Phare 
Phare 1994 
Annual Report 
from the European Commission 
Brussels 20.7.1995 Com (95) 366 final 
What is Phare? 
The Phare Programme is a European Community initiative 
which supports the development of a larger democratic 
family of nations within a prosperous and stable Europe. 
Its aim is to help the countries of central and eastern 
Europe repin the mainstream ot huropei 
through future membership of the European 
Phare does this by providing grant finance to support its 
partner countries through the process of economic trans­
formation and strengthening of democracy to the stage 
where thev are reach' to assume the obligations of 
In its first five years of operation to 1994. Phare has made 
available ECU 4.24N.5 million to 1 1 partner countries, 
making Phare the largest assistance programme of its 
kind. The main priorities for Phare funding are common to all 
countries, although every one is at a different stage of 
transformation. The kev areas include restructurine of 
state enterprises including agriculture, private sector 
development, reform of institutions, legislation and public 
administration, reform of social services, employment 
education and health, development of energy, transpoi 
and nuclear safety. 
For countries which have signed Europe Agreements. 
Phare funding is also focused on meeting the conditions 
or membership or the 
European Union's internal market and development of 
infrastructure, especially in border regions. 
Phare works in close cooperation with its partner countries 
to decide how funds are to be spent, within a framework 
agreed with the European Community. This ensures that 
Phare funding is relevant to each eovernment's own 
retorm policies and priorities 
know-how from a wide ranee of non­
commercial, public and private organisations to its partner 
countries. It acts as a multiplier by stimulating investment 
and responding to needs that cannot be met by others. 
Phare acts as a powerful catalyst by unlocking funds foi-
important projects from other donors through studies, 
capital grants, guarantee schemes and credit lines. It also 
invests direct]} in infrastructure, which will account for 
more Phare funds as the integration process progresses. 
Contents 
Commissioners' statement 2 
Phare 1994 financial overview 3 
1994 - a turning point for Phare 6 
Political developments in 1994 6 
Supporting a process of change 8 
Consolidation and integration - a new role for Phare 10 
Management of the Phare Programme 14 
Albania 17 
Bulgaria 18 
The Czech Republic 19 
Estonia 21 
Hungary 22 
Latvia 23 
Lithuania 24 
Poland 25 
Romania 27 
Slovakia 28 
Slovenia 29 
Phare funding by country 30 
Phare funding by sector 38 
Phare financial performance 44 
Major projects launched in 1994 47 
Multi-country programmes operational in 1994 50 
Commissioners' statement 
The Phare Programme was set up as a response of the 
European Union to the challenges that the countries of 
central and eastern Europe faced breaking free from totali­
tarianism and 40 years of central economic planning. 
At the time, no one could foresee exactly what this would 
involve and how quickly each country would progress. 
Consequently, the Phare Programme was structured to 
work within the political and economic policies of the 
governments of the countries concerned, responding to 
their own requirements. In this respect, Phare is unique 
among the initiatives launched by the global community 
to support the changes taking place in central and eastern 
Europe. 
In the early years of Phare, when the framework for politi­
cal cooperation was still unclear, the focus was on the 
immediate and obvious objectives of economic transfor­
mation. However, now that this process is underway, and 
in some instances almost nearing completion, the question 
of Phare's role in the wider political framework becomes 
more important. In this respect, 1994 was a highly signifi­
cant year, culminating in the adoption by the European 
Council at Essen of a strategy for accession of the central 
and eastern European countries to the European Union. 
The Phare Programme is one of the cornerstones of the 
accession strategy and important steps have been taken in 
1994 to allow the Programme to focus on integration. In 
particular this has concerned the development of infra­
structure, investment support and closer cross-border 
cooperation, both between the European Union and the 
countries of central and eastern Europe and between the 
countries themselves. The existence of Phare remains an important acknowl­
edgement that striving for membership of the European 
Union is not a task that should be borne only by those 
countries seeking to join. The European Union itself has a 
responsibility to prepare the path to membership, both 
through the support it makes available through the Phare 
Programme and in making changes to it own structures to 
accommodate the countries of central and eastern Europe 
who wish to join. 
The future for Phare and relations between the European 
Union and the countries of central and eastern Europe is 
an exciting one which holds both many challenges and 
many rewards. As the European Commissioners respon­
sible for the Programme in 1994 and who will take the 
programme forward in 1995, we jointly commend this 
Annual Report to you. 
Hans van den Broek 
Member of 
the European 
Commission Sir Leon Brittan 
Vice-President 
of the European 
Commission 
The Phare Programme has also made some important 
improvements in its own internal management processes. 
These have made the delivery of Phare funding more effi­
cient and, in 1994, the Programme increased the amounts 
of funds it contracted by 15 per cent on the previous year 
as well as increasing actual payments by 38 per cent on 
the previous year. This means that of the funds that Phare 
has contracted, over 95 per cent has now been paid. 
Phare 1994 financial overview 
In 1994 the Phare Programme committed a total of ECU 
963.3 million to its partner countries. This brings the total 
of commitments over the life of the Programme to ECU 
4,248.5 million. 
During 1994 Phare contracted funds worth ECU 659.8 
million - an increase of 15 per cent on the previous year. 
The Programme paid out ECU 721 million - an increase of 
38 per cent from the previous year. 
This means that of the total Phare commitments, 52.4 per 
cent has now been contracted and of the amount 
contracted, 95.8 per cent has been paid. This is an above 
average rate of disbursement for a programme of this type 
made up of a large number of small-scale know-how 
transfer projects as distinct from a limited number of 
major investment or loan operations. 
The breakdown of the 1994 commitment of funds by 
country and by sector are shown below. 
Phare funds committed from 1990-1994 
ECU 4,248.5 million 
1,012.6 1,003.6 
773.7 
495.2 
1990 1991 1992 1993 1994 
1990-1994 funds committed by country (in ECU million) 
Albania 
Bulgaria 
Czech 
Republic 
Czechoslovakia 1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
Estonia 
GDR 
Hungary 
Latvia 
Lithuania 
Poland 1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 ^^^^^^m^M^^mm^m 
197 
200 
Romania 1990 
1991 
1992 
1994 
Slovakia 
Slovenia 
Former 
Yugoslavia 
Multi-country 
programmes 1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990-1994 funds committed by sector (in ECU million) 
Agricultural 
restructuring 
Education, 
health, training 
and research 
Environment and 
nuclear safety 
Humanitarian 
and food aid 
Infrastructure 
(energy, transport 
and telecommuni­
cations) 
Private sector 
development and 
enterprise support 
Public institution 
and administrative 
reform 
Social 
development 
and employment 
Other sectors 1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 
1990 
1991 
1992 
1993 
1994 ,•- < .*•.•• 'Jy^it'i •~':'-Jt ifî'ï*? ?*/W!$W!:*fci?A;i?' ••'-•!(•'' 
102.5 
100 
/h 
26.5 
25.2 
1994 - a turning point for Phare 
This is the fifth annual report of the Phare Programme -
the European Community initiative which supports the 
development of a larger democratic family of nations 
within a prosperous and stable Europe. 
The year 1994 was perhaps the most significant year for 
Phare since the Programme's conception in 1989. It was 
the year in which a clear framework for the future devel­
opment of Phare emerged, based on the development of a 
common political and economic agenda for relations 
between Phare and its partner countries in central and 
eastern Europe. 
The Phare Programme developed initially as an immediate 
response to challenges facing the countries of central and 
eastern Europe as they sought to resume their central place 
in Europe's culture and civilisation and rejoin the 
economies and societies of Europe. A turning point came 
in June 1993 with the conclusion of the European Council 
at Copenhagen that the associated countries of central and 
eastern Europe that so desire shall become members of the 
European Union when they are able to assume the obliga­tions of membership by satisfying the economic and 
political conditions required. This set a goal for the Euro­
pean Union, Phare and its partners. The challenge during 
1994 has been to set up a system to ensure that Phare can 
support its partners at every step necessary to achieve this 
goal. 
What has emerged is that Phare is not a static instrument, 
designed exclusively to help in the transformation from 
centrally planned to market economies. It is now a flexible 
programme designed to support its partner countries 
through the process of economic transformation and 
strengthening of democracy to the stage where they are 
ready to assume the obligations of membership of the 
European Union. 
Confirmation of Phare's central role in this process 
occurred at the end of the year, with the adoption by the 
European Council at Essen of a strategy for accession. 
The implementation of this strategy will involve some 
significant changes to the focus of the Phare Programme. 
Political developments in 1994 
The development of Phare is now intimately linked to the 
overall development of political and economic relations 
between the European Union and the Phare partner coun­
tries. This relationship has been cemented by Phare's role 
as the financing instrument of the Europe Agreements and 
its central position in the strategy for accession adopted at 
the Essen Council. 
In this section the background to political and economic 
relations is outlined, together with the developments 
which took place in 1994 and an assessment of the conclu­
sions of the Essen Council and its impact on Phare. 
Background 
Phare has always worked in tandem with the other Euro­
pean Community initiatives which cover economic and 
political relations with the countries of central and eastern 
Europe. These initiatives initially covered establishing 
trade relations and developing market access and extending 
loan facilities. More recently they have developed a greater 
element of political, social and cultural cooperation. 
The process started in 1988 when Trade and Economic 
Cooperation Agreements were signed which established favourable trade relations and aimed at significantly 
increasing trade between the European Community and 
these countries. 
In 1990 the European Community developed a new form of 
agreement which went beyond just trade issues. These new 
agreements, known as Europe Agreements, established a 
framework whereby these countries can become more 
closely integrated with western Europe. They therefore 
covered political, economic and cultural cooperation in addi­
tion to trade relations. The Agreements are based on shared 
understanding and values and set the path for integration. 
The European Community and its Member States have 
concluded Europe Agreements with six countries; 
Bulgaria, the Czech Republic, Hungary, Poland, Romania 
and Slovakia. 
The Europe Agreements acquired greater political signifi­
cance following the European Council in Copenhagen in 
June 1993. At this Summit meeting the Council offered 
the prospect of membership of the European Union to 
those countries with Europe Agreements, subject to their 
being able to assume the accompanying economic and 
political obligations. 
Thus the Europe Agreements became, in effect, a basic 
framework within which countries could work towards 
membership of the European Union. Phare is identified in 
these agreements as the financing instrument available to 
help countries meet the objectives set out within them. 
Developments in 1994 
In February 1994 the Europe Agreements entered into 
force with Poland and Hungary. These Agreements had 
been signed in December 1991 but were awaiting ratifica­
tion by the parliaments of the individual Member States. 
While awaiting ratification Interim Agreements were in 
force which covered the basic trade-related aspects of the 
Agreements, thus ensuring that there was no delay in 
implementing this aspect. The Agreements with Bulgaria, 
the Czech Republic, Romania and Slovakia will come into 
force in February 1995. 
Poland and Hungary also formally lodged an application 
for membership of the European Union. 
In 1994 the Community also signed new Trade and 
Economic Cooperation Agreements with Estonia, Latvia 
and Lithuania. These agreements establish free trade with 
these countries. Negotiations for Europe Agreements with 
each of the Baltic states have started and similar negotia­
tions with Slovenia are expected. 
In 1994 a major step was taken which gave the process of 
cooperation, established by the Europe Agreements, a 
much clearer focus on the objective of achieving member­
ship of the European Union. This was the adoption by the 
European Council at its Essen Summit meeting in Decem­
ber of a strategy for accession prepared by the European 
Commission. 
This strategy set out a route plan for the associated coun­
tries as they prepare for accession. It encompasses the 
progressive preparation for integration into the internal 
market of the European Community, supported by imple­
mentation of policies to promote 
• integration through the development of infrastructure, 
including extension of trans-European transport 
networks 
• intra-regional cooperation between the countries of 
central and eastern Europe • environmental cooperation 
• cooperation in the area of the common foreign and 
security policy 
• cooperation in the areas of judicial and home affairs, 
culture, education and training. 
The Essen strategy for accession and its impli­
cations for Phare 
The Essen strategy states that "This integration will be 
supported by the European Union's Phare Programme 
which will develop on an indicative basis into a medium-
term financial instrument with improved possibilities to 
promote infrastructure development and intra-regional 
cooperation". 
In practical terms, Phare will devote a greater proportion 
of its funds to the co-financing of infrastructure develop­
ment projects, with the limit on its annual budget for this 
type of spending being lifted from 15 per cent to 25 per 
cent. Infrastructure will also receive significant funding 
through the cross-border programme and through trans­
port and environment projects. Phare will also introduce 
measures to promote cooperation between its partner 
countries and give a greater focus on investment support. 
It will also focus on supporting the partner countries in 
their steps to harmonise legislation, standards and prac­
tices with the European Community in preparation for 
participation in the internal market. This will involve 
significant support to the system of public administration 
to ensure that the necessary legislation adopted can be 
implemented effectively. 
The European Council agreed that the 1995 budget esti­
mate for the Phare Programme will serve as a minimum 
level for the years up to 1999, in total ECU 5.5 billion. 
This will allow Phare to develop a comprehensive multi-
annual programming framework for its operation through­
out this period. 
Further increases may result from budget adjustments 
following the enlargement of the European Union and 
further discussions on budget allocations within the 
overall financial perspective of the European Community. 
Supporting a process of change 
The Essen strategy now presents Phare with the challenge 
of covering a very broad range of activities if it is to be 
flexible enough to meet the needs of all its partner coun­
tries. 
Phare has developed a range of approaches, many of them 
in close coordination with other sectoral European 
Commission programmes, which match the various stages 
a country will pass through on the road to eventual 
membership. 
Phare's approach in the first stage covers support for basic 
macro-economic stabilisation, humanitarian assistance and 
the supply of basic imports necessary to sustain industry 
and agriculture. 
The second stage covers broad-based sectoral assistance, 
largely in the form of know-how, designed to put in place 
the necessary structures for a market economy. The third stage concerns consolidation where the supply 
of know-how becomes more tightly focused, in particular 
on areas of public administration and the mechanics of 
government. Investment support and infrastructure devel­
opment also feature more prominently. 
The fourth stage involves substantial support for the 
preparation for accession. It involves the development of 
infrastructure, physical integration in border regions with 
the European Union and the development and implemen­
tation of the legislation necessary to participate in the 
internal market. 
Support for stages one and two is well established within 
the Phare Programme. During 1994 Phare support in a 
number of countries became more focused on the third 
stage of assistance and the Essen decisions have provided 
the framework in which Phare can progress to the fourth 
stage. 
Consolidation and integration - a new 
role for Phare 
The past year has been an important one for Phare in 
terms of developing its capabilities in those areas which 
are linked to the consolidation of the reform process and 
closer integration with the European Union. These two 
areas will become increasingly significant for Phare and 
its partners as the move towards membership of the Euro­
pean Union gathers pace and becomes a greater priority 
for each partner country. 
Consolidation 
The consolidation of reform has two basic focal areas. The 
first concerns developing the capability within govern­
ment at all levels to manage and regulate a market-
oriented system. One of the most profound changes which 
has occurred in the countries of central and eastern Europe 
has been the switch from a command system of govern­
ment to a system based on regulation. This has also 
involved changes in the social security system which was 
previously linked to virtual full employment in state-
owned enterprises. As many of these industries have now 
been restructured or transferred to private ownership 
establishing social security systems adapted to the needs 
of a market economy is an urgent priority. 
Phare support is therefore focused on both the develop­
ment of new institutions within government and also non­
governmental organisations which have a role to play in 
the operation and regulation of a democratic, market-
oriented system. Support is also important in developing 
and implementing new legislation and other standards and 
practices. 
The transfer of know-how remains an important element 
of Phare support because continued progress in this area 
depends on each partner country building a resource base 
of skills and experience - both inside and outside govern­
ment and public administration. 
The second area linked to the consolidation of reform is 
investment support. Now that many countries are complet­
ing the basics of the transformation process in terms of 
restructuring state enterprises and establishing the condi­
tions for the development of private enterprise there is an 
increasing need to provide or attract investment in order to 
maintain the momentum of economic development. Phare 
support in this area is therefore focused on creating the 
conditions to attract investment and also on providing 
capital in those areas which cannot attract capital, usually 
due to market failure, from any other source. This direct 
investment is largely in the small business sector. Integration 
Phare support for integration is covered under four broad 
areas of activity: 
. co-financing investment in infrastructure 
• elimination of border-crossing bottlenecks and estab­
lishing customs corridors 
• the cross border cooperation programme 
• multi-country and intra-regional cooperation. 
Most of these areas focus on the development of transport 
infrastructure and contain a significant element of direct 
investment. However, the provision of know-how remains 
an important element, especially within some of the multi-
country programmes and to support and complement 
investment projects. 
Activities linked to consolidation and integration 
A particular feature of Phare's work in 1994 has been the 
development of capabilities in areas which are of rele­
vance to those partner countries which are entering the 
third or fourth stages of development on the road to even­
tual membership of the European Union. These stages are 
the consolidation of reform and integration both with the 
European Union and with other central and eastern Euro­
pean countries. 
These capabilities are examined in more detail below. 
Legislative and public administration reform 
The development of legal frameworks and the harmonisa­
tion of laws with those of the European Community has 
always been an important element of Phare support. Phare 
already provides support in the following areas: 
intellectual property 
consumer protection 
harmonisation of standards and technical regulations 
customs and statistics 
environment 
public procurement 
competition and state aid, transport, post and telecom­
munications 
• banking sector, tax legislation and accounting. 
However, this area has become especially important in the 
light of the Essen strategy which stresses the importance of 
preparing countries to adopt the European Community's 
internal market. This process essentially involves the adop­
tion and implementation of a body of legislation, standards 
and practices known as the 'acquis communautaire'. 
The European Commission is currently preparing a White 
Paper which will provide detailed guidance on the adop­
tion of the 'acquis communautaire' in the internal market 
area to be published before June 1995. This will build on 
the work on the harmonisation of legislation already 
accomplished by Phare in previous years. 
However, in 1994, Phare took an important step in the 
development of a framework within which individual 
countries can develop their own programmes of legislative 
alignment. This was the launch, in June, of a framework 
contract to facilitate the approximation of laws in the 
Czech Republic. A consortium of three law firms and two 
training institutions is helping to draft and revise legisla­
tion and regulations, providing training, hardware, soft­
ware, books and documentation as well as translating 
large sections of legal documentation. A similar approach 
is being discussed with Hungary and Slovakia and has 
been proposed to Bulgaria, Romania and Poland. 
In addition a framework programme of support to develop 
and approximate legislation has been set up for Latvia, 
Lithuania, Estonia, Slovenia and Albania. 
Linked to the development of new legislation is the reform 
of the public administration system. This is because an 
effective public administration together with the appropri­
ate administrative structures, staff and equipment is essen­
tial to the actual implementation of any legislation that is 
developed. 
Phare is supporting the necessary reform in the public 
administrations of central and eastern European countries 
by providing know-how to strengthen their administrative 
capacity. In 1994 Phare supported governments in their 
efforts to reform their public administration by providing 
support in the following areas: 
• support for improvement in governance and manage­
ment (known as SIGMA), a programme established in 
association with the Organisation for Economic Coop­
eration and Development (OECD) 
• reform of legal systems: drafting civil and penal codes 
and procedures, training of judges, reform of the 
Ministries of Justice and prosecution systems, training 
of the police 
• institution-building: developing strategies, civil service 
policy and training, restructuring and upgrading of 
central administration, decentralisation policy and 
strengthening of local governments 
• development of information technology. Social restructuring 
Phare support for the social sector is becoming increas­
ingly important for those countries which are in the 
consolidation phase of reform. This is because establish­
ing a system of social protection adapted to the needs of a 
market economy is a major undertaking which requires 
long-term action. Further progress in economic reform 
will also be hampered unless corresponding steps in social 
restructuring can be made. 
Reflecting this need Phare support is now moving towards 
supporting long-term restructuring following up its initial 
focus on the immediate needs resulting from the first steps 
of reform. Phare is focusing on the following areas: 
• reform of the system for pension provision 
• social security systems, to develop a new approach to 
social protection based on the experience gained in 
western Europe 
• employment policies, to counteract the job losses 
resulting from the privatisation and restructuring of 
state-owned enterprises 
• health care, in particular disease prevention, health 
services reorganisation and financing, training of health 
personnel and pharmaceutical policy. 
Increasing investment support 
Once the basic elements of economic transformation have 
been put in place the key to maintaining the momentum of 
economic development lies in achieving sustained high 
rates of investment. 
The Phare Programme has always recognised the impor­
tance of supporting investment and has therefore included 
initiatives to develop investment across the range of its 
programmes from the start of the Programme. However, 
in view of the increasing importance of attracting invest­
ment as part of the integration process highlighted in the 
Essen strategy, Phare has focused on developing its 
investment support activities in a number of key areas: 
• improving the legal and regulatory frameworks. 
• continuing support to the investment promotion agen­
cies already set up under the Phare Programme. Such 
agencies have been set up in 
The Czech Republic - Czechinvest 
Estonia - Estonian Foreign Investment Agency 
Hungary - Investment and Trade Development Agency 
Latvia - Latvian Development Agency 
Lithuania - Lithuanian Investment Promotion Agency 
Poland - State Foreign Investment Agency 
Romania - Romanian Development Agency 
Slovakia - Slovak National Agency for Foreign Invest­
ment and Development. 
10 
. providing finance across a wide spectrum of small 
businesses through established intermediaries. This is 
important both because it allows this important sector 
to have access to funding which it would otherwise be 
denied and because it serves as a model which the 
banking system can use to develop for its own lending 
to this sector. 
• banking reform. The banking system is not yet struc­
tured to efficiently channel savings into investment, 
neither is the provision of venture capital highly devel­
oped. Phare will therefore intensify its efforts to 
support the reform of the banking sector and promote 
the provision of equity, including venture capital. 
• management training. A number of pilot operations 
were started in 1994 and in the future the programme 
could support a large-scale industrial training attach­
ment programme. 
Infrastructure investment 
The decision of the Essen Council to raise the limit of the 
Phare budget that could be used to co-finance infrastruc­
ture investment reflects the importance of improving 
infrastructure as a major element in preparation for acces­
sion. This is because of the need to improve the physical 
links between the partner countries and the European 
Community and also because investment in infrastructure 
has a multiplier effect on economic growth. 
While Phare may only finance a small percentage of a 
project's final costs its role can be crucial either to bridge 
the gap between the amount that international financing 
institutions can lend and the contribution required from 
government or because its status as provider of grant, 
rather than loan finance, improves the quality of the mix 
of a financial package. 
This type of financing is provided by Phare in those cases 
where it mobilises more substantial loans from interna­
tional financing institutions or other investors or for 
projects supporting important integration objectives which 
would not otherwise go ahead. 
Most of the projects co-financed to date have been within 
the transport sector. While Phare can finance any infra­
structure project within the terms of the Copenhagen 
Council decision, so far the projects have either been 
linked to the seven major projects in central and eastern 
Europe which have been identified as priorities under the 
development of trans-European networks or are linked to 
eliminating bottlenecks at key border crossings. In 1994 ECU 100 million has been committed for the co-
financing of infrastructure investment in five countries 
(Poland, Hungary, Romania, Bulgaria and Albania). This 
covered eight projects (six transport, one gas pipeline 
project and a telecommunications project). 
Cross-border programme 
The cross-border programme is another important initiative 
linked to integration with a significant bias, at least in the 
initial stages, towards the development of infrastructure. 
The programme was first launched in 1994 on the initia­
tive of the European Parliament. It complements, and is 
closely linked to, the European Community's successful 
Interreg initiative. While Interreg is a programme aimed at 
cooperative development between regions on internal and 
external borders of the European Community, the Phare 
cross-border cooperation programme has the objective of 
developing networks and other forms of cooperation 
between border regions in partner countries with neigh­
bouring Interreg regions of the European Community. The 
principal fields of activity are transport, utilities, environ­
ment, economic development and human resources. 
Initially, in 1993, ECU 15 million from the Phare budget 
was set aside for interregional infrastructure cooperation. 
In 1994 this was extended to ECU 150 million. The coun­
tries eligible in 1994 were Albania, Bulgaria, the Baltic 
Republics, the Czech Republic, Poland and Slovenia. This 
will be extended to Hungary and Slovakia in 1995 as a 
result of the enlargement of the European Union to 
include Austria, Sweden and Finland. 
During 1994 Phare worked closely with the Directorate 
General for Regional Policies which manages Interreg, to 
make sure that both address cross-border cooperation in a 
consistent way. In line with these efforts, and the Essen 
European Council conclusions, Phare is aiming to give a 
multi-annual perspective to the Cross-border cooperation 
programmes so that they correspond to the Operational 
Programmes for the Interreg II programme which are 
decided on a multi-annual basis from 1995 to 1999. It is 
planned to prepare Multi-annual Indicative Programmes 
that mirror Interreg Operational Programmes and provide 
a framework for annual financing decisions. 
One of the striking differences between Phare cooperation 
and Interreg is the emphasis that the Phare countries place 
on infrastructure measures (the largest categories are 
transport and environment) while the Member States of 
the European Community concentrate on regional devel­
opment. To address these differences, Cooperation Agree­
ments between the neighbouring countries involved will 
be prepared. These will provide a framework including the 
setting-up of joint programming and monitoring commit­
tees to agree objectives, implementation and monitoring. 
The first Cooperation Agreement was signed between 
Poland and Germany in December 1994. 
Major projects launched under the 1994 Cross-border 
programme have concentrated on the following sectors: 
transport 
environment 
energy 
education 
communications 
agriculture. 
Phare funding was also made available for a smaller inter­
regional cooperation effort in the framework of the 
ECOS/Ouverture Programme, which supports cooperation 
on selected topics between cities and regions of the Euro­
pean Community and those of partner countries. Phare 
support enabled cities and regions of central and eastern 
Europe to take an active part in this programme. 
Eliminating border-crossing bottlenecks 
The third element of the Phare Programme which is 
concerned with integration are projects within the trans­
port sector developed either as part of partner countries' 
national programmes or under the transport multi-country 
programme. 
Phare attention in this area has largely been focused on 
improving border crossings to eliminate bottlenecks. 
Following the collapse of the previous regimes and the 
opening of borders traffic across borders has increased 
well beyond the point with which border crossing facili­
ties were designed to cope. As a result delays, especially 
for freight traffic, can exceed 40 hours at some crossing 
points. 
The problems that many of the partner countries have 
faced have stemmed from 
. poor infrastructure and customs facilities at, or close to, 
the border-crossings themselves 
• outdated and inappropriate customs clearance and 
control procedures 
• lack of coordination between the authorities on both 
sides of the border. Phare support has therefore focused both on improving 
practices through the transfer of know-how and also on 
direct investments to improve the infrastructure. The focus 
of Phare activity in previous years had been on the transfer 
of know-how - providing advice on setting up the neces­
sary procedures and training customs staff. Now that most 
of the partner countries have put this in place, Phare 
support is placing greater emphasis on investment to 
improve the crossing points themselves. This can involve 
upgrading the roads and vehicle-holding areas so that they 
can cope with the increased volume of traffic as well as 
restructuring or rebuilding the customs points themselves. 
Phare has provided more than ECU 100 million for this 
area so far and by the end of 1995 more than 50 individual 
border-crossing modernisation projects will have been 
implemented. Around ECU 80 million has been provided 
for the harmonisation and standardisation of documents 
and procedures as well as the computerisation of customs 
administrations. 
An important new initiative in 1994 has been the develop­
ment of the customs corridor concept. This was first 
proposed in relation to establishing a corridor which could 
improve transport in the Balkans, disrupted by the conflict 
in the former Yugoslavia. Most of the planning for the 
Balkans customs corridor has now been completed, an 
exercise involving cooperation between five countries, 
coordinated by Phare with the support of the European 
Commission's Directorates General VII and XXI. 
In March 1994 European transport ministers met in Crete 
for a pan-European transport conference which identified 
nine priority transport corridors. Phare is financing most 
of the pre-investment feasibility studies as the first step 
towards developing these corridors. Phare has also started 
work on the development of a customs corridor in the 
Baltics. 
Promoting multi-country and intra-regional cooperation 
The development of cooperation between the Phare 
partner countries has been recognised as an important 
element of reform, not only in terms of developing closer 
economic links, but also in promoting political stability. 
The Essen strategy for accession also emphasises the 
importance of developing cooperation between the Phare 
partner countries and the promotion of 'bon voisinage'. 
12 
In this context Phare is actively supporting the Pact on 
Stability in Europe which aims to promote good relations 
between countries in central and eastern Europe and is one 
of the first joint actions of the Common Foreign and Secu­
rity Policy. 
Phare funds totalling ECU 200 million are being used to 
fund projects submitted by the central and eastern Euro­
pean countries in the six main areas identified in the Pact 
as being the key themes for cooperation: 
regional trans-border cooperation 
questions relating to minorities 
cultural cooperation, including language training 
regional economic cooperation 
legal cooperation and administrative training 
environmental problems. 
A continuing emphasis was also placed on the develop­
ment of cooperation between the partner countries through 
Phare's multi-country programmes (previously called 
regional programmes) which were first set up in 1991. In 
1994 multi-country programmes received an allocation of 
ECU 86 million and covered the following key areas: 
• energy, with specific emphasis on a clean coal strategy, 
twinning and network programmes and the harmonisa­
tion of energy policies 
• transport, with a continuing focus on the elimination of 
border-crossing bottlenecks 
• statistics, in order to develop information systems to 
support and monitor economic reforms • education and research, with the Commission's ACE 
and COSINE programmes which both received addi­
tional support 
• public administration, with the SIGMA programme 
which received additional support and was extended to 
Albania, the Baltic States and Slovenia. 
Preparatory work was also carried out in the areas of 
distance education and telecommunications. 
Representatives in the group, which meets twice a year, 
are the National Aid Coordinators of the Phare partner 
countries. The group has a rolling presidency following 
the alphabetical order of country names. In 1994 Hungary 
had the presidency which was then passed to Poland at the 
end of the year. 
An orientations paper for multi-country programmes was 
prepared and agreed for the first time in 1994, setting the 
priorities for multi-country funding during the course of 
the year. 
A continuing effort was made in 1994 to decentralise 
programme management and to strengthen the technical 
support for the sector coordinators who are nominated by 
the coordination group. As a result Programme Coordina­
tion Units (PCU) now exist for the transport, telecommu­
nications, energy, customs and anti-drugs programmes. 
13 
Management of the Phare Programme 
1994 was a significant turning point in the management of 
the Phare Programme. The new political and economic 
environment relating to accession and the experience 
gained over four years of programme implementation 
demanded a re-think of many aspects of the Programme's 
operation. 
As a result, the Commission made some fundamental 
improvements to the way the Programme is structured, 
implemented and managed, as well as developing a new 
approach to the future management of the Programme. 
One of the most important areas of development 
concerned the strategy for accession adopted at the Essen 
Council. This involved preparing detailed working papers 
on how the Phare Programme could respond to the chal­
lenges of supporting the countries of central and eastern 
Europe in their preparation for membership. 
The production of these papers involved substantial devel­
opment of policy and management covering both the 
nature of support provided and the way it could be deliv­
ered. The areas which were developed, also covered in the 
previous section of this report, were infrastructure invest­
ment, all forms of multi-country and cross-border coopera­
tion, development of the internal market and the promo­
tion of investment. 
Linked to the Essen strategy are the developments in 
programming, in particular the agreement at Essen of 
multi-annual financial support up until 1999. 
The issue of decentralisation, which has been acknowl­
edged as an important step in the development of Phare, 
became more significant in the light of the Essen decisions 
and Phare has made substantial progress in the decentrali­
sation of financial management as well as in determining 
how best to develop decentralisation of programme plan­
ning and implementation. 
Phare also launched an important initiative in financial 
management by establishing a common financial manage­
ment system across all Programme Management Units 
which included systematic forms of monitoring and evalu­
ation. 
Finally, in recognition of the growing level of demand 
from many groups for information on the Programme, 
senior management seriously addressed the issue of 
communications for the first time. Decentralisation 
There is agreement between the Commission, the Parlia­
ment and the Court of Auditors that Phare must continue 
its move towards greater decentralisation. 
In the past, this had been viewed primarily from the point 
of view of technical and financial management and was 
related to establishing a system to allow Programme 
Management Units in the partner countries to have 
responsibility for the implementation and management of 
projects. However, the new focus on Phare as an instru­
ment for accession has opened up a much broader 
perspective on what Phare should be seeking to achieve in 
terms of decentralisation. It has become clear that there is 
a need for partner countries to take the steps necessary to 
define and manage their own programmes to a greater 
extent, provided this is linked to specific conditions estab­
lished by Phare, as well as to the more general objectives 
set out in the Europe Agreements. 
This will have an impact on the structure of Phare. Many 
of the functions of task managers, currently being carried 
out in Brussels headquarters will be transferred to the 
partner countries, and activity in Brussels would focus 
more on strategic policy development and guidance. 
However, before this can be accomplished on a general 
basis, each partner country will have to have certain 
elements in place, such as rules for public procurement, a 
legal basis for tendering and an effective system of public 
administration and financial reporting. Hence the impor­
tance of directing current Phare support to these areas. 
Programming 
Phare introduced multi-annual programming in the 1994 
to 1996 Indicative Programmes which were negotiated in 
1994 following adoption in the previous year of the 1993 
to 1997 Phare Guidelines where the concept of multi-
annual programming was first presented. This initiative is 
designed to ensure that Phare support more closely 
reflects each country's medium-term reform priorities, 
rather than being viewed as a series of one-off annual 
initiatives. At the time of its introduction the first concept 
of multi-annual programming was not supported by any 
multi-annual financial commitment, which hindered its 
implementation. Individual countries would indeed be 
reluctant to plan for Phare support in future years if there 
was no form of guarantee that funds would be available. 
14 
The lack of a multi-annual financial commitment also 
slows project implementation because it is based on an 
annual budget which must be committed each year. This 
means going through the full programming cycle each year 
and the actual commitment of funds is condensed into the 
end of the year. It also means that management must 
devote a disproportionate amount of effort to the commit­
ment procedure, to the detriment of project management, 
implementation and monitoring and evaluation. 
At the end of 1994, at the European Council meeting in 
Essen, the Council made a commitment to provide a 
minimum level of financial support for the period to 1999. 
The financial continuity necessary to construct medium-
term programmes for the use of Phare funds was thus 
provided. As a result future Indicative Programmes for 
the Czech Republic, Hungary, Poland and Slovakia will 
now be developed to cover the period from 1995 to 1999 
and Indicative Programmes will cover the period 1996 to 
1999 for the other partner countries. 
Phare management in Brussels headquarters has also 
started to develop a new system of guidelines on 
programme management which reflect the new multi-
annual perspective and build in a greater element of moni­
toring and evaluation. These guidelines provide a more 
effective structure for planning a longer-term approach to 
the deployment of Phare funds. 
It is anticipated that these guidelines will come into effect 
to cover a substantial part of 1995 programming. 
Implementation 
In 1994 Phare also launched an important initiative 
concerning the actual implementation of Phare 
programmes. This initiative was the introduction of a 
manual of procedures for the Decentralised Implementa­
tion System (DIS). 
The DIS is a system which provides a single, consistent 
framework within which to manage projects. Its main 
component is an overall strategic plan, individual work 
plans and a system for reporting on monitoring and evalu­
ation over the life of a programme. The key element of this system is the logical framework 
matrix - a system for establishing and measuring the 
objectives underlying any individual project. 
As part of the Decentralised Implementation System the 
financial accounting system which had been operating in 
Brussels headquarters for two years was adapted for, and 
extended to, the Programme Management Units. 
The Decentralised Implementation System manual and a 
further manual on contract and procurement rules were 
presented to all Programme Management Units during the 
year, in association with a training programme. 
These new manuals represent a major step forward in 
streamlining the technical and financial aspects of project 
management. The manuals have been designed as flexible 
systems which can be updated. Feedback received from 
the partner countries is being used to improve the system 
further. 
Monitoring and evaluation 
Phare has introduced some important initiatives in moni­
toring and evaluation in 1994. These cover both financial 
procedures as well as an assessment of how effective the 
programme has been in meeting its objectives. 
During 1994 Phare signed framework contracts with a 
number of independent auditing firms. Their brief is to 
conduct a detailed financial audit of selected projects. The 
Phare units in the Commission's delegations in the partner 
countries have supplied lists of immediate auditing priori­
ties, but the ultimate aim of this auditing process is to 
ensure that every Phare programme is audited at least 
twice during its life - which is usually two to three years. 
The audit plan is given to the Court of Auditors and Direc­
torate General XX (Financial Control) and the reports of 
the audit teams are also made available to these two 
bodies. 
The results of these audits are already proving valuable in 
planning how to establish an effective audit process in a 
future, more decentralised, operation. 
The advantage of this system is that, for the first time, one 
system of project management applies for all of the 
project implementers (the Programme Management Units) 
in the partner countries. During 1994 a number of independent reports were also 
commissioned to assess the impact of the Phare 
Programme. Hungary was selected as the country for 
investigation and so were individual sectors within a 
number of countries. 
15 
The results of these studies have confirmed that the basic 
principles of Phare management are sound in that 
programme objectives match the partner countries' needs 
and results are meeting the objectives. However, the 
reports have highlighted areas where changes must be 
introduced to achieve more effective management. In 
particular these concern changes to financial and adminis­
trative procedures to allow project implementers greater 
time to focus on the management of actual projects, rather 
than financial reporting. 
The Decentralised Implementation System itself also 
introduces a more controlled approach to both technical 
and financial evaluation through the regular monitoring 
and evaluation reports which result from the operation of 
the logical framework matrix. 
The next step in the area of evaluation is to establish a 
more systematic approach to the independent evaluation 
of programmes, in a similar way to that followed in 1994 
with the financial audits. 
Communications 
The Phare Programme is almost unique among European 
Commission initiatives in the degree of legitimate interest 
that many groups, both in the Member States and the 
eleven partner countries, have in the Programme. During 1993 it became clear that the resources devoted to 
satisfying the needs of these groups were not sufficient 
and that a more systematic approach was required. As a 
result, Phare management decided that a comprehensive 
communications strategy should be developed and 
resources devoted to communications should be increased. 
The strategy is based on a comprehensive research 
programme which identifies the information and commu­
nication needs of key decision-makers and of those 
working for the Programme, both inside and outside the 
Commission. 
The programme was launched from Brussels headquarters 
in mid-1994. The feedback has been sufficiently encourag­
ing to step up the level of activity in 1995. Programmes 
have included: a major rethink on written and visual corpo­
rate identity; a substantial publications programme in 22 
languages, including timely release of contract information; 
and development of a communications database, which 
currently holds more than 40,000 names. The programme is 
now fully operational in Brussels, Warsaw, Prague and 
Budapest and during 1995 it will be extended to at least 
three and possibly five more partner countries. Other 
partner countries are involved on a more ad-hoc basis. 
16 
Albania 
1994 was an important year for Albania and the Phare 
Programme. The emphasis of Phare support continued to 
move away from emergency assistance towards providing 
the know-how necessary to put in place the structure of a 
market economy and democratic society. 
This move reflects the steady improvement in the overall 
economic situation following the severe economic crisis 
which occurred in the wake of the collapse of the previous 
regime. Gross domestic product (GDP) grew by 6 per cent 
and the industrial output, which fell by 30 per cent in 
1991, increased by 12 per cent in 1994. 
This trend has enabled the government to put in place a 
longer term strategy for economic restructuring. Its 
medium term economic strategy for 1993 to 1996 and its 
public investment programme for 1994 to 1996 provide 
the basis for Phare's Indicative Programme which covers 
the period 1994 to 96. 
Cooperation between Phare and the government has 
revealed a shared understanding of the main priorities for 
reform. As a result, the development of effective 
programmes which can be implemented efficiently has 
been possible. 
The Indicative Programme for 1994 was signed in May 
and ECU 29 million was committed for five key areas: 
• sectoral restructuring (agriculture, health, SME devel­
opment) 
• infrastructure development 
• human resources development 
• institutional development 
. humanitarian aid. 
In addition, ECU 20 million was allocated for cross-
border cooperation with the neighbouring countries of 
Greece and Italy. The focus is on the transport sector and, 
in particular, the improvement of road infrastructure and 
border crossings in the key east-west and north-south 
corridors. 
At the end of the year a package of balance of payments 
support for ECU 35 million was also agreed. ECU 15 
million of this will come under the 1994 budget with the 
remaining ECU 20 million provided in 1995. Funds committed by sector 1994 
ECU 49 million 
Public institution 
and administrative 
reform 4.6 
Infrastructure 23 Education, health, 
training and research 9.4 
Humanitarian 
and food aid 7 
Agriculture continued to be a key priority for Phare 
support in 1994. The process of land reform is well 
advanced with 98 per cent of arable land now in private 
hands, although most of this is taken up by small subsist­
ence farms. In order to develop agriculture as a viable 
sector for private entrepreneurship, Phare activities 
include the promotion of an operational agricultural credit 
system, the development of agricultural extension services 
for private farming and support for land mapping. Phare 
provided training and equipment for three map production 
institutions responsible for the survey, mapping and regis­
tration of over 1.8 million parcels of land. 
There is an increasing and urgent need to address the 
severe deficiencies in Albania's infrastructure, a fact 
recognised by the government and included in its public 
investment programme. Phare is therefore focusing on 
improving infrastructure, in particular roads and port 
development. Phare is also co-financing the modernisation 
of the Diirres ferry terminal. The existing infrastructure 
has to be substantially improved to be able to respond to 
increased traffic in the last two years. 
Albania is performing well in terms of programme imple­
mentation. At the end of 1994 70 per cent of total funds 
committed for the country were actually contracted - a 
figure far above the average of 52 per cent for all Phare 
partner countries. Disbursement rates are also satisfying 
with 66 per cent of funds contracted actually paid. 
17 
Bulgaria 
The foundations of a market economy and democratic 
society have been established in Bulgaria. However, the 
pace of economic reform and development in Bulgaria has 
slowed over the last two years due to the particularly diffi­
cult economic conditions, the embargo against Serbia and 
Montenegro and political changes. The country still faces 
high inflation and unemployment and a major budget 
deficit. 
However, 1994 was a year when some positive signs 
emerged. The government put in place an ambitious 
economic plan and progress was made in several areas 
including the passage of the bankruptcy law and the intro­
duction of VAT which took effect from 1 April 1994. 
Trade with western markets has also increased signifi­
cantly in recent years. Funds committed by sector 1994 
ECU 85 million 
Public institution 
and administrative 
reform Others 1.2 Private sector development 
and enterprise support 3 
Infrastructure 62.6 Education, health, 
training and research 12 
Environment and 
nuclear safety 5 
Phare has played a significant role in the transformation of 
the Bulgarian economy. Phare funds have gone to the core 
areas of transformation, including privatisation and 
restructuring of state enterprises, private sector develop­
ment, modernisation of bank and financing services, 
labour market and social sector reform. 
In addition, Phare has provided humanitarian aid and a 
specific supplementary budget for nuclear safety. 
However, Phare has faced increasing difficulties in imple­
menting its programmes, in particular because the nature 
of support is shifting away from supply programmes and 
the provision of first-stage know-how towards more 
specialised support. This shift requires a greater level of 
cooperation with the government and progress on estab­
lishing legal and institutional restructuring in certain key 
areas. Such progress has been difficult due to several 
changes of government. 
However, in 1994, the government introduced an ambi­
tious reform programme. Phare activities were adjusted to 
support this and at the same time became more focused on 
those areas where past experience has shown positive 
results: 
. private sector development 
. human resources development and institutional reform 
• investment support. 
In total ECU 85 million was committed to Bulgaria under 
the 1994 programme. 
Of the overall amount of funds committed in Bulgaria 
since the beginning of the Programme in 1990, the 
percentage of contracted funds is slightly below the 
average (48 per cent against 52 for the whole Programme). Disbursement rates over the period are about average for 
the Programme as a whole (with 51 per cent of funds 
contracted actually paid against 50 per cent for the 
average). 
Some particular highlights of Phare's activities in 1994 
included support to the energy sector, both to improve 
safety at nuclear facilities and to remove the reliance on 
nuclear power by upgrading coal-powered stations. In 
particular, Phare will participate in the financing of the 
installation of an emissions reduction system at the 
Maritsa East power station. This will enable the environ­
mental standards to be met which are necessary to unlock 
financing for plant modernisation from the European 
Investment Bank and the European Bank for Reconstruc­
tion and Development. 
Phare is also participating in the financing of some impor­
tant infrastructure projects including the development of 
the E79 north-south highway. 
With the support of Phare work is also progressing on 
streamlining the Bulgarian telecommunications sector, 
both through training and the development of human 
resource policies and modernisation of the facilities of 
Bulgarian Post. 
Under the cross-border cooperation programme with 
Greece, Phare also finances the reconstruction of several 
sections of the Dupnitza-Kulata railway line including 
electrification of railway over 114 km in one direction. 
Another project is helping to install a new telecommunica­
tion link from Kavala to Haskovo including the laying of a 
120 km fibre optic cable and installing a digital transmis­
sion system in Sofia. 
Czech Republic 
1994 was a turning point for Phare in the Czech Republic. 
In the context of preparing the 1994 to 1996 multi-annual 
Indicative Programmes, a review of Phare activities was 
carried out. New orientations were established on the basis 
of which Phare was able to secure much greater support 
from the government based on a shared recognition of the 
importance of Phare in helping the Czech Republic move 
towards its desired membership of the European Union. 
The review also took account of the desire of the Czech 
government to shift the focus of Phare support from 
private sector development to support for public services, 
including infrastructure investment. The government also 
asked for less selective support for enterprise restructuring 
and for efforts in the private sector to be focused over the 
medium term on support for generalised services and busi­
ness development programmes. Funds committed by sector 1994 
ECU 60 million 
Public institution and 
administrative reform 11 Education, health, 
training and research 5.5 
Infrastructure 25 
The Programme review showed that delays in implement­
ing the 1991 to 1993 programmes caused by the split of 
the Czech Republic and Slovakia, combined with the 
rapid transformation of the Czech economy from a 
centrally-planned to a market economy, meant that fund­
ing was going to areas which were no longer necessarily 
priorities. Over 90 per cent of former state assets are now 
in private ownership, inflation is under control and unem­
ployment is low. The decline in economic growth seems 
to have been reversed, with forecasts now predicting 
growth of around four per cent. The state budget is 
balanced and the country has a surplus on its current 
account. 
Government priorities shifted to the consolidation of 
economic reform and the development of integration with 
the European Union. As a result Phare activity will 
become increasingly focused on legislative integration and 
the implementation of the Europe Agreement, as well as 
on developing infrastructure. 
This new approach will be further developed in the 1995-
1999 Indicative Programme. 
ECU 60 million was allocated to the Czech Republic in 
1994, of which ECU 25 million was allocated to projects 
under the new cross-border cooperation programme. Some of the important initiatives of 1994 included the 
development of the Regional Investment Company in 
Ostrava and the National Training Fund. These initiatives 
represent an important development in decentralisation 
and greater involvement of Czech organisations in decid­
ing where Phare funds are used. Two interesting new 
initiatives, the Energy Conservation Fund and an Environ­
ment Revolving Fund, are under preparation and are 
expected to be implemented during 1995 in cooperation 
with the EBRD. 
The Regional Investment Company is an ECU 8 million 
fund for the development of high growth companies 
mainly in the Ostrava region. Phare has provided the 
capital and a chief executive who has been seconded from 
an investment company in the European Union. Financing 
decisions are approved by a board of local business 
people. Since the fund officially started operations in June 
1994 it has invested ECU 1.1 million in four projects. A 
further investment of ECU 2.7 million has been approved 
by the Board and is being implemented. 
The National Training Fund provides funding for 13 pilot 
project local management training institutions to provide 
intensive high-level modular courses for the middle 
management of Czech private and public institutions. 
19 
The concept of establishing sectoral funds has been incor­
porated in the new approach to Phare which will be 
launched in the 1995 to 1999 Indicative Programme. 
Within the framework of the programme for small and 
medium-sized enterprises support was given to more than 
5,000 entrepreneurs by providing advisory services 
through a network of 20 regional centres and Business 
Information Centres. 
The cross-border cooperation programme was the main 
innovation in 1994. Despite some initial reservations the 
programme is proving to be a popular and much-appreci­
ated initiative. Six projects have been agreed concerning 
the improvement of transport infrastructure, the purifica­
tion of water supplies, a steam pipeline for the improve­
ment of heat distribution and the reduction of toxic emis­
sions in the Czech - German border region. 
In the area of foreign investment the Phare-supported 
investment promotion agency, Czechinvest, successfully 
developed its activities including the establishment of a 
local representatives network in Czech regions as well as a foreign representation in London (France and Germany 
are at the stage of preparation). Czechinvest also directly 
secured six investments in 1994 amounting to the value of 
US$ 48 million, generating 1,250 new jobs. 
Contracting and disbursement rates of the Czech Republic 
are far below the average of the Programme as a whole 
with only 13 per cent of funds committed actually 
disbursed and 21 per cent of funds contracted actually 
paid since the Programme started to support the country. 
This performance has not yet had serious consequences on 
project implementation as it only accounts for the Czech 
performance since 1993 when it became independent. 
Phare also took some important steps in the development 
of a proactive approach to communications. Research was 
carried out in the second half of the year to identify how 
best to improve communications with the Programme's 
key target audiences. The results of this research have 
been used to design a communications programme for 
1995 which supports the overall communications strategy 
developed for Phare by the European Commission. 
20 
Estonia 
Phare funds for Estonia in 1994 almost doubled from the 
1993 level, increasing from ECU 12 million to ECU 22.5 
million. The increase is based on the good performance of 
the Phare Programme and the firm commitment of the 
government to the reform process. 
Cooperation between the Estonian government and Phare 
has resulted in effective project implementation and a 
correspondingly high contracting rate (55.5 per cent of 
total funds committed). Disbursements at the end of 1994 
stood at 25 per cent of funds contracted. The ability of the 
government and of institutions to identify and implement 
programmes has thus improved, helped by the Phare Aid 
Coordination Unit established within the Ministry of 
Finance. With assistance from this unit, the different 
government and non-governmental organisations are now 
able to manage the majority of the programmes them­
selves instead of relying on direct programme implemen­
tation by the Phare services in Brussels. 
The government has been successful in establishing a 
framework for an independent economy following the 
extreme economic disruption resulting from Estonia's 
independence from the Soviet Union. Trade has been 
focused towards the west. An important initiative in this 
respect was the signing of a free trade agreement with the 
European Community and the start of negotiations for a 
Europe Agreement. 
Phare funding in 1994 has become more focused on key 
areas of reform such as privatisation and structural reform. 
The areas for Phare support, as outlined in the Indicative 
Programme signed in May, are economic reform, infra­
structure development and institutional and human 
resources development. Funds committed by sector 1994 
ECU 22.5 million 
Infrastructure 6 
Environment and 
nuclear safety 2.5 Private sector 
development and 
enterprise support ! 
Education, health, 
training and research 4.5 
Estonia had privatised almost half of its large state compa­
nies by the end of August 1994 with 157 deals signed for 
a total sale value of approximately ECU 60 million. Phare 
supported this through the creation of the Estonian Privati­
sation Agency, the drafting of relevant legislation, the 
preparation of pre-privatisation studies on key industries 
and training for board members and managers of privat­
ised companies. 
Phare also targeted the environment through the develop­
ment of a national environment strategy and an allocation 
of ECU 4 million devoted to solving the problems of envi­
ronmental hot spots. 
The programme also maintains a General Technical Assis­
tance Facility which will concentrate on the implementa­
tion of the new free trade agreement and support to 
prepare a public investment programme. 
21 
Hungary 
Hungary is well advanced in its economic transformation 
process and has put in place most of the basic elements of 
a market economy and democratic society. 
It has therefore reached the stage in its relationship with 
Phare where support is becoming more focused on consoli­
dation of reform and integration with the European Union. 
This is an important but difficult stage because it 
frequently involves tackling politically sensitive areas and 
making tough decisions. In Hungary some severe macro-
economic problems, such as the high level of consump­
tion, foreign debt and a current account deficit of around 
nine per cent of GDP, had not been tackled and threatened 
the momentum of reform. 
Phare established some basic objectives with the new 
government elected in May 1994. These are 
. to foster the conditions favourable for a resumption of 
economic growth consistent with maintaining external 
and internal balances 
• to deepen and extend the reforms 
• to address pressing social issues. 
In total ECU 85 million was allocated to Hungary in 1994 
and the areas selected for Phare support were private 
sector development, infrastructure development and 
human resources development. 
The rate at which Phare projects were implemented in 
Hungary is slightly above the average for Phare countries. 
At the end of 1994 55 per cent of the total committed to 
Hungary over the life of the Programme had been 
contracted. This compares to a figure of 52 per cent for the 
Programme as a whole. The disbursement rate stands at 
62.5 per cent of funds contracted. 
There is nevertheless a need to improve coordination 
between the Hungarian National Coordinators office and 
the Commission in order to identify projects which are 
relevant to the government's reform priorities and which 
can be implemented rapidly and effectively. 
Nonetheless, there have been some very positive develop­
ments during the year. The programme of support for 
small and medium-sized enterprises has been one of the 
most successful of any run in the Phare partner countries. Funds committed by sector 1994 
ECU 85 million 
Infrastructure 29 
Environment and 
nuclear safety 15.5 Private sector 
development and 
enterprise support 16.5 
Education, health, 
training and research 24 
Phare has also contributed to some major developments in 
the banking and finance sector - in particular the comple­
tion of a second-round bank re-capitalisation scheme. 
1994 was also the first year that Phare made significant 
investment in infrastructure. Phare concentrated on the 
sectors of transport, environment, energy and on the 
modernisation of border crossings. In particular the Phare 
Management Committee approved in 1994 the co-financ­
ing of two road rehabilitation projects (the E77 link to 
Slovakia and the M5 link with Romania) while five prior­
ity border crossings have been selected for improvement -
three with Romania and one each with Slovakia and the 
Ukraine. These improvements are an urgent priority due to 
the increase in traffic caused by the Balkan conflict. 
Implementation of these projects should start in early 
1995. 
The Trans-European Mobility Programme for University 
Studies (Tempus) for the exchange of academic staff and 
students in higher education with institutions in the Euro­
pean Union was also very successful and received a 
further ECU 16 million in 1994. 
The year also saw a significant increase in the number of 
Hungarian organisations under contract to implement 
Phare projects. Hungarian organisations represent 80 per 
cent of the total number of contracts awarded between 
1990 and 1994 by Phare. 
22 
Latvia 
Phare substantially increased its funding for Latvia in 
1994. From ECU 18 million in the previous year funding 
was raised to 29.5 million in 1994. This was due to 
Latvia's demonstration of its ability to implement projects 
effectively and therefore absorb a greater level of funding. 
This is also demonstrated by the Programme's financial 
performance. At the end of 1994 49 per cent of funds 
committed since Phare started to support Latvia were 
already contracted. Disbursement for the same period of 
time (1992-1994) is 25 per cent of funds contracted. 
The government is increasingly aware of the role that the 
Phare Programme can play in the development of the 
economy and in reaping the benefits of increased integra­
tion and trade with the European Community. Funds committed by sector 1994 
ECU 29.5 million 
Private sector 
development and 
enterprise support 14.5 
Education, health, 
training and research 5 
After a severe economic recession in the early 1990s, 
1994 was a positive year for economic development in 
Latvia. There was a substantial improvement in the 
balance of payments, unemployment remained stable at 
6.1 per cent and inflation decreased. The exchange rate for 
the new Latvian currency, the Lats, has remained stable 
against major currencies in the first quarter of 1994 and 
shows a persistent tendency to strengthen against the US 
dollar. 
In the latter half of 1994 the government produced a 
National Indicative Programme to cover the period from 
1995 to 1997 with the following priorities: 
• economic stabilisation and development with particular 
emphasis on the banking and financial sector 
. legal reform, including land reform, property registra­
tion and other issues necessary to facilitate privatisation 
• public administration reform, including development of 
institutions and human resources development. 
This will provide a useful guide for the development of 
the Phare Indicative Programme for 1995 to 1999. The financial support from the Phare Programme for 
Latvia in 1994 concentrated on economic reform, institu­
tional and human resources development and infrastruc­
ture development. 
Some of the major programme developments in 1994 
included establishing a training programme for 10,000 
central government civil servants. This programme will be 
expanded in 1995 to train 17,000 local government and 
police staff. 
Phare has also been involved in the reform of the national 
education system in 1994. A supplementary allocation of 
ECU 3 million was made available in the third quarter of 
the year to support vocational training and educational 
reforms. 
In support of the government's ambitious programme in 
the public administration sector Phare developed 
programmes for the customs, statistics and quality control 
services. 
23 
Lithuania 
Phare funds committed to Lithuania increased by ECU 25 
million to ECU 39 million in 1994. This is as a result of 
the proven ability of the country to absorb funds and 
implement projects as a result of effective coordination 
between the government and Phare. 
At the end of 1994 49 per cent of total funds committed 
since the start of the Programme in 1992 had been 
contracted. Disbursements stand at 24 per cent of funds 
contracted. 
The government has continued its programmes of struc­
tural reforms, macroeconomic stabilisation, fiscal restraint 
and private sector promotion. However, political pressure 
has delayed the finalisation of the privatisation 
programme as well as the adoption and enforcement of 
key economic legislation. 
As with Estonia and Latvia Phare support up until 1993 
was based on General Technical Assistance Facilities 
giving support across a wide range of sectors. This 
provided the basis to identify more specific sectoral strate­
gies which are reflected in the 1994 Indicative 
Programme. 
This Indicative Programme committed ECU 39 million in 
the following areas: infrastructure development, economic 
development and human resources development. 
An important development in 1994 was Phare's work with 
the government in preparing the first draft of the public 
investment programme. The programme is currently being 
implemented by the Lithuanian Government in close 
cooperation with Phare and the World Bank. Phare's role 
in the programme is to advise the Government on defining 
the sectors of strategic importance in which it should 
invest. It also involves the creation of training courses on 
project planning and analysis for the staff of Lithuanian 
ministries and other Government agencies. This will 
provide for some focus on Phare support in the infrastruc­
ture sector which is currently intended to address trans­
port, energy and environment projects. Funds committed by sector 1994 
ECU 39 million 
Infrastructure 16.5 
Private sector 
development and 
enterprise support 14.5 
Environment and 
nuclear safety I Education, health, 
training and research 6 
A key feature of the transformation of Lithuania's 
economy has been the speed at which the economy has 
been privatised. Within three years 80 per cent of the 
eligible enterprises in the key areas have been privatised. 
To support further the process of enterprise restructuring 
additional funds were allocated in 1994. A credit line for 
small businesses, channelled through commercial banks, 
has also been expanded and Phare will continue to support 
the operations of the Investment Promotion Agency estab­
lished by the Programme at the end of 1993. 
Other significant projects implemented during the year 
included the development of a 'roll-on-roll-off terminal at 
the Klaipeda port financed under the Cross-border 
cooperation programme and the upgrading of equipment at 
the central office of the Lithuanian Statistics Department. 
In the area of labour market reform Phare has been prepar­
ing a large programme for the development of vocational 
training schools at secondary and post-secondary level. 
24 
Poland 
Poland has, in many ways, advanced economic reform 
faster and further than in neighbouring countries. 
However, the reform process in Poland slowed somewhat 
in 1994. The difficulties of tackling some of the key areas 
of reform that remain have been acute. In addition the new 
coalition government had difficulty in taking decisive 
action given the need to balance a range of views on 
reform. 
As a result it took the government a considerable time to 
determine the priorities for Phare funding. The eventual 
allocation also represented a broad range of activities and 
was not as tightly focused on reform consolidation and 
integration as might be expected of a country at Poland's 
advanced stage in the economic transition process. 
The Indicative Programme, which was eventually signed 
in November 1994, commits ECU 208.8 million across 
nine specific areas: 
• financial sector development 
• investment in transport infrastructure 
• cross-border cooperation 
• development of higher education through the Tempus 
programme 
• supporting democratic institutions and development of 
civic society in local communities 
• worker protection 
• forestry protection 
. industrial restructuring, privatisation and investment in 
energy 
• Fiesta III - a multi-sectoral facility. 
The current slowing of reform has not yet had an impact 
on economic development. The economy showed strong 
growth recording a 5 per cent rise in GDP and an increase 
of 8 per cent in total. Privatisation and the development of 
the private sector have resulted in the private sector 
contributing 56 per cent to total GDP. However, Phare's 
privatisation programme has been held up pending 
government decisions on the pace of continued privatisa­
tion while Phare's programme for regional development 
also proved to be more complex than initially envisaged. Funds committed by sector 1994 
ECU 208.8 million 
Public institution and 
administrative reform 21.5 
Social development 
and employment 
Infrastructure 93.8 Private sector 
development and 
rprise support 31 
•K Education, health, 
IHI training and research : 
Agricultural restructuring 2.5 
Environment and nuclear safety 12 
Of the overall amount of funds committed over the life of 
the Programme in Poland only 39 per cent were actually 
contracted by the end of 1994. This compares with an 
average of 52 per cent for the Programme as a whole. This 
represents a significant amount of uncontracted funds 
given the size of budget allocations to Poland. This is 
largely due to the need to respond to political pressures to 
spread funding broadly rather than to focus on specific 
areas where Phare can be most effective. 
Disbursement rates in Poland have also been slower than 
average with 46 per cent of funds contracted actually paid. 
Despite some of the difficulties some positive initiatives 
were taken in 1994. Significant Phare funding was 
devoted to encourage the restructuring of the Polish 
banking sector - a continuing priority for Phare support. 
This funding, provided to finance the provision of know-
how, involved such tasks as the evaluation of bad debt 
positions. Finance is also made available to support the 
recapitalisation of banks with historically unsound loan 
policies and an imprudent risk exposure to debt, notably 
rural and provincial cooperative banks. 
25 
ECU 35 million was allocated in 1994 to transportation 
infrastructure schemes especially those that help 
modernise motorway and railway system connections 
with European Union Member States - projects envisaged 
as forming part of the trans-European networks. Signifi­
cant investment in infrastructure is also taking place under 
the Cross-border programme for which ECU 58.75 
million was allocated. This funding was largely devoted to 
schemes devised to remove bottlenecks at frontier cross­
ings. Work on these projects included the construction of 
modern customs terminals and the building of new access 
roads to ease the flow of cross-border transportation. 
1994 was also the first year that the Phare-funded Polish 
Agency for Regional Development started financing opera­
tions through investment grants. The Phare Programme is supporting the Polish Govern­
ment in its attempt to reform its public administration. 
Reform in this area remains difficult to accomplish but it 
is becoming increasingly important if Poland is to imple­
ment the initiatives required to meet the objectives set out 
for integration with the European Union. The initiatives in 
this area support the Agency for Municipal Development 
and the National Labour Inspectorate. 
Phare also achieved high-profile success in the environ­
ment sector through participation in a programme which 
used environmentally-friendly chemicals to rid over 
800,000 hectares of forest of an infestation of parasitic nun 
moths responsible for killing off large tracts of woodland. 
26 
Romania 
Romania's road to reform is among the most difficult of 
Europe's post-communist countries due to the tremendous 
task the country has to undertake to undo the effects of an 
isolationist culture and a very unbalanced economic struc­
ture. In 1994 the government continued to implement a 
major macro-economic stabilisation programme launched 
in 1993. This brought about a marked fall in inflation, 
liberalised the foreign exchange market and included 
curbs on implicit subsidies through the banking system. 
These measures allowed agreement on an International 
Monetary Fund standby facility and thus helped improve 
Romania's standing with the international investment 
community. 
However, at the microeconomic level, progress in crucial 
areas of reform and restructuring was slow in 1994. 
Important pieces of legislation, notably on bankruptcy and 
competition, were stalled in parliament. The draft law on 
mass privatisations tabled in mid-1994 was also strongly 
contested. 
This has had an impact on Phare activities blocking 
progress in the privatisation programme and other initia­
tives linked to economic restructuring. However, in 
general terms the management of the Programme and 
coordination with the government is good. This is 
reflected in the financial performance with 50 per cent of 
funds committed already contracted and 47 per cent of 
funds contracted paid at the end of 1994. 
The 1994 programme was allocated ECU 100 million. 
The four broad areas of funding, agreed for the period 
1994-1996, include economic and private sector develop­
ment, human resources, employment and social policy 
development, institutional reform and public finance 
management, regional development and European integra­
tion. 
A significant development in 1994 has been the number of 
programmes designed to support decentralised initiatives 
at local level. These include support for small and Funds committed by sector 1994 
ECU 100 million 
Public institution 
and administrative 
reform 9.( Private sector 
development and 
enterprise support 23.4 
Education, health, 
training and research 37 
medium-sized enterprises, regional economic develop­
ment, tourism and civil society development. The 
management of these programmes will be less dependent 
on the central administration. 
1994 also saw the approval of a major infrastructure co-
financing project - the first major project carried out under 
the scheme agreed at the Copenhagen Council of June 
1993. This covers a substantial road upgrading project and 
is co-financed with the European Bank for Reconstruction 
and Development and the European Investment Bank. 
This project also marked the start of a greater focus on 
investment and initiatives linked to integration. 
The year also saw the first discontinuation (in the form of 
non-extension) of a Phare programme. This concerned a 
programme carried out with the Ministry of Health which 
had been consistently delayed due to disagreements on 
certain areas of policy established in the original Financial 
Memorandum signed between Phare and the government. 
This example is by no means typical of Phare's relation­
ship with the Romanian government but is important in 
that it is the first tangible example of Phare's commitment 
to move funds out of non-performing programmes. 
27 
Slovakia 
Slovakia faces more serious economic problems than its 
former partner, the Czech Republic, because of a greater 
dependence on a relatively limited number of large state-
owned mono-industries (for example, armaments) which 
have presented particular restructuring difficulties. There 
has also been a greater level of political instability which 
has affected the pace of reform. 
However, 1994 was a positive year. After four years of 
economic decline signs of a recovery in economic activity 
began to emerge. Real GDP is estimated to have recorded 
year-on-year growth of 4.4 per cent, inflation slowed and 
the current account balance began to improve. 
The coalition government formed in March put in place a 
new economic policy aimed at revitalising the reform 
process. While its subsequent defeat has cast some doubt 
over the future pace of reform Phare was able to use this 
economic plan as the basis for establishing more clearly 
defined priorities. 
The multi-annual Indicative Programme, which was 
signed in 1994, identifies five areas for support: 
• development of the private sector 
• human resources development, including science and 
technology reform 
• strengthening the social protection system 
• promoting infrastructure development 
. modernising the structures of state and society. 
In total ECU 40 million was committed to Slovakia for 
1994. Funds committed by sector 1994 
ECU 40 million 
Others 5 
Public institution 
and administrative 
reform 4 Private sector 
development and 
enterprise support 5 
Social 
development 
and employment 
5.5 Education, health, 
training and research 9 
Infrastructure 6.5 
Some of the significant initiatives which Phare imple­
mented in 1994 included a major effort to mobilise funds 
committed in previous years to support a second wave of 
privatisation. Phare has also earmarked funds to co-
finance a post-privatisation fund with the European Bank 
for Reconstruction and Development. Once launched it 
will offer equity funding for newly privatised companies 
which need restructuring. 
Phare also provided some valuable support for the 
banking sector in the areas of banking supervision and 
training - both for the Slovak National Bank and the 
Ministry of Finance. This has included the development of 
a strategy for handling bad loan portfolios and for estab­
lishing work-out units. 
Phare and the Slovak Government took some important 
steps in 1994 which have improved the performance of 
many of the programmes. This has largely been achieved 
through the resolution of some of the difficulties caused 
by the split of the former Czechoslovakia. 
The Phare Programme in Slovakia had been hit more 
severely by this split than in the Czech Republic. This was 
because of a greater need to establish ministries and the 
mechanics of government and a subsequent delay in 
setting up Phare Programme Management Units within 
the new ministries. However, this work has now been 
completed and by the end of the year the Programme in 
Slovakia had contracted 57.2 per cent of funds available to 
the end of 1993. This figure is slightly better than the 
average for Phare partner countries. The disbursement rate 
of the country over the same period was 37.5 per cent of 
funds contracted. Phare has, in addition, established a loan fund for small 
and medium-sized enterprises in association with three 
Slovak banks and the Government. This fund will fit into 
the overall initiatives for small and medium-sized enter­
prises which include a development agency and a network 
of 14 regional advisory and information centres and one 
business innovation centre. 
In 1994 an effective structure was also set up with the 
government to monitor and coordinate the implementation 
of the Europe Agreement signed in 1993. 
Plans were also finalised in 1994 to open a European 
Commission Delegation in Bratislava. This will allow 
further improvements in the coordination of the 
Programme with the Slovak Government and the imple­
mentation of a communications programme. 
28 
Slovenia 
Slovenia has been one of the most successful of the Phare 
partner countries in transforming its economy and promot­
ing economic growth, achieving 5.5 per cent of GDP 
growth in 1994. With public debt at around three per cent 
and a balanced budget it already fulfils two of the three 
European Union's single currency 'convergence' criteria. 
Slovenia's economic progress towards integration is 
somewhat in advance of political links with the European 
Union. A Trade and Economic Cooperation Agreement 
has been in force since 1993 pending the conclusion of a 
Europe Agreement. 
Following the Essen Council the focus of Phare in the 
future will be on facilitating the preparation for eventual 
accession and on implementation of the future Europe 
Agreement while continuing support for key sectors for 
the medium-term restructuring of the economy aimed at 
improving economic efficiency and competitiveness. 
Slovenia received ECU 24 million for 1994 and focused 
on five priority areas: 
• private sector development 
• the harmonisation of legislation to accepted European 
standards 
• public infrastructure 
• science and technology 
• human resources development. 
In 1994 Slovenia also received ECU 4 million under the 
Cross-border cooperation programme. This is being used 
to fund ten initiatives in the Italian border region in three 
core areas: transport and border-crossing infrastructure, 
environment and agriculture. 
Phare has also provided the necessary feasibility studies to 
support the east-west transport corridor financed by the 
European Bank for Reconstruction and Development. Funds committed by sector 1994 
ECU 24 million 
Infrastructure 6 
Education, 
health, training 
and research 5.5 Private sector 
development and 
enterprise support 12.5 
Phare is also providing funds under a General Technical 
Assistance Facility which funds small-scale initiatives for 
a range of different sectors. Support provided includes 
policy advice on the development of the telecommunica­
tions and transport sectors, support for the promotion of 
private sector involvement in research, the analysis of the 
marketing, technological and economic factors leading to 
the preparation of a strategy for the chemical and paper 
industries, support for the Bank of Slovenia in carrying 
out on-site inspections of banks due to join the Bank 
Rehabilitation Agency and the development of a compre­
hensive training programme on economic legislation. 
Of the overall amount of funds committed by Phare to 
Slovenia 57.5 per cent have been contracted. This is a 
good performance especially since the Programme has 
only been operational since 1992. The disbursement rate is 
also encouraging with 43 per cent of funds contracted 
actually paid at the end of 1994. 
Phare launched a programme for energy and environment 
in 1994. It finances the preparation and implementation of 
energy-saving activities such as the creation of an energy-
saving fund, the development of a clean coal programme 
and advisory support. 
29 
Phare funding by country 
This section contains a detailed breakdown of how Phare 
funds allocated to each country have been committed to 
sectors. 
For each country the following information is given: 
. an overview of total funds committed by year since the 
beginning of the Phare Programme 
• an overview of how total funds committed have been 
allocated by sector from 1990 to 1994 
The same information is also given for funds committed 
under multi-country programmes. 
For some countries the figures will not show a complete 
picture of the sectoral distribution of funds because a large 
proportion of the funds allocated are in the form of a 
General Technical Assistance Facility (GTAF). This is 
classified under the category 'other' but frequently 
finances a range of different initiatives across a variety of 
sectors. 
Albania 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development 
and enterprise support 
Education, health, training 
and research 
Humanitarian and food aid 
Agricultural restructuring 
Environment and nuclear safety 
Infrastructure (energy, transport 
and telecommunications) 
Social development and employment 
Public institution and 
administrative reform 
Others 0 
0 
10 
0 
0 
0 
0 
0 
0 35 
1.2 
50 
15 
0 
4.4 
0 
0 
4.4 42 
8.5 
10 
10 
3.3 
0 
0 
1.2 
0 0 
9.4 
7 
5 
0 
23 
0 
4.6 
0 77 
19.1 
77 
30 
3.3 
27.4 
0 
5.8 
4.4 
Total 10 110 75 49 244 
Note: Albania entered the Phare Programme in 1991 
30 
Bulgaria 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development 
and enterprise support 
Education, health, training 
and research 
Humanitarian and food aid 
Agricultural restructuring 
Environment and nuclear safety 
Infrastructure (energy, transport 
and telecommunications) 
Social development and employment 
Public institution and 
administrative reform 
Others 0 
0 
5 
16 
3.5 
0 
0 
0 
0 30 
5 
20 
25 
26.5 
13 
2.5 
0 
0 22.5 
23 
0 
10 
8.3 
13 
0 
0 
0 11 
28 
0 
0 
10.8 
13.9 
4 
16 
1.5 3 
12 
0 
0 
5 
62.6 
0 
1.2 
1.2 66.5 
68 
25 
51 
54.1 
102.5 
6.5 
17.2 
2.7 
Total 24.5 122 76.8 85.2 85 393.5 
Czech Republic 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development 
and enterprise support 
Education, health, training 
and research 
Humanitarian and food aid 
Agricultural restructuring 
Environment and nuclear safety 
Infrastructure (energy, transport 
and telecommunications) 
Social development and employment 
Public institution and 
administrative reform 
Others 27 
8 
0 
0 
0 
9 
8 
0 
8 0 
5.5 
0 
4.5 
0 
25 
14 
11 
0 27 
13.5 
0 
4.5 
0 
34 
22 
11 
Total 60 60 120 
Note: prior to 1993 Phare funds were provided to Czechoslovakia 
31 
Estonia 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development 
and enterprise support 
Education, health, training 
and research 
Humanitarian and food aid 
Agricultural restructuring 
Environment and nuclear safety 
Infrastructure (energy, transport 
and telecommunications) 
Social development and employment 
Public institution and 
administrative reform 
Others 0 
1.5 
0 
0 
0 
0 
0 
0 
10.5 4.5 
0 
0 
2.5 
6 
0 
0 
1.5 7 
0 
0 
2.5 
6 
0 
0 
21 
Total 10 12 22.5 44.5 
Hungary 
Funds allocated by sector each year Note: Estonia entered the Phare Programme in 1992 
1990 1991 1992 1993 1994 Total 
Private sector development 
and enterprise support 
Education, health, training 
and research 
Humanitarian and food aid 
Agricultural restructuring 
Environment and nuclear safety 
Infrastructure (energy, transport 
and telecommunications) 
Social development and employment 
Public institution and 
administrative reform 
Others 
Total 31 
7.5 
0 
20 
27 
1.3 
3 
0 
0 
89.8 59.5 
22 
0 
13 
10 
7 
0 
119.5 11 
16 
0 
5 
10 
0 
26 
14.5 
15 
97.5 31 
36 
0 
30.5 
0 
0 
0 
1.5 
0 
99 16.5 
24 
0 
0 
15.5 
29 
0 
0 
0 149 
105.5 
0 
68.5 
62.5 
37.3 
29 
24 
15 
85 490.8 
32 
Latvia 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development 
and enterprise support 
Education, health, training 
and research 
Humanitarian and food aid 
Agricultural restructuring 
Environment and nuclear safety 
Infrastructure (energy, transport 
and telecommunications) 
Social development and employment 
Public institution and 
administrative reform 
Others 0 
1.5 
0 
0 
0 
0 
0 
0 
13.5 0 
2 
0 
0 
0 
0 
0 
0 
16 14.5 
5 
0 
0 
5.5 
0 
0 
0 
4.5 14.5 
8.5 
0 
0 
5.5 
0 
0 
0 
34 
Total 15 18 29.5 62.5 
Lithuania Note: Latvia entered the Phare Programme in 1992 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development 
and enterprise support 
Education, health, training 
and research 
Humanitarian and food aid 
Agricultural restructuring 
Environment and nuclear safety 
Infrastructure (energy, transport 
and telecommunications) 
Social development and employment 
Public institution and 
administrative reform 
Others 9.5 
1.5 
0 
0 
0 
0 
0 
0 
9 0 
2.5 
0 
0 
0 
0 
0 
0 
22.5 14.5 
6 
0 
0 
1 
16.5 
0 
0 
1 24 
10 
0 
0 
1 
16.5 
0 
0 
32.5 
Total 20 25 39 84 
Note: Lithuania entered the Phare Programme in 1992 
33 
Poland 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development 
and enterprise support 
Education, health, training 
and research 40 72 79.2 27 31 249.2 
2.8 34.5 42 45 39 163.3 
Humanitarian and food aid 0 0 0 0 0 0 
Agricultural restructuring 100 17 18 30 2.5 167.5 
Environment and nuclear safety 22 35 18 0 12 87 
Infrastructure (energy, transport , in 0AA „ Q~s 1QQ0 
andtelecommimcations) 6 10 26A 63 938 1992 
Social development and employment 0 18 7.2 0 9 34.2 
10 7.5 9.1 27 21.5 75.2 Public institution and 
administrative reform 
Others 0 3 0 33 0 36 
Total 180.8 197 200 225 208.8 1,011.6 
Romania 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development Q Q 45 7Q 234 138 4 
and enterprise support 
Education, health, training Q 35 13 jg 3-7 JQ3 
and research 
Humanitarian and food aid 15.5 34.3 22 9.9 0 81.7 
Agricultural restructuring 0 34 32 5 0 71 
Environment and nuclear safety 0 0 5 0 0 5 
Infrastructure (energy, transport 0 9 0 0 25 34 
and telecommunications) 
Social development and employment 0 0 15 0 0 15 
Public institution and 0 0 0 10 9.6 19.6 
administrative reform 
Others 0 26 16 27 5 74 
Total 15.5 138.3 148 139.9 100 541.7 
34 
Slovakia 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development 
and enterprise support 
Education, health, training 
and research 
Humanitarian and food aid 
Agricultural restracturing 
Environment and nuclear safety 
Infrastructure (energy, transport 
and telecommunications) 
Social development and employment 
Public institution and 
administrative reform 
Others 19 
5 
0 
3 
0 
5 
3 
0 
5 5 
9 
0 
5 
0 
6.5 
5.5 
4 
5 24 
14 
0 
8 
0 
11.5 
8.5 
4 
10 
Total 40 40 80 
Slovenia Note: prior to 1993 Phare funds were provided to Czechoslovakia 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development 
and enterprise support 
Education, health, training 
and research 
Humanitarian and food aid 
Agricultural restructuring 
Environment and nuclear safety 
Infrastructure (energy, transport 
and telecommunications) 
Social development and employment 
Public institution and 
administrative reform 
Others 0 
2.3 
0 
0 
0 
0 
0 
0 
6.7 0 
3.5 
0 
0 
0 
0 
0 
0 
7.5 12.5 
5.5 
0 
0 
0 
6 
0 
0 
0 12.5 
11.3 
0 
0 
0 
6 
0 
0 
14.2 
Total 11 24 44 
Note: Slovenia entered the Phare Programme in 1992 
35 
Czechoslovakia 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development 
and enterprise support 
Education, health, training 
and research 
Humanitarian and food aid 
Agricultural restructuring 
Environment and nuclear safety 
Infrastructure (energy, transport 
and telecommunications) 
Social development and employment 
Public institution and 
administrative reform 
Others 0 
4 
0 
0 
30 
0 
0 
0 
0 39 
9 
0 
0 
5 
11 
15 
0 
20 31 
25 
0 
0 
0 
10 
0 
0 
34 70 
38 
0 
0 
35 
21 
15 
0 
54 
Total 34 99 100 233 
GDR Note: from 1993 Phare funding was provided separately to the Czech Republic and Slovakia 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development 
and enterprise support 
Education, health, training 
and research 
Humanitarian and food aid 
Agricultural restructuring 
Environment and nuclear safety 
Infrastructure (energy, transport 
and telecommunications) 
Social development and employment 
Public institution and 
administrative reform 
Others 0 
1 
0 
0 
20 
0 
0 
0 
14 0 
1 
0 
0 
20 
0 
0 
0 
14 
Total 35 35 
Note: Aid to GDR ceased after German unification 
36 
Former Yugoslavia 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development 
and enterprise support 0 0 0 0 0 0 
Education, health, training 
and research 0 6 0 0 0 6 
Humanitarian and food aid 30.2 7.1 47.8 25 23 133.1 
Agricultural restructuring 0 0 0 0 0 0 
Environment and nuclear safety 0 0 0 0 0 0 
0 0 0 0 Infrastructure (energy, transport ft 0 
and telecommunications) 
Social development and employment 0 0 0 0 0 0 
0 0 0 0 2 2 Public institution and 
administrative reform 
Others 0 0 0 0 0 0 
Total 30.2 13.1 47.8 25 25 141.1 
Multi-country programmes 
Funds allocated by sector each year 1990 1991 1992 1993 1994 Total 
Private sector development Q 20 3 27.5 21 71.5 
and enterprise support 
Education, health, training 21.5 28.5 24 30.6 26 130.6 
and research 
Humanitarian and food aid 
Agricultural restructuring 
Environment and nuclear safety 51 0 0 0 0 51 
0 0 0 0 0 0 
0 23.5 46 20 36 125.5 
Infrastructure (energy, transport o 0 35 24 33 92 
and telecommunications) 
Social development and employment 0 0 0 0 0 0 
Public institution and 0 11 1.5 10 28 50.5 
administrative reform 
Others 13.4 15.8 50.3 70.6 51.5 201.6 
Total 85.9 98.8 159.8 182.7 195.5 722.7 
37 
Phare funding by sector 
During 1994 there were some significant shifts in the allo­
cation of Phare funds between sectors. These shifts reflect 
the fact that Phare is adapting to reflect the changing 
needs of its partner countries. 
In particular there was a significant increase in funding 
allocated to infrastructure (transport, energy and telecom­
munications). Funds allocated to this sector increased 
from ECU 114.9 million in 1993 to ECU 326.4 million in 
1994 - an increase of 184 per cent. This reflects the fact 
that improving the infrastructure of the partner countries, 
in particular the physical links between these countries 
and the European Union, is becoming an important objec­
tive linked to integration with, and eventual membership 
of, the European Union. 
Funds allocated to the environment also increased signifi­
cantly. The Phare budget for this sector increased from 
ECU 34.1 million in 1993 to 77.5 million in 1994. This 
increase has gone hand-in-hand with a shift in Phare's 
focus from funding urgent actions and establishing the 
basic policy and institutional foundations to a more long-
term strategic approach. In particular this involves raising 
public awareness and strengthening environmental non­
governmental organisations as well as providing capital 
investment which is essential to stimulating the estimated 
ECU 300 billion needed over the next 15 years to substan­
tially raise the quality of the environment in central and 
eastern Europe. 
Funding for social development and employment also 
increased from ECU 15 million to ECU 28.5 million. This 
is due to the fact that coming to terms with increasing 
unemployment caused by the restructuring of industry and 
establishing new systems of social protection is an 
increasing priority for the Phare partner countries. 
Public administration and institutional reform received a 
25 per cent increase in funds allocated to it. This increase 
reflects the fact that governments in the partner countries 
still face many challenges in delivering the services of 
government at both central and local level adapted to the 
needs of a market oriented system. In particular those countries which are developing a greater focus on integra­
tion with the European Union need support in this area to 
establish the legal and regulatory changes necessary to 
adopt the European Union's 'acquis communautaire'. 
Funding devoted to private sector development and enter­
prise support decreased by ECU 105.1 million to ECU 
149.4 million. This is due to the fact that much of the 
initial work in privatisation and restructuring has been 
accomplished, particularly in terms of establishing the 
necessary legal and regulatory frameworks, the area where 
Phare know-how transfer plays an important role. 
Phare funding for the agriculture sector also decreased 
largely as a result of the fact that there is now much less 
emphasis on agricultural supply programmes which were 
a feature of Phare support to a number of countries in the 
early stages of transition. Phare support in this sector is 
now more focused on providing the know-how necessary 
to improve the performance of the sector as well as devel­
oping government policies which are in line with Euro­
pean Union laws and regulations. 
Likewise funding for humanitarian aid has decreased as 
this type of emergency assistance is usually only required 
to help countries overcome the initial shocks associated 
with the early stages of transition to market economies. 
The following information in this section contains a 
detailed breakdown of how Phare funds allocated to each 
sector have been committed to each country. 
For each sector the following information is given: 
• an overview of total funds committed by year since the 
beginning of the Programme 
• an overview of how total funds committed have been 
allocated by country from 1990 to 1994 
38 
Private sector development and enterprise support 
Funds committed by country each year 1990 1991 1992 1993 1994 Total 
Poland 40 72 79.2 27 31 249.2 
Hungary 31 59.5 11 31 16.5 149 
Romania 0 0 45 70 23.4 138.4 
Bulgaria 0 30 22.5 11 3 66.5 
Czech Republic 0 0 0 27 0 27 
Slovakia 0 0 0 19 5 24 
Czechoslovakia 0 39 31 0 0 70 
Albania 0 0 35 42 0 77 
Lithuania 0 0 9.5 0 14.5 24 
Former Yugoslavia 0 0 0 0 0 0 
GDR 0 0 0 0 0 0 
Latvia 0 0 0 0 14.5 14.5 
Estonia 0 0 0 0 8 8 
Slovenia 0 0 0 0 12.5 12.5 
Multi-country programmes 0 20 3 27.5 21 71.5 
Total 71 220.5 236.2 254.5 149.4 931.6 
Education, health, training and research 
Funds committed by country each year 1990 1991 1992 1993 1994 Total 
Poland 2.8 34.5 42 45 39 163.3 
Hungary 7.5 22 16 36 24 105.5 
Romania 0 35 13 18 37 103 
Bulgaria 0 5 23 28 12 68 
Czech Republic 0 0 0 8 5.5 13.5 
Slovakia 0 0 0 5 9 14 
Czechoslovakia 4 9 25 0 0 38 
Albania 0 0 1.2 8.5 9.4 19.1 
Lithuania 0 0 1.5 2.5 6 10 
Former Yugoslavia 0 6 0 0 0 6 
GDR 10 0 0 0 1 
Latvia 0 0 1.5 2 5 8.5 
Estonia 0 0 1 1.5 4.5 7 
Slovenia 0 0 2.3 3.5 5.5 11.3 
Multi-country programmes 21.5 28.5 24 30.6 26 130.6 
Total 36.8 140 150.5 188.6 182.9 698.8 
39 
Infrastructure 
Funds committed by country each year 1990 1991 1992 1993 1994 Total 
Poland 6 10 26.4 63 93.8 199.2 
Hungary 1.3 7 0 0 29 37.3 
Romania 0 9 0 0 25 34 
Bulgaria 0 13 13 13.9 62.6 102.5 
Czech Republic 0 0 0 9 25 34 
Slovakia 0 0 0 5 6.5 11.5 
Czechoslovakia 0 11 10 0 0 21 
Albania 0 0 4.4 0 23 27.4 
Lithuania 0 0 0 0 16.5 16.5 
Former Yugoslavia 0 0 0 0 0 0 
GDR 0 0 0 0 0 0 
Latvia 0 0 0 0 0 0 
Estonia 0 0 0 0 6 6 
Slovenia 0 0 0 0 6 6 
Multi-country programmes 0 0 35 24 33 92 
Total 7.3 50 88.9 114.9 326.4 587.5 
Environment and nuclear safety 
Funds committed by country each year 1990 1991 1992 1993 1994 Total 
Poland 22 35 18 0 12 87 
Hungary 27 10 10 0 15.5 62.5 
Romania 0 0 5 0 0 5 
Bulgaria 3.5 26.5 8.3 10.8 5 54.1 
Czech Republic 0 0 0 0 0 0 
Slovakia 0 0 0 0 0 0 
Czechoslovakia 30 5 0 0 0 35 
Albania 0 0 0 3.3 0 3.3 
Lithuania 0 0 0 0 1 1 
Former Yugoslavia 0 0 0 0 0 0 
GDR 20 0 0 0 0 20 
Latvia 0 0 0 0 5.5 5.5 
Estonia 0 0 0 0 2.5 2.5 
Slovenia 0 0 0 0 0 0 
Multi-country programmes 0 23.5 46 20 36 125.5 
Total 102.5 100 87.3 34.1 77.5 401.4 
40 
Agricultural restructuring 
Funds committed by country each year 1990 1991 1992 1993 1994 Total 
Poland 100 17 18 30 2.5 167.5 
Hungary 20 13 5 30.5 0 68.5 
Romania 0 34 32 5 0 71 
Bulgaria 16 25 10 0 0 51 
Czech Republic 0 0 0 0 4.5 4.5 
Slovakia 0 0 0 3 5 8 
Czechoslovakia 0 0 0 0 0 0 
Albania 0 0 15 10 5 30 
Lithuania 0 0 0 0 0 0 
Former Yugoslavia 0 0 0 0 0 0 
GDR 0 0 0 0 0 0 
Latvia 0 0 0 0 0 0 
Estonia 0 0 0 0 0 0 
Slovenia 0 0 0 0 0 0 
Multi-country programmes 0 0 0 0 0 0 
Total 136 89 80 78.5 17 400.5 
Humanitarian and food aid 
Funds committed by country each year 1990 1991 1992 1993 1994 Total 
Poland 0 0 0 0 0 0 
Hungary 0 0 0 0 0 0 
Romania 15.5 34.3 22 9.9 0 81.7 
Bulgaria 5 20 0 0 0 25 
Czech Republic 0 0 0 0 0 0 
Slovakia 0 0 0 0 0 0 
Czechoslovakia 0 0 0 0 0 0 
Albania 0 10 50 10 7 77 
Lithuania 0 0 0 0 0 0 
Former Yugoslavia 30.2 7.1 47.8 25 23 133.1 
GDR 0 0 0 0 0 0 
Latvia 0 0 0 0 0 0 
Estonia 0 0 0 0 0 0 
Slovenia 0 0 0 0 0 0 
Multi-country programmes 51 0 0 0 0 51 
Humanitarian aid 0 0 0 0 0 0 
Total 101.7 71.4 119.8 44.9 30 367.8 
41 
Public institution and administrative reform 
Funds committed by country each year 1990 1991 1992 1993 1994 Total 
Poland 
Hungary 
Romania 
Bulgaria 
Czech Republic 
Slovakia 
Czechoslovakia 
Albania 
Lithuania 
Former Yugoslavia 
GDR 
Latvia 
Estonia 
Slovenia 
Multi-country programmes 10 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 7.5 
8 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
11 9.1 
14.5 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1.5 27 
1.5 
10 
16 
0 
0 
0 
1.2 
0 
0 
0 
0 
0 
0 
10 21.5 
0 
9.6 
1.2 
11 
4 
0 
4.6 
0 
2 
0 
0 
0 
0 
28 75.1 
24 
19.6 
17.2 
11 
4 
0 
5.8 
0 
2 
0 
0 
0 
0 
50.5 
Total 10 26.5 25.2 65.7 81.9 209.3 
Social development and employment 
Funds committed by country each year 1990 1991 1992 1993 1994 Total 
Poland 
Hungary 
Romania 
Bulgaria 
Czech Republic 
Slovakia 
Czechoslovakia 
Albania 
Lithuania 
Former Yugoslavia 
GDR 
Latvia 
Estonia 
Slovenia 
Multi-country programmes 
Total 18 
0 
0 
2.5 
0 
0 
15 
0 
0 
0 
0 
0 
0 
0 
0 
35.5 7.2 
26 
15 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
48.2 0 
0 
0 
4 
8 
3 
0 
0 
0 
0 
0 
0 
0 
0 
0 
15 9 
0 
0 
0 
14 
5.5 
0 
0 
0 
0 
0 
0 
0 
0 
0 
28.5 34.2 
29 
15 
6.5 
22 
8.5 
15 
0 
0 
0 
0 
0 
0 
0 
0 
130.2 
42 
Other sectors 
Funds committed by country each year X990 1991 1992 1993 1994 Total 
Poland 0 3 0 33 0 36 
Hungary 0 0 15 0 0 15 
Romania 0 26 16 27 5 74 
Bulgaria 0 0 0 1.5 1.2 2.7 
Czech Republic 0 0 0 8 0 8 
Slovakia 0 0 0 5 5 10 
Czechoslovakia 0 20 34 0 0 54 
Albania 0 0 4.4 0 0 4.4 
Lithuania 0 0 9 22.5 1 32.5 
Former Yugoslavia 0 0 0 0 0 0 
GDR 14 0 0 0 0 14 
Latvia 0 0 13.5 16 4.5 34 
Estonia 0 0 9 10.5 1.5 21 
Slovenia 0 0 6.7 7.5 0 14.2 
Multi-country programmes 13.4 15.8 50.3 70.5 51.5 201.5 
Total 27.4 64.8 157.9 201.5 69.7 521.3 
43 
Phare financial performance 
The financial performance of the Phare Programme can be 
measured using the following indicators: 
• the level of commitments compared with the annual 
budget 
• the amount contracted 
• the level of payments compared with the budget for 
payments established at the start of the year 
• the amount paid 
• cumulative contracts and payments as a percentage of 
cumulative commitments. 
Commitment of the Phare budget 
Since the beginning of the Programme, the percentage of 
the Phare budget actually committed has always been 
close to the maximum figure of 100 per cent and reached 
99.9 per cent of the 1994 budget. 
Amount contracted 
Phare has made a dramatic increase in the level of 
contracting since the Programme began. In 1990, only 
ECU 155 million was contracted. This increased to ECU 
297 million in 1991, ECU 542 million in 1992, ECU 572 
million in 1993 and reached ECU 660 million in 1994 (see 
fig. 1). 
Figure 2 gives the cumulative figures of funds contracted 
at the end of each budget year. It shows that the level of 
contracting greatly increased in 1994 where it reached 
fourteen times the level of contracting in 1990. Fig. 1 - Funds committed, contracted and paid 1990-
1994 (ECU 4,248.5 million) 
(in ECU million) 
1990 1991 1992 1993 1994 
• commitments • contracts payments 
Fig. 2 - Cumulative funds committed, contracted and 
paid 1990-1994 (in ECU million) 
1990 1991 1992 1993 
commitments • contracts payments 1994 
44 
The budget year to which the contracts signed in each 
calendar year refer can be seen in figure 3. 
Payments compared with the budget 
The Phare Programme establishes at the beginning of each 
year a budget for funds to be disbursed during the course 
of the year. In 1994, more than 99 per cent of the 
budgeted amount was actually paid. Fig. 3 - Contracts concluded by calendar year (in ECU 
million) 
'•012.6 1,003.6 
963.3 
1990 budget 1991 budget 1992 budget 1993 budget 1994 budget 
92.4% 76.9% 59.4% 38.6% 19.1% 
% contracted as of 31.12.94 
contracted in 1990 contracted in 1991 
• contracted in 1992 • contracted in 1993 
• contracted in 1994 • not yet contracted 
Funding procedure 
Each stage of the programme cycle, starting with the 
production of Operational Programmes, is matched by 
an equivalent stage in the delivery of funds. 
Commitment - The design of Operational Programmes 
and their associated financing proposals corresponds to 
what is referred to as the commitment of funds. Once a 
financing proposal has been approved by the Phare 
Management Committee and decided by the Commis­
sion, the relevant funds associated with that proposal 
are said to have been committed. Phare must commit 
its entire annual budget within the year to which that 
budget applies, or else the uncommitted money will be 
returned to European Union funds. 
Contracting - The tendering procedure precedes the 
next funding step known as contracting. As soon as a 
tender has been successfully completed and a contract 
signed, the relevant funds are said to have been 
contracted. Payment - Payment is the final step in the funding 
process. This will take place over the length of the 
project, which can be up to two or three years. 
Contracting is the most important measure of the 
implementation of the Programme. This is because it is 
mis that unlocks Phare funds and marks the start of real 
implementation on the ground. 
45 
Amount paid 
The increase in the contracting level previously mentioned 
is naturally followed by an increase in payments, but with 
a certain time lag as payment is spread out over the period 
of the contract. Payments may in some years exceed the 
corresponding amount contracted. This is due to advance 
payments made by the Commission to the Programme 
Management Units in partner countries to enable them to 
meet their contractual and payment obligations. 
The level of payments, however, notably improved in 
1994 where ECU 721 million was disbursed (see fig. 1). 
This is an increase of 38 per cent from the previous year 
and four times the amount paid in 1990. 
The budget years to which payments in each year relate 
can be seen in figure 4. Fig. 4 - Payments in each budget year 
(in ECU million) 
1,012.6 1,003.6 
963.3 
1990 budget 1991 budget 1992 budget 1993 budget 1994 budget 
95.9% 81.4% 62.1% 32.4% 7.7% 
% paid as of 31.12.94 
paid in 1990 paid in 1991 • paid in 1992 
• paid in 1993 • paid in 1994 • not yet paid 
Cumulative contracts and payments as percentage of 
cumulative commitments 
Both ratios have significantly improved over the life of the 
Phare Programme (see fig. 5). In 1990, only 31 per cent of 
funds committed were contracted and 35 per cent were 
paid. By the end of 1994, both figures had increased to 52 
and 50 per cent of funds committed respectively. Fig. 5 - Cumulative contracts and payments 1990-1994 
1990 1991 1992 1993 1994 
Cumulative contracts 
as percentage of 31% 36% 44% 48% 52% 
cumulative commitments 
Cumulative payments as 
percentage of 35% 36% 39% 43% 50% 
cumulative contracts 
46 
Major projects launched in 1994l 
Agriculture 
Agriculture and land registration programme 
Czech Republic ECU 4.5 million 
Agriculture and land registration programme 
Slovakia ECU 5 million 
Programme for credit, land market extension 
and agro-processing restructuring 
Albania ECU 5 million 
Reallocation of funds from the 1993 programme 
for the agricultural and rural sectors 
Poland ECU 2.5 million 
Education and health 
Regional cooperation on distance education 
All ECU 
Regional industrial property programme 
All ECU 
Research and development networking 
All ECU 
Programme for vocational education 
and training reform 
Slovakia ECU 
Programme for the reform of vocational 
education and training 
Romania ECU 
Programme to restructure the health sector 
Albania ECU 
Programme for the national training fund 
Czech Republic 
Programme for vocational education 
and training reform 
Estonia 
Programme to strengthen links 
between education and the economy 
Hungary 
Programme for vocational education 
and training reform 
Latvia ECU 3 million 
0.8 million 
4 million 
4 million 
25 million 
5 million 
2 million 
ECU 3 million 
ECU 8 million 
ECU 3 million Programme for vocational education 
and training education 
Lithuania ECU 4 million 
Programme for labour market development 
Slovakia ECU 3.5 million 
Programme for vocational education 
and training reform 
Slovenia ECU 3 million 
Environment 
Programme for environmental protection 
Lithuania ECU 1 million 
Programme for pollution monitoring 
and environment legislation 
Estonia ECU 2.5 million 
Programme for rural water development 
Latvia ECU 2.5 million 
Programme for forestry protection 
Poland ECU 12 million 
Energy 
Harmonisation of European energy 
policies and strategies, interconnection 
of energy networks 
All ECU 13 million 
Reduction of sulphur dioxide 
emissions 
Bulgaria 
Energy and environmental 
programme 
Hungary ECU 15 million 
ECU 15.5 million 
Energy programme (efficiency policy) 
Slovakia ECU 4 million 
Programme for the energy sector 
Estonia ECU 3 million 
Programme for the energy sector 
Lithuania ECU 6.9 million 
Programme for energy and 
the environment 
Slovenia ECU 2 million 
1 The following list gives the names of all major projects launched 
in 1994 in each sector as well as the country concerned and the 
corresponding budget. Contracts under ECU 500,000 are not listed. 
47 
Infrastructure 
Transport infrastructure programme 
Romania 
Transport infrastructure development 
programme 
Bulgaria 
Transport infrastructure development 
programme 
Lithuania 
Infrastructure programme 
(transport, energy, environment) 
Slovakia 
Programme for transport 
Albania 
General infrastructure programme 
Bulgaria 
Programme for transport 
infrastructure development 
Hungary ECU 25 million 
ECU 12 million 
ECU 4.6 million 
ECU 
ECU 
ECU 6.5 million 
3 million 
10.6 million 
ECU 18 million 
Programme for transport, 
communications and water management 
Hungary ECU 
Programme for transport 
infrastructure development 
Poland ECU 
Border crossing modernisation programme 
Hungary 
Cross-border cooperation programme 
with Greece and Italy 
Albania 
Cross-border cooperation programme 
with Greece 
Bulgaria 
Cross-border cooperation programme 
with Germany 
Czech republic 
Cross-border cooperation programme 
with Germany 
Poland 
Cross-border cooperation programme 
with Italy 
Slovenia ECU 3 million 
35 million 
8 million 
ECU 20 million 
ECU 25 million 
ECU 25 million 
ECU 55 million 
ECU 4 million Cross-border cooperation programme 
with Denmark 
Estonia ECU 3 million 
Cross-border cooperation programme 
with Denmark 
Latvia ECU 3 million 
Cross-border cooperation programme 
with Denmark 
Lithuania ECU 5 million 
Cross-border cooperation programme 
with Denmark 
Poland ECU 3.8 million 
Cross-border cooperation programme 
for the environment 
All ECU 3 million 
Private sector development and enterprise 
restructuring 
Economic development programme 
(privatisation and enterprise restructuring, 
banking, public finance and accounting) 
Estonia ECU 8 million 
Private sector development programme 
Hungary ECU 16.5 million 
Programme for private sector development 
Latvia ECU 10.5 million 
Programme for economic development 
Lithuania ECU 12.5 million 
Programme for private sector development 
Slovakia ECU 5 million 
Programme for the development of SMEs 
All ECU 10 million 
Programme for financial sector development 
Poland ECU 20 million 
Programme for mass privatisation 
Bulgaria ECU 3 million 
Programme for enterprise restructuring, 
privatisation and energy 
Poland ECU 11 million 
Programme for SMEs and regional 
development 
Romania ECU 18.4 million 
48 
Public institution and 
administrative reform 
Regional consumer protection 
Ail ECU 
Regional programme on copyright protection 
Ail ECU 
Civic society development programme 
Czech Republic ECU 
Programme to upgrade 
the Statistical Information System 
Romania ECU 
Customs transformation programme 
Latvia ECU 
Programme to modernise 
the Latvian State Statistics Committee 
Latvia ECU 
Programme to modernise 
the Lithuanian Statistics Department 
Lithuania ECU 
Customs transformation programme 
Lithuania ECU 
Programme for public 
administration reform 
Romania ECU 
Programme for civil society development 
Bulgaria ECU 
Programme for worker protection 
Poland ECU 
Programme of support 
for decentralised activities 
Poland ECU 
Programme for tourism development 
Romania ECU 
Programme for civil society development 
Romania ECU 
Programme to support public administration 
Slovakia ECU 2 million 
2 million 
2 million 
4.6 million 
2.5 million 
1.5 million 
1 million 
1 million 
5 million 
1.2 million 
5 million 
10 million 
5 million 
5 million 
4 million 
Social development 
Programme for social protection reform 
Czech Republic ECU 6 million Programme for social insurance reform 
Slovakia ECU 2 million 
Labour market development programme 
Czech Republic ECU 6 million 
Multi-country programmes 
Link Inter European NGOs (LIEN) ECU 5 million 
Telecommunications and post services ECU 1 million 
Transport programme ECU 30 million 
Complementary programme for 
multi-country statistical cooperation ECU 17 million 
Programme for competition protection ECU 2 million 
Programme to improve veterinary 
disease, diagnostics and controls ECU 6 million 
Programme to support the Commission 
of the European Communities to implement 
Tempus and for staff development in 
vocational training sector ECU 2.6 million 
Others 
General Technical Assistance Facility (GTAF) 
Slovenia ECU 12.5 million 
General Technical Assistance Facility (GTAF) 
Albania ECU 4.6 million 
General Technical Assistance Facility (GTAF) 
Estonia ECU 1.5 million 
General technical support and know-how 
Czech Republic ECU 9 million 
General Technical Assistance Facility (GTAF) 
Estonia ECU 1.5 million 
General Technical Assistance Facility (GTAF) 
Lithuania ECU 1 million 
General technical know-how and support 
Slovakia ECU 5 million 
Europe Agreement information programme 
Bulgaria ECU 1.2 million 
Programme providing a flexible service for technical 
assistance (Fiesta III) 
Poland ECU 22 million 
49 
Multi-country programmes operational 
in 1994 
Multi-country programming in 1994 supported the follow­
ing key sectors: 
Infrastructure 
Environment and nuclear safety 
Education, health, training and research 
Public institution and administrative reform 
Private sector development and enterprise support. 
Infrastructure 
Transport - launched 1992 
Budget ECU 75 million 
Objectives: 
• To reconstruct and upgrade transport infrastructure 
• To promote ongoing integration of western and eastern 
Europe 
. To assist coordination of various technical assistance 
and training activities. 
Projects: 
Infrastructure/border-crossings component 
Training for air traffic services (ATS) 
Trans-European motorways and Trans-European rail­
ways (EMP/PER) 
Sector studies component 
Development of an integrated transportation informa­
tion system (ITS) 
Border-crossing bottlenecks elimination programme 
Pre-investment activities 
Regional studies/seminars. 
Telecommunications - launched 1992 
Budget ECU 8 million 
Objectives: 
• To complement those which are taking place 
. To support the identification and preparation of invest­
ment-related projects 
• To train staff in regulatory and operation areas. 
Projects: 
. Training modules 
Regulating the telecommunications sector 
Managing a telecommunications company 
Human resource management 
Marketing and selling telecommunications, 
products and services 
Introducing new technology 
Managing computer systems in telecommunications. Energy - launched 1992 (projected end 1994) 
Budget ECU 25 million 
Objectives: 
• Increase east-west cooperation 
. Improve energy policy-making, supply and demand 
problems, efficiency and conservation measures, envi­
ronmental and other safety measures. 
Projects: 
. Natural gas interconnection study 
. Clean coal study 
• Coordination of natural gas strategies in the Baltic 
states 
. Twinning/training activities 
. Harmonisation of energy policies. 
Customs - launched 1994 
Budget ECU 2 million 
Objectives: 
• To introduce a new customs code in Phare countries 
• To continue the fight against illegal transportation of 
nuclear waste. 
Projects: 
• Upgrading customs laboratories 
• Technical assistance and training for national customs 
administrators and officials. 
Environment and nuclear safety 
Environment - launched 1991 
Budget ECU 46 million 
Objective: 
• To encourage the development of capital investments 
in the field of the environment by providing project and 
implementation assistance to Project Preparation 
Committees (PPC), donors, banks and Phare partner 
countries. 
Projects: 
Danube integrated environment programme 
Regional environmental programme for the Black 
Triangle 
Corine/remote sensing programme 
Research programme on air pollution and health 
State of the environment report 
Regional environmental centre for central and eastern 
Europe 
Black Sea regional environment programme 
Regional programme for the Baltic Sea. 
50 
Education, health, training and research 
ACE (Action for Cooperation in the field of Economics) 
- launched 1991 
Budget ECU 22.5 million 
Objectives: 
• To enhance the intellectual process reform and liberali­
sation 
• To increase the exchange of scientific and management 
knowledge between professionals and academic scientists. 
Projects: 
• Scholarships 
• Conferences 
• Research. 
COSINE (Cooperation for Open Systems International 
Networking in Europe) - launched 1991 
Budget ECU 6.5 million 
Objective: 
• To provide the CEECs' research and development 
community with pan-European network services. 
Distance learning - launched 1994 
Budget: ECU 3 million 
Objectives: 
• To pilot a programme for distance education 
• To help the education system overcome the problems 
which it faces and adapt to the needs of rapidly changing 
economies. 
Projects: 
General measures and pilot courses for staff training 
Basic infrastructure 
Regional coordination unit 
Implementation 
Procurement of equipment. • Development of a drug information system 
• Support for demand-reduction programmes 
• The development of a multi-disciplinary training 
programme on the drug phenomenon and its conse­
quences 
• Control of illegal production and trafficking 
• Measures to control the production of and trade in 
psychotrophic substances and related chemical and 
pharmaceutical products. 
Public administration 
SIGMA (Support for Improvement in Governance 
and Management in central and eastern European 
countries) - launched 1992 
Budget ECU 11 million 
Objectives: 
• To provide short and long-term support to develop 
coherent reform strategies 
• To help authorities of partner countries cope with the 
changes resulting from institutional reform and move 
away from centralisation 
• To support the development of efficient and effective 
public institutions which can sustain market economies, 
provide a base for democratic pluralist systems of 
governance and implement public policies. 
Areas of support: 
• Management of policy-making (for example, organisa­
tion and procedures supporting the Council of Ministers) 
• Budgeting and financial management (for example, 
budget and audit systems) 
. Management of public service(for example, civil 
service law, pay systems) 
• Control over administration (for example, appeals 
mechanisms, and as a support to reformers) 
• Management of change (for example, building home­
grown consulting capacities). 
Fight against drugs - launched 1992 
Budget ECU 12 million 
Objective: 
• To take measures and provide know-how to control the 
illegal circulation of drugs. Statistics - launched 1991 
Budget ECU 22.5 million 
Objective: 
• To develop statistics information systems to support 
and monitor economic reforms. 
Projects: 
• Measures against the diversion of precursors. 
• Measures for money laundering. 
51 


ISSN 0254-1475 . Com (95) 366 final. DOCUMENTS . EN . Catalogue number: CB-CO-95-392-EN-C 
ISBN 92-77-92087-4. Office for Official Publications of the European Communities L-2985 Luxembourg 
European Commission • Phare Information Office • Directorate General External Relations: 
Europe and the New Independent States, Common Foreign and Security Policy and External Missions (DG IA) 
Office Address Aarlenstraat 88 1/26 Rue d'Arlon B-1040 Brussels Tel (+32-2) 299 14 00 / 299 13 56 / 299 16 00 English 
Mailing Address AN 88 1/26 Wetstraat 200 Rue de la Loi B-1049 Brussels Fax (+32-2) 299 17 77 P/EN/08.95/01/02/11/B