was achieved relatively quickly, in 
some cases rights are still unclear or restricted. The restitution issue is a source of confusion 
in some countries, even two years after the enactment of the law. Everywhere restrictions on 
the purchase of property by foreigners were introduced and are, in some cases, disincentives 
to business. In several countries the legislation on land ownership needs to be amended or 
modernised. In addition, in all PHARE countries the systems for the recognition of property 
rights are underdeveloped, which restrains the development of real estate, housing or 
mortgage markets. 
On the external front, the opening up and liberalisation were also far-reaching, with a rapid 
dismantling of tariffs, quotas and licences. Restrictions were still in place in 1992 in 
Lithuania and Albania. In countries, which are more advanced, governments are having 
some second thoughts on the merits of rapid and comprehensive trade liberalisation. In 
1992, revisions in tariffs or the introduction of an import surcharge were implemented in the 
Central European countries. But trade policy is, anyhow, bound by various trade agreements 
that PHARE countries are concluding. 
Trade liberalisation was supported by a rapid switch to current account convertibility of 
PHARE countries' currencies, which gave domestic operators free access to foreign 
exchange and allowed exchange rates to be adjusted to sustainable levels. 'Only minor 
restrictions were still in force, such as ceilings on travel allowances in the Central European 
countries. The advanced countries implemented these changes before 1992 together with 
trade reform. In Estonia, Latvia and Lithuania, the currency reform began in 1992. In 
Romania, because of a sustained gap between the official and parallel exchange rates, there 
is insufficient foreign exchange to meet import demand and some sort of rationing is applied. 
The exchange rate regimes remain extremely diversified across the region. 
Finally, most countries have opened their economies to foreign investment through very 
liberal legislation, allowing full foreign ownership, transfer of profits and repatriation of 
capital. Bulgaria established the legal basis for foreign investment only in 1992, and Albania 
has still a very poor and restrictive legislation. 
19 
5.1.3 Privatisation and restructuring 
PHARE countries have generally given priority to privatisation to enhance the development 
of a competitive productive sector. Restructuring has been less actively pursued, although 
there is a growing awareness of the urgent need for restructuring plans. This is partly related 
to the fact that privatisation has often resulted in a kind of appropriation of firms by the 
workers and the management without generating any improvement in efficiency. Moreover, 
it is now clear that privatisation will be a slow process and that a large state-owned sector will 
dominate the economy for some years. More urgently, the accumulation of inter-enterprise 
arrears and bad loans is now raising acute problems for the sustainability of ongoing reform 
programmes. 
Privatisation has not progressed uniformly throughout the region. Although by the end of 
1992 the legal basis was in place in all countries, there were some impediments to 
implementation, such as the issue of restitution or compensation, which has slowed down 
the small-scale privatisation in Poland and the privatisation of agricultural units in Hungary, 
Romania and Latvia. In most countries, small-scale privatisation, together with privatisation 
of housing and agriculture, is underway. Large-scale privatisation had hardly begun, except 
in Hungary, Lithuania, Estonia and more recently in 1992, in the CSFR. and. to a very limited 
extent, Romania. Of the other countries. Poland. Bulgaria and Slovenia, finalised legislation 
only late in 1992 or early 1993. In Albania the privatisation agency was set up recently, but 
legislation is still lacking. Apart from drawing up a~list of eligible companies for privatisation, 
Latvia did not initiate anything in this field in 1992. In most countries, however, the first 
major step in large-scale privatisation was the transformation of state-owned enterprises into 
companies. In some countries, this process entailed some restructuring through dismantling 
of large companies into smaller units, as in Bulgaria, but it generally did not improve 
enterprise behaviour. Nowhere is privatisation a smooth process, all countries encountering 
obstacles, from the inadequacy of legislation in Albania, to the lack of political consensus in 
Bulgaria, or the levelling-off of demand for state-owned firms in Hungary. 
Once state subsidies have been withdrawn, access to preferential sources of credits has 
been stopped, and a credible bankruptcy law is being enforced, restructuring of the non-
privatised part of the economy is expected to occur through market forces. However, in 
most PHARE countries thèse three conditions have not yet been met, although the 
dismantling of direct production subsidies is fairly complete in all countries by now. 
Bankruptcy legislation was still very weak, except in Slovenia and Hungary, which 
experienced massive bankruptcy waves in 1992. In Poland a comprehensive Enterprise and 
Financial Sector Law was being finalised in 1992 which would establish the necessary 
regulatory framework for bankruptcy procedures as well as for solving enterprise bank debts. 
However, nô proper bankruptcy legislation existed yet in Bulgaria or Romania. It is not 
enforced in the CSFR, lacks the institutional framework for implementation in Estonia, Latvia 
and Lithuania, and had begun to be applied only recently in Albania 
Financial discipline has been lax everywhere, and inter-enterprise arrears and bad loans in 
the banks' portfolios are becoming an acute problem, amounting in all countries to several 
percentage points of GDP. The chain reaction of liquidity problems makes the screening of 
profitable and non-profitable companies difficult. At the same time, banks are prevented from 
making resources available for new investments. Some countries began to address the issue 
of bad debts in 1992. Most countries opted for a strategy of substituting bad loans with State 
bonds, as in Hungary, Slovenia, Estonia, Bulgaria, and soon in Albania and Romania. In the 
CSFR, a consolidation bank to which bad loans were transferred was set up. In Poland, part 
of the stabilisation fund was converted for recapitalization purposes at the end of 1992. 
Lithuania did not initiate any action, and Latvia intends to address the issue of inter-
enterprise arrears through the confiscation of inventories 
20 
The difficulty of enforcing any financial discipline without generating massive closures of 
companies has prompted some governments to adopt a cautious restructuring policy. This 
often leads to a kind of wide screening of state-owned companies to select companies which 
need temporary support or companies which can be reorganised or those which will be 
liquidated. Such a screening has been initiated in Hungary, leading to some temporary 
sectoral support programmes and to the selection of companies to remain permanently state-
owned. Similar actions will start in Poland, with the forthcoming Pact on State Enterprises, 
and for 100 companies in Romania. 
In spite of the slow progress in restructuring and privatisation, the private sector is expanding 
fast in all PHARE countries, as a result of the sustained creation of small and medium-sized 
enterprises. This indicates the ability of these economies to generate a supply response and 
suggests that the prospects for investment may improve. 
5.1.4 Financial sector reform 
The financial sector has a key role to play, in the transition, as it is expected to be an 
important channel for allocation of resources according to market rules and the main support 
for an upturn in investment. 
All PHARE countries have overcome the first step of the reform, i.e. setting up a two-tier 
banking system where the financial intermediation functions are separated from the central 
bank functions of monetary control. It seems to have been easier to adapt monetary policy 
than to develop an efficient banking sector. All countries except Albania have deregulated 
interest rates and all except Estonia, Latvia and Lithuania have removed administrative 
allocations of credits. Some countries have kept, however, credit ceilings or preferential 
credits for some specific purposes. 
However, the efficiency of the banking sector is very low. Although small banks have 
mushroomed, the banking sector is still dominated by the large state owned banks which are 
highly specialised and not familiar with commercial practices. Except in CSFR where the 
voucher scheme implemented in 1992 covered banks, bank privatisation did not start except 
for small banks in Romania, Poland, Slovenia and Hungary. Overall the sector is still highly 
non-competitive. Starting from very low capital/asset ratios, all banks are now suffering from 
the high share of bad loans in their portfolios. The recapitalization of the banks will remain 
the priority of the reform programmes for at least the next two years. Thus, it is unlikely that 
the banks will be able to participate more actively in the restructuring and privatisation 
process and to enhance the development of financial markets in the near future. 
5.1.5 Fiscal reform and social sector issues 
For the government sector, the transition to a market economy implies major shifts away 
from the legacy of central planning: an overall reduction of the size of the government, an 
extension of the tax base to other sources than companies, a streamlining of social benefits 
to target them to the vulnerable groups and a regrouping of social activities, which were in 
the previous system split between companies and other public institutions. Most of the 
countries are at the very beginning of this reorganisation process 
21 
AH PHARE countries have made significant progress in the modernisation of their tax 
systems, except Bulgaria, Albania and Romania which is expected to start in 1993. Apart 
from Hungary, which introduced personal income tax, VAT and corporate tax at a very early 
stage of the reform and Estonia, Latvia, Lithuania and Slovenia which initiated the reform 
already in 1990 and 1991, most of the changes in the tax area occurred in 1992. But 
independently of the progress in tax reform, all countries experienced recently a collapse of 
their tax base and the accumulation of large tax arrears as a result of the sharp recession in 
the region. In addition, tax administrations are so weak that they do not succeed in enforcing 
new laws and tax evasion is particularly acute in the new expanding private sector. Under 
these conditions, a fiscal crisis as experienced in Hungary, Bulgaria and Poland seems 
unavoidable at one stage or another of the transition. 
On the expenditure side, even less progress was made. All countries have now a social 
safety net in place, including a system of unemployment benefits, although this is very recent 
in Albania. However, this social safety net is still strongly biased towards a system of 
benefits awarded across the board without redistribution or targetting considerations. PHARE 
countries have so far made very little progress, if at all, with the streamlining of the generous 
social security systems, although countries facing a fiscal crisis such as Hungary, Poland, 
Bulgaria, Romania or Albania cannot avoid painful measures any longer. These are 
prerequisites for the social sector reform, which will probably necessitate an increase in 
public expenditures if the education and health sectors are to be upgraded Other areas of 
traditional state interventions will also very soon absorb more public resources. The next 
priorities will be an active labour market policy and the rehabilitation ot infrastructures so 
much needed for the improvement of the business environment 
5.2 - IMPACT OF PHARE - ACHIEVEMENTS AND PROBLEMS 
The PHARE programme was initiated with Poland and Hungary. It has since grown to cover 
eleven states of Central and Eastern Europe. Between 1990-92 some 2.3 billion ECU have 
been committed to Community actions in support of the economic, social and political 
transformation of these countries. Of this amount some 1.6 billion ECU (approximately 70% 
of the total) have been allocated to national programmes; the remainder has financed a 
variety of regional programmes as well as humanitarian and emergency aid The national 
programmes thus constitute the main focus of PHARE involvement in the transformation 
process and of related Community grant assistance 
Since its inception PHARE had two broad aims: (a) to ensure that in each country Community 
assistance helps to promote the key restructuring priorities; and (b) to respond flexibly to the 
variety of needs at many levels (both in and outside the Government/state sector) which 
systemic transformation generates. The latter include the requirements deriving from the goal 
of progressive integration of CEECs in the European economy including specific assistance 
for legal approximation and the harmonisation of standards for those countries having 
Association Agreements with the Community. The grant nature of PHARE assistance and its 
ability to draw on the wealth of Community expertise and resources have made it a 
particularly desirable form of assistance for these purposes. This has resulted in a pattern of 
assistance characterised by enormous diversity within a broadly sector-oriented framework. 
Progress may be gauged from the sectoral analysis of national programmes. It is not possible 
to provide other than a selective indication of the kind of activities supported and results 
achieved. Within and across programmes assistance covers the spectrum from TA for policy 
definition, strategy development and establishment of the legal and institutional structures to 
help in actual policy implementation (e.g. for active privatisation transactions, agricultural and 
business advisory services, financing schemes). 
22 
Up to 1992 over 400 MECU or nearly a quarter of total national allocations have been for 
enterprise development covering privatisation, enterprise restructuring, support for small and 
medium enterprises (SMEs), investment promotion and other related activities (e.g. export 
development). In Romania PHARE has been the major actor in the privatisation process, 
helping to prepare and implement the country's voucher privatisation scheme including 
setting up the Private and State Ownership Funds and preparing share sales guidelines and 
asset valuation seminars for companies; PHARE assistance has been instrumental in the 
active privatisation of some companies and the preparation for privatisation of others. In 
Poland, PHARE assistance helped to set up the Ministry of Privatisation and to develop the 
legal framework for its operations; it has contributed to a number of major privatisations, 
some involving foreign investment, as well to promoting the privatisation of thousands of 
small firms. 
Similarly, in Hungary the PHARE programme has helped with the establishment of the State 
Privatisation Agency as well as the State Holding Company (charged with managing 
enterprises in which the state intends to retain an interest) and related training alongside 
assistance for active privatisation transactions. In Bulgaria the programme has involved 
assistance with setting up the Privatisation Agency and legal framework, leading to the 
adoption of the law on privatisation as well as the screening of all major enterprises and 
completion of major sectoral restructuring studies. 
Alongside assistance for privatisation/restructuring several programmes have initiated 
schemes for channelling financial assistance to the newly emerging private economic agents, 
notably SMEs and small-medium sized farmers. Such schemes, ranging from the provision of 
advisory/supportNservices to concessional loans and credit guarantees have been established 
in Romania, Hungary, Poland, Bulgaria, the Czech and Slovak Republics and Albania. In 
Poland business support centres have been set up in several regions with almost 1900 
entrepreneurs receiving training. In Hungary Local Enterprise Agencies have been 
established in twelve of the nineteen counties providing advice and support to SMEs; the 
LEAs work alongside appointed bank branches offering specialised credit facilities and 
services and through which PHARE financial assistance is channelled. 
In the area of agriculture PHARE assistance has helped with implementation of the land 
reform/restitution programmes in Romania and Bulgaria (essential to promote a market in 
land as a necessary but not sufficient condition for raising agricultural productivity) as well as 
in the formulation of an agricultural policy for these countries. In both Hungary and Romania 
PHARE is supporting the development of advisory services for the new private farmers 
alongside the provision of credit (para 6 above), as well as helping with restructuring of the 
agro-industrial sectors. Poland, Romania, Bulgaria and Albania have been recipients of 
significant amounts of assistance for agricultural inputs and supplies. 
PHARE support to the social sectors is helping with policy definition and institutional reforms 
in the areas of: health care (Romania. Poland. Bulgaria. Lithuania); education and vocational 
training (Hungary, Czech and Slovak Republics, Poland); labour market and employment 
development (Romania, Poland. Hungary, Bulgaria, Czech and Slovak Republics); social 
policy and social security/social safety net (Poland, Hungary, Romania, Latvia); community 
development and self-help initiatives (Hungary). 
23 
Most PHARE programmes are still in process of implementation. For a number of reasons the 
lead time involved in programming and implementation has in many cases been longer than 
expected. Since PHARE's inception decisions on how the PHARE national allocation should 
be used has relied on a demand-led approach in which Governments largely determine 
priorities in the framework of a continuing policy dialogue with the Commission. In each 
country the National Coordinator (usually the senior official or Minister in the Department 
responsible for coordinating external grant assistance) plays a leading role in coordinating 
internal demands from line ministries and other institutions for PHARE assistance. This 
approach has ensured internal consensus on allocations to high priority areas. However, in 
certain CEECs the allocations have not always reflected an optimal use of resources. This is 
particularly due to: (a) a lack at central policy-making levels of well-defined medium term 
strategies and related decision-making authority on relative sectoral priorities; (b) limited 
capacities for, or resources devoted to, economic analysis and public expenditure/investment 
planning; (c) changes of government which have caused priorities to change and/or 
difficulties in clarifying strategy objectives, sometimes necessitating reallocation of 
commitments; and (d). separate arrangements for coordinating grant and loan assistance. In 
addition, systematic transformation can mean that while there is agreement on broad 
objectives, detailed implementation policies or the precise application of them may still be 
being worked out, perhaps in the teeth of political opposition. 
These issues should be addressed in general through the.putting into practice of the principles 
contained in the new PHARE Guidelines 1993-1997 (see paragraph VII) and more specifically 
through future PHARE financed activities. This in turn is expected to lead to a further 
strengthening of the demand led approach. 
At the level of programme implementation it has taken time to establish the structures, 
relationships and familiarity with Community procedures required for efficient programme 
management and implementation. Institutional weaknesses and problems in attracting 
qualified local staff for project management units have affected some programmes. To an 
extent these problems reflect the 'growing pains' of institutions adapting to a new framework 
of economic cooperation. At the same time the Commission's own procedures may have 
been time-consuming. The problem is how to ensure the most rapid access to Community 
expertise and resources consistent with preserving aid quality and accountability, recognising 
that the procedures have themselves helped the transfer of know-how in important areas. A 
review of PHARE procedures is currently under way with the aim of reducing lead times in the 
cycle from programme approval through implementation. 
24 
VI - COMMISSION ORGANISATION 
During 1992 the workload of PHARE almost doubled its tasks, including the execution of the 
1990 and 1991 budgetary commitments in the order of MECU 127.5, together with the 
programming and implementation of the 1992 programme amounting to MECU 1015. A 
"mini-budget" allocation was used for a variety of staffing, equipment and operational 
requirements related with PHARE assistance and aid co-ordination in accordance with the 
Commission regulation governing its use. 
Staffing of PHARE staff increased during 1992 as follows : 
END 1991 END 1992 
Officials 36 48 
(all grades including 
secretarial staff) 
Non-statutory staff 72 85 
(all grades including 
secretarial staff) 
Staff is organised into four units essentially on sectoral or functional lines : 
1. Agriculture, environment, infrastructure, nuclear safety. 
2. Enterprise restructuring and privatisation, SMEs, investment promotion, banking and 
financial sector development 
3. Employment, social policies and health, public administration and infrastructure, 
humanitarian aid and NGOs country co-ordination and programming. 
4. Administration and finance ; secretariat of the PHARE Management Committee 
5. Legal and public affairs 
In the latter part of 1992. following the reorganisation of some of the DGI's services, the 
PHARE operational service became Directorate L of DGI and was granted a number of 
permanent and temporary statutory staff post in response to the abolition of the mini-budget 
and the accompanying reduction of non-statutory staff. However, as indicated in the two 
previous year's reports, the constraint on staffing level has been a major preoccupation. Thus 
the total number of staff during 1992. excluding the staff responsible for the implementation 
of the Europe agreements only increased by 5% whereas the workload in financial terms 
increased by 80%. 
25 
VII - PHARE Guidelines 1993-97 
During 1992 new guidelines for PHARE covering the period 1993-97 were agreed by the 
Commission with member states. Related 'Conclusions' were adopted by the Foreign Affairs 
Council in November 1992. The two documents, which are complementary, are referred to 
together below as the Guidelines' and will constitute the framework for further support under 
the PHARE programme for Central and Eastern Europe countries (CEECs) 
The Guidelines reaffirm PHARE's general mandate to promote the political, economic and 
social transformation of the countries. They contain a number of elements or principles 
designed to govern PHARE's operations over the next phase. Among the chief of these are: 
a. a continuing flexible response to the differing needs of 
countries reflecting their different levels of development, 
stage of transformation reached and progress with reforms; 
b. the assessment of progress with reform efforts as a factor in 
determining both the annual national allocation to a country as 
well as commitments to particular sectors within the national 
allocation; 
c. the incorporation of explicit policy objectives and related 
performance measures in sectoral programmes while ensuring 
that PHARE actions properly support priority restructuring needs; 
d. greater concentration of effort in a limited number of areas at a 
time coupled with a forward-looking multiannual approach to the 
programming of PHARE assistance; 
e. increasing support for investment alongside a continuing 
emphasis on TA and training for policy definition and institutional 
development; 
f strengthened donor coordination including seeking out 
opportunities for co-financing where appropriate and practicable; 
g streamlining implementation procedures with a view to increasing 
decentralising of programme management to implementing 
agencies consistent with maintaining aid quality and 
accountability. 
The thrust of the Guidelines is thus towards a more 'performance oriented' approach in the 
determination of assistance levels and the design of sectoral programmes, combined with 
greater flexibility in the range of aid instruments and greater involvement of beneficiary 
institutions in the management of programmes. 
The point of aspect (d) is that by planning activities ahead over a two-three year period this 
can help to avoid excessive 'dispersal' of PHARE effort in any one year Such planning would 
be of a provisional/conditional nature (dependent inter alia on the review of priorities at the 
time and on performance with existing programmes) and without commitment, but would 
introduce an important element of predictability in PHARE operations; alongside (c) it would 
help to enhance impacts at sectoral level. 
26 
The Guidelines will have implications for PHARE's methods of operation. The Indicative 
Programme will become an increasingly important instrument of policy dialogue with recipient 
governments. In addition to adopting a multi-year programming perspective it will review 
reform efforts and make explicit the linkages between PHARE levels of support and progress 
with reforms. In some countries the machinery for determining priorities for the use of PHARE 
resources will need to be reviewed. A stronger emphasis on performance criteria in PHARE 
sectoral programmes will necessitate more explicit conditionality in certain programmes, 
requiring appropriate coordination with other donors. 
It is recognised that the pace at which Guidelines principles can be applied will vary among 
countries and will need to be progressive. For the larger recipients faster progress should be 
expected. Even where 'full' implementation is the goal the scope will partly depend on 
circumstances outside PHARE's control. The crisis nature of the reform process in some 
CEECs and complex political and institutional circumstances (including the significant powers 
of some legislatures vis-a-vis their Governments) can make forward planning an uncertain 
venture. The required 'medium term' perspective and well defined conception of priorities 
may be lacking or extend to barely more than a year or two in effective budgetary and public 
expenditure planning terms, possibly limiting the scope for effective multi-annual 
programming or increasing the risks associated with it. In general, the multiannual 
programming approach will need careful handling to take account of the limitations and/or 
risks in Governments' own planning horizons and, most importantly, to avoid locking PHARE 
into inappropriate programmes over several years 
TABLE 1 tt 
SYNTHESIS OF NATIONAL INDICATIVE PROGRAMMES 1992 
ALBANIA 
Agriculture 
Animal feed 
Agricultural Chemicals 
Veterinary Drugs 
Seeds 
Small Equipment 
Mechanisation 
Aid Coordination Unit 
T.A. for the Economic Reform 
SMEs Programme 
Privat/Restructuring 
Tourism 
Financial sector 
TEMPUS 
Transport 
Various sectors MECU 
3 
3 
1 
1 
1 
3.5 
2.5 
1.3 
0.8 
0.2 
0.5 
1.2 
4.4 
1.6 
BULGARIA 
Enterprise restructuring and promotion of the private sector 
Integral regional conversion projects and trade unions 
Environment 
Energy 
Health (Part 1) 
Health (Part 2) 
Telecommunications 
Agriculture 
Human Resources (TEMPUS, ACE) 
Nuclear Safety 
Transport 
Coordination Unit/Reserve 20 
2.5 
7.5 
8 
15 
10.5 
3 
10 
8 
3.5 
1 
1 
1% 
TABLE 1 continued 
CZECHOSLOVAKIA MECU 
Privatisation, Restructuring and Private Sector Development 31 
Civic Society Development 2 
Energy 4 
Telecommunications 6 
Education 10 
TEMPUS 13 
General Technical Assistance Facility (GTAF) 30 
General Reserve 4 
ESTONIA 
Privatisation, enterprise restructuring, 
private sector and SME development 3.5 
Banking and financial sector reform 2.5 
TEMPUS 1 
Reserve for other technical cooperation actions 
(including aid coordination - 0.5 MECU) 3 
HUNGARY 
Restructuring of the Economy 
Strengthening the private sector, support for SMEs 11 
Rural credit and land registration 5 
Upgrading of statistical system 10 
Research and Development 5 
Reform of the Public Administration 5 
Local and regional Development 10 
Development of Human Resources 
Social policy, labour market and social dialogue 26 
TEMPUS 16 
Environment. Energy and Infrastructure 
Environment protection fund 10 
Reserve 2 
l°\ 
TABLE 1 continued 
LATVIA 
Privatisation, enterprise restructuring, private sector 
or SME development 
Banking and financial sector reform 
TEMPUS 
Other technical cooperation actions of which : 
complement to 1991 PHARE Sectors 
social sector 
other MECU 
4.5 
3.0 
1.5 
2 
1.3 
2.7 
LITHUANIA 
Financial and Banking sector 
Privatisation and private sector development 
Labour Market Development 
TEMPUS 3.5 
9.5 
2 
1.5 
Technical Cooperation in other priority sectors and aid coordination 3.5 
POLAND 
Economic Restructuring 
Structural development in selected regions - STRUDER 
Export promotion - EXPROM 
Development of tourism industry - TOURIN 
Agriculture - privatisation and cooperatives - APRICOT 
Land information system - LIS 
Support to economic strategy and the creation 
of the Ministry of Economy - SUPEC 
Support to implementation of the Europe Agreement - SIERRA 
Human Resources Development 
Modernisation of vocational education - MOVE 
Teaching and education in strategically significant areas - TESSA 
TEMPUS 
Local administration management building and 
development - LAMBDA 
Support for the science and technology sector reform - SCI-TECH 
Environment 
General Technical Assistance Facility - GFTA 
Reserve 60 
10 
4.5 
18 
5 
3 
10 
5 
4 
26 
5.5 
7 
18 
10 
14 
}o 
TABLE 1 continued 
ROMANIA MECU 
Industrial Restructuring and Privatisation 30 
Small and Medium Size Enterprises 10 
Social Sector 1 5 
Agricultural Sector 32 
Environment 5 
Financial Sector 5 
Human Resources (TEMPUS & Economic research) 14 
GTAP 19 
SLOVENIA 
Enterprise privatisation & restructuration, small business 
development, and training in Management & Marketing 2.5 
Science and technology. Research and Development 1.6 
Financial and Banking Sector Reform 1.6 
Public Infrastructure restructuring 1 
TEMPUS 2.3 
2>[ 
TABLE 2 
PROVISIONAL BREAKDOWN BY SECTOR OF NATIONAL PROGRAMMES (1992) 
FORESEEN ACCORDING TO INDICATIVE PROGRAMMES 
ECONOMIC RESTRUCTURING 
AGRICULTURE COUNTRY AMOUNT 
(M.ECU) 
vate sector development 
vate sector development 
vate sector development 
vate sector development 
vate sector development 
vate sector development 
vate sector development 
vate sector development 
vate sector development Privatisation/Restructuring/Pr 
Privatisation/Restructuring/Pr 
Privatisation/Restructuring/Pr 
Privatisation/Restructuring/Pr 
Privatisation/Restructuring/Pr 
Privatisation/Restructuring/Pr 
Privatisation/Restructuring/Pr 
Privatisation/Restructuring/Pr 
Privatisation/Restructuring/Pr 
SME 
SME 
Banking/Finance 
Banking/Finance 
Banking/Finance 
Banking/Finance 
Banking/Finance 
Banking/Finance 
Banking/Finance 
Export promotion 
Trade promotion 
Support to Economic strategy & 
creation of the Ministry of Economy SUPEC 
Structural development in selected regions 
Local and regional development 
Integral regional conversion projects and trade unions 
Tourism 
Tourism 
Tourism 
Standards A 
B 
CS 
ES 
H 
LV 
LI 
R 
SL 
A 
R 
A 
CS 
ES 
LV 
LI 
R 
SL 
P 
CS 
P 
P 
H 
B 
A 
P 
R 
CS 0.80 
20.0 
31.0 
3.5 
11.0 
4.5 
9.5 
30.0 
2.5 
1.3 
10.0 
0.5 
5.0 
2.5 
3.0 
3.5 
5.0 
1.6 
10.0 
4.0 
3.0 
60.0 
10.0 
2.5 
0.2 
4.5 
4.5 
2.0 
Import/sector programmes 
Privatisation & development of agriculture 
Privatisation of agriculture & agro-industries 
Agriculture - Privatisation & cooperatives 
Agriculture and food production 
Land Information system 
Rural credit and land registration A 
B 
R 
P 
CS 
P 
H 15.0 
10.0 
32.0 
18.0 
3.0 
5.0 
5.0 
TABLE 2 continued 3>Z-
INFRASTRUCTURE 
Energy 
Energy 
Telecommunications 
Telecommunications 
Transport 
Transport 
Transport 
Energy, Telecommunications, Transport 
Public Infrastructure Restructuring 
Nuclear safety 
ENVIRONMENT 
Environment 
Environment 
Environment 
Environment protection fund 
HUMAN RESOURCES COUNTRY 
B 
CS 
B 
CS 
A 
B 
CS 
R 
SL 
B AMOUNT 
(M.ECU) 
8.0 
4.0 
3.0 
6.0 
4.4 
1.0 
2.0 
6.5. 
1.0 
3.5 
7.5 
5.0 
18.0 
10.0 
TEMPUS 
Education 
Education 
Social Sector 
Social Sector 
Social Sector 
Social sector 
Social sector 
Science & Technology/Research & Development 
Science & Technology/Research & Development 
Science & Technology/Research & Development 
Science & Technology/Research & Development 
Health 
Health 
Statistics 
Statistics 
Public administration/Local government 
Public administration/Local government 
Public administration/Local government 
Public administration/Local government 
Civic Society Development 
VARIOUS TECHNICAL ASSISTANCE / RESERVE ALL 
CS 
P 
CS 
LV 
R 
H 
Ll 
H 
P 
SL 
R 
B 
CS 
H 
CS 
H 
P 
CS 
R 
CS 
A 
B 
CS 
ES 
H 
LV 
Ll 
P 
R 84.5 
10.0 
9.0 
2.0 
1.3 
15.0 
26.0 
2.0 
5.0 
7.0 
1.6 
1.0 
25.5 
4.0 
10.0 
2.0 
5.0 
5.5 
2.0 
1.5 
2.0 
1.6 
1.0 
8.0 
3.0 
2.0 
4.7 
3.5 
34.0 
^jjMLi'SSlQN .OP THE llUKOI'llAN COMMUNiril-^ 
IJlKCCTORATC-GCNeRAL FOR EXTERNAL RELATIONS 
OPERATIONAL SERVICE PHARE TABLE 3 
PLANNING COMMITMENTS OP PHARE PROGRAMMES ON 1992 BUDGET 
MANAGEMENT COMMITTEE OR DECISION Pro-
-1992 15 
17/03 16 
20/05 17 
OS/07 IS 
28/07 19 
16710 20 
02/12 21 
14/12 TOTAL 
NATiONAferROGriRA>>irft:irâj 
:ALBANtA-: 549:0 8*S*> 
15.0 S14SÏ5 
1.2 ••$SL9 
4.4 Kf43:ll 
4.4 *97;0 îïîSiS 
0.0 >:74;00 M^I-0<> 
60.00 
AI.970I Import guarantee (caoccllod1. replaced by A9203) IfPJL 000 
15.00 
4.40 AL9702 Dcv. agriculture .& transport infrastructure. 15.0 
AL9205 Geocral Technical Assistance Facility 
AL9206 Transport 4.40 
Al.9207 Tcnipui 1.20 
AL92IO Balance of payments grant 35.0 35.00 
DU1X7ARLA 30.5 0.0 8.0 3.5 2S.5 87.50 
HG9I01 Environment 2 7.5 7.50 
HG9107 Energy 8.0 8.00 
1IG9201 Restructuring of health system 15.0 15.00 
HG9202 Nuclear safety 3.5 3.50 
IIG9203 Telecom 3.0 3.00 
HG9204 SME Si regional reconversion 22.5 22.50 
HG9205 Tcmpus 8.0 8.00 
HÇ92XXTransport (transfcrod to multidisciplinary) 0.00 
HG9206 Agriculture 10.0 10.00 
MO9207 Energy, complementary- for winter 92(nuclcar&.lhcrm 10.0 10.00 
HG9301 Restructuring of health system ->'9S 
HUNGARY 14.5 ICO 0.0 35.0 5.0 20.00 101.5.0 
HU9I12 Science <fc. tech noiogv 5.0 5.00 
IU/9201 Statistical information system 9.5 9.50 
HU9202 Agriculture (rural credit & land registration) 5.0 5.00 
HI. 79203 Environment protection Fund 10.0 
HU9204 Employment <v. social dialog 20.0 20.00 
HU9205 Tcmpus 16.0 16.00 
HU92I0 lyocal Si regional development 10.00 10.00 
HU9206 SME: rcstruct. St. privatisation 11.0 11.00 
HU9209 Social Policy Development 6.00 
HU9208 Tech. Assist, for the implement, of Eur.Agreement 4.00 4.00 
IUJ9207 Public administration reform Si training 5.0 5.00 
rOLAND 0.0 25.0 15.5 36.0 89.5 200.00 
r 1.9201 Tourism 4.5 4.50 
1*1.9202 Export promotion 10.0 10.00 
1-L9203 Tcmpus 25.0 1.0 26.00 
l*L92XX Supp. to ccon. strategy &. Min. or Econ. -> PL920S 0.00 
1*1.9205 Agricultural and Rural Development 18.0 18.00 
l'1.9206 Ijnd information srvstcm T.A. 
1*1.9209 Science St technology sector reform 5.0 5.00 
7.0 7.00 
1'1.9208 Public sector niana*. coord. &dccc«tr.-OMEGA 1] 8.5 8.50 
l*L9210 Education Reform 9.0 9.00 
1*1.9204 Environment 18.0 18.00 
l*L9207 Structural dcvcl. io sclcctod localities - STRUDER 60.0 60.00 
*1.92xx Support to implctn. of Eur.Agfccm.-SlERRA PL9211 0.00 
'1.921 1 Technical Assistance for the implement, of Eur.Agreement 34.00 34.00 
ROMANIA 4.0 30.0 46.0 0.0 15.0 15.0 1 0.01 20.00 130.00 
RO9105 Technical Assistance Fund GTAF 4.0 4.00 
RO920I Privatization Si restructuring 30.0 30.00 
KO9203 Privati7Jtion agro-industry 12.0 20.00 32.00 
UO9204 Financial sector 5.0 5.00 
KO9205 GTAF 16.0 16.00 
KO9206 Environment 5.0 5.00 
KO9207 SMF. 10.0 10.00 
KO9208 Tcmpus 13.0 13.001 
UO9209 Employment ^.Social Development 15.0 15.00 
CHECHOSLOVAKIA 0.0 0.0 43.0 41.0 12.0 0.00 
OS920I GTAF 30.0 30.001 
OS9202 Encigy -:.0 4.00 
O9203 Pnv.iiulion 31.0 i 3 1.00 
OS9204 P/'ucat.on 10.0 1 
<'S9205 T, 
</S9206 Telecom 13.0 I 2 0 
S9^()7 C.v.r 
<l): I 6.0 
Jl. iil 
rx.i Iwl-^nJiicc) : (2 ) = approve (vis.:) : (3) = not approve) i.-M vti lomiilr. confirm»! 10.00 
o.ool 
* .00 
COMMISSION OP THE EUROPEAN COMMUNITIES 
DIRECTORATE-GENERAL FOR EXTERNAL RELATIONS 
OPERATIONAL SERVICE PHARE M Bec ^ P^v. ~2-
PLANNING COMMITMENTS OF PHARE PROGRAMMES ON 1992 BUDGET 34-
MANAGEMENT COMMITTEE OR DECISION Pro 
-1992 15 
17/03 16 
20/05 17 
08/07 18 
28/07 19 
16/10 20 
02/12 21 
14/12 TOTAL rAL [ 
.;.;.:•:; •.*&EX-YUCOSL^IAW 
SL9201 SLOVENIA: Gen. Technical Assistance Facility 
SL9202 SLOVENIA: Tcmpus 
CR92XX Croatia (p.nU 
BH92XX Bosnia-Hcrzgovina 
MN92X Montenegro 
MA92X FYR0M 0.0 0.0 2-3 
2.3 0.0 6.1 
6.7 0.0 0.0 0.00 
0.00 
0.00 
0.00 
0.00 9.00 
6.70 
2.30 
0.00 
0.00 
0.00 
0.00 
Tl IE BALTIC STATES 
ZZ9302 Baltic Slates: Improvement of Animal Production 
ZZ92xx Baltic States: Energy Supply 
LI920I LITHUANIA: GTAF 
LI9202 LITHUANIA: Privatisation 
LI9203 LITHUANIA: Tcmpus 
LE920I LATVIA: GTAF 
LE9202 LATVIA: Tempus 
ES920I ESTONIA: GTAF 
ES9202 ESTONIA: Tcmpus 0.0 0.0 4.0 
1.5 
1.5 
1.0 41.0 
9.0 
9.5 
13.5 
9.0 0.0 0.0 0.0 0.00 
:;-•::><-•:> 93, 
- >93 45.00 
0.00 
0.00 
9.00 
9.50 
1.50 
13.50 
1.50 
9.00 
1.00 
(1) = authorized (ocxlonnancc) ; (2) = approved (vise) ; (3) = not approved |X| programming hot yet formally confirmed 
Table 4 
SECTORAL BREAKDOWN OF 1992 COMMITMENTS 
Enterprise Development (1) 
Financial Sector Reform 
Agriculture 
Infrastructure (2) 
Regional Development 
Environment 
Education (3) 
TEMPUS 
Social sectors (4) 
Public Administration 
Miscellaneous (5) 
TOTAL 
% Country Allocs 1992 National Programmes : Commitments by Sector (MECU) 
Pol. 
40(*) 
18 
5 
30(*) 
18 
16 
26 
8.5 
38.5 
200 
28.6 Hung 
11 
5 
10 
10 
5 
16 
26 
5 
13.5 
101.5 
14.5 Rom. 
40 
5 
32 
6.5 
5 
1 
13 
15 
12.5 
130 
18.6 Cz-SI. 
31 
5 
3 
12 
10 
15 
10 
2 
12 
100 
14.3 Bulg. 
22.5 
10 
24.5 
7.5 
8 
15 
87.5 
12.5 Slov. 
2.5 
1.6 
1 
1.6 
2.3 
9 
1.3 Alba. 
2.1 
0.5 
15 
4.4 
1.2 
0.7 
0.9 
0.2 
25 
3.6 Esto. 
3.7 
2.3 
0.35 
1 
2.65 
10 
1.4 Latv. 
4.5 
3.0 
0.7 
1.3 
0.55 
1.5 
1.3 
2.15 
15 
2.2 Lith. 
9.5 
3.5 
0.6 
0.9 
1.5 
3 
1 
20 
2.9 Total 
166.8 
20.9 
84.65 
55.6 
40.0 
41.05 
33.6 
85.5 
71.0 
16.4 
82.5 
698. 
100% % 
23.8% 
3.0% 
12.2% 
8.0% 
5.7% 
5.9% 
4.8% 
12.3% 
10.2% 
2.3% 
11.8% 
100% 
(1) Includes: Privatisation, Enterprise Restructuring, SMEs, Investment Promotion, Export Development. 
(2) Includes: Energy/Nuclear Safety, Transport, Telecommunications. 
(3) Includes: Science & Technology, Scientific Research. 
(4) Includes: Health, Employment, Social Policy, Labour Market Development. 
(5) Includes: Customs, Statistics, Tourism Development, Land Information Systems, Aid Coordination, Programme Management and Other 
Multi-Sectoral/Non Sector-Allocated GTA. 
(6) STRUDER programme allocated 30 MECU to Enterprise Development and 30 MECU to Regional Development. 
(7) Excluding balance of payments assistance to Albania of MECU 35. (A 
Table 5 
REGIONAL COOPERATION PROGRAMME 1992 y» 
Sector Budget 
(MECU) 
A) INFRASTRUCTURE 
Transport programme 
Key components : 
• Transit Infrastructure 
• Trans-European North/South Motorway and 
Trans-European North/South Railway 
• Integrated Training-cum-Technical 
Assistance Programme 
• Sectoral Studies 15.0 
2 
2 
2 
B) ENVIRONMENT 21 
ii) Telecommunications programme 
Key components : 
• Special case studies/training needs 
• Management/coordination 
• Evaluation/management 
• Contingency 5.6 
0.7 
0.1 
0.6 
iii) Energy Programme 
Key components : 
Electricity Interconnections 
Natural Gas Interconnections 
Oil Refining/Transportation 
Management Twinning Training 
Legislation/Regulation 
Environment Programme II 
Key components : 
• Integrated Environmental Programme for 
Danube River Basin 
Black Triangle 
Black Sea Programme 
Baltic Sea 
Remote Sensing 
Support for Regional Environmental Centre 
Post-Dobris Environmental 
Action Programme 4 
3 
1 
2 
5 
1 
10 
26 
ii) Nuclear Safety Programme 
Key components : 
Safety Authorities, Emergency preparedness 6 
Fuel Cycle, Waste Management, Decommissioning 2 
WER 230 Operational Safety 7 
WER 213/1000 Operational Safety 5 
C) EDUCATION/TRAINING 
D MISCELLANEOUS 20 
ACE for all PHARE countries 6 
TEMPUS (JEPS) 12.5 
TEMPUS (Technical Assistance) 5.5 
24 
Extension of 1991 statistics programme to 
Baltics. Albania/Slovenia and Poland - 2.5 
Extension of 1991 customs programme 
to Baltics and Albania 1.5 
Extension of 1991 standards programme 
to Baltics. Albania and Slovenia 2 
Fight against Drugs . 2 
Regional Industrial Property Programme (RIPP) 3 
ÏT~ 
TOTAL 116 11 
PHARE - HUMANITARIAN AID 1992 TABLE 6 Ix 
Country 
ALBANIA 
ALBANIA TOTAL Nature & Operation Amount (MECU) 
Import support I 
Import support II 
FEOGA 
Hospitals/ex-political prisoners/NGO's 10 
20 
10 
10 
50 
BOSNIA-HERZEGOVINA 
BOSNIA-HERZEGOVINA TOTAL Emergency help 
ECHO 1.5 
37.5 
39 
FYR0M 
FYR0M TOTAL Import supply drugs 10 
10 
ROMANIA 
ROMANIA TOTAL Food aid 
Children 10 
12 
22 
YUGOSLAVIA 
YUGOSLAVIA TOTAL Monitor mission 0.5 
0.5 
TOTAL HUMANITARIAN AID 1992 121.5 
OPEN SUPPLY TENDERS IN THE OFFICIAL JOURNAL 
OF THE EUROPEAN COMMUNITIES \*V>U= "^ 
Date of Number of Country 
Official Journal 2C\ 
Information System 
Computer Equipment 
Survey Equipment 
Computer Equipment and Software 
Equipment for Blood Collection and Production. 
Monitoring system for water quality 
Computerised Operations Support System 
Upgrading of the information system 
Mobile Air Quality Monitoring Station 
Computer System 
Information Centre for Hazardous Waste 
Equipment for a Toxicologic^! Centre 
Laboratory Equipment 
Computer System 
Emission Monitoring System 
Stack Emission Monitoring Vansv 
Bending Roller 
Computer Equipment 
Equipment for Water Quality Measurement 
Equipment for the Ecotoxicological Center Bratislava 
Upgrading of the Information System 
Various Supplies 
Computer Equipment 
Various Supplies 
Medical Equipment 
Various Supplies 
Certificates or ownership 
Air Pollution Monitoring Network 
Impmvmg the numitoniii; til drinking water quality 17/12/92 
08/12/92 
25/11/92 
10/11/92 
19/09/92 
16/07/92 
09/07/92 
27/06/92 
19/06792 
18/06/92 
13/06/92 
13/06/92 
03/06/92 
21/05/92 
20/05/92 
16/05/92 
16/05/92 
06/05/92 
05/05/92 
05/05/92 
28/03/92 
26/03/92 
24/03/92 
21/03/92 
19/03/92 
18/03/92 
29/01/92 
04/01/92 
04 AM/\>2 S 245 p.07 
S 238 p.06 
S 229 p.07 
S218p.07 
S 183 p.09 
S 136 p.05 
S 131 p.07 
S 123 p.05 
S 118 p.07 
Sll7p.06 
S114p.l2 
S 114 p.ll 
S 107 p.07 
S 099 p.08 
S 098 p.07 
S 096 p.06 
S 096 p.06 
S 088 p.05 
S 087 p.05 
S 087 p. 05 
S 063 p.07 
S 061 p.05 
S 059 p.07 
S 058 p.07 
S 056 p.06 
S 055 p.07 
S 020 p.07 
S 003 p.07 
S (10."' p.06 CS 
HU 
BG 
CS 
RO 
CS 
HU 
RO 
RO 
BG 
CS 
CS 
RO 
BG 
HU 
PL 
PL 
BG 
HU 
CS 
HU 
RO 
RO 
RO 
BG 
RO 
RO 
HU 
CS 
GENERAL OVERVIEW OF THE PHARE PROGRAMMES as at 31/12/92 
PAYMENTS . 
National programmes Programm 
year 
m 1990 
(2) 1991 
1992 
';*:Totaï' Committed 
399.1 
616.0 
708.5 
*::!ltt723'# PAID ON BUDGET YEAR (in million ECU) 
1990 
95.2 
.Wf&ti 1991 
113.1 
97.6 
•••< 21017 1992 
45. r 
120.0 
140.2 
::.:305.3' Total 
..•.••••••••.•••¥i;253/4 
•••••.•••;•••,: :-:-N217.6 
mwmwz 
-••' -mm-Total % 
63.49% 
35.32% 
19.79% 
35.46% 
Humanitarian aid (3) 1990 
1991 
1992 
"Total 66.5 
72.7 
121.5 
••. v->i260;7 53.7 
53 ;7-11.3 
30.4 
41.7 1.3 
29.3 
48.2 
78.8 ^ 66.3 
•:i59.7 
.48.2 
174.2 99.70% 
82.12% 
39.67% 
66.82% 
Regional programmes 1990 
1991 
1992 
Total 21.5 
99.9 
116.0 
- ::237;4 19.3 
19.3 1.4 
22.1 
23.5 0.3 
14.5 
16.3 
31.1 21.0 
36.6 
16.3 
73.9 97.67% 
36.64% 
14.05% 
31.13% 
Multidisciplinary 1990 
1991 
1992 
Total 10.0 
10.0 
37.3 
57;2 1.9 
1.9 1 4.3 
1.8 
6.1 2.1 
5.4 
10.9 
18.4 8:3 
•.-•7.2 
.10.9 
26.4 83.00% 
72.00% 
29.22% 
46.07% 
Others 1990 
1991 
1992 
Total 3.4 
0.4 
7.5 
•^V&gflStf 0.9 
. •'•.:.::':0i9-1.8 
0.1 
:::;-.:.'.x.-i:9. 0.1 
0.2 
0.1 
:':•• •.• 0.4 2.8 
•••' ' 0.3 
:V:0.1 
-'•3.2 82.35% 
75.00% 
1.33% 
28.32% 
Total (1) 
(2) 1990 
1991 
1992 
.• :-:ïi=Totâl: 500.5 
799.0 
990.8 
&ii2&90B; 171.0 
0.0 
0.0 
skm/im 131.9 
152.0 
0.0 
$»283;9,; 48.9 
169.4 
215.7 
*.S::::,::'434;0 •-351.8 
•::321:.'4' 
.,215.7 
!-:888.9 70.29% 
40.23% 
21.77% 
38.81% Balance 
to be paid 
mmmmsfr wmm&9mi 
mm®$$6w 
^%mmm-
•\:";-.*:\-=?0.2; 
•'••:,U-^S[m 
..73.3 
86.5 
.J-0.6.-5 
63.3 
99.7 
: 163.5 
•..-••..•. 1.7 
••^•••;-2."8-
26.4 
30.9 
0.6 
0.1 
7.4 
8.1 
> 
148.7 V 
• 477.6 
•775.1 
1 401:4 
Budgets: Alloc, payments 1 350.01 470.9 1 (*) 437.01 
(1) includes 515.980Ecus committed in 1991 for H9011 Infrastructure commerce extérieur 
(2) includes 24.5 MioEcus balanceof'91 programmes committed in 1992 (BG9101.BG9107.HU9112.RO9105) 
(3) includes 51 MioEcus FEOGA-garantie 
(*) 537 Mccu, reduced to 437 after Notenboom transfer m 
00 
I 
Macroeconomic Indicators of PHARE Countries * 1990 • 1992 
GOP ,».t constant prices (a) 1990 
(a) 1991 
(o) 1992 
Apricul'.urnl production (a) 1990 
(a) 1991 
(a) 1992 
K-!u.i:ri/il production (a) 1990 
(a) 1991 
(a) 1992 
Consumer price index (a) 1990 
(a) 1991 
(a) 1992 
lJ".»:^oloymftnt r Ate, in % (b) 1990 
(b) 1991 
(b) 1992 
IV.iflpei bftUnce, % OOP (c) 1990 
(c) 1991 
(c) 1992 
LxpoMs in S (a) 1990 
(a) 1991 
(n) 1992 
Current Account S bn 1990 
1991 
1992 
Dsht-export ratio. % (e) 1990 
(o) 1991 
(o) 1992 
IV.I: rrofliammo Albania 
•13.1 
•27.1 
•6.0 
•7.4 
n.a. 
13 
•7.5 
•40.0 
n.a. 
n.a. 
36.0 
226,0 
8.6 
n.B, 
32.0 1a) 
• 20.0 
•44.0 
•22.0 
•7.5 
• 40.7 
•4.1 
•0.1 
•0.3 
•0.4 
284 
593 
953 
Stmd by 
(Aug92-Juld3l 
en trtet Estonia 
•3.6 
•11.8 
•32 
•18.0 
•20.8 
•21.3 
•5.6 
•9.5 
•38.7 
23.1 
210.0 
1075.9 
0.0 
0.0 
1.5 
'• 3.1 
4.7 
1.7 
n.a, 
n.a. 
• 88.0 
0.5 
0.0 
n.a. 
n.a. 
n.a. 
Stmd by 
|Jul92-Jun93l 
on trick. Baltic itates 
Latvia 
•0.2 
• 3.5 
•32.9 
•17.2 
•3.6 
• 13.0 
7.4 
0.0 
•35.1 
10.5 
124.5 
909.6 
0.0 
0.0 
2.3 
2.2 
6.3 
• 1.4 
n.a. 
n.a. 
•85.4 
0.1 
0.1 
0.0 
n.a. 
n.a. 
n.a. 
Stmd by 
|Jul92-Jun93) 
en triek Lithuania 
•5.0 
•12.8 
•35.0 
•11.5 
•8.0 
•30.0 
0.3 
•1.3 
•56.9 
8.4 
275.0 
1020.5 
0.0 
0.0 
1.0 
•2.9 
2.8 
2.2 
2.1 
35.3 
92.7 
n.a. 
0.1 
n.a. 
n.a. 
n.a. 
Stmd by 
|Jul92-Jun93) 
on uieV Bulgaria 
•9.1 
•16.7 
•7.7 
•6.7 
•13.2 
•12.9 
•16.3 
•27.5 
•22.0 
21.6 
333.5 
91.1 
"il.7 
10.2 
15.6 
•9.1 
• 14.9 
•14.0 
n.a. 
• 36.7 
12.9 
•1.2 
•0.9 
•0.4 
299 
271 
255 
Stmd by 
|Api92-Mir93l 
oil tfieV CSFR 
0 
•16 
•8 
•2 
•14 
•12 
• 4 
•21 
•12 
10 
58 
12 
1 
7 
5 
0 
•2 
•2 
11.7 
10.6 
11.4 
•1.1 
1.0 
0.2 
135 
91 
84 
Stmd by 
|Api92.0ee9}| 
on trieV Hungary 
•3.5 
•11.9 
•5.0 
•8.4 
•5.0 
•23.0 
•9.2 
•19.1 
•9.8 
28.9 
35.0 
23.0 
1.7 
8.6 
12.2 
•0.1 
•4.6 
•7.4 
•1.6 
7.0 
8.3 
0.1 
0.3 
0.3 
335 
245 
214 
|P«b9I.Peb9*l 
oil IncV Poland 
•11.6 
•7.6 
1.0 
•2.2 
•0.9 
•11.0 
•21.3 
•14.0 
4.2 
249.3 
60.4 
43.0 
6.3 
11.8 
13.6 
3.1 
•5.6 
•6.0 
43.4 
17.5 
9.7 
0.7 
•2.2 
• 0.3 
251 
346 
357 
iff 
|Apr9!.Ap/94| 
off trie* Romania 
•7.4 
•13.0 
•15.0 
-3.0 
•5.0 
• 9.2 
•17.4 
•18,7 
•21.8 
473,7 (f) 
199,0 
0.0 
2.9 
8.4 
•1.1 
•2.0 
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> CD 
<4-2_ 
FOURTH ANNUAL REPORT FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 
ON 
THE IMPLEMENTATION OF COMMUNITY ASSISTANCE 
TO THE COUNTRIES OF EAST AND CENTRAL EUROPE (PHARE) 
IN 1993 
4-3 
Contents 
PREAMBLE 
I - GENERA L CONTEXT FOR EC ASSISTANCE IN 1993 
1 I Legal basis 
1.2 Financial framework 
1.3 Policy orientations 
1.4 Programming 
II- 1993 MEASURES 
2.1 Preparation and decision making 
2.2 National Programmes and Sectors 
2.3 Other measures 
2.4 Regional Cooperation 
2.5 Humanitarian Aid 
2.6 Europe Agreement Activities 
2.7 Information Activities 
III -IMPLEMENTATIONOF 1990 - 1993MEASURES 
3.1 Commitments 
3.2 Tenders and contracts 
3.3 Payments 
3.4 Monitoring and Evaluation 
3.5 Counterpart funds 
IV- COMMISSION ORGANISA TION 
V. - SPECIFIC ISSUES 
5.1 Assessment of the reform efforts in PHARE countries in 1993 
5.2 The Copenhagen Initiative 
5.3 Health 
5.4 Public Administration Reform 
5.5 Cross Border Cooperation 
5.6 Coordination with other donors 
5.7 Direction of Phare 
4-4 
Tables 
1. Synthesis of National Indicative Programmes 1993 
2. Breakdown of 1993 commitments by sector and country 
3. Regional Programmes 1993 
4. General Overview of Budgets 1990-93 
5. General Overview of Contracts 1990-93 
6. General Overview of Payments 1990-93 
7. Amount of Operations.concludecJ by Year (1990-93) 
8. Breakdown of Commitments, Contracts and Payments by Country 1990-93 
9. Breakdown of Commitments, Contracts and Payments by Sector 1990-93 
10. Breakdown of Commitments by Country and Sector 1990-93 
11. Breakdown of Contracts by Country and Sector 1990-93 
12. Breakdown of Pavmentsbv Country and Sector 1990-93 
Annexes 
H. Professional Associations and Non-Profit Making OrganisationsA warded Phare Contracts 
4b 
PREAMBLE 
This is the fourth report on Community assistance under the PHARE Programme to the 
Central and Eastern European Countries (CEECs) which was extended in 1993 to eleyen 
countries - Albania, Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, 
Poland, Romania, Slovakia and Slovenia. 
1993 saw a number of key developments of considerable impact on the Phare 
programme. The 1993-97 Guidelines were adopted by the Commission in July 1993 and 
the implementation of Phare programmes reflected their adoption. Considerable progress 
was made in introducing the multi-annual approach into programming in order to integrate 
Phare assistance more effectively into the process of medium term restructuring of the 
beneficiary country. Steps have been taken to streamline implementation procedures, 
including more decentralisation. 
The Copenhagen Council in June 1993 came to two decisions having considerable impact 
on the Phare programme. The Council confirmed the prospect of future EU membership 
for the associated countries. This meant that Phare, as one of the principal financial 
instruments in the implementation of the Europe Agreements, would henceforth be 
directed and focused on measures aimed at transforming the economies of the associated 
countries within the perspective of their preparation for future membership of the 
European Union. Secondly, a decision was made at the Copenhagen Council to allow up 
to 15% of the Phare budget to be used in support of infrastructure programmes. This 
increased emphasis in the Phare programme on investment recognises that the demand 
for the- type of assistance required by the Countries of Central and Eastern Europe 
(CEECs) changes as the restructuring of the economies progresses from classic technical 
assistance to investment support programmes. 
The report looks at the policy and programming aspects of assistance in 1993. It reviews 
the national assistance programmes, regional programmes, humanitarian assistance, 
activities in the area of the Europe agreements and Phare information activities. The 
implementation of the Phare programme over the period 1990-93 is examined as are 
issues of specific concern - the assessment of the reform efforts in the CEECs, the 
Copenhagen initiative on infrastructure investment, health, public administration reform, 
cross-border cooperation, donor coordination and the direction of the Phare programme. 
4^ 
GENERAL CONTEXT FOR EC ASSISTANCE IN 1993 
1.1 Legal basis 
Council Regulation n° 3906/89 of 18 September 19891 as last amended in 19932 
represents the legal basis for Phare assistance. In 1993, the Commission transmitted a 
proposal to the Council in order to formally include3 "The Former Yugoslav Republic of 
Macedonia" (FYROM) in the regulation. The proposal has not yet been adopted. 
1.2 Financial framework 
The Phare programme is the largest source of grant financing mobilised in support of the 
economic transformation of the CEECs. In 1993, the initial appropriations under the 
budget line B-7600 - Aid for the Economic Restructuring of Central and Eastern Countries 
reached 1040 MECU for commitments and 447.7 MECU for payments. 
During the course of 1993 a number of modifications to the Phare budget were approved. 
30 MECU were transferred to the "Erhergency Humanitarian Aid" budget line B-7514, 5 
MECU to the Nuclear Safety Multilateral Fund for the CEECs and the CIS which is 
managed by the EBRD, and 0.3 MECU for the purposes of the Common Foreign Policy 
and Security Pillar of the European Union. The Phare budget was increased in December 
1993 by 1 MECU from the budget line B 3-1025 for actions in the field of training. 
The final amount available for commitments was, therefore, 1,005.7 MECU, out of which 
1,003.9 MECU were committed, 1 MECU was carried over to 1994, and 0.8 MECU were 
not committed. 
The breakdown of the commitments was: 
National Programmes 801.0 
Regional Programmes 112.2 
Multidisciplinary and other measures 70.8 
Humanitarian Aid 19.9 
1,003.9 MECU 
Appropriations for payments were reinforced by the end of the year by a transfer of 108 
MECU. Taking into account the modifications in the budget mentioned above, the net 
reinforcement for payments in the PHARE Programmé during 1993 was 73.4 MECU. 
This meant that the final amount available for payments in 1993 was 521.1 MECU, an 
amount completely used by the end of the year. 
1.3 Policy Orientations 
Two key developments, the adoption of the 1993-97 Guidelines by the Commission and 
the decisions of the Copenhagen Council in regard to membership for the associated 
countries and support for infrastructure investment, shaped Phare policy orientations in 
1993. The Copenhagen Council in June 1993 came to two decisions having considerable 
1 OJ L375 of 23 December 89, pt 11 
2OJL162of 3 July 93, p. 1 
3 OJ C231 of 27 August 93, p. 15 
v> 
impact on the Phare programme. The Council confirmed the prospect of future EU 
membership of the associated countries. This meant that Phare, as one of the principal 
financial instruments in the implementation of the Europe Agreements, would henceforth 
also be directed and focused on measures aimed at transforming the economies of the 
associated countries within the perspective of their preparation for future membership of 
the European Union. Secondly, a decision was made at the Copenhagen Council to allow 
up to 15% of the Phare budget to be used in support of infrastructure programmes. 
1993 marked the first year of the implementation of the Phare guidelines. The Guidelines, 
adopted by the Commission in July 1993, reaffirmed Phare's mandate to contribute to the 
process of economic reform, structural adjustment and sustainable development in. the 
recipient countries and'to show a"flexible -response to the differing/ needs of the recipient 
countries, reflecting their different levels of development, stage of transformation and 
progress with reforms. 
For countries at relatively early stages of reform where the key priorities are 
macroeconomic stabilisation involving rigorous monetary and fiscal policies, progressive 
liberalisation of prices and foreign trade and establishment of the legal, regulatory and 
institutional framework necessary for a market economy, Phare assistance is used to 
complement balance of payments financing through for example import supply 
programmes and "classic" technical assistance (studies, training, provision of expertise) 
for institution building and initiating reforms. Exceptionally a balance of payments grant 
was extended to Albania in 1993. 
As a country proceeds through its reform process, needs shift from that for classic 
technical assistance to that involving more direct support for the process of long term 
"restructuring of the economy. Long term restructuring involves consolidation of private 
ownership and an increase of the share in the economy of the private sector, 
reorganisation of remaining state enterprises, modernising banking and financial systems, 
restructuring of the educational and vocational training systems, reform of public 
administration and the mobilisation of infrastructure investment. In this phase of 
development, countries increasingly need investment/structural assistance as opposed to 
classical technical assistance. 
In 1993 the conclusions of the European Summit of Copenhagen permitted Phare 
assistance to adapt to the needs of this long-term restructuring phase with an increasing 
focus on investment and related operations. It was decided that a significant portion, up to 
15% of total Phare commitments spread over Phare countries, can be used for capital 
expenditure for infrastructure projects which are jointly financed by the EIB and/or 
International Financial Institutions and beneficiary countries. Phare assistance is as well 
being used to. facilitate investment in the private sector for projects which have a positive 
economic return but face transitional problems of market failure. This type of support is 
usually directed toward SME development, regional development, environmental 
improvement and agricultural restructuring. Phare supports financial intermediaries in the 
provision of certain types of financing such as small loans, seed capital and guarantee 
schemes. 
In addition to investment support, the Copenhagen summit provided impetus to Phare 
support for the implementation of the Europe agreements. Programmes were introduced 
in a number of beneficiary countries to assist signatories to the Europe agreements to 
support a full range of measures including the facilitation of the approximation of laws 
and their implementation, the identification of barriers to the integration with the EU, the 
improvement of technical understanding and know-how of the public sector in relation to 
the above issues; the enhancement of the quality and effectiveness of public education 
and information activities about the EC, and; the effective monitoring of the process of the 
implementation of the Europe Agreements. 
4g 
1.4 Programming 
The 1993-97 guidelines defined some new principles on which PHARE support should be 
provided. The most important are: 
The need to ensure greater coherence and integration of PHARE into the national 
strategy and the general reform programme of the beneficiary country. To that end a 
multiannual approach in the context of an ongoing dialogue on priorities and policies 
would be adopted. 
Continuing flexible response to the differing needs of countries reflecting their 
different levels'of development, stage of transformation and progress with reform. ' 
The importance of an assessment of progress with reform efforts and the performance 
of the PHARE programme by maintaining its focus on support for the development 
and implementation of policy reforms and structural change, notably in areas directly 
linked with economic reform. 
A concentration on a limited number of areas so as to achieve the critical mass 
necessary to achieve impact. This combined with a more thorough assessment of 
needs and absorptive capacity should lead to an acceleration of the rate of 
disbursement. 
In order to put these principles into practice the Commission started in 1993 to strengthen 
the programming process. Thus the multiannual approach was introduced in a number of 
countries and where its implementation was not possible, preparatory work for such an 
approach from 1994 onward was initiated. Moreover, efforts were made in the 1993 
programming exercise to concentrate assistance in a limited number of areas linked with 
policy reform and structural change and to better assess needs and absorptive capacities. 
Finally, to put more emphasis on a discussion with member states on country 
programmes, Orientations Papers describing the assistance orientations were drawn up 
and discussed with member states. These papers serve as a basis for member state input 
into the programming process. 
Indicative Programmes were signed with all beneficiaries and while not being formal 
binding agreements with the Commission they are working documents indicating priorities 
and providing a framework for the identification, formulation and appraisal of projects to 
be financed. They are summarised in Table 1. 
The indicative programmes established the sectoral priorities which were eventually 
reflected in the sector programmes presented in the form of financing proposals to the 
management committee. Priority continued to be granted to economic restructuring and 
private sector development programmes. However, infrastructure, human resources 
development (particularly through the TEMPUS programme on higher education reform) 
and social sector programmes gained in importance in 1993 relative to the private sector 
programmes. 
In several countries a general technical assistance facility was identified as being a 
flexible multidisciplinary instrument which would allow the beneficiary countries to respond 
relatively quickly to urgent needs for technical assistance with a view to develop reform 
policies and provide institutional support across a wide range of areas. In three countries, 
Estonia, Latvia and Lithuania, the bulk of the assistance was provided in the form of this 
facility, reflecting the early phase of the transformation of these countries and the need to 
conduct a range of preparatory work prior to launching sectoral programmes. 
¥\ 
PROGRAMMING AND APPRAISAL CYCLE 
A-/N Economic and Social Assessment 
Review of On-Going 
Phare Programmes 
\ Orientations Paper 
i 
i Indicative Programme 
4/ 
-| Preliminary Sector Appraisal 
\L. 
Detailed Programme Design 
(to preparation of FP) 
—| Programme Monitoring 
^o 
II- 1993 MEASURES 
2.1 Preparation and decision making 
The total number of PHARE financing decisions on the 1993 budget was 87. These 
included 66 national sector programmes and 10 regional cooperation programmes. The 
remaining financing decisions concerned mainly EBRD projects, humanitarian aid and 
authorisations for small scale multidisciplinary actions. The General Guidelines for 1993-
97 were adopted by the Commission in July 1993. The PHARE Management Committee 
met on six occasions concentrated in the latter part of the year and gave a favourable 
opinion on all financing proposals. 
2.2 National Programmes 
During 1993 the number of PHARE beneficiary countries grew to eleven given the 
dissolution of the Czechoslovak Federation and the creation of two republics. Total 
assistance on national programmes - that is, excluding humanitarian assistance and 
regional programmes - amounted to nearly 801 MECU. The largest PHARE recipient was 
Poland with 225 MECU, equivalent to 28.% of total national allocations, followed by 
Romania (130 MECU, 16.2%). Hungary (100 MECU, 12.5%) and Bulgaria (90 MECU, 
11.2%). 
Table 2 shows the broad sectoral pattern of assistance by country. Thé figures should be 
treated with caution mainly because the general technical assistance programmes include 
significant sectoral components such as banking and finance, social protection, public 
administration, Europe agreement implementation and so on, meaning that the shares of 
these specific sectors in the total is actually higher than the table suggests. Bearing this in 
mind, the 1993 programmes reflected a continued focus on support for the development 
of the private sector and economic restructuring. Roughly 25% of total national allocations 
(190 MECU). was committed to enterprise development covering privatisation, enterprise 
restructuring, assistance to small and medium enterprises (SMEs), investment promotion 
and export development. 
In recognising that a modem banking system is crucial to à properly functioning market 
economy, there was an increased emphasis on support for the financial sector and 
banking institutions in 1993. Funds have been provided for strengthening the newly 
created central banks, for legislation, training, portfolio audits, banking associations, 
information systems, payment systems and bank restructuring. Phare support has been 
provided as well in schemes dealing with the problem of bad debts and re-capitalisation of 
banks, both key issues in the reform. 
Agriculture continued to receive substantial support (78.5 MECU or 10% of national 
allocations) reflecting the importance of agrarian reform in the economies of Eastern 
Europe. There was increased emphasis in 1993 on assistance for agricultural strategy 
development and transformation including farm privatisation, development of land reform 
and registration systems, agro-industrial restructuring, advisory services and the 
development of credit channels for the new private farmers. 
An increasingly important task of the CEEC governments in 1993 was to maintain the 
momentum of economic reform while preserving a social consensus. Phare assistance 
played an increasingly important role in helping these governments deal with the social 
implications of the transformation process; Assistance was provided for institutional and 
organisational change in the labour market and social protection sectors. This included 
support to pro-active labour market programmes addressing the problem of high 
unemployment resulting from the restructuring process and assistance for the reform of 
51 
the social benefits system involving the development of unemployment insurance, 
pension and health care schemes as well as social assistance programmes. 
Support for human resources development and the reform of public administration was an 
increasingly important part of the 1993 programmes. In regard to the first, a significant 
commitment continued to be made in 1993 to the reform of higher education through the 
TEMPUS programme. Vocational education training schemes and education system 
reform programmes were important components of some of the 1993 national 
programmes. In the public administration field there was a continued focus on institutional 
development and training at both the national and local government levels. 
In regard, to the infrastructure sector, there'was somewhat less emphasis on the 
environment in 1993 national programmes although significant commitments were made 
in Bulgaria and Albania. This reflects in part the substantial allocations made in previous 
years to most Phare beneficiary countries. Environmental support has evolved towards 
support for policy formulation and the preparation and implementation of environmental 
strategies for specific sectors. There has been an increased focus on the promotion of 
investment related to the environment either through the support for investment funds or 
through co-financing operations with International Financial Institutions (IFIs). 
Support of infrastructure (energy, telecommunications and transport) focused in 1993 on 
restructuring and adaptation to the circumstances of the market economy. Allocations 
were made to Bulgaria, the Czech Republic, Poland and Slovakia and included support 
for the restructuring of the railway companies, the preparation of the regulatory framework 
for the telecommunications and transport sectors and the establishment of energy saving 
funds. The shift towards investment in infrastructure development, is reflected by the 30 
MECU Phare contribution for a railway development project in Poland. 
Additional measures covered under the 1993 Phare programme were a 35 MECU balance 
of payments support grant to Albania and assistance to the Former Yugoslav Republic of 
Macedonia (FYROM). At the end of 1992, the Edinburgh Council decided on a 100 MECU 
support programme for FYROM to assist in coping with the consequences of the blockade 
against Serbia and non-recognition by the international community. The assistance given 
to FYROM in 1992 was complemented in May 1993 by a 25 MECU programme in support 
of the import of industrial raw materials and equipment as well as technical assistance in 
the field of customs, statistics, health and agriculture. 
2.3 Multidisciplinary and other measures 
In addition to the sectoral programmes several operations were financed under the 
heading Multidisciplinary Measures. 
First of all a commitment of 26.4 MECU for "multidisciplinary technical assistance" was 
agreed in three tranches in 1993. This is an enabjing device giving a global authorisation 
to finance, within given parameters, small-scale operations such as feasibility studies and 
technical assistance without requiring a specific Management Committee opinion and 
Commission decision on each operation. 
After the so-called "Bangkok Agreement" between the EBRD and the EC in 1992, a new 
cooperation scheme was established between both institutions. This enabled the 
implementation of measures in the beneficiary countries, which are approved and 
financed by the Commission and are technically managed by the EBRD. This 
collaboration received an allocation of 11.7 MECU, in actions mainly related to the 
financial sector. 
SX-
PHARE Information Action which has the objective of informing the business and political 
milieu in the EC Member States about the Community's relations with, and assistance for 
the countries of Central and Eastern Europe received 2.7 MECU. 
The PHARE Democracy Programme received an allocation of 10 MECU in 1993. This 
amount supports the continuation of the démocratisation process in Central and Eastern 
Europe. It enables financial and technical aid to be provided on a non-party basis, through 
parliamentary institutions, for the reinforcement of general civic education and democratic 
principles. 
A new initiative was approved in 1993 entitled the Phare Partnership and Institution 
Building Prôgrërnrhe which aims at supporting the . development ' of sustainable 
partnerships between EU and CEEC non-profit organisations. This programme is a cost 
sharing scheme and is operating as a pilot programme focusing on a number of sectors 
notably economic development, business promotion, local/regional government, 
community development and worker/consumer interests. It will support some 90 projects 
in the CEECs with each project requiring the participation of at least one organisation 
based in the EU and one in a Phare beneficiary country. The European Union will provide 
matching funding to equal contributions secured by the partner organisations themselves. 
The EU Member States are responsible for preselecting projects and can decide to which 
extent they will participate themselves in the projects. The initiative was allocated 10 
MECU in 1993. 
These multidisciplinary and other measures amount to 70.7 MECU, for which the 
breakdown is as follows: 
Multidisciplinary technical assistance 26.4 MECU 
EBRD 11.7 MECU 
Information Action • 2.7 MECU 
Democracy Programme 10.0 MECU 
Tempus "Overhang"4 9.9 MECU 
Partnership/Institution Building 10.0 MECU 
TOTAL 70.7 MECU 
2.4- Regional Cooperation 
Regional cooperation is seen as playing an important role in developing an economic and 
political dialogue among the countries of Central and Eastern Europe (CEEC) and 
between the CEECs and the Member States of the European Union. It is seen as 
promoting political stability in Europe and closer economic integration among the CEECs. 
The Europe Agreements, the conclusions of the Edinburgh and Copenhagen summits and 
the proposed Pact on Stability all stress the importance of enhanced regional cooperation 
building on existing relationships such as Visegrad. In this context, the Phare regional 
programmes initiated in 1991 have played a major role in stimulating such a dialogue and 
promoting cooperation on a wide range of issues of common concern and interest in the 
CEECs. 
This amount covered the remaining financial commitments from TEMPUS projects seleced 
over the period 1990-93, prior to the commencement of the second phase of TEMPUS 
(TEMPUS II) 
s2> 
1993 saw a continued emphasis on the development of regional cooperation amongst the 
now enlarged group of eleven beneficiary countries with an overall allocation of 112.3 
MECU for regional programmes. This approach has been further reinforced with the 
adoption by the Regional Coordination Group of orientations for future programming 
which endorse the principles of a multi-annual programming approach, and on 
concentration on a limited number of core areas, for programmes which are inherently 
regional in nature and which focus on enhancing regional co-operation between 
beneficiary countries. 
For 1993, the focus was on three key areas: 
An extension/consolidation programme to enable the new beneficiary countries to benefit 
from existing programmes and to build on established programmes in the original 
countries of the Regional Coordination Group. Some 29 MECU of additional support was 
provided in this way for the Drugs, Transport, Customs and Energy programmes. 
Support for a limited number of core area programmes. A substantial allocation (20 
MECU) was made to the Transport sector, principally to continue the programme of 
support for the elimination of a limited number of high priority border crossing bottlenecks. 
This element is complemented by activities under the 1993 Regional Customs 
programme to ensure a well-balanced approach in resolving infrastructure, administrative 
and customs problems in a coherent way. A further allocation of 20 MECU for Nuclear 
safety was made in 1993 in recognition of the urgent need to continue and reinforce the 
activities begun in 1992, in particular with respect'to the improvement of safety standards 
for the Soviet designed nuclear reactors. The TEMPUS programme was allocated 15.8 
MECU in 1993 to complete the Joint European Projects launched in earlier years, and to 
support the operational costs of managing the programme. The Joint Venture PHARE 
Programme (JOPP) which was initiated in 1991 and assists the creation of new, or 
expansion of existing, joint ventures between companies from EU Member States and 
PHARE beneficiary countries received an additional allocation of 27.5 MECU. 
As well, a number of preparatory studies were launched for the medium term 
programming period in particular in the areas of human resources (concentration on 
distance learning and higher education) and to explore the potential for developing cross-
border co-operation between PHARE beneficiary countries and trade development 
initiatives. 
The Regional Coordination Group has continued to play a key role in the programming 
and coordination of the regional programmes. Participation by the beneficiary countries in 
the implementation and monitoring of regional programmes has been assured in 1993 
through Sector Coordination meetings to plan implementation of programmes and identify 
future needs. This process.has been further extended with the appointment of Sector 
Coordinators for Customs (Slovenia) and Trade development (Slovakià)J 
The process of decentralisation of the day to day management of regional programmes 
also began in 1993 with the creation in Prague of a Regional Transport Coordination Unit, 
responsible for implementation of the Transport programmes, and the establishment in 
Bulgaria, within the existing national PMU. of a Secretariat for the coordination of the 
Telecommunications programme. Similar Coordination Units, established wherever 
possible alongside existing PHARE management units and staffed by local staff assisted 
by technical advisors, are also planned for the Energy, Customs and Drugs programmes. 
^ 
2.5. - Humanitarian Aid 
Phare humanitarian assistance in 1993 was dominated by the difficult situation in Albania, 
the problems entailed by the drought in Romania as well as by the conflict in the former 
Yugoslavia. 
For Albania, a decision was taken in December 1993 to extend an extraordinary allocation 
of 10 MECU for the rehabilitation of schools and prisons throughout Albania and for the 
continuation of programmes for building houses for ex-political prisoners. For Romania, 
because of the continuation of the crisis in agricultural production related to the drought in 
1992, Phare financed food' aid- in the arhûirnt. of 9.9MECU: • 
The war in ex-Yugoslavia and the dramatic situation of the refugees was the focus of 
activities and funding allocations of the European Office of Humanitarian Aid (ECHO) in 
1993. A total of some 300 MECU was spent in 1993 for emergency aid for refugees. This 
was organised and implemented through UNHCR, ICRC and other NGOs. Phare 
contributed to this operation through the transfer of 90 MECU from the Phare budget to 
the new "Emergency Humanitarian Aid" budget line mentioned in Section 1.2. 
2.6 - Europe Agreement Activities 
The Europe Agreements provide a legal, political, and economic framework for the 
relationship of the signatory CEECs (Poland, Hungary, Bulgaria, Romania, Slovakia and 
the Czech Republic) with the European Union. Phare is one of the principal vehicles for 
providing financial assistance to the signatory countries. The decision taken at the 
Copenhagen Council in June 1993 which confirmed the prospect of future EU 
membership for associated countries had implications of considerable importance for the 
Phare programme. It means that Phare must also give priority to the transformation of the 
economies of the associated countries within the context of their preparation for 
membership. 
The implementation of the Europe Agreements is supported through the provision of 
technical assistance covering specific provisions of the agreements aimed at facilitating 
integration. There are a number of both national and regional programmes which provide 
support in implementation of the Europe agreements. In regard to the former, building on 
the Euro-GTAF (92) in Hungary and the Sierra (92) programme in Poland, Euro-GTAF's 
were agreed upon in 1993 for Bulgaria, the Czech Republic, Romania and Slovakia. 
These multi-sector financial instruments support a wide range of activities, insofar as 
assistance is not otherwise available under Phare funded sectoral reform programmes, 
including: 
(i) the preparation and implementation of strategies designed to lead to laws which are 
compatible with EC laws, . 
(ii) funding the technical assistance required for each key area of policy concerned by the 
Europe Agreements, 
(iii) training, targeted study visits (for instance to appreciate legislative and institutional 
methods of implementation in the Community) and public information initiatives including 
the establishment of documentation centres. 
< 
Additionally there are a number of Phare regional economic legislation programmes 
having components supportive of the implementation of the Europe Agreements. In the 
area of approximation of economic legislation, framework programmes in Latvia, Estonia, 
Lithuania and Slovenia were started in 1993 with the aim of approximation of financial 
service law, commercial law, labour law and trade law. In regard to competition and state 
aids, general programmes of assistance are being provided to Bulgaria, Estonia, Hungary, 
Lithuania, Romania, Poland, Slovenia and Slovakia for the provision of experts to assist 
in the process of reform of the relevant laws, regulations and implementing procedures, to 
prepare inventories of the existing state aids and monopolies of a commercial character 
and to provide training. A further regional programme in the area of consumer protection 
provides for-institutional and legislative-assistance for the.approximation of laws, training 
and the setting up information systems. A regional intellectual property programme, 
cofinanced with the European Patent Office addresses the development of trade mark, 
patent and industrial design protection in all Phare beneficiary countries. Finally, the 
European Committee for Standardisation (CEN) is implementing a regional Phare 
programme on quality assurance which provides for the provision, translation and 
transpositions of European norms, standards and technical EC directives and regulations. 
It also provides for the auditing of quality assurance systems and training. 
2.7. Information Activities 
In an effort to increase the transparency of the Phare programme and to provide timely 
information to interested parties on Phare activities, an increased focus was placed on 
information activities in 1993. This involved the broadening of the constituency for Phare 
information activities beyond the business community, an initial target group, to a wide 
variety of opinion leaders in the Member States and in the beneficiary countries. The 
information strategy aimed not only at explaining the Phare programme and providing 
information on tenders and contract procedures but as well at addressing certain public 
misconceptions and misunderstandings about the programme. The funding for the 
expanded information programme was increased to 2.7 MECU. 
The Phare information office produced a series of documents over the course of the year, 
including continued publication of an operational programme compendium, the indicative 
programme summaries and the operational programme updates as well as new 
publications such as country profiles, sector profiles, a "success story" compendium, 
newsletters, a mission statement and information on contracts. A database of some 5000 
interested parties was used for three mailings. 
In addition to these publication activities, the Phare information office undertook some 
150 speaking engagements over the course of 1993 and met with an average of 50 
visitors per week. In the audio-visual field, meetings were organised with CIRCOM, the 
umbrella organisation for East and Western European TV stations to investigate the 
potential of broadcast sponsoring for Phare related documentaries. Finally, Phare 
participated for the first time in 1993 at a number of trade fairs - the Hannover Fair, the 
Brno Fair and "S'implanter" in Paris. 
5fc> 
III.- IMPLEMENTATION OF 1990-1993 MEASURES 
The reforms in the CEECs have involved fundamental economic and political changes. 
While there has been a consensus on the principle of establishing a market system, there 
are wide divergences within and between the CEECs on the content and timing of the 
actual measures needed to achieve this. Phare has thus faced the challenge of dealing 
with frequent changes in government and basic policies as well as in the institutions and 
the counterparts responsible for implementing the programmes. Despite this the 
programme responded rapidly to the needs of the reform process and^ has made a 
substantial contribution to the transformation of the CEECs. 
3.1. Commitments 
Once the financing decision has been taken, a financing memorandum is signed by both 
the Commission and the Implementing Authority, usually the line ministry in the country 
concerned, specifying the respective responsibilities for management of both parties. The 
amount specified in the financing memorandum is the commitment. In 1993 all funds 
available, 1004 MECU, were successfully committed. This brings the total amount of 
Phare commitments since 1990 to 3294 MECU. 
The commitment of funds is only a first step. Progress in implementation is reflected in 
contracts signed and by the subsequent expenditure. 
3.2 Tenders and Contracts 
Tendering and contracting are undertaken in accordance with the Phare Council 
Regulation 3906/89, the Financial Regulation (Title IX/External Aid) and the General 
Regulations for tenders and award of contracts financed from Phare/Tacis funds. 
In accordance with these regulations, service contracts are normally awarded after a 
restricted invitation to tender. The criteria on which the final choice of a project is made 
are weighted towards quality rather than simply price. For supply contracts, an invitation 
to tender is normally published in the Official Journal of the EC. For smaller service and 
supply contracts with a value of below 50,000 ECU, a contract can be awarded by direct 
agreement. 
Individual Phare programmes are increasingly implemented through a Decentralised 
Implementation System where the execution of the programme including the launching of 
tenders and the signing of contracts has been transferred to an Implementing Agency in 
the beneficiary country. Based on approved work programmes, funds are regularly 
transferred to these agencies to finance the activities. For other programmes, however, 
the tendering and contracting is done by the Commission on behalf of one or several 
beneficiary governments. 
In a number of different sectors - banking, taxation, training, customs, regional 
development - Phare programme implementation in certain beneficiary countries has 
been contracted to associations, professional organisations and other non-profit making 
organisations. In certain cases contracts have been won by these organizations through 
the tendering process; in other cases, and specifically in regard to the European 
professional associations, contracts have been extended directly. An overview of the 
non-profit organisations and the programmes in which they are involved is provided in 
Annex 1. 
s> 
The overall amount of contracts concluded in 1993 was MECU 572.1. Of this amount 
MECU 450.7 correspond to contracts awarded by the Commission on behalf of the 
beneficiary governments and 121.4 MECU are contracts concluded directly by the 
recipient institutions. 
In the period 1990-93. of the 3294 MECU committed under the Phare programme, 1566 
MECU or 48% has been contracted. The breakdown for each programme year (Table 5) 
shows that 77% of 1990 commitments, 64% of 1991 commitments, and 23% of 1993 
commitments have been contracted,. These contracting figures together with the 
payment/disbursement figures mentioned below reflect the. nature of PHARE programmes, 
which are normally implemented over a three to five year period. Funds committed for 
programmes in any given year will normally be contracted and disbursed in subsequent 
years. Contracting starts in the first year of programme implementation and is followed by 
disbursement which builds up significantly in the third to fifth year of programme 
implementation. 
3.3 Payments 
As has been the case in previous years, 1993 saw an important increase in payments. 
The total amount disbursed was 521.1 MECU, representing 20% more than the 
disbursements in 1992. 
There were insufficient appropriations for payments in 1993 From an initial 447.7 MECU 
allocation, the budget was increased to a final amount of 521.1 MECU. Despite this, ± 50 
MECU could not be paid because of a lack of appropriations, and was deferred for 
payment to 1994. 
The breakdown of payments in 1993, per programme year is as follows : 
Programmes of 1990 68.6 
Programmes of 1991 148.0 
Programmes of 1992 161.5 
Programmes of 1993 143.0 
Total 521.1 MECU 
In 1993, of the 521.1 MECU in payments, 328.7 MECU was paid on contracts by the 
Commission and 192.4 MECU was advanced to the Programme Management Units 
(PMU's) in the beneficiary countries. 
At the end of 1993 total payments by the PHARE Programme were 1,412.2 MECU, or 
42.9% of the total commitments to the beneficiary countries. The total amount advanced 
to the PMUs in the 1990-93 period was 451.1 MECU, 32% of total payments. An overall 
view of disbursements is provided in the tables in annex. It is important to note that the 
tables show payments made on contracts awarded by the Commission and the advance 
payments made to the beneficiary countries (rather than payments actually made on 
contracts locally). 
S£ 
3.4 Monitoring and Evaluation 
Monitoring and evaluation received considerable attention in 1993. Three major sector 
assessments were conducted for Phare support to SME development, to banking sector 
reform and to privatisation and restructuring5. The recommendations of those 
assessments provided key input into further programme design. 
Additionally, in the context of a major initiative in 1993 to streamline and consolidate 
Phare procedures, very careful attention was paid to the subject of monitoring and 
evaluation..The result of this initiative was the preparation of two manuals: (1).the manual 
for decentralised'implementation, and (2)-the manual for'contracts and procurement 
rules. 
In the first manual, a monitoring and evaluation system has been defined. The main 
innovation in this system is the creation of a general document, the strategic plan, which 
is the basic instrument covering the entire duration of the programme. It is based on the 
content of both the Financing Memorandum and the Monitoring and Evaluation Matrix 
attached to the Financing Proposal and translates the two documents into operational 
terms. One of the elements of this document is the Plan of Operations which summarises 
the implementation arrangements and the major milestones of the programme. An annual 
monitoring and assessment report reviews the extent to which targets have been met, 
analyses main constraints and identifies corrective action. The monitoring report provides 
a review of the overall achievement of the programme, lessons learnec and 
recommendations for the future. In addition, external independent mid term and end of 
project evaluation will continue to be carried out to supplement the internal monitoring 
system. 
The preparation of the manuals is an important step towards the strengthening of the 
management and control functions of the beneficiary institutions and an increased 
decentralisation of the Phare programme. In addition, the planning and monitoring tools 
contained therein contribute towards better project design and improved programming. 
3.5 Counterpart funds 
In 1991 agreements on the use and generation of counterparts funds were drawn up with 
Albania, Bulgaria and Romania. In 1992 agreements were drawn up with the governments 
of Estonia, Latvia and Lithuania. 
The Counterpart Funds in Romania are managed by the Ministry of Finance and the 
Department for European Integration. Counterpart Funds in Romania were generated by 
the sale of food-aid, and commodity supplies provided in the context of the PHARE 
Programmes for transport, agriculture and humanitarian aid (medicines). An Indicative 
Programme for the use of Counterpart Funds has been agreed by the Romanian 
Government and the Commission of the European Communities. 
In Albania Counterpart Funds were generated by the sale of food-aid, industrial supplies, 
agricultural equipment and transport equipment. As a result of the large budget deficit and 
in accordance with the recommendations of the IMF, the Commission decided -in 
cooperation with the major donors- to use the Counterpart Funds for budgetary support. 
These assessments are reviewed in a recent Phare publication "Phare - A Performance Review 
1990-93", March 1994, Annex 2 
S ' \ 
Poland's Counterpart Funds have mainly come from the sale of animal feed and 
agrichemicals. The funds were generated within the context of 1990 PHARE National 
Programme and their use was set on an annual basis according to the Indicative 
Programme. The task of management of the counterpart funds has been assigned to the 
Co-operation Fund, a State Treasury Foundation. Part of the funds have been used for 
the pre-financing of PHARE programmes and the promotion of the opening of the new 
branch of the College of Europe in Natolin. Funds have also been allocated to training 
programmes and in support of economic/legal research in the context of the Europe 
Agreement and for emergency actions such as saving national heritage in the context of 
the Wileczka flooding and providing equipment for animal transport notification (Foot and 
Mouth outbreak): - •. •.. . • : ••• ••: • •• ..•.••:..• 
Bulgarian Counterpart Funds were generated by the sale of agriculture, medical and 
energy supplies delivered as from the end of 1990. The funds are managed on behalf of 
the Government by a state Fund for Reconstruction and Development. Awaiting the 
agreement on an Indicative programme some of the funds have been used for health care 
programmes as well as energy equipment. 
Estonia, Latvia and Lithuania agreed on Counterpart Funds in December 1991. Prior to 
the first deliveries, memoranda of understanding, setting out general principles for receipt 
and distribution of EC supply programme assistance, and aides mémoires, setting out 
details specific to the cereals supply programmes, were negotiated and signed with each 
republic. All funds generated from the first tranche of sales have been allocated to income 
supplement schemes targeted at the most needy socially deprived groups. An exception 
was made in Latvia where the funds were allocated to agricultural reform and 
development measures. A higher proportion of allocations from second tranche receipts 
has been used to support PHARE and national reform programmes, particularly the 
development of private agricultural business. 
ko 
IV - COMMISSION ORGANISATION 
Following a reorganisation of DG l's services at the end of 1992, Directorate L was 
created comprising 6 units (L1 to L6). Two separate units (Public Relations and G24 co­
ordination) also report to the Chief Advisor in charge of Directorate L. The original 
PHARE Operational Service Units (formerly PHOS 1,2,3 and 4) are therefore now to be 
known as units L3, L4, L5 and L6. The newly created units L1 and L2 are involved in 
general relations with-the beneficiary countries, in particular, the development, of the 
European agreements and trade matters. ' ' 
In spite of a considerable increase in the funds managed by the Phare programme, 
staffing remained essentially constant in 1993 as compared to 1992. The replacement in 
1993 of non-statutory staff by Commission officials as shown in the table below, while a 
positive step in a long term perspective, caused various problems and dislocations 
inherent in a period of large staff turnover. 
A. DG l/L, only ex-"PHARE OPERATIONAL SERVICE" UNITS (Principal Counsellor 
and Staff, Units L3, L4, L5 & L6) 
END 1992 END 1993 DIFFERENCE 
Officials 39 66 +27 
(permanent and 
temporary, all grades, 
including secretarial 
staff) 
Non-statutory staff 84 59 - 25 
(seconded national 
experts, service, 
contracts, all grades 
including secretarial) 
TOTAL 123 125 +2 
u 
M - SPECIFIC ISSUES 
5.1 Assessment of the reform efforts in PHARE countries in 1993 
Stabilisation and liberalisation have been largely completed in all the PHARE countries. 
Nevertheless macroeconomic policy continues to be dominated by the need to control 
inflation and, in those countries faced with fiscal crisis, by the need to reduce budget 
deficits. The Visegrad countries (the ÇSER, Hungary and Poland).had accomplished, 
stabilisation and liberalisation by the end of 1991 and began to focus more attention on 
structural reform. Slovenia has since caught up with them, and Bulgaria, Estonia and 
Latvia are following with somewhat of a lag. Slovakia since it became independent at the 
start of 1993 has tended towards a more interventionist and gradualist approach. Albania, 
Lithuania and Romania have been more hesitant about adopting and pursuing a coherent 
reform strategy. 
5.1.1. Economic performance in 1993 . 
Only two countries experienced growth in 1993: Poland, where GDP rose by 4.5%, and 
Albania, with growth of 11%, which resulted from the continued recovery of agriculture 
after its collapse in 1990 and 1991. In the other countries output again declined, though in 
all of them by less than in 1992: the fall in GDP ranged from about -1% in the Czech 
Republic, Hungary and Romania to -17% in Lithuania. Fixed investment continued to fall 
in most countries, and in some the decline even accelerated. 
Inflation slowed everywhere except in Romania. It was relatively low (between 20% and 
35% year-on-year)-in Hungary, the Czech and Slovak republics, Poland and Slovenia, but 
remained very high in Lithuania (410%). 
Unemployment has stabilised, at least temporarily, at 14-16% in Bulgaria, Poland, the 
Slovak Republic and Slovenia and 10-12% in Hungary and Romania. In Latvia it is lower 
but rising, while it is still very low in the Czech Republic, Estonia and Lithuania. In all of 
these three countries this reflects significant hidden unemployment, although in the Czech 
Republic it is also explained by a particularly tight labour market. Within most countries 
there are sizeable differences among regional unemployment levels: Productivity 
improved significantly in Poland and Slovenia in 1993, and to a lesser extent in Hungary. 
Serious fiscal imbalances face Albania, Bulgaria, Hungary, Poland and Slovakia, though 
the situation improved in Poland in 1993, as the strong performance of the economy 
helped generate increased revenue. The trade balance deteriorated acutely in 1993 in 
Hungary and Poland, and less sharply in Bulgaria and Slovenia. In Hungary's case the 
positive aspect of this development is an increase in imports of investment goods. Most 
other countries have seen a slight improvement in their external accounts. 
<-2_ 
5.1.2 Liberalisation and deregulation 
The far-reaching liberalisation and deregulation of the PHARE countries' economies 
encompassed liberalisation of prices, a new legal and regulatory framework, an opening 
up of the economies to international markets and a switch to convertible currencies. 
For almost all countries, the liberalisation of prices and the removal of administrative 
allocation mechanisms and subsidies were largely completed by the end of 1992. In 
Romania this liberalisation process was completed^ by the end of 1993. Most of the 
remaining price, controls'and consumer subsidies in the PHARE countries are on rents, 
household energy, utilities or transport services, and can be considered largely compatible 
with market economy standards. 
Simultaneously, the PHARE countries undertook the major task of adjusting their 
legislation to the standards and requirements of a market economy. New company, 
accountancy and auditing laws, together with competition legislation were in place at a 
very early stage of the reform process. In Bulgaria and Romania some legislation still has 
to be passed by Parliament. Albania is lagging further behind. The legislative and 
regulatory framework being put in place is generally adequate. The main deficiencies 
and challenges for the future lie in the enforcement of the laws and the inadequate 
administrative capacity for implementing and supervising them. The dispute resolution 
mechanisms are also often very weak. This can cause confusion and may be a deterrent 
to investment. 
A priority in the reform process was to lay down a clear basis for the acquisition and 
protection of property rights. Although this was achieved relatively quickly, in some cases 
rights are still unclear or restricted. The restitution issue is a source of confusion in some 
countries, such as Poland, where the main law has yet to be enacted. Almost everywhere 
restrictions on the purchase of land by foreigners were introduced and are, in some cases, 
disincentives to business. In several countries there is room for further amendment and 
modernisation of legislation on land ownership. In addition, in all countries there is room 
for improvement of the systems for the recognition of property rights so as to promote and 
sustain the development of real estate, housing or mortgage markets. 
External liberalisation has also been far-reaching: tariffs, quotas and licences have been 
rapidly dismantled, except in Albania, where restrictions are still in place. 
Trade liberalisation was'supported by a rapid introduction of current accountconvertibility, 
which gave domestic operators access to foreign exchange and allowed exchange rates 
to be adjusted to sustainable levels. Only minor restrictions such as ceilings on travel 
allowances remain in force. In Romania, because of a sustained gap between the official 
and parallel exchange rates, there is insufficient foreign exchange to meet import demand 
and rationing is applied. The exchange rate regimes are extremely diversified across the 
region. 
Finally, most countries have opened their economies to foreign investment through very 
liberal legislation, allowing full foreign ownership, transfer of profits and repatriation of 
capital. In Albania, although a suitable legislation exists, the treatment to which some 
foreign investors are subjected acts as a disincentive. 
fc.3 
5.1.3 Privatisation and restructuring 
The PHARE countries have generally focused on privatisation as one of the means to 
enhance the development of a competitive productive sector. Restructuring has been 
less actively pursued, although there is a growing awareness of the urgent need for 
enterprise restructuring. Privatisation of itself does not generate improvement in efficiency 
and the newly privatised firms must often be restructured to operate effectively in a 
market system. Moreover, it is now clear that with the exception of the Czech Republic, 
privatisation will be a. slow process and that a large stat.e-dwned sector wijj dominate the 
economy for some years. More urgently, the accumulation of inter-enterprise arrears and 
bad loans is now raising problems for the sustainability of reform programmes. 
Privatisation has not progressed uniformly throughout the region. Although by the end of 
1992 the legal basis was in place in all countries, there were some impediments to 
implementation, such as the issue of restitution or compensation, which has slowed down 
small-scale privatisation in Poland and the privatisation of agricultural units in Hungary 
and Latvia. In. most countries, small-scale privatisation, together with privatisation of 
housing and agriculture, is under way; in the Czech and Slovak republics it is almost 
complete. 
Large-scale privatisation has advanced in the Czech Republic under the voucher scheme, 
where it has been most rapid, and in the Slovak Republic, Hungary, the Baltic states and, 
to a more limited extent, Romania. In most countries, however, the first major step in 
large-scale privatisation was the transformation of state-owned enterprises into joint stock 
limited liability companies. In some countries, this process entailed some restructuring 
through dismantling of large companies into smaller units, as in Bulgaria, but this 
generally did not improve enterprise behaviour. Nowhere is privatisation a smooth 
process; all countries have encountered obstacles, from the inadequacy of legislation in 
Albania, to the lack of political consensus in Bulgaria, or the Ievelling-off of demand for 
state-owned firms in Hungary. 
Only following the withdrawal of state subsidies, the removal of preferential access to 
credit and the enforcement of credible bankruptcy laws can the restructuring of 
enterprises take place through market forces. In most PHARE countries these three 
conditions, have not yet been met, though in all of them the dismantling of direct 
production subsidies is fairly complete. 
Bankruptcy legislation in most CEECs is still weak. It is non-existent or inadequate in 
Bulgaria and Romania; is not enforced in Albania and the Czech and Slovak republics and 
Slovenia; and lacks the institutional framework for implementation in the Baltic states. In 
Poland, legislation The Enterprise and Financial Sector Law", was passed in 1993 to 
facilitate out of court settlement of enterprise debt cases. This law is designed to avoid the 
situation which arose in Hungary in 1992 when rigorous bankruptcy legislation was 
introduced but the commercial courts did not have the capacity to process the massive 
wave of bankruptcy proceedings triggered by this legislation. 
Financial discipline has not been rigorous and inter-enterprise arrears and bad loans in the 
banks' portfolios are becoming an acute problem, amounting in all countries to several 
percentage points of GDP. The chain reaction of liquidity problems makes it difficult to 
distinguish profitable and unprofitable companies. At the same time, banks are prevented 
Ê»4-
from making resources available for new investments. Some countries have begun to 
address the problem of bad debts. Hungary and Slovenia opted for a strategy of 
substituting state bonds for bad loans. In the CSFR. a consolidation bank to which bad 
loans were transferred was set up. In Poland, the major banks have established units to 
manage the bad loan portfolios as a part of a comprehensive national scheme to deal with 
the bank-enterprise dept problem. In the Baltic states, some progress has been made 
with restructuring and consolidation of banks. 
The difficulty of enforcing financial discipline without generating massive closures of 
companies has.prompted some governments to adppt a cautious restructuring policy. This, 
often leads to-a. kind of wide screening of state-owned companies to select companies 
which need temporary support or companies which can be reorganised or those which will 
be liquidated. Such a screening has been initiated in Hungary, leading to some temporary 
sectoral support programmes and to the selection of companies which will remain 
permanently state-owned. Similar actions are to be initiated in Romania. 
In contrast to the slow progress in restructuring and privatisation, the expansion of the 
private sector has been rapid in all PHARE countries as a result of the sustained creation 
of small and medium-sized enterprises. This indicates the ability of these economies to 
generate a supply response and suggests that the prospects for investment may improve. 
The share of the private sector in GDP ranges from about 20% in Bulgaria to 50% in the 
Czech Republic and Poland. The private sector dominates construction and retail trade, 
with shares ranging from 50% to over 80%, but is much less present in industry, with 
shares of 13% to 33%. 
5.1.4 Financial sector 
The financial sector has a key role to play in the transition, as it is expected to be an 
important channel for allocation of resources according to market rules and the main 
support for an upturn in investment. 
All PHARE countries have taken the first step of the reform, i.e. setting up a two-tier 
banking system in which the financial inter mediation functions are separated from the 
central bank functions of monetary control. All countries have ended administrative 
allocation of domestic credits and many have deregulated interest rates. Some countries, 
however, have kept credit ceilings or preferential credits for some specific purposes. 
However, there is still considerable room for improving efficiency in the banking sector in 
most countries. Although small» banks have mushroomed many of these banks focus on 
short term trade and foreign currency operations. The banking sector is still dominated by 
the large staterowned banks, which tend to dominate certain regions or sectors of the 
market (e.g. agriculture).,They are highly specialised and not familiar with commercial 
practices. Except in the Czech and Slovak republics, Estonia and Poland, where at least 
some large state banks have been privatised, bank privatisation is only beginning in other 
countries. Overall the sector is still uncompetitive. Most banks began with very lov/ 
capital/asset ratios and continue to suffer from the high share of bad loans in their 
portfolios. Until the banks have been recapitalized they will be unable to participate more 
actively in the enterprise restructuring and the privatisation process and to enhance the 
development of financial markets. A comprehensive recapitalisation scheme is underway 
in Poland and is being launched in Hungary. 
<0> 
5.1.5 Fiscal reform 
For the government sector, the transition to a market economy implies major shifts away 
from the legacy of central planning: an overall reduction in the size of the public sector, an 
extension of the tax base to sources other than enterprises, a streamlining of social 
benefits to target them on vulnerable groups, and the transfer to the state of those aspects 
of social protection that previously were the responsibility of enterprises. 
All the PHARE countries have made significant progress in modernising their tax systems, 
except Albania which has begun only recently. Apart from Hungary, which introduced 
personal income tax, VAT and corporate tax at a very early stage of the reform and the 
Baltic states and Slovenia, which initiated the reform in 1990 and 1991, most of the 
changes in tax systems occurred in 1992 and 1993. 
Most countries have experienced a collapse of their tax base and the accumulation of 
large tax arrears. This reflects the steep fall in output, particularly in the state-owned 
sector, which until recently was the main source of revenue. Furthermore, because of 
weak tax administration, the new systems are not being effectively implemented; in 
particular, the expanding private sector generates less revenue than it should, because of 
widespread tax evasion. This heightens the risk of fiscal crisis. 
On the expenditure side, all countries have difficulties in restructuring the social protection 
system. Although basic social insurance legislation is in place, social benefits still have to 
be targeted more narrowly on needy groups. The Phare countries have, at best, made 
limited progress in streamlining their generous social security systems. Reforms in the 
areas of social assistance/social work and the development of occupational/private 
insurance schemes are still outstanding. Other aspects of social sector reform, notably 
improving education and health services, will probably necessitate an increase in public 
expenditures. The next priorities will be an active labour market policy and the 
rehabilitation of infrastructure that is so necessary to improve the business environment. 
5.2 The Copenhagen Initiative - Phare Support for Infrastructure Development 
The Phare 1993-97 Guidelines, while maintaining the emphasis on the role of Phare in 
supplying technical assistance for the transformation process, defined the possibility for 
an increased use of Phare funds for investment purposes. The Guidelines identified the 
following sectors as the most relevant: environmental improvements, energy savings, 
regional, reconversion, job creation, SME development, research, education, health, 
housing and infrastructure. 
The most important initiative in 1993 in this respect was that the European Council at it 
meeting in Copenhagen in June 1993 decided that as from 1993 up to 15% of the total 
Phare budget could be made available in support of the implementation of infrastructure 
investments, notably in the areas of energy, telecommunications and transport. 
Through the Copenhagen Co-financing scheme financial support will be provided for a 
limited number of major infrastructure investments. The main criteria for eligibility are 
that (i) the intervention is" linked with progress in restructuring or reorganising the sector in 
question; (ii) the project is bankable according to normal criteria applied by international 
financing institutions (IFIs); (iii) the project is cofinanced with one or several of the IFIs 
Lie 
and the Government; (iv) that the Phare contribution is a necessary part of the 
Government contribution and advance the date of project finalisation or make the project 
feasible at all; (v) Phare will not replace private financing and (vi) the project is of 
Community interest. 
The Copenhagen Co-financing scheme was used in 1993 in support of the upgrading and 
integration into the European network of the E-20 railway line in Poland between the 
German border and Warsaw. Phare through the 1993 National Programme for Poland 
financed 30 MECU out of total investment costs of approximately 450 MECU. It is 
envisaged that approximately 100 MECU will be used for co-financing of transport and 
energy infrastructure investments in CEECs in 1994. 
In addition to the Copenhagen Co-financing scheme. Phare provided approximately 35 
MECU in 1993 for the elimination of border crossing bottlenecks in the region. These 
projects, concentrating on high impact, urgent interventions, supported the upgrading of 
basic infrastructure in the border crossing area, the establishment of and equipment for 
customs clearance and control facilities. By focusing on the main international corridors, 
coherence and complementarity with larger ongoing or planned infrastructure investments 
have been ensured The projects have generally been cofinanced with recipient countries 
and with Phare providing 50% of financing. 
5.3 Health 
Health care systems have been placed in a precarious position due to the difficult socio­
economic situation faced by the countries of Central and Eastern Europe. Reform of these 
systems is essential if they are to become viable and affordable in the context of a market 
economy while at the same time being socially acceptable. Health care restructuring is a 
key priority of Central and Eastern European governments. 
This need for restructuring has come at a time at which the countries in question find 
health standards in decline and the gap between East and West growing. Health care 
systems are deteriorating with unsuitable infrastructure, shortages of medicines and 
inadequate staff. The financial situation in the health care sector is critical with seriously 
shrinking resources and badly targeted and uncontrolled spending. 
Priority areas are: (i) reform of planning and management, (ii) decentralisation of health 
care, (iii) the development of community health care (family practitioners, etc.), (iv) the 
introduction of ways of keeping access to health care as open as possible, (v) 
improvement of the qualifications of hearth care staff and (vi) the development of 
preventive medicine and action to tackle the causes of disease. 
Phare's first activities in the health sector sought to ensure that various basic health 
services continued to be available, while at the same time supporting the first steps in 
institutional reform and the definition of new health care policies. The health care systems 
at greatest risk were therefore supplied with consumables. However, this type of 
assistance, similar to humanitarian aid, was limited to the early phases of reform. 
By encouraging CEECs to adopt a strategic approach to health care, Phare is now aiming 
to support reforms which will provide the foundations of systems which can develop in a 
new social and economic setting and take on board the concepts of cost/benefit and 
comparative advantage. Such strategies are becoming a part these countries' medium-
term health care policies. 
*? 
Priority areas for Phare support are (i) financing of health care expenditure (budgetary 
practices, cost control, personnel salaries, contribution systems), (ii) the reorganisation of 
health services (particularly the movement from a centralised hospital system to one 
focused on family medicine, ambulant care and privatisation); (iii) pharmaceutical 
policies (legislative framework, price policies, reorganisation of supply and distribution, 
including privatisation), (iv) training of personnel, (v) activities related to the promotion of 
preventative medicine. 
Phare is now operating in all of Central and Eastern Europe apart from Slovenia, either 
through sectoral programmes (Romania, Bulgaria, Poland, Albania and Hungary) or 
through a GTAF. (Lithuania, Latvia. Estonia, Czech Republics and Slovakia). Phare 
commitments by the end of 1993 were ECU 100 million (excluding humanitarian aid); for 
programmes lasting an average of three years. 
With a view to concentrating assistance resources in the health care sector, Phare has 
recently put together programming guidelines intended for aid coordinators, health 
ministries. Commission delegations, multilateral partners. Community Member States and 
technical assistance staff involved in drawing up Phare health care programmes. 
5.4 Public Administration Reform 
Whilst the pivotal objective of PHARE has been to contribute to the process of economic 
reform, structural adjustment and sustainable development through the provision of 
support focused on the four core areas defined in the 1993-97 guidelines, it has been 
necessary to broaden the range of sectors and issues implicated in the process of 
economic reform. Assistance for reform in the area of public administration has during 
1993 taken on a greater urgency and a higher profile than was previously the case in the 
first years of PHARE. 
The process of decentralisation, déconcentration and transformation of the state involves 
a complex range of interventions, and the reform of public administration has already 
been a feature of some sectoral programmes. Subsequently, the need has arisen to 
develop fully-fledged stand-alone assistance programmes in order to introduce reforms 
into the structures of central and local governments in a more concentrated form. Thus, 
PHARE support in the area of Public Administration has been directed at two levels: i) 
local and regional government ii) central government. In addition to the programmes 
already underway in the Czech Republic, Hungary, Poland and Slovakia support 
amounting to 7.2 MECU is being, provided through the respective GTAFs within the 
framework of the National Programmes in Bulgaria, Estonia, Latvia and Lithuania. A first 
phase of assistance has also been approved for Albania in the form of a package which 
combines support to both central and local government. As a necessary part of co­
ordinated support, all the above National Programmes work in conjunction with the 
Regional Programme SIGMA. 
A horizontal approach to public sector management and public administration reform is at 
the forefront of assistance towards institutional development and change, but it is a 
Sensitive sector susceptible to political whim, sometimes requiring unpopular decisions 
and with an impact on civil servants who are traditionally conservative by nature. 
Therefore in some instances, implementation has been delayed or slowed down by lack of 
political will and change of circumstance. Reform of the public administration should be 
viewed as a slow process requiring sustained support over the years as it tackles the core 
te 
issues of central government reform, public finance and budget, decentralisation of public 
services, reform of management systems, civil service reform and training. In addition, 
with the recently acquired powers and responsibilities of local authorities, a massive effort 
in terms of human resource development is required as new legislative frameworks 
emerge and local governments assume greater autonomy. 
In 1993, further to the EURO-GTAF of Hungary and SIERRA (Poland) four new 
programmes in support of the implementation of the Europe Agreements were initiated in 
Bulgaria, the Czech Republic, Romania and Slovakia. The underlying importance of 
support to public administration reform is further evidenced by the emergence of the 
Europe Agreements as the new legal and political framework for Community assistance. 
The ability of the central administrations to draw up policies, administer, approximate and 
implement legislation effectively and efficiently within agreed time frames will be 
essential. Therefore the strengthening of administrative capacities of the CEECs and the 
creation of satisfactory conditions of employment for the civil service during the 
forthcoming years will be crucial. 
During 1993 important initiatives were taken with the Council.of Europe in the realisation 
of two joint programmes totalling some 2 MECU: a programme in Albania covering legal 
system reform and assistance to local government reform and legal reform in Estonia, 
Latvia and Lithuania within the framework of the Council of Europe's LODE and THEMIS 
programmes. Both of these programmes financed from multi-disciplinary funds are 
viewed as experimental models of co-operation with the Council of Europe incorporating 
the cost-effective pooling of resources to satisfy a common need in the CEECs in the area 
of local democracy. 
5.5 Cross Border Cooperation 
In recognition of the specific development problems normally faced by border regions and 
of the key role that cross border cooperation initiatives can play in the creation and 
development of networks between the CEECs and the member states of the EU, the 
European Parliament (EP) requested in the commentary to the 1993 budget that up to 15 
MECU of the Phare programme budget (B 7600) be set aside for CEEC/EU cross border 
cooperation and that at least 5 MECU be used for similar CEE/CEEC measures. The EP 
request was based on the positive results generated by the Community's structural funds 
initiative INTERREG which is aimed at cooperative development across national borders 
with the EU. 
Early in 1993, the Commission services (DG I in close cooperation with DG XVI) started a 
process of project identification, involving the receipt of initial project proposals from the 
Member States which were subsequently discussed with the CEECs in the Phare 
programming process. A number of these projects were selected in addition to those 
proposed by the CEECs, with the result that by the end of 1993 some 14 MECU was 
committed for projects of cross border cooperation between Albania, Bulgaria, the Czech 
Republic and Poland and their respective bordering EU member state and over 40 MECU 
committed for cross border initiatives between the CEECs. Both groups of projects 
involved primarily infrastructure (border crossing) and environmental projects. Most of the 
CEEC/EU initiatives linked up directly with projects included in INTERREG. An overview 
of the CEEC/EU projects is provided below. 
l*\ 
PROJECTS OF CROSSBORDER COOPERATION 
WITH MEMBER STATES FINANCED BY PHARE IN 1993 
COUNTRY I PROJECTS I AMOUNT 
(MECU) 
ALBANIA Border Crossing at Kakavia/Ktismata 0.5 
BULGARIA Environmental Study, Mesta (Nestos) River 0.7 
CZECH Border Crossing in Folmava and Bavaria 1.5 
REPUBLIC 
Northern Bohemia - Saxony Regional 1.722 
Programme. Includes the following cross border 
impact activities: 
- Cargo Railway Crossing at Vejprty 
- Border Crossing at Mnisek 
- Border Crossing at Moldava 
- Ferry Connection Reiharsdorf/Schona-Hrensko 
- Border Crossing at C. Potok-Johstadt 
- New tourist track Loucna-Oberwiesenthal 
- Joint sewage system for village Cesky Jiretin 
- Waste water purification plant Moldava 
- Disposal of waste water Petrovice-Bahratal 
- Waste water purification Véjprty-Barenstein 
- Border tourist path Brandov-Olbernhan 
- Landscape protection tn area Cinovec-
Petrovice 
POLAND Border crossing (bridge) in Qlzyne/Forst 6.8 
Border crossing at Kalboskowo, Route E28 Z8 
TOTAL 14.0226 
PHARE 
Funding | 
In the process of identifying and launching the cross border initiatives, a number of policy 
and implementation issues were raised.' The CEECs were initially reluctant to take up 
proposals for projects in border regions with Member States, as these regions were 
already in a better economic and social position relative to other border areas of their 
countries, which in their view, needed more support. 
Although in several instances and within the context of INTERREG I, there were contacts 
at local and regional level between a Member State and a CEEC, there was little evidence 
of such contacts being reflected within the plans and objectives of central government 
departments dealing with Phare. The cross border exercise should assist in improving the 
communication channels between regions and the centre within the CEECs in regard- to 
Phare programming. 
This amount is only what PHARE programme contributes to investment that may be of larger 
value. It does not include contributions from the side of the Community member states. 
3o 
Although the implementation procedures of Phare and Interreg are different, the 
experience gained in 1993 showed that with close coordination and cooperation cross 
border initiatives can be successfully programmed and implemented both between the 
CEECs and the EU Member States and between the CEECs. The "demand driven" 
approach of Phare was maintained and the overall exercise will be useful in developing 
experience for the programming and implementation of similar exercises involving twc 
community assistance programmes. 
5.6 Co-ordination with other donors 
Aid co-ordination has been a major preoccupation of the Commission since the beginning 
of the PHARE programme. It has over time strengthened its efforts to achieve 
complementarity of aid through closer co-operation with the IFI's and bilateral donors at 
the various stages of the programming and project cycle. In addition, co-ordination 
contributes towards the sharing of experience among donors. The Commission's 
commitment to aid co-ordination was reconfirmed in the PHARE guidelines 1993-1997 in 
which it is underlined that "aid-co-ordination including co-financing with the G-24 countries 
and the multilateral agencies will continue to be a major consideration for the 
Commission". In addition, the guidelines stress the importance of the "synergies with 
major sources of finance such as EIB, EBRD and the World Bank". Although there is a 
great variety in the nature of co-ordination, it is evident in all sectors, and indeed, for most 
programmes. Though the key partners are the World Bank, EBRD the EIB and Member 
States, a number of other bilateral bodies have been involved. 
*' Co-ordination takes place in a variety of ways as indicated below: 
The Commission continues to liaise closely through a regular exchange of information, 
working meetings and joint in-country.missions with the IFI's such as the IMF, World 
Bank, EBRD and of course directly with the EIB. This is aimed at ensuring consistency of 
• views and objectives on macroeconomic policy and sector strategies, as well as a better 
division of labour in providing assistance. For example the IMF is the main source of the 
initial advice to central banks on policy and the regulatory and supervisory framework. 
PHARE support is then provided in close co-ordination with the Fund for the subsequent 
technical assistance, training and infrastructure, such as computer systems, needed to 
develop the institution. Such operations have been undertaken in all CEECs. Similar co­
operation with the IMF is ongoing in the area of fiscal reform. 
Where reform strategies do not exist, the Commission has been instrumental in assisting 
' ;the national authorities in developing appropriate sectoral policies and strategies which 
are often followed by financial operations. For instance, in Romania a medium term 
agricultural strategy has been developed with the assistance from the PHARE 
programme, World Bank and the EBRD in addition to several bilateral donors. It will form 
the basis for future financial support. Similar support has been provided for strategy 
formulation in the agricultural sector in Bulgaria and Poland. In the Romanian banking 
sector a co-ordinated approach involving a 60 MECU EBRD loan through a local bank 
combined with PHARE technical assistance was developed. In Albania an operation of 
this type was carried out for the health sector. In Poland a major programme to 
recapitalise banks with substantial bad loan portfolios is being cofinanced with the World 
Bank, EBRD and UK, French and US AID, involving a total donor contribution in excess of 
500 MECU. A similar programme is under discussion in Hungary. 
>l 
PHARE technical assistance for feasibility studies and technical assistance provides 
opportunities for subsequent loans and investment operations by the EIB and EBRD. The 
33 MECU made available in 1992-93 under the Bangkok facility led to an estimated 434 
MECU EBRD participation in investment projects ranging from transport, water and waste 
treatment and energy to capital participation in enterprises. Similarly, studies financed for 
the EIB resulted in several major loans to a total of some 635 MECU being signed and 
others being considered in various fields including air transport, telecom and energy. 
Under the G-24 mechanisms regular meetings are held at the level of senior officials and 
sectoral working groups to ensure coherence of policy and objectives, as well as to 
discuss possibilities of common action in specific sectors. Phare technical assistance has 
been provided to set up aid co-ordination units in all CEE countries to co-ordinate G-24 
assistance at the national level. At the sector level, the management and financing 
mechanisms put in place for PHARE sector programmes also provide a framework for G-
24 aid initiatives. Examples are the four major environment programmes in Poland, 
Hungary and the Czech and Slovak Republics that co-ordinate bilateral assistance 
ranging from policy development to specific projects. Similarly, in Hungary the SME 
programme management provides support to bilateral operations, and thus twelve G-24 
donors, including Austria, Finland, USA and Turkey, have cofinanced projects under this 
scheme. Under the auspices of the privatisation programme in Slovakia, UNIDO, 
PHARE, French and German bilateral aid are co-operating in creating a subcontracting 
advisory service for local enterprises. 
Other aid co-ordination initiatives include the co-ordination of sector policies and 
assistance strategies in the context of the discussion on the Orientations Papers. Finally, 
PHARE is contributing to improved donor co-ordination through its support for public 
investment planning in Lithuania. Similar assistance is foreseen for Latvia and Estonia. 
5.7 Direction of PHARE 
The process of economic transformation falls into two stages. The first includes short-term 
stabilisation through macroeconomic measures (interest rates, credit control, reduction of 
budget deficit...) combined with liberalisation of trade, prices and current account 
convertibility. In addition the legal, regulatory and institutional framework required for a 
market economy needs to be established, together with the formulation and starting up of 
reforms in key sectors (privatisation, banking, labour market, private sector 
development...). These are essential prerequisites for economic restructuring. 
The focus on PHARE assistance up to 1992 has reflected the requirements of this first 
stage of the reforms. The concentration was on traditional technical assistance, such as 
the studies, training and expertise needed for policy formulation, legislation,, institution 
building and for initiating reform programmes. Other forms of support were provided, but 
up to 1992 these were largely limited to investment schemes for specific purposes, such 
as credit for SME's or small farmers, or the supply of essential goods to countries facing 
particular difficulties. 
The second stage of reforms is more complex. It concerns the fundamental long term 
restructuring of the national economy and increasing the share of the private sector. This 
involves, inter alia, a substantial shift to private ownership, reorganisation of remaining 
state enterprises, modernising banking and financial systems or measures to mobilise 
investment and upgrading infrastructure. The dismantling of barriers to setting up and 
developing private firms is equally important. A major restructuring of the education and 
training system is required, including large scale programmes for professional and 
vocational training. Finally, a thorough reform of public administration and the 
establishment of the basic institutions of a civic society are necessary. 
r-2. 
The first phase of transformation is well under way and certain PHARE beneficiary 
countries are now beyond the initial stages of reform. They are entering the second stage 
of reform characterised by a diminishing need for classical technical assistance and an 
increasing requirement for large scale private and public investments with an important 
multiplier effect. Public investment will, however, due to limited mobilisation of domestic 
saving and the budgetary restrictions necessary to maintain internal macroeconomic 
equilibrium, have to be financed by a combination of loans provided by IFI's, budgetary 
means and external grants. 
The Europe Agreement provides the framework for preparing the associated countries for 
future membership of the EU. This was confirmed by the European Summit of 
Copenhagen. There will therefore be a need for structural assistance to help to adapt the 
economic, social and physical structures of the CEEC to the requirements of integration. 
Examples are the improvement of physical links between the EU and the CEEC (as well 
as between the CEEC themselves) in fields such as transport, telecommunications or 
energy and support for regional development in areas facing difficulties due to the 
reforms. Finally, greater attention could be paid to 'sensitive' sectors such as steel, with 
the aim of removing potential conflicts through better mutual cooperation. A number of 
operations along the above lines are underway, but these will need to be developed 
further within a medium term programming framework. 
PHARE has already» or, is in the process of, providing investment support within the limits 
of the existing guidelines. This support is extended to the private sector in situations of 
market failure where neither local financial institutions nor external sources can provide 
the necessary resources. The lending efforts of the EIB and EBRD are supported as are 
those of appropriate domestic financial intermediaries. In the public, sector, PHARE 
•support has been effective in developing and improving the efficiency of national financial 
instruments. In addition, PHARE has financed urgent infrastructure on a limited scale and 
infrastructure programmes with a demonstration effect. Finally, PHARE is co-financing 
infrastructure with IFI's in accordance with the eligibility criteria and within the financial 
ceilings decided by the European Summit of Copenhagen (see 5.2). 
These various avenues of investment support are not sufficient if PHARE is to respond to 
the needs of the CEECs in a significant way and is to continue to have the impact sought 
by member states. There is, therefore, a need to increase the existing possibilities for 
investment support in addition to further developing the investment operations already 
underway. 
A multiannual assistance programme with the twin aims of helping to accelerate the 
transformation process through support for strategic investment (together with the major 
lenders of capital, the EIB, EBRD and IBRD and the private sector) and to continue 
support for structural reform carried out within the context of the implementation of the 
Europe Agreements would be an effective means to support and sustain the process, 
leading to accession. Such a programme could serve to reduce the costs of membership 
of the CEECs in the European Union. 
12) 
PHARE PROGRAMME 
SYNTHESIS OF NATIONAL PROGRAMMES 1993 
NATIONAL PROGRAMMES 801.0 
l ALBANIA | €5.0 
AL9301 Balance payments grant 35.0 
AL9302 Tcmpus 2JS 
AL9303 • " Health .6.0 
AL9305 Private sector development ; 7.0 
AL9306 Environment 3.3 
AL9307 Public administration reform 1.2 
AL9308 {Agriculture (ARISE) | 1Q~Ô~ 
[BULGARIA I 90.0 
BG9202 Nudear safety reconst. BG9107 4.8 
BG9301 Health 10.5 
BG9302 Tempus . 15.0 
BG9303 Private sector 6.0 
BG930S Transform, of customs 8.0 
BG9306 Financial sector 5.0 
BG9307 Energy 8.4 
BG9308 Transport . 3.5 
BG9309 Telecommunications 2.0 
BG9310 Environment 7.0 
BG9311 Nuclear safety 3.8 
BG9312 GTAF Social & labour market 2.0 
BG9313 GTAF Social dialogue , 2.0 
BG9314 GTAF Education 1.0 
BG931S GTAF Manag. training ' 1.5 
BG9316 GTAFImptenxEuropeagr 2.0 
BG9317 GTAF Public admn. reform ; .3.0 
BG9318 GTAF Statistics 3.0 
BG9319 JGTAFAkl co-ordination , \ 1.5 
(CZECH REPUBLIC j 60.0 
CZ9301 Tempos 8.0 
CZ9302 Private sector develop. 27.0 
CZ9303 Infrastructure 9.0 
CZ9304 • GTAF 1» 8J) 
CZ9305 } Human resources \ 8.0 
[ESTONIA | 12.0 
ES9301 Tempus 1.5 
ES9302 JGTAF \ 10.5 
[HUNGARY I 100.0 
HU9208 Tedw. assist ; 1.0 
HU9301 Tempus ' 16.0 
HU9302, . . Health '_ 10.0 
H09303 Private se^rdévAétop^' ' 'r" w^^ •"•••-yix) 
HU9304 Agriculture 30.5 
HU930S .{Technological develop. 100 
HU9306 (Assistance co-ordination J 1.5 
lLATVIA I 18.CJ 
LE9301 Tempus 2.0 
LE9302 JGTAF | 160 
~~ LITHUANIA I 2G.QJ 
LI9301 Tcmpuc ? f)| 
LI9302 IGTAF j ~"22"î>1 
%• 
JPOLANO j 22S.0 
PL9301 Tempus 35.0 
PL9302 Upgrading statistical inf. 12.0 
PL9303 Quality control 5.0 
PL9304 Financial sector 10.0 
PL930S Customs 15.0 
PL9307 Safe society ; 10.0 
PL9308 • Transport ; 18.0 
PL9309 Transport infrastructure 30.0 
PL9310 Tourism 8.0 
PL9311 Foreign investment 10.0 
PL9312 Rural and agricultural 30.0 
PL9313 Posts & Telecom. 7.0 
PL9314 Training & education rcf. 10.0 
PL931S • •' Enterprise restructuring ; 7.0 
PL9316 Flexible reserve TA. 16.0 
PL9317 Fiesta ll Commerce 1.0 
PL9318 (Fiesta 11 Securities | 1.0 
[ROMANIA I 13(TÔ~ 
RO9302 Tempus 18.0 
RO9303 Private sector develop. 70.0 
RO9304 Computer, customs 100 
RO930S GTAF 27.0 
RO9306 | Agriculture \ 5.0 
[SLOVAKIA | 40.0 
SR9301 Tempos 5.0 
SR9302 Private sector develop. 19.0 
SR9303 Infrastructure 5.0 
SR9304 Agriculture 3.0 
SR9305 GTAF 111 5.0 
SR9306 . JHuyman resources | 3.0 
~~ [SLOVENIA [ 11.0 
SL9301 Tempos 3.5 
SL9302 IGTAF | 7"!s 
jex-YUGOSLAVIA [ 2S.0 
MA9301 iFYROM-knportation | 25.0 5r^ 
PHARE BREAKDOWN OF 1993 COMMITMÉNTS;.BY SECTOR AND COUNTRY (silualion at 31.12.1993) 
SECTORS -C 
Private sector, fteiiructurtng, Prtvatlaatlon, SME'» "*. 
financial sector v 
Administration and Publie Institutions :'. 
Agricultural reslruclurtng V 
Environment and Nucl»er Safety •' 
.•i 
Social develeomerl ind Employment 
Education, Training and Aeseareh 
Publie health i* 
Infraalruelur» l£n«'9y, Transport, Telecom.) 
Integrated ftaolonM Measures 
Humanitarian and cood Aid <• 
Oemoerallsailon 
Other (MultldlselpiMAry, OTAP, tie...) "j, 
Total v PR 
n 
AO 
AO 
EN 
SO 
ED 
SP 
IN 
Rt 
HA 
Ot 
AA AL 
7.0 
35.0 
1.2 
10.0 
3.3 
2.6 
6.0 
10.0 
76.0 10 
14.0 
5.0 
15.8 
14.5 
17.5 
13.9 
3.0 
6.5 
10.0 ts 
1.5 
10.6 
12.0 W • 
31.0 
30.5 
10.0 
26.0 
2.6 
100.0 It 
.2.0 
16.0 PL 
22.0 
20.0 
30.0 
45.0 
75.0 
33.0 
18.01 226.0 Ll 
2.5 
22.5 
25.0 
•A t 7«A| »«A| 1'A 10* 2'A ftO 
70.0 
5.0 
16.0 
10.0 
9.9 
27.0 
13».» 
22'AI 2'AI 1<*A C2 
27.0 
6.0 
6.0 
9.0 
6.0 
(0.6 SA 
19.0 
3.0 
3.0 
S.O 
5.0 
6.0 YU 
25.0 
40.01 25.0 JL 
35 
(') 
;.5 
11.6 M | OJ 
200 
to.o 
20 6 
u.o 
2?.5 
11Î.3 10.0 
9.9 
10.0 
40.6 
70.? (Mécus) 
TOTAL 
190.0 
70.0 
1.2 
78.5 
36.9 
45.5 
162.2 
6,0 
146.9 
3.0 
44.9 
10.0 
206.8 
1,603, t 
8'A| 4M | 2'A| l'A | It'AJ ?*A| 100*A j 19S 
7S 
OS 
OS' 
4S 
5s; 
16S' 
IS; 
15S, •' 
OHJ 
4H ; 
IS'-
21SJ 
100*"?. 
AL « ALBANIA \ 
uG » BULOAPIA .v 
ES » ESTONIA 
HU» HUN GARY 
LE «LATVIA 
Ll » LITHUANIA I 
HL • POLANC .••• 
no « rtOMANA :'. 
CS 'OX-CZECMOS'-CVAKIA 
CI * CZECH PSPi.'DL'C 
SA • SLOVAKS ;:. 
YU « ex-YUGC.)U' •"'• 'ffjeeot S'ÔV^I) j 
SL t SLOVEN'V 
GOft » «i.eor-
HP « Region*! Pre;-a-^es 
CP » Oiher Prcr»--** 
' •, Th.i /imou" -.11 •** • f'.ni^ccc 6ui (' i>« eack«o« c( N.vona^proflrimme». 1Ô93: BY SECTOR 1993: BY COUNTRY 
OP AL * 
Table 3 
It, 
PHARE PROGRAMME 
SYNTHESIS OF REGIONAL PROGRAMMES 1993 
REGIONAL PROGRAMMES } 112.3\ 
ZZ930S Tempus technical assist. 5.5 
ZZ9306 Tempus regional projects ; 10.3 
77Q3f)fl Regional energy sector 5.0 
ZZ9311 Joint venture JOPP 27.5 
ZZ9312 Customs 10.0 
ZZ9313 Transport extension 92 4.0 
ZZ9314 Transport 20.0 
ZZ9316 Drug extension 10.0 
ZZ9317 | Nuclear safety } 20.0 
PHARE PRâfî8A;Miyi£: /-. .? i&V&^f** 
• iliîi^lfrtîffrrifnTtfiiii Table 4 
GENERAL OVERVIEW OF BUDGETS SINCE 1990 
(budget line B7-6000 - situation at 31.12.1993 - in Mecu) 
Budget 
Year 
1990 
1991 
1992 
1993 
Total Appro 
{ Initial 
r. Budget 
•• 300.0 
759.9 
• 1,000.0 
1,040.0 
i 3,099.9 priations for commitments 
Final 
Budget 
500.0 
775.0 
1,015.5 
1,005.7 
3,296.2 Commitments 
(1) 
500.0 
775.0 
1,014.3 
1,003.9 
3,293.2 Appropriations for payments 
Initial 
Budget 
300.0 
291.9 
537.0 
447.7 
1,576.6 Final 
Budget 
350.0 
307.0 
437.0 
521.1 
1,615.1 Payments 
171.0 
283.9 
436.2 
521.1 
1,412.2 
(1) After decommitment of unused amounts. 
GENERAL OVERVIEW OF;CONTRACTS • 1990-1993 
silualion at 31.12.1993 • inlMecu) 
;Contrsct$ concluded by the Commission headquarters and by the recipient countries) Table 5 
Year 
1 
1990 
1991 
1992 
1993 
Total Corrimltmentâ 
2 
k- 600.0 
775.0 
1,014.3 
1,003.9 
3,293.2 Contracts concluded in 
1990 
3 
154.7 
0.0 
0,0 
0.0 
154.7 1991 
4 
99.6 
197.6 
0.0 
0.0 
297.1 1992 
5 
103.6 
179.8 
258.8 
0.0 
542.2 1993 
6 
27.8 
115.3 
186.0 
243.0 
572.1 Total 
7 = 3 to 6 
385.6 
492.7 
444.8 
243.0 
1,566.1 •% 
8 = 7/2 
77.1% 
63.6% 
43.9% 
24.2% 
47.6% d? 
GENERAL/OVERVIEW OF PAYMENTS .1990-1993 
(situation at 31.12.1993 • in Mecu) 
(Payments on Commission headquarters contracts + advance payments to recipients) 'able 6 
Year 
1 
1990 
1991 
1992 
1993 
Total 1 Commitments 
: 2 
\ 500.0 
775.0 
1,014.3 
. i 1,003.0 
I 3,203.2 Paid on budget year 
1990 
3 
1.71.0 
0.0 
0.0 
0.0 
171,0 1991 
4 
131.9 
152.0 
0.0 
0.0 
283.9 1992 
5 
51.1 
169.4 
215.7 
0.0 
436.2 1993 
6 
68.6 
148.0 
161.5 
143.0 
521.1 Total 
7 «• 3 to 6 
422.6 
469.4 
377.2 
143.0 
1,412.2 % 
8 = 7/2 
84.5% 
60.6% 
37.2% 
14.2% 
42.9% 2 
PHARE Programme, 
AMOUNT OF OPERATIONS CONCLUDED BY YEAR -1990-1993 
(situation at 31.12.1993 • in Mecu) 'able 7 
Operations 
Commlttdd 
Contracted (1) 
Paid ; (2) 1990 
500.0 
154.7 
171.0 1991 
775.0 
297.1 
283.9 1992 
1,014.3 
542.2 
436.2 1993 
1.003.9 
572.1 
521.1 Total 
3,293.2 
1,566.1 
1,412.2 
(1) Contracts concluded by the Commission headquarters and by the recipient countries. 
(2) Paymenis on Commission headquarters contracts and advance payments to recipients. 
1,200.0 -^ 
1.000.0 
800.0 4 
0.0 4 — •- • 
• « Committed 
i 
i • • •• Contracted 
i 
' • Paid 
1990 1991 1992 1993 
BREAKDOWN OF COMMITMENTS, CONTRACTS AND PAYMENTS BY COUNTRY - 1990-1993 
(situation at 31.12.1993 - in Mecu) Fable 
1 
Country '; 
Albania »\ 
Bulgaria 
Estonia •'. 
Hungary 
Latvia .• 
Lithuania 
Poland 
Romania 
ex-Czechoslovakia : 
C2ech Republic 
Slovakia 
ex-Yugoslavia (except Slovenia) 
Slovenia 
ex-GDR 
(Rooional Programmes) 
(Other Programmes) 
Total •2 
Commitments 
195.0 
308.5 
22.0 
405.8 
33.0 
45.0 
802.8 
441.7 
233.0 
60.0 
40.0 
123.9 
20.0 
35.0 
389.1 
138.3 
3,293,2 3(1) 
Contracts . 
149.5 
139.6 
8.6 
149.0 
11.2 
14.9 
270.5 
225.0 
• 102.9 
8.0 
5.0 
121.4 
11.9 
22.9 
210.0 
115.8 
1,566.1 4 = 3/2 
% 
76.7% 
45.3% 
38.7% 
36.7% 
34.1% 
33.0% 
33.7% 
50.9% 
44.2% 
13.3% 
12.5% 
97.9% 
59.7% 
65.4% 
54.0% 
83.7% 
47.6% 5(2) 
Payments 
136.3 
124.2 
5.3 
196.3 
7.3 
8.0 
277.6 
198.8 
111.0 
6.4 
3.5 
83.0 
8.4 
25.9 
163.8 
56.4 
1,412.2 6 e 5/2 
% 
69.9% 
40.3% 
24.1% 
48.4% 
22.1% 
17.7% 
34.6% 
45.0% 
47.6% 
10.6% 
8.7% 
67.0% 
42.0% 
74.0% 
42.1% 
40.8% 
42.9% 
.'»; Corrects concluded by the Commission headquarters end by the recipient Countries. 
'?; Payments on Commission headquarters contracts êndêdvance payments to recipients. oQ 
BREAKDOWN OF COMMITMENTS, CONTRACTS AND PAYMENTS BY SECTOR -1990-1993 
(situation at 31.12.1993 • in Mecu) Table 9 
1-
Sectors 
Private sector, Restructuring, Privatisation, SME's 
Financial sector 
Agricultural restructuring 
Environment and Nuclear Safety 
Sochi development and Employment 
Education, Training &r\d Research 
Infrastructure (Energy, Transport, Telecom.) 
Administration and Public Institutions 
Integrated Regional Measures 
Humanitarian and Food Aid 
Public health 
Démocratisation 
Other (Multidisciplinary, GTAF, etc...) 
fmm^^ÊÊ^^^ÊKÊKÊSMKÊBKKtm 2 
Commitments 
594.5 
161.7. 
383.5 
312.4 
220.7 
446.4 
307.6 
40.2 
20.8 
385.6 
6.0 
10.0 
403.8 3(1) 
Contracts 
198.1 
89.3 
179.5 
79.4 
26.7 
• 374.9 
73.5 
20.7 
12.9 
339.6 
0 
0 
171.6 4=3/2 
% 
33.3% 
55.2% 
46.8% 
25.4% 
12.1% 
• 84.0% 
23.9% 
51.5% 
62.0% 
88.1% 
0.0% 
0.0% 
42.5% 5(2) 
Payments 
200.4 
98.3 
191.8 
95.7 
34.3 
323.1 
65.9 
9.7 
4.4 
286.1 
0 
0 
102.7 
:'B^W?/y.%y(rt'£® 6-5/2 
•/• 
33.7% 
60.8% 
50.0% 
30.6% 
15.5% 
72.4% 
21.4% 
24.1% 
21.2% 
74.2% 
• •. " • 0.0% 
0.0% 
25.4% 
I^M^MMWM 0Q 
(Vi Contracts concluded by the Commission headquarters and by the recipient countries. 
(2} Payments on Commission heedquarters contracts and advance payments to recipients. 
Table 10 
PHARE COMMITMENTS FROM 1990 T0.1993 (situation at 31.12.1993). 
SECTORS ;•. 
PrMt» aeeior, ftejtruelurlng, Prlvaiiwiion, SMÊ'i • 
Financial aictor j 
Agricultural reairueiurlno. 
Environment and Nuclear Safety "; 
Social development »nd Employment 
Education, Training <nd fteie/ireh 
infraalrueturt (Energy, T/iniport, Telecom.) 
Admlnlatratlon and Public Inniiuilei» 
inteejrated AaglonM Maaiure» , > 
Humanitarian and rood Aid ;' 
Publie Malin 
OemoeraUaailon 
Omar (Multldiieio.'inaf/, OTA*, ate...) ';. 
Total AL 
7,000 
70.000 
25.000 
3.300 
0 
3.700 
' 4,400 
uoo 
0 
70.600 
6.000 
Ô 
4,400 
111,006 SO 
56,500 
15,000 
51.000 
37,600 
17,000 
30.500 
51,400 
3,000 
0 
40.000 
0 
• 0 
6.500 
261,100 fl 
0 
0 
0 
0 
0 
2.500 
0 
0 
0 
0 
0 
0 
10,600 
22,000 MU 
113,500 
16,000 
68.500 
47,000 
26.500 
66.500 
11,300 
13.000 
10.000 
0 
0 
0 
6,600 
401,100 u 
0 
0 
0 
0 
0 
3.500 
0 
0 
0 
0 
Ô 
0 
26,500 
12,000 PL 
136.000 
42,700 
165.000 
75,000 
117.200 
104.300 
117.450 
6,500 
0 
0 
0 
0 
33.660 
102,100 Ll 
6.500 
0 
0 
0 
0 
4.000 
0 
' 0 
0 
0 
ô 
6 
61,500 
41,600 
•A 1 11*1 11* 1 t'A 12U| 1'A| 24V* | 1H ftO 
110.000 
5:000 
• 71,000 
5,000 
15.000 
41.000 
19.000 
0 
0 
106.720 
0 
0 
66,000 
441,726 
131* 06ft 
0 
0 
0 
10,000 
0 
1.000 
0 
0 
0 
0 
0 
0 
14.000 
31,606 es 
60.000 
0 
0 
35.000 
19,000 
38,000 
21.000 
0 
0 
0 
0 
0 
30,000 
2)2.000 M 
27.000 
0 
0 
0 
6,000 
6.000 
9.0CO 
0 
0 
0 
0 
0 
6.000 
10.000 J» 
19.000 
0 
3.000 
0 
3C00 
S.000 
S.ÎCO 
0 
0 
0 
0 
0 
J.COO fj 
0 
0 
0 
0 
0 
6.OC0 
0 
0 
0 
Mr.900 
0 
0 
0 
40,0001 m.too K 
0 
0 
0 
0 
0 
S.600 
0 
0 
0 
0 
0 
0 
U.20Ô 
10,000 HP 
23.000 
0 
0 
66.500 
13.000 
94.X2 
$9.000 
9.*95 
10.800 
51.000 
0 
0 
29.000 
in(n« tKècus) 
OP | 10ÎAL 
0 
10.000 
0 524.500 
141.700 
3S3 5ÔO 
0| 312 400 
0 
10.292 
0 
i.000 
0 
0 
0 
10.000 
103.64 S 
ni.})) 220.700 
44^.434 
307.550 
40.196 
20.600 
365.620 
6.000 
10.000 
403.766 
),2)),1ll. 
11*| 71* j *'A| 11*| i'A| IM| 12K| 4Vl| IOOH| 
AL «ALBANIA 
60 •BULGARIA 
ES • ESTONIA 
HU» HUNGARY 
LE t LATVIA 
11 t LITHUANIA 
Pi • POlANO 
r«0 • ROMANIA 
CS « «I.CZECWOJI.OV'.\KIA 
11 ««ECHAEPunuC 
Sn • SLOVAKIA 
ru « ea.YUGOSlAViA (except S'ovtNa) 
Si » SLOVENIA 
COR * Oa-GOR 
ftp « rUgionaiProj.-ann*» 
OP « Oin«( Prôçjrnr.ttjj OP AL 
Table 11 
PHARE CONTRACTS FROM 1990 TO 1993 (1) (situation at 31.12.1993) 
.: _ .. _ t ... 
SECTORS 
Private aecior, P.esi-jeiu.'lng, PrfvMlsmlon, SVE-» 
financial «ector 
Agricultural resiruciurlno. ; 
Environment ar.d Nuclear Safely 
Social development and Employment 
Education, Tralrlng »nd fteeeareh 
Infraalruetura (£ner;y, Trinipon, Telecom.) 
Admlnlalratlon *nd "ublle Injtliutioni 
inlegratad Regional Meaiuraa ,i 
Humanliarl«n «rd Peod Aid 
Public he*n>> 
Oemocratlsmlor. ;: 
Other (MuiHiiacMi!-»rY, OT/f, >•( ..| 
Tolal ; AL , 
0 
70.000 
8.256 
0 
0 
3,700 
4.031 
0 
6 
59.406 
0 
6 
3.697 
141,412 80 
12,774 
1,741 
30,775 
9.415 
1,609 
26,000 
27,647 
0 
0 
27.363 
0 
. 0 
0 
131,127 Î4 
0 
0 
0. 
0 
0 
2.500 
0 
0 
0 
0 
0 
0 
6.011 
1,111 HU 
40,237. 
7,516 
17.548 
1.740 
9.867 
65,654 
7.212 
6.962 
2,092 
0 
0 
0 
0 
141,021 LC '-
0 
0 
. 0 
0 
0 
3,500 
0 
0 
0 
0 
0 
0 
7,737 
11,237 PL 
61,649 
6.523 
67.374 
21,625 
7.661 
76,666 
6,712 
0 
0 
0 
0 
0 
0 
270,131 Ll 
3,640 
0 
0 
0 
0 
4.000 
' 0 
0 
0 
0 
0 
0 
7.023 
14,113 
'•• • 
'A •; I 101* | VA 11*1 101*1 11* 171*1 11* AO 
19.955 
3.486 
35.520 
0 
125 
41.000 
8.376 
0 
0 
66.344 
0 
0 
30.(85 
224,661 
14% OOft 
0 
• 0 
0 
11,300 
0 
6.700 
0 
0 
0 
0 
0 
0 
4,690 
12,166 CS 
36.604 
0 
0 
21.605 
4.147 
29,066 
7,619 
0 
0 
0 
0 
0 
3,619 
162,111 Ci 
0 
0 
0 
0 
c 
6,000 
0 
0 
0 
0 
0 
0 
0 
1,000 JA 
0 
0 
0 
0 
0 
i.000 
Û 
0 
0 
0 
0 
0 
0 
1.000 rv 
0 
0 
0 
0 
c 
Î.000 
0 
0 
0 
I1S3S* 
0 
0 
0 
uuw SL 
0 
0 
0 
0 
.0 
î.eoo 
0 
0 
0 
0 
0 
0 
6.140 
11,140 HP 
23.000 
0 
0 
13.455 
3.000 
66.766 
9.676 
8.749 
10.768 
S 1.000 
0 
0 
1.400 
209,919 OP 
0 
c 
0 
0 
0 
16.245 
C 
5,000 
0 
0 
0 
0 
100,552 
111,137 (KÔCUS) -
tOtAL • 
195.059 
69.255 
179.473 
79 44*^ 
26.723 
374,232 
73.476 
20,711 
12 630 
339 544 
0 
6 
171.624 
1,111,112 
1H | 71* 11*1 01*1 l'A| 1'A| 1)V.| 7'A| IOOHI 
AL » ALBANIA 
00 • BULGARIA 
ES • ESTONIA 
HU» HUN GARY 
IE «LATVIA 
ll «LITHUANIA 
Pi • POLAND 
RO «ROMANIA 
CS « Of.-CZECHOSlCVAKIA 
C2 «C2ECHRE--UC..IC 
Sfl. » SLOVAKIA 
YU • e«.YUGOSlAV:.\ (ocepi S'ovesa) 
SL «SLOVENIA 
GOR • «a-GOR 
HP * Regional Pitys-mei 
OP « Other Pr0Cf.':T.r»» 1 
li) CanuêC.i coc :>c?.i ù*i"t Co-- ss-f^tiCiu'-fi i-i 6y \h6 r'ttipitnl eounlrliS. 
Table 12 
PHARE PAYMENTS FROM 1ÔÔ0 TO-1993 (1) (situation at 31.12.1993) 
SECTORS 
Private aecior, Rejirueturlng, Prlvatliatlon, SME'a 
r • 
Financial aecior 
Agricultural restructuring \ 
Environment aid Nuclear Safety 
Social developmeni and Employment 
Education. Trailing and Aeieereh 
Infraetrveture (Energy, Trenapori, Telecom.) 
Administration and Public Initllutloni 
Integraiad Regional Measures ,< 
Humanitarian »nd food Aid i. 
Public health 
Oomoerailsailri 
Other (MuiiidU:ioi:'Mry, OTA', ete...l 
Total AL , 
0 
70.000 
9.366 
0 
0 
3,463 
1.067 
0 
0 
50,102 
0 
0 
2,267 
1)1,341 60 
12,062 
2.701 
31,404 
6.109 
466 
21.547 
20,359 
0 
0 
27,563 
0 
0 
0 
124,221 ts 
0 
0 
0 
0 
0 
2.500 
0 
0 
0 
0 
0 
0 
2.611 
1,311 HU 
48.595 
11.465 
27.892 
32.970 
9,196 
54,449 
6.876 
2.751 
1.607 
0 
0 
0 
600 
191.232 It 
0 
0 
0 
0 
d 
3.500 
0 
0 
0 
0 
0 
0 
3.790 
7,210 PL 
65.235 
11,566 
67.523 
20.697 
15,646 
65,043 
10.795 
640 
0 
0 
0 
0 
0 
277,117 Ll 
3.052 
0 
0 
0 
0 
3.755 
0 
0 
0 
0 
0 
o 
1.175 
7,912 
'A 1 10'A 11* O'A 141* | 11* 1 201* 11* ftO 
' 14.337 
2.463 
35,566 
0 
• 628 
36,656-
7,321 
0 
0 
60.370 
0 
0 
21,271 
191,131 
14'A OOft 
0 
0 
0 
• 14.600 
0 
927 
0 
0 
0 
0 
0 
0 
10.366 
21,195 es 
46.414 
0 
0 
14.654 
7.054 
28,792 
6,612 
0 
0 
0 
0 
0 
3.652 
110,119 a 
0 
0 
0 
0 
0 
6,368 
0 
0 
0 
0 
0 
0 
0 
!.)(! SA 
0 
0 
0 
0 
0 
3/6? 
0 
0 
0 
0 
0 
0 
0 
:.4t) ru | SL 
0 
0 
3 
0 
0 
6.000 
0 
0 
0 
77.006 
0 
0 
0 0 
0 
0 
0 
0 
5.619 
0 
0 
0 
0 
0 
0 
2.71» 
13,001 | 1.40? M 
8.639 
0 
0 
4.625 
900 
60.103 
10.999 
3.597 
2.757 
51.000 
0 
0 
I.^S 
113.141 OP 
0 
0 
0 
0 
0 
962 
0 
2.504 
0 
0 
0 
0 
32.925 
11,311 (Kécus) 
TOÎAL 
200.35* 
93.267 
191.753 
96.635 
34.291 
323.144 
65.928 
9.692 
4.364 
266.120 
C 
0 
102,671 
1,412,249 
21*| l'A| 0'A| O'A | IV. | l'A | . 1}'/. | 4'A| 1001* 
AL » AL8ANIA 
OG » flUlGAR-A 
ES «ESTONIA 
HU'HUNCAPY 
LÊ « LATVIA 
ll «LITHUANI\ 
I'L 1 POlANO 
RO « ROMANIA 
CS « CJ-CZECMOSIOVAKIA 
tl ' CZECH RSPuOllC 
SA » SLOVAKIA 
VU • e»<YUGOSLAVIA (eteeoi $iev<>.«../>) 
Si « SLOVENIA 
GOR « et-GOR 
RP « Regional f.'oç-amr.ei 
OP • Other Prove-mes A 
(il Ptyr.tni e- Cc-im/iio* teiciv.ir.m covn:: t'd tàyênet payments lo recipients. 
%G 
ANNEXE 
Professional Associations and Non-Profit Making Organisations 
Awarded PHARE Contracts 
PROJECT CONSULTANT 
1. Banking and Financial Sector ' x 
- Assistance to the Latvian Central Bank - European Association of Cooperative Banks 
- Assistance to the Latvian Savings Bank - European Association of Savings Banks 
- Capital Market Development - Czech Republic - Banque Nationale de Belgique 
- Banking Supervision Reform - Slovakia - Banque de France 
- Banking Trai nirtg - Chartered Institute of Bankers . 
- Insurance Training - Insurance Training Association 
- Development of EU linked compensation - ECU Banking Association 
2. Taxation and Accounting 
- Assistance for taxation reform in the CEECS - Danish, Irish, French, Belgian and Dutch 
Ministries of Finance (Tax Administrations) 
- Accounting training - Institute of Chartered Accountants 
3. Institutional Infrastructure 
- Customs Administration Reform - Eurodouanes (customs association of the 12 EU 
Member States) 
- Statistics Reform • - CESD, Unité Conseil d'Eurostat 
"Developmentand Harmonisation of Industrial >-. r CEN-ÇIîi^ELJÇC;..Comité JEuropéen de ^ ^ 
Standards and Quality Control Normalisation 
- Reorganisation of the Patent Offices - European Patent Office 
l*\ 
4. SME Promotion and Regional Development 
- Training and Reorganisation of Chambers of 
Commerce in the CEECs 
- Creation of BICs (Business and Innovation 
Centres) 
- Assistance to SME Associations in the CEECS 
- Assistance to Regional Agencies in Poland 
- Support to regional development in Slovakia 
- SME Development in Romania 
- Restructuring of the textile industry and SME 
development Lodz, Poland Eurochambers, European Association of 
Chambers of Commerce and Industry 
EBN, European Business and Innovation Centre 
Network 
UAPME, (Union of SME Associations): 
Centre de Rencontres et d'Initiatives pour le 
Développement Local (CRIDEL-DATAR, France) 
avec le Centre Européen de Recherche sur les 
Reconversions et les Mutations (CERRM, Longwy) 
• SPRI, Sociedad para la promotion y Reconversion 
Industrial, Bilbao 
• CNA Venelo, Confederazione Artiginale e délie 
Piccola Imprcse di Veneto, Italie 
- Novacité et Chambre de Commerce de Lyon 
5. Financial Instruments for SMEs 
- Creation of financial assistance schemes 
- Creation of a guarantee fund for SMEs in 
Poland 
- Creation of a Regional Investment Fund, 
Ostrava, Czech Republic 
- Creation of a Regional Investment Fund, 
Zilina, Slovakia - IAPME, Istituto de Apoio as Pequehas e medies 
Empresas e as Investimento, Portugal 
- CEPME, France, Crédit d'Equipment des PME 
- NEHEM-ING, Netherlands 
- 1BF Belgique (Institut Belge de Formation) with 
FRIULIA (Société régionale d'Investissement du 
Frioul) 
6. Public Administration and Training 
- Training of Public Enterprise Managers, 
Bulgaria 
- Industrial training attachment programme 
- Management training^ - "ChemicaTlridustry 
- SME Support 
- Public Administration Reform 
- Regional Cooperation in Higher Education - Université Bocconi, Milano with a consortium of 5 
Business Schools 
- Eurochambers (responsible for the selection of 
placing interims) 
- CËriC fëùropéarfConfédération ôfthé'CHeniicâr L 
Industry Federation) 
- European Senior Service (European Association of 
Retired Managers established specifically for TACIS 
and Phare) 
- OECD 
- OECD 
8S 
7. Health. Social Sector; Employment. 
Democracy 
- Healthcare support and training 
- Health and security in Romania 
- Development of Social Services - Romania 
^ Worker protection - Poland .-••.«• 
- Social and employment policy - Bulgaria 
- Democracy Programme 
- NGO Programme ECPC, European Consortium for Primary Healthcare 
Danish Working Environment Service 
King's Fund College (UK registered charity) 
Health and Safety Executive * 
ILO (International Labor Organisation) 
European Human Rights Foundation 
European Volunteer Centre 
8. Food Aid 
- 250 MECU Food Aid operation to ex-
USSR in 1991 
- Pesticide Distribution in Poland 
- Development and training of rural coopérative 
bank staff in Poland 
- Training of Cooperative field advisors in Poland - A number of non-profit organisations were 
responsible for the distribution e.g. Red Cross, 
Médecins Sans Frontières, Save the Children Fund 
- Foundation for the Development of Poland 
(Rockfeller Foundation) 
- EC Association of Cooperative Banks 
- The Plunkett Foundation, UK 
9. Environment. Energy. Infrastructure 
- Technical assistance to the Romanian Energy 
Conservation Agency 
- Development of an Energy Conservation 
strategy for Slovenia 
- Research Programme on Air and Health in 
Central and Eastern Europe 
- Strengthening the Role of Environmental NGOs 
and stimulating environmental awareness and 
education 
- Institutional Development of the Bulgarian 
Ministry of Transport 
- Institutional Development of Lithuanian 
Natrona! Roads Ad ministration'" " ' -'- "•'• '-•"• •""• 
- Training of Air Traffic Controllers in Central 
and Eastern Europe Agence pour les Déchets, l'Environnement et la 
Maîtrise de l'Energie, France 
Energy Technology Support Unit from the State 
Department of Environment (UK) 
The National Institute of Public Health (NL) and the 
London School of Hygiene and Tropical Medicine 
British Council 
Deutsche Gesellschaft fur Tcchnische Zusammen-
arbeil (GTZ) 
Danish National Roads Administration 
Eurocontrol 
ISSN 0254-1475 
COM(95) 13 final 
DOCUMENTS 
EN ll 
Catalog number : CB-CO-95-019-EN-C 
ISBN 92-77-85100-7 
Office for Official Publications of the European Communities 
L-2985 Luxembourg