Source: EURLEX
Language: en
Format: md

# Phare

##### European Commission:
### The Phare Programme Annual Report 1995

Brussels 23.07.1996 Com (96) 360
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 Europe rejoin the
mainstream of European development through future
membership of the European Union.

Phare does this by providing grant finance 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.

In the first six years of operation to 1995, Phare has made
available ECU 5,416.9 million to eleven partner countries,
making Phare the largest assistance programme of its kind.

Phare works in close cooperation with its partner countries
to decide how funds are to be spent, within a framework
agreed by the European Community. This ensures that
Phare funding is relevant to each government's own
reform policies and priorities.

Phare provides know-how from a wide range oi noncommercial, public and private organisations to its partner
countries. Phare acts as a powerful catalyst by unlocking
funds for important projects from other donors through
studies, capital grants, guarantee schemes and credit lines.
It also invests directly in infrastructure, which will account
for more Phare funds as the integration process progresses.

The main priorities for Phare funding are common to all
countries, and include restructuring of state enterprises
including agriculture, private sector development, reform
of institutions, legislation and public administration,
reform oi' social services, employment, education and
health, development of energy, transport and telecommunications infrastructure, and environment and nuclear safety.

For countries that have signed Europe Agreements, Phare
is the financial instrument of the European Union's preaccession strategy which will lead them to full membership.

Contents

Commissioner's statement 2

Phare 1995 financial overview 3

Political developments in 1995 3
Phare in 1995 6

Operational management of Phare 10
Albania 13

Bulgaria 14
Czech Republic 16
Estonia 18

Hungary 19
Latvia 20

Lithuania 21

Poland 23

Romania 25

Slovakia 27

Slovenia 29

1990 - 1995 funds committed by country 30
1990 - 1995 funds committed by sector 32
Phare funding by country 34
Phare funding by sector 40
Phare financial performance 44
Major programmes launched in 1995 47

#### Commissioner's statement

Over the last year the Phare Programme has greatly
increased its role as a provider of grant finance and knowhow to the countries of central Europe. As political
relations between those countries and the European Union
have progressed, Phare has embraced a new purpose.

In 1995, therefore, Phare began to function as the financial
instrument of the European Union's pre-accession
strategy. Unveiled at the European Council in Essen,
December 1994, the pre-accession strategy is the means
whereby the central European countries can progress
towards full membership of the European Union. It is
designed to help them bridge the gap between their
political and economic systems and those of the European
Union.

In 1995, the European Commission published its White
Paper on the preparation of the partner countries for
integration into the internal market. Phare is supporting
the implementation of the White Paper, which guides the
partner countries in their efforts to harmonise their
legislation with that of the European Community. At the
same time, 1995 was a year in which Phare focused on
sectors whose development is closely linked to
integration, such as infrastructure investment and crossborder cooperation.

Phare's role in the pre-accession strategy is also reflected
in the new programming cycle. National and cross-border
programmes are now mapped out over a multi-annual
period. This means that Phare operates in the framework
of medium-term objectives, and can respond more flexibly
to the needs of the partner countries. As shown in this
Report, Phare has also made improvements in its
operational procedures. This has been possible because of
the dedication and commitment of the Commission staff

who work on Phare.

The Dayton peace agreement reached in December
required the help of the international community. In the
same month, the European Commission and the World
Bank organised the first meeting of donors for BosniaHerzegovina, with the objective of identifying
reconstruction needs and mobilising donor assistance. A
programme was prepared and, on the basis of a multilateral plan, the first phase of the Phare Essential Aid
Programme (worth ECU 62.5 million) was launched in
January 1996. Above all, this programme illustrates the
concrete support given by the European Union to the
peace process which will eventually bring BosniaHerzegovina into the scope of Phare funding.

As a new millennium approaches, the enlargement of the
European Union is an ambitious project which requires
the support of both the Union and the central European
countries preparing to join. Phare is at the heart of that
project. As the European Commissioner responsible for
the Programme in 1995 and who will take the Programme
forward in 1996,1 commend this Annual Report to you.

Hans van den Broek
Member of the European Commission

### Phare 1995 financial overview

In 1995, the Phare Programme committed a total of ECU
1,154.7 million to its partner countries. This is an increase
of 19 per cent on 1994 (ECU 973 million), and represents
a commitment rate of 99.4 per cent. Total commitments
over the life of the Programme (1990 to 1995) now equal
ECU 5,416.9 million.

During 1995, Phare contracted funds totalling ECU
1,142.9 million. This represents an increase on 1994's
total contracts (ECU 665 million) of 72 per cent and is a
significant achievement for the Programme. Phare also
paid ECU 762.4 million in 1995 which was an increase of
5 per cent.

In total, therefore, 62.3 per cent of all Phare funds
committed have been contracted, and of the contracted
funds 85.9 per cent have been paid.

The following chart shows the breakdown of Phare funds
committed year on year, 1990 - 1995.

```
  1990 1991 1992 1993 1994 1995

```

It should be noted that the 1995 Phare Annual Report
contains figures from all five budget lines managed within
the framework of the Phare Programme. Owing to
reporting software limitations, figures contained in the
1994 Phare Annual Report only included two budget
lines. This therefore accounts for the small discrepancy in
the historical figures between the 1994 and the 1995 Phare
Annual Reports.

#### Political developments in 1995

Phare is at the heart of the political and economic relations
between the European Community and the partner
countries of central Europe. Those countries are now
preparing for full membership of the European Union.
The pre-accession strategy, adopted at the Essen Council
in December 1994, provides the framework for their
preparations. Phare is the financial instrument of that

strategy.

**Pre-accession strategy**

The pre-accession strategy is the path which leads the
central European countries with Europe Agreements
towards full membership of the European Union. It is
designed to help the partner countries bridge the gap
between their political, economic and legal systems and
those of the European Community.

The strategy for accession was adopted at the Essen
Council in December 1994. This represented a clear
turning point in the relationship between the European
Union and its partner countries.

The strategy has three main elements: the Europe
Agreements, the structured dialogue, and the Phare
Programme.

**Europe Agreements**

The Europe Agreements are the framework for bilateral
relations between the European Communities and their
Member States on the one hand, and the partner countries
on the other. Developed by the European Community in
1990 and then signed with individual countries over the
following years, the Europe Agreements cover trade
related issues, political, economic and cultural cooperation
and list Phare and the European Investment Bank as
providers of financial assistance. They are based on shared
understandings and values, and prepare the way for
progressive convergence in a wide range of areas. Given
that accession to the European Union is now the explicit
goal of the partner countries, the Europe Agreements have
become the framework within which these countries

prepare for membership.

**Official application**
**for EU membership**

December 1995

January 1996

November 1995

March 1994

October 1995

December 1995

April 1994

June 1995

June 1995

June 1996

**Country**

Bulgaria

Czech Republic

Estonia

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

**Europe Agreement**
**signed**

March 1993

October 1993

June 1995

December 1991

June 1995

June 1995

December 1991

February 1993

October 1993

June 1996

**Europe Agreement**
**came into force**

February 1995

February 1995

February 1994

February 1994

February 1995

February 1995

The Europe Agreements acquired greater political
significance following the European Council summit in
Copenhagen in 1993. There, the European Council
explicitly agreed that "the associated countries in central
and eastern Europe that so desire shall become members
of the European Union. Accession will take place as soon
as an associated country is able to assume the obligations
of membership by satisfying the economic and political
conditions required".

Under the Agreements, the partner countries commit
themselves to approximating their legislation, particularly
in the areas relevant to the internal market, to that of the
European Community.

One of the key elements of the Europe Agreements is the
Association Councils. These are a series of bilateral

meetings between the European Communities, their
Member States and each of the partner countries. During
1995, these Association Councils have concentrated on
the implementation of the pre-accession strategy and
regional cooperation.

The Association Councils are complemented by
Association Committees, which review all areas under the
Europe Agreements, and the Joint Parliamentary
Committees.

**Structured dialogue**

The second instrument of the pre-accession strategy is the
'structured dialogue'. Dialogue has always been a

cornerstone of the European Community's cooperation
with the central European countries. As they emerged
from decades of isolation from the rest of Europe, it
played an essential part in bringing about an improved
understanding of their requirements and interests.

The Copenhagen European Council in June 1993 agreed
on a multilateral framework of regular meetings at
ministerial level between the Union and the partner
countries. This framework was endorsed at Essen, where
the specific arrangements of the structured dialogue were

set out.

The structured dialogue fulfils an essential role in
preparing the partner countries for membership of the
Union, enabling discussion of issues of common concern,
in areas where solutions require action at European level.
The areas of policy range from cultural cooperation to the
Common Foreign and Security Policy (CFSP).

The discussion of issues of common concern also allows

prospective members to become more involved in the
European Union's activities before accession negotiations
begin and more familiar with the institutions of the
European Union and how they function. As a result, the
structured dialogue enhances the close working
relationship essential to the European integration process.

The heads of government of the partner countries were
invited to the European Councils at Cannes and Madrid.
Ministers also met to discuss a wide range of issues with a

trans-European angle, such as telecommunications,
transport, environment and scientific research, as well as
other matters related to the European Community's
internal market. In the field of justice and home affairs,
cooperation has focused on the fight against organised
crime.

**A new focus for Phare**

Developed initially as an immediate response to the
challenges facing the central European countries, the
Phare Programme is now also the financial instrument of
the pre-accession strategy.

The pre-accession strategy, as outlined at the Essen
Council, states that "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 concrete terms, this means that Phare is devoting a
greater share of its funds to the co-financing of
infrastructure development projects and to promoting
cross-border cooperation. Phare is also introducing
measures to promote cooperation between the partner
countries and to place a greater emphasis on investment

support.

To prepare the partner countries for participation in the
internal market, it was decided to support their efforts to
harmonise their legislation, standards and norms with
those existing within the European Community. This will
involve the provision of significant support for the system
of public administration to ensure that the necessary
legislation can be implemented effectively.

In its progress report on the pre-accession strategy which
it submitted to the European Council in December 1995,
the European Commission stated that further emphasis
still needed to be placed on support for investment and
infrastructure. It also stated that Phare would also be

supporting a number of projects in the area of justice and
home affairs.

In order to increase the efficiency of the Phare
Programme, the European Commission coordinates its
assistance activities with the other donors supporting the
central European countries, such as the European Bank for
Reconstruction and Development (EBRD) or the World
Bank. Emphasis is given to particular sectors in order to
heighten the impact of assistance.

**The Cannes European Council**

The European Commission, in accordance with the
conclusions of the Essen summit, presented its White
Paper on the preparation of the partner countries for
integration into the internal market of the European
Community. The Cannes European Council concluded
that "the preparation of the associated countries for
integration into the internal market is, as was affirmed by
the Essen European Council, the main element of the
strategy of preparation for accession."

The Council also agreed to an increase in the
Programme's financial envelope until 1999. The Phare
budget will rise from ECU 1,154 million in 1995 to ECU
1,634 million in 1999, a total of ECU 6,693 million over
the period, thereby reinforcing the commitment of the
European Union to accession.

Before the publication of the White Paper, the partner
countries had already begun approximating legislation and
moving towards the economic freedoms on which the
internal market is founded. However, with the prospect of
full membership of the European Union moving closer, it
was decided to produce a document which sets out the
body of essential internal market legislation.

Phare funding is already being used for the
implementation of the White Paper. Above all, this is a
technical manual which forms a key element of the preaccession strategy. As it guides the partner countries
through the legislation, structures and broad economic
conditions essential to the functioning of the internal
market, the White Paper's purpose is to clarify the task of
approximating national laws to those of the European
Union.

For each of the twenty-three sectors of internal market
legislation, the White Paper proposes a logical sequence in
which to tackle the approximation exercise. While it is
considered vital to lay down priorities for action, it is the
countries themselves who identify those areas where the
greatest impact will be achieved.

The White Paper marks the beginning of a process in
which the partner countries play the leading role. The task
of enacting, implementing and enforcing the necessary
laws can be carried out only by the partner countries
themselves. Support will be provided by the European
Union and its Member States, but it is important that this
is coordinated so that the provision of assistance is both
efficient and effective.

It is for this reason that the White Paper recommended
that the Commission sets up and manages a Technical
Assistance Information Exchange Office. This is being
supported by the Phare multi-country programme and will
be the focal point for the provision of advice and expertise
on legislation and the necessary implementation
structures. It will house an internal market database

through which all interested parties will have access to
information concerning the support available under Phare
and other European Union programmes. It will also serve
as a clearing house, matching requests for support from
the partner countries with specialists and programmes
available at national and European levels. In this way, the
Office will direct support provided by Phare and by the
various other public and private sector sources, towards
the needs of the partner countries.

**Madrid Council and enlargement**

In December 1995, at the Madrid summit, the European
Commission submitted its study on alternative strategies
for the development of relations in the field of agriculture
between the European Community and the partner

#### Phare in 1995

1995 was a year of both continuity and change for the
Phare Programme. In many areas, the Programme
continued the work started in 1994. This meant that

infrastructure projects continued to be of great importance,
the cross-border cooperation programme gained
momentum, and Phare continued to provide know-how
and grant finance to its partner countries.

In other areas, however, Phare made some fundamental
changes. The new role as the financial instrument of the
pre-accession strategy, and the challenge that this
represented, meant that Phare had to modify its
organisational structure, while continuing to improve its
programming process, create a new monitoring structure
and enhance its financial management.

The following sections outline both the changes which
Phare made in 1995 and the areas in which it continued to

concentrate its efforts.

countries. The Commission also presented reports on the
progress made in the pre-accession strategy, and on the
impact of enlargement on the European Union's policies.

The Madrid Council announced that the European
Union's intergovernmental conference (IGC) would begin
in March 1996. While the conference will have no direct

impact on the Phare Programme, it will shape the
European Union's institutions for the next century.

In the course of 1995, the following countries made
official applications for full membership of the European
Union: Bulgaria, Estonia, Latvia, Lithuania, Romania and
Slovakia. Poland and Hungary applied in 1994. The Czech
Republic decided to wait until the beginning of 1996,
while Slovenia submitted its application in June 1996.

The Madrid Council "hopes that the preliminary stage of
negotiations will coincide with the start of negotiations
with Cyprus and Malta". These should begin six months
after the conclusion of the IGC, which is due to finish in

mid-1997.

**Concentration on infrastructure investment**

In 1995, Phare continued to concentrate on infrastructure
projects and intensified the work begun in 1994. The
Essen European Council in December 1994 recognised
the increasing importance of Phare's work in this area by
increasing the limit of Phare spending allowed on
infrastructure to 25 per cent from a previous level of 15
per cent. This increased the Programme's ability to play a
complementary role to its traditional provision of knowhow by providing targeted grant funds in key areas.

In practice, this means that Phare has been able to unblock
projects which may otherwise have stalled, by providing a
financing bridge between International Financial
Institutions or private sector investors and the
governments of the partner countries. Phare's investment
in infrastructure is subject to a number of ground rules.

The most important of these are that

- the project must be a stated priority for the partner
country. This is in line with the spirit of the preaccession strategy which places the responsibility for
determining the priorities along the road to accession
with the partner countries themselves. The partner
country is therefore required to contribute counterpart
funds itself to the project.

- Phare's contribution must bring a clear additional
benefit to the project which would not otherwise be
present. This might include, amongst others,
unblocking a high priority project which cannot go
ahead because a country is unwilling to support a
project where the costs are concentrated in its own
areas but the benefits span several countries; or where
Phare's money would attract additional commercial
finance through the multiplier effect.

- Phare's contribution must complement and not
compete with the normal actors in this area, such as the
partner country governments, private operators,
commercial lenders and the International Financial

Institutions.

. the project must be supported by an overall strategy
which is in line with European Union standards.

Phare's infrastructure investment in 1995 has continued to

concentrate on the areas of transport, the environment,
energy, telecommunications and private sector
development. In particular it has been focused on two
broad but critical areas. The first of these are trans
European networks, recognised as a priority sector in the
1992 Maastricht Treaty and still an integral requirement of
an effective internal market. This caused a number of

infrastructure improvements to be identified in 1995,
including roads and railways linking Berlin and Warsaw;
Dresden and Prague; Nuremberg and Prague; Trieste,
Ljubljana and Budapest; a telematic platform in the Baltic
Sea and a Baltic ring electricity network.

The second area concerns projects which assist the
countries of central Europe in the transition from a
centrally-planned economy to a market economy. In the
area of transport, this has included the restructuring and
modernisation of both road and rail networks, the
elimination of border crossing bottlenecks, and the
development of traffic management systems.

Environmental projects have also been identified which
tackle regional 'hot spots' in air and water pollution,
especially where there is a cross-border impact. Other
areas include projects of nature conservation such as
coastal zone and wetlands management, environmental
projects which have immediate health benefits such as the
clean-up of rural water supplies or industrial and military
sites, and the introduction of cleaner technologies.

In the field of energy, infrastructure projects which have
received Phare investment include the environmental and

safety upgrading of power plants, projects aimed at
increasing energy efficiency and renewable energy, and
local projects with clear environmental benefits.

Finally, Phare has helped to fund the development of rural
telephony pilot projects - a significant step towards
creating the communications infrastructure vital in today's
global business environment.

**Cross-border cooperation**

The Phare cross-border programme, established in 1994 at
the initiative of the European Parliament, continued to
play an essential part in the pre-accession strategy.

Whereas in 1994 efforts focused on the creation or

adaptation of the necessary institutional framework for the
communication, programming, implementation and
monitoring of the programme, 1995 saw a number of
concrete steps being taken.

Phare worked closely with Directorate General for
Regional Policies, which manages INTERREG, in order
to ensure coherence with regional cooperation aims and
practices. Commission Regulation N° 1628/94 on crossborder cooperation between the Member States and the
central European countries in the framework of the Phare
Programme, provides the rules for financing actions of a
structural nature in border regions of central European
countries sharing a common border with Member States,
in harmony with the European Union structural policies,
and with INTERREG II in particular. Joint Programming
and Monitoring Committees composed of the appropriate
authorities from both sides play the principal role in
assuring overall coordination in the planning and
implementation stages, and in monitoring the programmes
selected.

Although the bulk of the Phare cross-border cooperation
projects have focused on the development of
infrastructure, transport, telecommunications and energy,
the new approach adopted for 1995-1999 will include
more "soft" actions such as tourism, human resources and
culture. This has been underpinned by the setting up of a
Small Project Fund Facility.

In 1994, the central European countries eligible for
participation were Albania, Bulgaria, the Baltic states, the
Czech Republic, Poland and Slovenia. In 1995, Hungary
and Slovakia were added to the list (owing to Austria's
accession to the European Union) as well as new border
regions in the Czech Republic and Slovenia. The eligible
border regions were determined by the partner countries
themselves in collaboration with the European
Commission in order to ensure coherence with

INTERREG.

In 1995 the Phare Management Committee gave a
favourable opinion on cross-border projects for Albania,
Bulgaria, the Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Poland, Slovakia and Slovenia. These projects
mainly concerned transport, environment, agriculture,
human resources and economic development and a budget
of ECU 169 million was agreed.

Sectoral cooperation programmes regarding the
environment and interregional cooperation were also
given a favourable opinion. This type of programme
involves funding from an International Financial
Institution and/or a European Union Member State. Phare
provides for the necessary support during the project
appraisal and preparation period as well as its
implementation. A wide range of measures is eligible,
such as the abatement of air pollution, waste water
management and minimising the environmental effects of
transport projects.

As for the interregional cooperation programme, already
built upon the ECOS and Ouverture instruments of the
European Union, it is the first time funding has been
provided for cities and regions in all Phare partner
countries and those of the European Union. Over 100
interregional cooperation projects are being funded.

Looking to the future, as the countries of central Europe
come closer to integration, the Phare cross-border
cooperation programme will shift from infrastructure
project implementation and evaluation, towards increased
training, administration and development of socio

economic structures. This will allow the programme to
respond better to the needs of the integration process.

**Opening of Community programmes**

In 1993, at the Copenhagen Summit, heads of the Member
States took the political decision to offer to the associated
central European countries the possiblity of participating
in Community programmes.

On 4 December 1995, the Commission and the Council, in
agreement with the European Parliament, concluded
Additional Protocols to the Europe Agreements with
Bulgaria, the Czech Republic, Hungary, Poland, and
Romania in order to provide the necessary legal
framework for their participation in these programmes. An
Additional Protocol was also signed with Slovakia,
pending the European Parliament's agreement. The
additional protocols for the Baltic states are integrated into
the Europe Agreements with each country.

This will allow the partner countries to participate in the
Socrates, Leonardo, and Youth for Europe III
programmes. It will also allow those countries whose
audiovisual legislation is compatible with European
Community law to participate in the Media II programme.
Other programmes covering the fields of culture,
environment, health, energy and the internal market will
have to be adapted in order to take into account future
participation by the central European countries. Corine
(satellite mapping), LIFE (environment), SAVE II (energy
efficiency) and Synergy (energy cooperation) are
examples of programmes which have been designed for,
or extended to, the central European countries.

In 1995, a budget of ECU 9.9 million was committed for
the preparation of the associated countries' participation
through information sessions, visits and training for
national administrators, the transmission of the necessary
documentation, and establishment of the appropriate
national structures or information offices for the purposes
of acquiring a better understanding of these programmes.

Specific programmes under the Fourth Framework
Programme for Research and Development have also been
opened under certain conditions to the partner countries.

**Coordination with other donors**

In order to increase the efficiency of European
Community assistance, and particularly that of the Phare
Programme, the European Commission coordinates its

assistance activities with the other donors supporting the
central European countries. Since the G7 summit of heads
of state and government held in Paris in July 1989, the
Commission has the official task of coordinating the
activities of all those donors.

In this capacity, and given the importance of Phare, the
Commission works closely with the G-24 countries, as
well as the International Financial Institutions such as the

World Bank, the European Bank for Reconstruction and
Development (EBRD), the European Investment Bank
(EIB) and the Organisation for Economic Cooperation and
Development (OECD).

Phare and the OECD have collaborated, for example, on
the SIGMA programme (Support for Improvement in
Governance and Management in central and eastern
Europe). SIGMA provides support to the partner countries
to develop coherent reform strategies and efficient public
institutions. An example of Phare/EBRD co-financing is
the environment project preparation facility, a horizontal
programme launched at the end of 1995 which facilitates
the implementation of critical environmental projects in
the central European countries.

In March 1995, at the High Level meeting, the G-24
donors together analysed the reforms undertaken during
the first five years of transition in central Europe. The
general conclusion was that this transition is irreversible.
The donor organisations committed themselves to
continuing active support for the integration of the central
European countries into the international economic
community. Moreover, their assistance will be designed to
fit into and enhance the pre-accession strategy.

With these objectives in mind, the European
Commission's coordination work will be strengthened on
the ground, in the partner countries, with emphasis being
given to distinct sectors in order to heighten impact. The
organisations will work together at programme and project
level.

In 1995, the profile of foreign-aid coordination was raised
in the public eye. The peace agreement reached by the
republics of the former Yugoslavia requires the support of
the international community. In December 1995, the
European Commission and the World Bank organised the
first meeting of donors for Bosnia-Herzegovina. The key

objectives were to identify the needs of the country in its
task of reconstruction, and to mobilise the donors'
assistance. Above all, this illustrates the concrete support
given by the European Union to the peace process, and its
role as the world community's aid coordinator for central
Europe.

**Phare and former Yugoslavia**

1995 marked the year in which reconstruction of the
former Yugoslavia began. The financing plan approved by
the European Commission for support to the peace
process allocated ECU 600 million, to be spent over the
period 1996-99.

Likewise, in the light of the Dayton peace agreement,
reached in December 1995, it was of utmost importance
that the short and medium-term reconstruction of Bosnia
Herzegovina start as quickly as possible. A number of
international institutions, notably the World Bank, the
International Monetary Fund (IMF), the European Bank
for Reconstruction and Development (EBRD), and the
European Community prepared a programme for that
purpose. The first phase of the Phare Essential Aid
Programme was elaborated on the basis of the multilateral
plan, and a first tranche of aid worth ECU 62.5 million
was due to be launched immediately in January 1996.

**The Court of Auditors**

In November 1995, the Court of Auditors delivered its
report on the financial and operational performance of the
European Commission during 1994. The Court recognised
that the efforts made by Phare management had led to a
number of improvements in the Programme.

The Court did, however, highlight scope for further
improvement, in particular better use of the PHACSY
financial reporting system; greater rigour in the tendering
process; and a more operational use of the results of
studies conducted using Phare funds, especially to
encourage real investments.

As outlined in the section below, both the financial
management systems and the operational procedures for
Phare were already being reviewed during the course of
1995 and improved. A new monitoring unit was also
established.

#### Operational management of Phare

Since its inception Phare has sought to involve its partner
countries as much as possible in the strategic and
operational activities of the Programme. It has, therefore,
adapted its structure over time to accommodate the
changing needs of its partners, to increase cooperation and
coordination between the Commission and the countries,
and to heighten the impact of the programmes carried out
within the Phare framework.

This process of operational improvement continued in
1995. The internal structure of the Directorate and the

management of the Programme were changed so as to
forge closer links between work on Phare, the Europe
Agreements and the pre-accession strategy.

Management processes were improved. The financial and
management reporting systems were overhauled, and the
number of standardised and regular independent audits
increased. A stand-alone monitoring and assessment unit
was created with the intention of improving the
operational quality of Phare programmes and ensuring a
more cost-effective use of funds. This will support the
process of decentralisation which is increasing in
importance as the pre-accession strategy runs its course.

Finally, the emphasis on increasing openness in the Phare
Programme was maintained through a targeted
communications programme to other European Union
institutions, European Union Member States - notably the
public services and commercial sectors - and partner
countries.

**Operational structure**

The Directorate which manages the Phare Programme
within Directorate General IA (Europe and the New
Independent States, Common Foreign and Security Policy
and External Missions) was reorganised in 1995.

Up until this point, the Phare service had been organised
largely on a sector basis, with staff divided into sectoral
units such as agriculture or infrastructure. It became clear,
however, that an integrated geographical structure was
needed to reflect the needs of the pre-accession strategy
and the Europe Agreements, and the structured
relationship and financial cooperation which were critical
to its success.

Therefore, in July 1995, the Commission reorganised the
Directorate responsible for Phare on a country by country
basis. Three geographical units were created, with

**10**

responsibility for all aspects of relations with the central
European countries. This was designed to focus on all
aspects of each country's pre-accession needs at the same
time as improving the performance of the Programme by
enabling a faster, co-ordinated response to country issues,
and operational synergy between the Delegations in the
partner countries and staff in Brussels.

Many Phare programmes do, however, involve several
partner countries. So as not to lose the overview necessary
to manage these, separate horizontal and sectoral units
were created with responsibility for policy coordination
and the management of multicountry and horizontal
programmes. These ensure that cooperation between
countries is maintained and that opportunities for
synergies are identified and implemented.

The Directorate began to work on this new geographical
basis from June 1995 onwards so as not to lose the

momentum created by the Essen and Cannes Councils and
the launch of the pre-accession strategy.

Phare also launched an initiative to address the issue of

staff, both at Headquarters in Brussels and in the
Delegations. Studies are underway to identify those tasks
which are core to managing the Phare Programme, which
fall within the executive competence of Commission
service, and which will therefore need to be carried out by
Commission staff. Other tasks identified as non-core can

then be contracted out, thereby using existing staff in the
most efficient way.

**A new programming approach**

1995 saw the streamlining and improvement of the Phare
programming approach. The Essen and Cannes Councils
had provided a clearer definition of common objectives
and the opportunity therefore to target funds more
effectively. They had also provided Phare with a multiannual financial horizon with the intention that the

Programme be allied more closely with the medium term
strategic ambitions of the partner countries.

This resulted in new, multi-annual indicative programmes
being prepared in 1995 for four countries (the Czech
Republic, Hungary, Poland and Slovakia), with multiannual indicative programmes planned for the other Phare
countries by the middle of 1996. These are prepared in
partnership with the countries concerned and cover the
period up until and including 1999. They lay out for each
of the countries its objectives, priority sectors, activities

and timeframes, including an indication of funds to be
allocated to each sector. Multi-annual indicative

programmes were produced for eleven cross-border
programmes, covering all partner countries except
Romania.

This new approach has benefits for both the partner
countries and the Member States. For the partner
countries, it brings accession into a sharper focus,
provides a series of concrete objectives, and allows them
to build the Phare Programme into their medium term
restructuring programmes and strategies for accession. For
the Member States, it gives them an opportunity to make a
strategic contribution and to take a longer, more
comprehensive view of each country's Phare priorities.

Whilst the multi-annual indicative programmes have
given Phare a medium-term perspective, it should be
remembered that the implementation of the programmes
remains subject to an annual budgetary procedure. This
means that the allocation of funds which appears in the
multi-annual programme is purely indicative and therefore
only a statement of intent. Each year, the Commission
allocates the appropriate funds to each country based on a
country operational programme which includes all the
programme components in one document. This is based
on the multi-annual indicative programme, but need not
faithfully reproduce it. This allows an additional flexibility
to both the country and Phare, should circumstances or
priorities change.

Nevertheless, the introduction of multi-annual indicative
programmes has eased the pressure caused by the annual
programming round, has cut down the time lag between
commitment, contracting and payment, and significantly
simplified the programming process.

**Changes in implementation**

Implementation is the most critical area of Phare
programmes. The ability to manage the individual projects
on the ground determines the degree of their impact and
thus the effectiveness of the use of public money.

Certain limits are set by the Council's financial regulation,
attributing full responsibility for the use of funds to the
Commission, thus limiting the extent to which
responsibility can be delegated to the partner countries.
Nevertheless, 1995 saw continued attempts to reconcile
this potential conflict and to arrive at an implementation
process which was both effective and stringent.

Further progress was made in 1995 towards the
decentralisation of the implementation process. This was
started in 1994 with the publication of the Decentralised
Implementation System manuals, a response to the need
for a common operating system across the whole
Programme and an attempt to reconcile the management
skills and habits of partner administrations with respect for
the Phare Regulation.

During 1995, further work was done, in conjunction with
the partner countries, on improving the Decentralised
Implementation System. This concentrated on

. simplifying the programming approach, with special
attempts to reduce the overall workload by establishing
a closer link between the documents needed for both

programming and implementation. This will reduce
duplication of effort.

- transferring implementation responsibility at the two
most important levels - firstly, from the Commission to
the partner country, and secondly, from Phare staff in
Brussels to Commission staff in the country
delegations. In practice this will mean a gradual
transfer from ex ante approval to ex post monitoring
and assessment, without sacrificing the overall
supervisory responsibility of the Commission.

- clearly defining the roles and responsibilities of the
main implementation players, particularly the Brussels
headquarters and the Delegations. This has involved
agreeing job descriptions which again will reduce
duplication of effort, allow more efficient use to be
made of the resources available and increase the levels

of understanding between the teams.

Work was also done in 1995 on making the Decentralised
Implementation System manuals themselves more
accessible and user friendly. These will be reissued,
covering all the new procedures, in 1996 and be backed up
by additional training for the Delegations and the
Programme Management Units.

**Financial management**

The complexity and range of the Phare Programme,
combined with the Commission's responsibilities for
supervision, require a sophisticated financial management
system. Launched in 1994, the PHACSY system was
designed to gather all programming information directly

from the Programme Management Units, and to use this
as a monitoring tool. PHACSY was refined in early 1995
and reissued in a new, more user-friendly format.

Prior to this it was merged with Desiree, the main Phare
information database, which was in turn fully integrated
with SINCOM, the financial management system of the
entire Commission. This has made the financial

management process for Phare more streamlined and
accurate, has reduced duplication and wasted effort, and
has extended the reach of the system among PMUs. By
the end of 1995, about 95% of all available management
information from PMUs was contained in PHACSY and

efforts will be made in 1996 to obtain the remaining
information. This has been supported by the increased
number of independent financial audits in 1995 which will
continue into 1996.

**Monitoring and assessment**

Crucial to the process of ensuring greater decentralisation
while maintaining the Commission's responsibilities is the
creation of an effective monitoring and assessment
system. When the Directorate responsible for Phare was
restructured in 1995, a new unit was created with specific
responsibility for monitoring and assessment.

The unit is responsible for the implementation of a
monitoring and assessment system which will be
independent, credible and based on the principle of
common ownership and involvement of the partner
countries. In doing so, it was asked to move to a standard
system which could be widely applied across all Phare
projects.

In 1995, the foundations were put in place for the new
monitoring and assessment system. A regional structure
was created, with three regional offices staffed with
independent consultants from the European Union and
local experts. It is planned that these offices will become
fully operational in the first half of 1996 and that over four
hundred projects will be both monitored and assessed each

year.

The process developed is primarily an operational tool for
all those involved in the Phare Programme. By providing
a regular assessment of the status and progress of Phare
projects, the new unit will be able to identify and share
best practice across all the partner countries, pinpoint
poorly performing projects and suggest remedial action,
and provide rapid feedback to those designing future
programmes. As the monitoring and assessment system

**12**

has been designed to dovetail with the regular
programming process, the information will allow
programmes to be adapted more closely to the needs of
the partner countries.

**Communications**

Since 1993, Phare has actively responded to increasing
interest shown by European Community institutions and
advisory bodies, Member States and partner countries in
the Programme.

In 1995, Phare spent ECU 3.2 million on
communications. It published 67 separate titles in 18
languages and distributed over 800,000 copies in 26
countries. The Information Unit responded to over 60,000
telephone enquiries, letters and faxes, and about 5,000
personal visits. Information Unit staff also made over 100
speeches and presentations on the Phare Programme to
conferences and workshops, mainly in the Member States.

In 1995, the research programme was continued in
partner countries to identify and find appropriate
mechanisms to satisfy people's information needs.
Delegation information programmes became much more
focused on communicating with decision-makers and
opinion-formers about pre-accession and what it may
mean to join the European Union. These programmes
include local-language publications, media relations, the
development and implementation of contact programmes,
and the creation of local communications databases. The

bimonthly "European Dialogue" magazine was launched
and, by the beginning of 1996, was being mailed in six
centra] European languages to 20,000 decision-makers
and opinion-formers in the region. Specific communications programmes were launched in the Czech
Republic, Hungary, Poland and Slovakia. Television
documentaries about the European Union began
appearing increasingly in the partner countries to give
more information about the Union to the general public
as well.

Contracts were also drawn up during 1995 to launch a
Phare 'on-line' information service on the Internet. This

will provide contract information, access to the Phare
address book, and other general information on Phare. It
will also give people an opportunity to communicate
easily with Phare through an e-mail facility. This will be a
further step forward for Phare's communication
programme, will lead to greater speed of access to
information, and will make the communications process
more efficient and cost effective.

#### Albania

The Albanian economy has begun to recover from the
collapse of an economic system whose closed and
centrally-planned structure was more pronounced than
that of other former communist countries. In 1995, it
achieved one of the highest growth rates (11.3 per cent) of
all the central European countries. Inflation fell to 6.0 per
cent, a result of a disciplined monetary policy, and
unemployment also dropped to 14 per cent. The
privatisation process is on track, with all the remaining
state enterprises being transformed into joint-stock
companies in April 1995. This has made possible a massprivatisation programme which will begin in 1996.

During 1995, progress was also made towards bringing
Albanian institutions and laws closer to those of the

European Union's standards. New civil, penal and labour
codes were adopted resulting in a more robust judicial
framework. Albania also signed the convention of the
Council of Europe for the protection of minorities and was
granted full membership of the Council in July 1995.

In 1995, Phare continued to provide considerable support
to Albania's progress towards reform. Albania is no
longer dependent on essential aid and therefore Phare's
focus within the country has evolved to reflect the
country's considerable economic improvement.

ECU 35 million was therefore allocated through the 1995
indicative programme for the development of

. the transport, telecommunications and energy sectors
. an effective higher education system through the

Tempus programme
. local community infrastructure through the Albanian

Development Fund

- the private sector, public administration and judicial

systems.

Within this, Phare's priorities in 1995 shifted from the
agricultural sector towards infrastructure development,
particularly roads and ports, telecommunications and
energy. Development in these areas is essential if Albania
is to participate fully in the single market. The main
infrastructure priority for 1995 was the rebuilding and
upgrading of the East-West corridor. This meant that
Phare financed, together with the European Investment
Bank, the following projects

- upgrading of the Durres-Elbasan and PogradecKapshtica sections (a total of 146 km) of the East-West
corridor

. developing the Durres ferry terminal.

These projects demonstrate the important role Phare can
play in unlocking funds from other international financing
institutions.

In other areas, Phare also played a leading role. Work has
been done on improving primary healthcare and
developing hospitals, programmes have been set up to
strengthen local government, and measures have been
taken to channel funds directly to small-scale projects
which will have a direct and beneficial impact on local
communities. Phare will also continue to support the
energy sector, placing emphasis on the preparation of a
national strategy, policy and legislative framework and the
provision of pre-investment studies in key areas.

Absorption capacity of the Phare Programme in Albania
continued to be satisfactory with around 73 per cent of
total committed Phare funds contracted by the end of
1995. Nevertheless, the increased emphasis on
infrastructure projects which require longer periods of
preparation as well as more complex tendering processes,
coupled with the logistical limitations on the pace of land
registration and the inability of the banking sector to
provide the necessary credit lines when needed, have
resulted in some slowing down in implementation and
payment during 1995.

Looking forward, the stable economy will allow the Phare
Programme in Albania to plan for the longer term and a
multi-annual indicative programme covering the period
1996 to 1999 is being developed. Albania also hopes to
make progress towards its goal of association with the
European Union. In March 1995 Albania made a formal
request to open negotiations for a specific agreement.

**13**

**Funds allocated by sector 1995**
**ECU 88 million**

Education, training
and research 3.5

Infrastructure

(energy, transport,

telecom.) 34

Financial sector 35

#### Bulgaria

Bulgaria's social and economic transformation has not
been easy. The changes in government, combined with
varying levels of parliamentary support, resulted in
relatively slow decision-making in key areas of structural
reform. In addition, the collapse of the Comecon markets,
the Gulf crisis, and the UN sanctions against former
Yugoslavia also affected economic growth. Nevertheless,
the basis for a market economy has been created and the
foundations have been laid for a democratic and civil

society.

In 1995, the economic improvement begun in 1994
continued. Gross Domestic Product grew by 2.5 per cent,
inflation and unemployment fell and privatisation
progressed. This, plus a greater political stability, created a
more constructive environment for the management of the
Phare Programme in Bulgaria and programme
management structures became more stable, and therefore
more efficient.

The 1995 Phare Programme supported projects in the
following areas in Bulgaria for a total of ECU 60 million

the approximation of legislation
the promotion of private agriculture
human resources development
transport development
energy and nuclear safety.

Phare provided ECU 5 million in 1995 for a number of
agricultural projects. These included policy support to the
Ministry of Agriculture and Food Industry, registering and
restoring historic land ownership rights and other
transactions, restructuring and privatising state-owned
industries, and the development of production and marketing

structures.

In the area of education, Phare continued to support the
Tempus programme for the reform of higher education.
Based on a 1993 pilot project, a programme was started
for the development of post-secondary vocational training
and the financial management of secondary education.
The programme also supported the creation of a higher
education accreditation and assessment agency.

**14**

**Funds allocated by sector in 1995**
**ECU 83 million**

Infrastructure

(energy, transport,

telecom.) 48

Education, training
and research 21

Environment and
nuclear safety 7

The 1995 transport programme confinanced, with the
European Bank for Reconstruction and Development and
the World Bank, a major project for railway rehabilitation
(approximately 400 km). It also supported the
restructuring of the Sofia urban transport system.

In the energy sector, Phare supported the improvement of
energy efficiency (electricity, district heating and gas),
pre-investment studies and measures to promote the
introduction of the 'acquis communautaire'.

In 1995, a multi-annual indicative programme for crossborder cooperation with Greece was also approved.
Covering the period 1995-1999, the programme was
allocated an indicative budget of ECU 115 million. Set
against the background of good bilateral relations between
the two countries, the programme will support the
development of Bulgaria's border regions with Greece,
within the overall Bulgarian policy of regional cooperation. Key areas of work are transport, environment,
economic development and human resources.

A closer monitoring of programme implementation
enabled occasional problems and delays to be identified at
an early stage and remedied, and political stability has
allowed medium-term planning to be considered.

As a result, part of the backlog of uncommitted funds
dating from previous years was cleared and the overall
contracting rate increased from 48 per cent in 1994 to 56
percent in 1995.

The 1995 programme for the approximation of laws
aimed at developing a comprehensive match between
Bulgarian and European Community legislation.
Accordingly, Phare assisted with the drafting of new laws
and provided training to target groups in the public
administration as well as the judiciary. It is also intended
that the programme will draw on the information and
experts made available by the Technical Assistance
Information Exchange Office, established in Brussels in
1996.

In February 1995, the Europe Agreement with the
European Communities and their Member States came
into force and the first Association Council was held in

May 1995, at which the two parties discussed Bulgaria's
progress within the pre-accession strategy. Phare is the
main instrument to support that strategy.

In December 1995, Bulgaria submitted its official
application for membership. The government has declared
European integration to be among its main priorities and
has established an inter-ministerial European integration

structure.

**15**

#### Czech Republic

1995 was the year when the country's Europe Agreement
with the European Union came into force, and the national
economy continued the substantial progress already made.
In the same year, the country was the first from central
Europe to be accepted, as of 1 January 1996, into the
Organisation for Economic Cooperation and Development
(OECD), a move which endorsed the economic reforms
carried out by the Czech government.

The continued policy mix of macroeconomic stabilisation
and, on the microeconomic level, price liberalisation,
deregulation and privatisation enjoyed positive results.
Growth was strong and unemployment, at 3.5 per cent,
was low. In 1995, the koruna, the national currency, was
made fully convertible.

The entry into force of the Europe Agreement meant that
the Czech Republic could take part fully in the 'structured
dialogue' with the European Union. Within this
framework the first Association Council took place in
April 1995, and the first meeting of the Joint
Parliamentary Committee in May where the White Paper
on the internal market was discussed.

In 1995, the Phare Programme in the Czech Republic took
a new direction in the support it provides. As with the
other associated countries, this new direction is
characterised by the direct linkage of Phare to the
preparation of the Czech Republic for membership of the
European Union, with a special focus on improving the
infrastructure in the areas bordering Germany and Austria
and on strengthening the institutions central to the
integration process and future membership.

The Czech Republic was allocated a total of ECU 110
million, including ECU 71 million for the 1995 country
operational programme, together with ECU 8 million for
the Tempus programme, and ECU 25 million and ECU 6
million for cross-border cooperation with Germany and
Austria respectively.

**Funds allocated by sector 1995**
**ECU 110 million**

Social development Other 3
Private sectorand employment 2 _an<_ Public institutions _^_ administrative reform 5

support 1

Infrastructure (energy
transport, telecom.) 91

The main focus of Phare during 1995 was the
development of the Czech Republic's infrastructure. Phare
has contributed to the construction of the Berlin-Decin
Prague-Breclav-Vienna rail corridor and a number of
infrastructure investment initiatives under the cross-border

cooperation programme. It has also, since 1995, started to
support socio-economic development and tourist projects
in the border region, including the renovation of historical

monuments.

Since the accession of Austria to the European Union at
the beginning of 1995, some 67 per cent of the Czech
Republic's border is shared with member states of the
European Union. This, plus the dramatic increase in road
and rail traffic (particularly between the Czech Republic
and Germany), has increased the focus on the border
regions and the structural and environmental impact that is
being made.

Accordingly, the Phare cross-border cooperation
programme is financing improvements to roads and
railways, improving or creating new border crossings and
introducing measures to reduce bottlenecks. Phare will

also improve the quality of air and water in the regions by,
amongst other projects, building new gas and steam
pipelines, introducing environment-friendly technology in
heat and power generation, improving sewage systems
and building new water treatment plants to reduce river
pollution and improve drinking-water standards.

Phare has also contributed to the strengthening of Czech
legislative and institutional capacity by financing expert
assistance and training to Czech civil servants and by
supporting the ministries and institutions central to the
integration process, such as customs, statistics, industrial
property, competition and standards administration. A
considerable part of this effort has focused on assisting the
Czechs to ensure the approximation of their laws with
European Union legislation.

Looking forward, the Phare multi-annual indicative
programme for 1995-99 was signed and approved, with
increasing emphasis placed on investment support and the
use of Phare as a medium-term financial instrument. With

a total budget of between ECU 300 million and ECU 330
million, including cross-border cooperation, the indicative
programme will be devoted to the following priority areas

- legislative integration with the European Communities,
with the ultimate goal of adopting the 'acquis
communautaire'

. infrastructure integration with the European Union,
particularly in the fields of transport, energy and the
environment

- socio-economic development, including SME and
export promotion, regional development, and
promotion of foreign direct investment and social
security reform.

**17**

#### Estonia

Estonia has undergone a remarkable economic recovery in
the past few years. In terms of trade liberalisation and the
macroeconomic aspects of reform, the country is well
advanced. This was reflected in GDP growth in 1995,
with a six per cent increase being recorded for the second
consecutive year. Importantly, foreign investment also
remained at the high level achieved during the previous
year. These results have been made possible by the
substantial progress made in the area of structural reform.

Two areas of the economy will, however, need special
attention over the coming period: the relatively high level
of inflation, and the trade deficit, which was running at
approximately ECU 300 million at the end of the year.

Estonia submitted its formal application for membership
of the European Union in November 1995, and
participates in the structured dialogue of the pre-accession
strategy. In November, the European Union signed an
agreement with Estonia to open a Delegation of the
European Commission in Tallinn.

The privatisation process was accelerated in 1995, helped
by Phare's contribution to the Privatisation Agency.
Though work remains to be done in the large, state-run
enterprises, the privatisation of small enterprises is almost
complete, with small and medium-size enterprises now
accounting for over 40 per cent of employment. The
privatisation of the economy was further helped by the
Estonian government's efforts to create the legal
framework for the national stock exchange, which is
expected to open in the first half of 1996.

Phare's focus in 1995 was to help Estonia build on its
economic success and prepare itself for eventual accession
to the European Union. Estonia's Europe Agreement was
signed in June 1995, and now awaits ratification by all the
European Union Member States. Estonia remains the only
central European country not to have requested a
transitional period within which to liberalise its trade
policy.

Phare funding for Estonia increased to ECU 24 million in
1995. This brings the total amount committed to Estonia
for the period 1991-1995 to ECU 68.5 million. Continued
cooperation between the Estonian government and the
Phare Programme has resulted in a steady increase in the
amount of funds committed.

**18**

**Funds allocated by sector 1995**
**ECU 24 million**

Social development
and employment 2.9

Private sector

development and
enterprise support 9.1

Public institutions

and administrative

reform 2.8

Education, training
and research 4.2

nfrastructure

(energy, transport,
telecom.) 5

In the agricultural sector, Phare has continued to support
planning processes, the development of rural credit
facilities, land registration and land privatisation. In
addition, Phare will focus on institutional and human
resources development in the Ministry of Agriculture.
This will help to improve the efficiency of agro-industries
through the provision of professional advice to farmers,
the training of advisors in farm and business analysis, and
the provision of support for rural credit agencies.

Phare also provided support during 1995 for the
development of an energy strategy aimed at achieving
greater energy efficiency; reducing the levels of pollution;
investing in transport infrastructure; and reforming the
social safety and health systems.

Within the framework of the multi-annual indicative

programme, which has been allocated a budget of ECU 84
million for the period 1995-1999, Phare will focus on the
following priority sectors

- European integration

- export development

- regional development

- public sector management
development.

and infrastructure

It is planned that throughout the period the focus of the
programmes will shift to both public and private
investment, particularly in the areas of agricultural and
regional development. The change in focus is partly
intended to counterbalance the emphasis placed
previously on urban development, but also to take account
of the pre-accession strategy.

#### Hungary

Among the first countries to benefit from Phare support,
Hungary has established a system of democratic political
institutions which enjoys general support from the
country's main social and political forces, and has made a
serious effort to develop harmonious relations with its
neighbouring countries.

Its history as the most market-oriented of the former
Comecon countries also enabled Hungary to attract the
largest inflow of foreign investment in the region (40.5%
of the region's total in the 1989-94 period). Privatisation
laws, aimed at speeding up the privatisation of state
companies, were rapidly introduced and all the basic
structures of a market economy have been established.

Nevertheless, in 1995, the Hungarian government was
faced with serious macroeconomic strains which led to the

adoption of a stabilisation plan intended to reduce the
budget and current account deficits and accelerate public
finance reform.

Phare's support in 1995, therefore, concentrated on
supporting the government in its move towards further
economic orthodoxy, and in helping Hungary achieve the
pre-accession strategy measures outlined in the White
Paper. Hungary was the first former communist country to
submit its application for full membership of the European
Union (April 1994), and the government's firm
commitment to the pre-accession process has meant that
Phare has placed a great deal of focus on supporting the
harmonisation of legislation and restructuring the public
administration.

In practice this has meant providing sector and legal
analyses, drafting new legislation and translating existing
Community legislation into Hungarian, establishing
necessary institutional structures, providing training
sessions for public officials and other decision-makers,
and organising public relations actions targeted at key
target audiences.

Another area of great importance is the transformation and
reform of the Hungarian transport and communications
infrastructure. In its current state it partly discourages
domestic and foreign investment and contributes to the
uneven economic development of different regions within
the country. Phare is actively supporting the development
of appropriate standards and is cofinancing, amongst
others, infrastructural improvements, road building,
railway lines and combined transport terminals.

Infrastructure Environment and
(energy, transport. nuclear safety 12

In 1995 the Phare multi-annual indicative programme
(1995-1999) was adopted to give support worth ECU 425
million in the following priority areas

- European integration, including approximation of laws
and public administration reform

- education and training with emphasis on the
establishment of a human resources development fund

- economic development, focusing on agriculture,
privatisation and restructuring, small and medium-sized
enterprises development, regional development, trade
and investment promotion, tourism development

- public finance and social sector reform

- infrastructure development with emphasis on road and
rail transport, communications, transit, water
management, energy and the environment

- participation in European Community programmes.

For the year 1995, ECU 85 million was allocated to
support these priorities.

1995 also saw the first cross-border cooperation
programme between Hungary and Austria. A multi-annual
indicative cross-border cooperation programme, covering
the period 1995-1999, has been agreed with the Hungarian
authorities on the basis of their bilateral cooperation with
Austria.

**19**

**Funds allocated by sector 1995**
**ECU 92 million**

Social development

and employment 2
Integrated regional

measures

Private sector
development
and enterpri
support 6

Public institutions and

administrative reform 3

#### Latvia

In 1995, Latvia once again enjoyed a substantial
improvement in the economy, following the recession in
the early 1990s. Economic growth was particularly strong
in the service, construction and forestry sectors although,
as a result of necessary restructuring, both the industrial
and agricultural sectors continued to decline.

Efforts to privatise small and medium-sized enterprises
proved successful in 1995, although progress has been
much slower with regard to larger enterprises. The process
has been supported by the creation of a single national
privatisation agency. The agency will progressively tender
the remaining state-owned companies over the course of
the next few years, and in the meantime enterprises still in
the public sector will be managed by a State Property
Fund.

In the area of private sector development, Latvia still
needs to complete and simplify the legal basis which is
essential for attracting investment. Phare has been
providing assistance both to the Latvian Privatisation
Agency and the State Property Fund.

Like the other countries of central Europe, Latvia places
strong emphasis on the approximation of legislation as a
key step towards eventual accession to the European
Union. The reform of public administration is an essential
part of this effort, and a Phare-funded scheme will train as
many civil servants as possible by the year 2000.

Despite its economic success, the Latvian economy
suffered a number of setbacks in 1995. In June 1995 the

main commercial bank, Bankas Baltija, was declared
insolvent, precipitating a general banking crisis. The
European Union pledged to give ECU 2.5 million to help
the financial sector.

A further economic setback was caused by a shortfall in
government revenue as a result of tax evasion. This
resulted in a budget crisis in the first half of 1995 and
contributed to a state budget deficit for 1995 of
approximately 4.8 per cent of Gross Domestic Product.

In 1995, Latvia took a number of steps towards
membership of the European Union. A Europe Agreement
was signed in June 1995 and Latvia submitted its formal
application for membership of the European Union on 27
October 1995. The country participates fully in the
structured dialogue of the pre-accession strategy.

Phare's assistance to Latvia has focused on the provision of
know-how. This has concentrated in particular on public

**20**

**Funds allocated by sector 1995**
**ECU 32.5 million**

Public institutions

and administrative reform 1.3

Social development
and employment

Private sector
development and
enterprise support 8.3

Education, training
and research 2

Financial sector 2.5

Infrastructure
(energy, transport,
telecom.) 9.2

administration reform, privatisation, the development of
small and medium-sized enterprises and the improvement
of the banking, agriculture, telecommunications, energy,
transport, health and higher education sectors. During 1995,
however, Phare support was broadened to include support
for economic reform, institutional and human resources
development and infrastructure development

Within Phare's efforts to support Latvian infrastructure
development, the energy sector received particular
attention. The country has no hydrocarbon resources, and
is to a great extent dependent on energy imports.
However, there are domestic sources which can be
developed, notably hydropower, wood and peat and Phare
has financed studies to examine the feasibility of their
development.

Phare funds for Latvia were ECU 32.5 million in 1995.

This brings the total of funds committed to Latvia for the
period 1991-1995 to ECU 108 million. Looking forward,
the multi-annual indicative programme, signed in 1995,
will focus on the following priority sectors during the
period 1996-99

- private sector development: this includes restructuring
and privatisation, banking, small and medium-sized
enterprise development, foreign investment and trade
promotion and agricultural reform

- institutional integration, human resources and social
sector, including statistical cooperation, public
administration reform, higher education, public finance
and accounting, and social sector reform

- infrastructure - focusing on the energy sector,
environment and transport development.

#### Lithuania

The Lithuanian economy emerged from deep recession
following the dissolution of the Soviet Union and, having
declined in 1992 and 1993, Gross Domestic Product grew
by 1.5 per cent in 1994 and 5 per cent in 1995.

The privatisation process has been satisfactory and, in the
small companies sector, has progressed rapidly, conducted
mainly through the exchange of vouchers or through local
investors. By mid-1995, a new law on privatisation was
passed by the parliament outlining the relative responsibilities of the economic ministries, state institutions, and
local authorities. The law clearly marks a commitment by
the government to complete the privatisation process.

In addition, a privatisation agency was created in 1995
which, assisted by a resident Phare advisor, has rapidly
become operational. The agency is a semi-autonomous
body whose objective is to prepare and implement the
remaining privatisation programme under the supervision
of the Prime Minister's office. Both the new law and the

operations of the agency are expected to boost the
privatisation process, with an additional focus put on
restructuring companies in order to provide further
technical competence or financial means to those
companies already privatised.

As part of the development of the private sector, in 1995
the government also started to define the legal framework
for small and medium-sized enterprises and a
development agency has been established as a non-profit
and independent institution. Entrepreneurs, however,
continue to suffer from a lack of finance for capital
formation. To a certain extent this has been helped by the
rapid growth in foreign investment (some ECU 254
million between 1989 and 1994) although this is
significantly less than the other Baltic states. The problem
of coordination among the various economic development
agencies established over the past few years is being
addressed by the government.

Lithuania's formal application to join the European Union
was presented in December 1995 and was reinforced by a
declaration adopted by the Lithuanian parliament.

The Europe Agreement was signed by Lithuania during
June 1995 and the country has subsequently actively
participated in all the meetings organised within the
framework of the structured dialogue. Moreover, the
government has been active in setting up both the
institutional and legislative framework to begin the
European Integration process.

As part of this, Lithuania made efforts in 1995 to begin to
approximate its legislation to that of the European
Community's 'acquis communautaire'. Phare helped this
process by supporting the development of legislation in
financial services (banking law, insurance and securities),
commercial law, labour law, European Community and
international law, and constitutional and administrative law.

An amendment to the Lithuanian constitution, relating to
the purchase of land by foreigners and made necessary by
the Europe Agreement, is expected to be passed by the
parliament in the first half of 1996. The Europe
Agreement is also expected to be ratified during 1996.

In 1995, Phare committed ECU 38 million to Lithuania,
an increase of ECU 4 million on the previous year. This
money was focused on the priority areas outlined in the
1994-1995 indicative programme: economic development,
infrastructure development, the public investment
programme, European integration and human resources
development.

Phare's contribution to the development of the private
sector has been to help to launch a network of Business
Advisory Centres and a Euro-Correspondence Centre in
Vilnius. It has also continued to provide one resident
advisor to the Lithuanian Investment Promotion Agency
which was set up in 1993 to promote the country.

**21**

**Funds allocated by sector 1995**
**ECU 42 million**

Social development
and employment 4.4

Public institutions

and administrative reform 5.S

Education, training
nd research 3.5

Infrastructure

(energy, transport,
telecom.) 19

Phare has also been active in the agricultural sector which Phare was also active in programmes focusing on public
has suffered a decline over the past few years but remains administration reform, where a policy design programme
the second largest sector of the economy. The was completed in March 1995; the health sector,
privatisation of holdings has led to a break-up of the land particularly in primary healthcare; and the provision of
into small parcels and this, together with the limited strategic advice in the social sector and labour market
availability of capital, business skills and know-how, area,
continues to depress the sector. Phare has therefore helped
to develop policies aimed at strengthening economic
planning in the sector and to deliver business and
technical advice and credit and loan finance.

**22**

#### Poland

In 1995, Poland moved significantly further along the road
of economic reform. Over half of national income is now

generated by the private sector, the transformation to a
market economy is established and economic performance
is becoming increasingly independent of political
developments.

The country's economic progress was reflected most
clearly in the 1995 growth rate: after a 5 per cent increase
in 1994, Gross Domestic Product grew by 7 per cent in
1995 due to a strong surge in exports and investment.

On the back of this economic performance, the Polish
government officially launched the mass privatisation
programme in November 1995. The programme created
15 national investment funds run by professional asset
managers. Each of the funds acts as the holding company
for some 500 medium-sized enterprises being privatised,
with the public able to buy shares in the funds at a
symbolic price. The European Community, through its
Phare Programme provided support to this programme by
financing the public awareness campaign, as well as the
printing and distribution of share certificates. The
privatisation of the remaining 4,400 state-owned
enterprises will be continued in 1996.

As part of this privatisation process, renewed efforts were
made to restructure and privatise the banking sector which
is still 60 per cent state-owned. Phare continued to provide
support to the banking work-out unit in charge of this
process and decisive acceleration in this area is expected
in 1996.

Under its Phare Programme for Poland in 1995, the
European Union committed ECU 174 million. This
amount is part of the multi-annual indicative programme
for Poland, whose budget for 1995 to 1999 totals ECU
1,015 million of grant funds.

The main objective of Phare support within this
framework is to facilitate Poland's participation in the
process of European integration by supporting the process
of socio-economic transformation.

The multi-annual indicative programme focuses on the
following key areas, which were chosen in line with the
Polish government's economic strategy for 1994-1997

- bringing industrial relations closer to those existing in
the market economy, counteracting structural
unemployment and improving environmental
protection

- continuing institutional reforms in the fields of social
security, social services and the financial sector
. increasing the competitiveness of the Polish economy.

Within the 1995 Phare programme for Poland, the
continued support for the development of the country's
infrastructure represented 52 per cent of the funds
committed. Of this, ECU 22 million were attributed to the
co-financing, with the European Investment Bank and the
European Bank for Reconstruction and Development, of
the modernisation of the E-20 railway line linking Berlin,
Warsaw, Minsk and Moscow.

ECU 53 million were attributed to cross-border

cooperation in 1995. The funds are to be attributed in a
concentrated manner, with only eight regions on the
border with Germany and the Baltic Sea receiving funds.
Ultimately, the programme aims to develop the
infrastructure on Poland's western border until it reaches a

**23**

**Funds allocated by sector 1995**
ECU **174 million**

Private sector development
and enterprise support 9

Public institutions

and administrative reform 2

Agricultural restructuring 13

Environment and

nuclear safety 22

level similar to that achieved in the eastern part of
Germany. Funds are mainly concentrated on transport
infrastructure and the environment, 55 per cent of which is
devoted to border crossings. Further infrastructure support
is being generated through continued regional
development activities financed by Phare in various
regions of Poland, for which ECU 20 million were
committed.

The continued importance of the environmental sector
was reflected in the extension of financing for the
National Environment Fund by ECU 18 million. This was
in accordance with a recommendation by the European
Parliament to maintain Phare funding for environmental
clean-up projects.

**24**

Other major areas of support under the 1995 Phare
programme for Poland included agriculture, tourist
development and the educational sector.

The significant acceleration of Phare implementation in
1995 was encouraging and reflected the enhancement of
relations between Poland and the European Union which
could be observed in 1995. Within the framework of the

Europe Agreement, the bilateral Association Council held
its second meeting in July 1995. The Council focused on
three issues: Poland's strategy for integration into the
European Union; intra-regional cooperation; and traderelated issues.

#### Romania

For Romania, 1995 was a year of steady economic
progress and stronger political relations with the European
Union. Official government figures for the year 1995
show a 6.9 per cent increase of gross domestic product, a
halving of the inflation rate to 27.8 per cent, a reduction in
the unemployment rate from 10.9 per cent to 8.9 per cent
and a 16.3 per cent increase in the average real wage.
However, the deterioration of the balance of payments and
of the public's confidence in the national currency which
occurred in the last part of the year shows that, even if
impressive achievements have been recorded, not all the
macroeconomic conditions for sustainable growth are in
place.

At the microeconomic level in 1995, the State Ownership
Fund managed to divest itself of over 650 companies, the
best annual performance to date in terms of the number of
companies. This brings the total number of privatised
companies in Romania to 1,524, representing some 10 per
cent of the total employed workforce. Moreover, in June

1995 a revised Mass Privatisation Programme was
launched. Under this new programme, Romanian citizens
will receive a significant shareholding in up to 4,000
Romanian enterprises. The State Ownership Fund will
retain significant residual stakes which will be sold for
cash by one of several methods: auction, public offering,
trade sale. Public interest in the programme was limited
and an extension of the subscription period up to March

1996 was established. The programme will facilitate the
decentralisation of the productive sector and will prove an
important step towards a functioning market economy.

For 1995, Phare committed ECU 66 million to
programmes in Romania for implementation foreseen
over two to three years. This amount is part of the multiannual financial perspective for Romania, whose budget
for the 1995-1999 period totals ECU 550 million.
Assistance for the period 1990-1994 totalled ECU 542
million.

In 1995, Phare was particularly active in implementing
assistance in the areas of privatisation and industrial
restructuring. Support was provided for the implementation of the government's Mass Privatisation Programme,
which included a public awareness campaign to maximise
public understanding and involvement. In addition,
substantial Phare assistance is being granted to the State
Ownership Fund to assist in the disposal of its residual
stakes.

**Funds allocated by sector 1995**
**ECU 66 million**

Education, training
and research 18

In the restructuring of the major state-owned enterprises,
progress was slow in 1995. There was a substantial Phare
contribution in terms of the preparation of financial
recovery plans for 26 heavily-indebted enterprises, but
these plans have not yet been put into effect.

Phare continued to help the development of small and
medium-sized enterprises (SMEs) through support to a
network of SME advisory centres backed up by a grant aid
scheme. Phare also financed an assistance programme for
banks to help them in doing business with SMEs.

Beyond the enterprise sector, there was substantial
progress in other areas of reform. For example, the reform
of vocational education is gathering pace with major
Phare assistance both to the process at national level and
to a key group of 25 vocational schools around the
country. In addition, the new Education Law foresees the
development of university autonomy, and a Phare
programme has been developed to support this approach.

Restructuring of the research and technology sector,
which played a big role in the centralised economy, was
also initiated under support from Phare.

Phare has been active in supporting decentralised projects
developed by local partnerships between public and
private sector bodies in towns throughout the country. The
most developed programme in this area is focused on the
development of active employment measures.

**25**

Phare grants worth ECU 50,000 were awarded to projects
in 21 towns in 1995. The number of towns will increase in

1996. Additional programmes of this nature under
preparation in 1995 include support to local economic
development and social services.

In its efforts to develop civil society, Phare has supported,
through the Democracy programme, the implementation
of 19 micro-projects in the following areas: training of
young politicians; encouraging dialogue between local
government and citizens; strengthening Romanian
organisations and their cooperation with authorities at
local and national levels; promoting children's rights;
Hungarian-Romanian dialogue and other multi-cultural
activities. In the health sector, Phare contributed to the
development of techniques to preserve vaccines in rural

areas.

Phare supported the development of Romanian
infrastructure both directly through co-financing, with the
European Investment Bank, of a major road rehabilitation
project and, indirectly, through the financing of feasibility
studies and other preparatory work in the sectors of
transport, telecommunications and energy.

**26**

The Europe Agreement between Romania and the
European Communities and their Member States came
into force in February 1995. The first meeting of the
Association Council took place in April 1995. At the
Association Committee in October 1995, access to the
Phare cross-border and implementation of multi-country
programmes were discussed, together with commercial
funding issues.

In June 1995, the country submitted its formal application
for membership of the European Union. Declaration of
support for Romania's accession was signed by all the
parties attached to the application. Likewise, the "national
strategy for accession", which accompanied Romania's
formal application, placed great emphasis on the national
consensus driving Romania's political, social and
economic transition.

In line with the White Paper on the internal market,
Romania began work on the harmonisation of national
legislation with that of the European Community. Priority
has been given to competition, state aids, public and
financial services, and the free movement of people.

#### Slovakia

Slovakia achieved an impressive macroeconomic
performance in 1995. It recorded high GDP growth and
low inflation, while the trade balance remained positive
and the government deficit fell significantly. The only
negative elements were the unemployment rate and the
low level of foreign investment.

After the spectacular economic turnaround in 1994, when
the economy expanded by 4.8 per cent, real GDP growth
accelerated further in 1995 to reach 7.4 per cent. Higher
real wages and some increase in employment promoted
private consumption, and economic growth was finally
having a positive impact on investment. Despite the
acceleration in economic growth, inflation fell below 10
per cent, thanks mainly to a continued tight monetary
policy.

Higher growth also led to higher import levels, which
reduced the current account surplus and the contribution
of net exports to growth.

Phare committed ECU 46 million to Slovakia in 1995, an
increase on the previous year's figure of ECU 40 million.

The total Phare commitment was the first tranche of the

multi-annual indicative programme, agreed in 1995. This
states that Phare's support in the medium term will focus
on the following broad strategy areas

- adopting the 'acquis communautaire', including the
modernisation of the structures of state and society, and
the approximation of laws, standards and regulations

- private sector development and restructuring

- human resources development, including social sector
reform

- infrastructure development.

Under the multi-annual indicative programme for 19951999, committed funds in the future may be modulated on
the basis of needs and absorption capacity. The latter is of
particular importance given that the Slovak performance
on past programmes leaves room for improvement. An
on-going dialogue with the Slovak authorities is in
progress on how to improve the efficiency and
effectiveness of Phare.

Phare support in 1995 concentrated mainly on the
provision of know-how and investment support to assist
private sector development. Specifically, Phare supported
the following projects vital to assisting Slovakia in its
preparation for membership of the European Union

- a post privatisation fund, a joint Phare-European Bank
for Reconstruction and Development initiative
providing equity capital and know-how to Slovak
medium-sized enterprises

- the successful small and medium-sized enterprises
programme which brings financial assistance and
know-how transfer to Slovak small and medium-sized

enterprises. The financial instruments under the
programme have all been well subscribed, particularly
the small loans fund. This financial assistance, together
with business counselling through a network of
assistance centres, provides small and medium-sized
enterprises with a valuable service

- continued know-how transfer to the Slovak National bank

and the Ministry of Finance in support of their important
role in economic reform and European integration
. in the human resources development area, a health
programme was launched in 1995, focusing on primary
health care and health financing

- further support to the Slovak customs administration,
the standards office, the judiciary and the civic society

programme

**27**

**Funds allocated by sector 1995**
**ECU 46 million**

Public
health 2
Social development
and employmen
Integrated
regional
measures 1

Public institutions and

administrative reform 5

Agricultural restructuring 2.6

Civil society and
démocratisation 0

Education, training
and research 5

Environment and
nuclear safety 1

Financial sector 3

Infrastructure (energy,
transport, telecom.) 8.2

a significant infrastructure initiative, funded in 1995,
providing investment support for the drilling of a
geothermal well
a Slovak-Austrian cross-border cooperation programme,
involving the commitment of ECU 4 million to a
number of environmental (sewage and waster water
treatment) projects as well as feasibility studies in
transport, socio-economic development and regional
planning fields.

Slovakia has made integration into western political,
economic and security structures, and particularly
membership of the European Union, a priority. On 27
June 1995, Slovakia formally applied to join the European
Union. It participated fully in the structured dialogue with
the Member States throughout the year and furthered the
implementation of the Europe Agreement through the first
meeting of the Association Council in May and the Joint
Parliamentary Association Committee in November.

**28**

#### Slovenia

Through a series of rapid economic adjustments, Slovenia
has achieved a high level of macroeconomic stability. In
terms of income per capita, the country is at a level similar
to that of some Member States of the European Union. In
1995, the economy grew by almost 5 per cent, and the rate
of inflation fell below 10 per cent. 65 per cent of the
country's exports are sold to the European Union.

Slovenia's performance within the Phare Programme is
impressive: the contracting rates have been particularly
high with almost 100 per cent of funds committed in 1992
and 1993, and almost 60 per cent of those committed in

1994 being contracted. This reflects the efficient way in
which Slovenia uses Phare funds.

In 1995, Slovenia was allocated ECU 16.4 million within
the framework of the country operational programme. In
addition, funding committed to cross-border cooperation
(ECU 6 million) and the Tempus programme (ECU 2.6
million) brought the total amount of Phare funding in

1995 to ECU 25 million.

In 1995, Phare had an immediate impact in certain key
areas. There was continuing support for sector and
enterprise restructuring, including the training of business
executives, and for the voucher privatisation scheme.
Funds were used to unblock the border-crossing to
Hungary at Dolga Vas, a major transport bottleneck on
one of the principal routes into central Europe, and the
reform of public finances and the banking sector,
including the creation of a new fiscal system, were also
supported.

The cross-border cooperation programme with Austria
involved the improvement of the Jezersko bordercrossing, and the reconstruction of the sewage system in
Gornja Radgona. A similar programme with Italy covered,
among others areas, transport infrastructure, the
environment, human resources development, and cultural
cooperation.

In June 1995, a memorandum of understanding was
signed between the National Phare Coordinator and the
Commission which outlined the strategy for future Phare
multi-annual assistance to Slovenia. This served as a basis

for the 1996-1999 multi-annual indicative programme
which, in line with the principal government policy
objective of closer integration with the European Union
and eventual membership, outlines three broad areas
where Phare will support Slovenia's pre-accession
strategy

. preparing to take on obligations of membership (the
'acquis communautaire') through the progressive
adaptation of laws, standards and rules to achieve
compatibility with those of the European Union. This
includes making provisions for their implementation
and enforcement as well as adjustments to take account
of key internal Union policies, such as in agriculture.

- the development and strengthening of economic,
commercial and physical links, not only with the
Union, but also with associated countries and, where
appropriate, other neighbouring regions. This is an
essential element in preparation for future enlargement
and sustainable development of the region as a whole.

- medium-term economic and social structural reform.

This includes raising the competitiveness of industry
and services to international levels, as well as
promoting further development of the private sector,
investment, export capacity and capital markets. In
addition, the social sector and public administration
will need to be reformed, as well as the science and
technology, infrastructure and environmental protection
sectors, and regions facing difficulties with reform will
need to be supported.

During the year under review, Slovenia's Europe
Agreement was initialled. The Trade and Economic
Cooperation Agreement, signed in 1993, continued to
underpin trade relations between the two sides. Since the
signature of the Europe Agreement on 10 June 1996,
Slovenia participates fully in the pre-accession strategy
and the Government has drafted a white paper for a
national pre-accession strategy, and set up the structures
for its implementation.

**29**

**Funds allocated by sector in 1995**
**ECU 25 million**

Education, training
and research 2.6

Infrastructure (energy,
transport, telecom.) 7.4

Social development
and employment 4.4

Private sector development
and enterprise support 3

#### 1990 -1995 funds committed by country

Albania

Bulgaria

Czech Republic `1990` `0`

```
          1991 0

          1992 0

          1993

          1994

          1995

Czechoslovakia 1990

          1991

          1992

          1993 0

          1994 0

          1995 0

    Estonia 1990 0

          1991 0

          1992

          1993

          1994

          1995

     GDR 1990

          1991 0

          1992 0

          1993 0

          1994 0

          1995 0

   Hungary

    Latvia

   Lithuania 1990 0

          1991 0

          1992 1

          1993

          1994

          1995

```

(in ECU million)

197

200

225

(208/8,

_m_ 106.5

```
99

6 100

```

**i** **us**

```
10

 12

```

```
22.5

24

 25

```

```
34

 39

  42

```

```
Poland 1990

      1991

      1992

      1993

      1994
```

`1995` **^t*$9$ftWRR**

**30**

Romania

Slovakia

Slovenia

Former
Yugoslavia

Multi-country

programmes

Other

programmes

Note:

The 1995 Phare Annual Report contains figures from all
five budget lines (B7-5200 Phare Democracy Programme,
B7-6000 Assistance for economic restructuring in the
countries of central and eastern Europe (Phare), B7-6020
Cross-border cooperation, B7-6310 Community
contribution to measures taken by NGOs, B7-6330
Opening of Community programmes to associated
countries of central Europe) managed within the
framework of the Phare Programme.

243.2

Owing to software limitations figures contained in the
1994 Phare Annual Report only included two budget
lines.

This therefore accounts for the small discrepancy in the
historical figures between the 1994 and the 1995 Phare
Annual reports.

31

#### 1990 -1995 funds committed by sector

Agricultural
restructuring

Civil society and
démocratisation

Critical aid

Education,
training and

research

Environment

and nuclear

safety

Infrastructure

(energy, transport,
telecom
munications)

Private sector

development and
enterprise support

Public health

Public institutions

and administrative

reform

**32**

(in ECU million)

Social

development
and employment

Approximation
of legislation

Consumer

protection

Financial

sector

Integrated

regional

measures

Other sectors

Note:

48.2

47.3

1990 0

1991 0

1992 0

1993 0

1994 0

1995 | 2

1990 0

1991 0

1992 0 0
1993 Hp5
1994 p 4
## 1995 I

The 1995 Phare Annual Report contains figures from all
five budget lines managed within the framework of the
Phare Programme.

Owing to software limitations, figures contained in the
1994 Phare Annual Report only included two budget
lines. This therefore accounts for the small discrepancy in

the historical figures between the 1994 and the 1995 Phare
Annual reports.

Owing to the financial reporting process it is possible to
provide more accurate sector breakdown. This accounts
for the increase in sectors from 9 in 1994 to 15 in the 1995

Annual Report.

33

#### Phare funding by country

**Albania** (in ECU million)

**Funds allocated by sector 1990-1995** **1990** **1991** **1992** **1993** **1994** **1995** **Total**

Public institutions and administrative reform 0 6 0 1.2 4.6 0 5,8
Agricultural restructuring Ô 0 15 10 5 0 30
Civil society and démocratisation 0 0 0 0 0 0 0

Education, training and research 0 0 1.2 2.5 2.4 3.5 9.6
Environment and nuclear safety 0 Ô 0 3.3 0 0 3.3

Financial sector 0 0 35 35 0 35 105

Critical aid 0 10 50 10 7 0 77
Infrastructure (energy, transport, telecom.) 0 Ô 4.4 0 23 34 61.4
Approximation of legislation 0 0 0 0 0 0 0
Consumer protection 0 0 0 0 Ô 0 0
Private sector development and enterprise support 0 0 0 7 0 0 7
Integrated regional measures 0 0 0 0 0 8.5 8.5

Social development and employment 0 0 0 0 0 0 0
Public health 0 Ô 0 6 7 0 13

Other 0 0 4.4 0 0 7 11.4

**Total** 0 **10** **110** **75** **49** **88** **332**

Note: Albania entered the Phare Programme in 1991

**Bulgaria**

**Funds allocated by sector 1990-1995** **1990** **1991**

Public institutions and administrative reform 0 0

Agricultural restructuring 16 25
Civil society and démocratisation 0 0

Education, training and research 0 5
Environment and nuclear safety 3.5 19

Financial sector 0 10

Critical aid 5 20

Infrastructure (energy, transport, telecom.) 0 5
Approximation of legislation 0 0

Consumer protection 0 0
Private sector development and enterprise support 0 20
Integrated regional measures 0 0

Social development and employment 0 2.5

Public health 0 0

Other 0 0

**Total** **24.5** **106.5**

**1992**

0

10

0

0
**()"**

21

0

0

22.5

0

0

15

0

**87.5**

**1993**

16

0

0

17.5

15.6

5""

0

13.9

0

"" 0

6

0

4

10.5

1.5

**90**

**1993**

**0**
**"(T**

**o**

**o**

**o**

**o**

**9**

**"** **ô**

**0**

**"27"**

**0**

**"8**

**0**

**8**

**60**

**1994**

1.2

0

1.2

**12**

**5**

**0**

**0**

62.6

**0**

**0**

**3**

**0**

**0**

**0**

**0**

**85**

**1994**

**4.5**
**Ô**

5.5

**0**

**0**

**0**

**25**

**0**

**0**

**0**

**0**

**14**

**0**

**0**

**60**

**1995**

" "O

5

0

21

""7

"""" 0

0

**48**

**2**

**0**

**0**

**0**

**0**

**0**

**0**

**83**

**1995**

**"""5**

**0"**

**0**

**8**

**0**

**0**

**0**

**91**

**0**

**0**

**1**

**0**

**""2**

**0**

**3**

**110**

**Total**

17.2

56

1.2

63.5

61.1

15

25

150.5

2

0

51.5

0

6.5

25.5"

1.5

**476.5**

**Total**

**16**

**"4.5**

**Ô**

"21.5

**0**

**0**

**0**

125

0

0

28

0

24

0

11

**230**

**Czech Republic**

34

**Funds allocated by sector 1990-1995** **1990** **1991** **1992**

Public institutions and administrative reform 0 0 0

Agricultural restructuring 0 0 0

Civil society and démocratisation 0 0 0
Education, training and research 0 0 0
Environment and nuclear safety 0 0 0

Financial sector 0 0 0

Critical aid ~" 0 " 0 0""

Infrastructure (energy, transport, telecom.) 0 0 0
Approximation of legislation 0 0 0
Consumer protection 0 0 0

Private sector development and enterprise support 0 0 0
Integrated regional measures 0 0 0

Social development and employment 0 0 0

Public health 0 0 0

Other 0 0 0

**Total** **0** **0** **0**

Note: Prior to 1993 funds were provided to Czechoslovakia

**Czechoslovakia**

**Funds allocated by sector 1990-1995** **1990**

Public institutions and administrative reform 0

Agricultural restructuring 0

Civil society and démocratisation 0
Education, training and research 4
Environment and nuclear safety 30

Financial sector 0

Critical aid _~W_

Infrastructure (energy, transport, telecom.) 0
Approximation of legislation 6

Consumer protection 0

Private sector development and enterprise support 0
Integrated regional measures 0
Social development and employment 0

Public health (T

Other (T

**Total** **34**

**1991**

0
**"IT**
**~o"**

" 9

**~T"**

**o**

**"6**

**lT**

**" 6**

**"o**

**39**
**"IT**

**15"**

**""0**
**2Ï)"**

**99**

**1992**
"" Ô"
**IT**

4 "

**"""25** **"**

_**~~Q~**_

**o**

**" o**

"10

" 0

""" 0

31
**"IT"**
**"""** **o** **""**

**~** **o**

**""""** **3 0 "**

**100**

**1993**

**'"" " ô**

**rr**
**IF**

**0 "**
**~"T"**

**o**

**1994**

0

0"
**""()"**
Ô

0

0

0

0
**"""()**

0"

0

**(")"**

""" 0

0
**ô"**

0

**1995** **Total**

**0**

**0**

**" 4**

**"38"**

**35**

**0**

**" 0**

**"21**

**" 0**

**" 0**

**70**

**"** **0**

**~i~5**

" 0

50

233

Note: from 1993 Phare funding was provided separately to the Czech republic and Slovakia
**Estonia**

**1995** **Total**

2.8

0

0

4.2

**(")**
**()'"**

**O"**

**"** **5"**

**"** **"()"**

**0**

**9.1**

**0**
**Y9**
**"** _**(V**_

**o**

24

**Funds allocated by sector 1990-1995**

Public institutions and administrative reform

Agricultural restructuring

Civil society and démocratisation

Education, training and research

Environment and nuclear safety

Financial sector

Critical aid

Infrastructure (energy, transport, telecom.)

Approximation of legislation

Consumer protection

Private sector development and enterprise support

Integrated regional measures

Social development and employment

Public health

Other

**Total**

**1990** **1991** **1992** **1993**

0

0

"0

1.5

0

**ô**

"0
**1 )**

2.8

0

0

11.2

2.5

**"'()**

0

II

0

0

17.1

0

**2.9**

**""'"'()**

21

**68.5**

**1994**

**0**

**0**
**"Ô**

**4.5**

**2.5**

**0**
**~~** **Ô"**

"~ 6

**" 6**

**o**

**"8**

**0**
**"""""(")"**
**ô**

**"~[.5"**

**22.5**

0

0

0

0

9
**To**

0

" 0

"""0

0
**'"()'**

0

10.5

**12**

Note: Estonia entered the Phare Programme in 1992

**GDR**

**1995** **Total**

0

" 0

0

" 1

20

0

0

0

" 0

0

0

"14

"35

**Funds allocated by sector 1990-1995** **1990** **1991**

Public institutions and administrative reform 0 0

Agricultural restructuring 0 0

Civil society and démocratisation 0 0
Education, training and research 1 0
Environment and nuclear safety 20 0
Approximation of legislation 6 0
Consumer protection 0 0

Private sector development and enterprise support 0 0
Integrated regional measures 0 0

Social development and employment 0 0

Public health (T 6
Other " Ï4 0""

**Total** **35** **0**

**1992**

**(T**
**'""(F**

" 0

**b**

**ô**

**6**

**o**

**~'"o**

**o**

**o**

**" "o"**

**6**

**1993**

**_** **0'**

**0""**

**" "0**

**"0**

**""~ô**
**ô~**

**(T**
0
**()** **"**
0

**'~~ô~**

0

0

**1994**

**(T**
**"o**

**"o**

**""** **"o"**

**o**

**" o**

**o**

**o**

**o**

0

" 0

0

0

Note: Support to GDR ceased after the German unification in 1990

35

Hungary

Latvia

Lithuania

36

**Funds allocated by sector 1990-1995**

Public institutions and administrative reform

Agricultural restructuring

Civil society and démocratisation

Education, training and research

Environment and nuclear safety

Financial sector

Critical aid

Infrastructure (energy, transport, telecom.)

Approximation of legislation

Consumer protection
Private sector development and enterprise support

Integrated regional measures

Social development and employment

Public health

Other

**Total**

**Funds allocated by sector 1990-1995**

Public institutions and administrative reform

Agricultural restructuring
Civil society and démocratisation

Education, training and research

Environment and nuclear safety

Financial sector

Critical aid

Infrastructure (energy, transport, telecom.)

Approximation of legislation

Consumer protection
Private sector development and enterprise support

Integrated regional measures

Social development and employment

Public health

Other

**Total**

**Funds allocated by sector 1990-1995**

Public institutions and administrative reform

Agricultural restructuring
Civil society and démocratisation

Education, training and research

Environment and nuclear safety

Financial sector

Critical aid

Infrastructure (energy, transport, telecom.)

Approximation of legislation

Consumer protection
Private sector development and enterprise support

Integrated regional measures

Social development and employment

Public health

Other

**Total**

**1990**

b"

b"

7.5

27"

5

""b

OX

b

b"

26

b

"" 3"

" 0

**0**

**893**

**1990**

o

**0**

b "

b"

(T

b"
""b"

__.

**"** **"0**

"""b"

b"

0

**"b"**

"b"

**"0"**

**0**

**1990**

**0 "**

" 0 "
**TT"**

0"

0 "

"0 "

**0**

b

**0**

"b"

"b""

b

**b"**

0

"0

**1991**

7.5

b

" 0

45.5

"" "0"

0

" " " 0

**b"**

**115**

**1991**

**~~rT"**

**b**

**"""b"**
**j T**

**o"**
**"IT**

**b"**
**"b"**

" 0

**1991**

**0"**

" b

"b"

b""

b"

**0**

**0**

b

**0**

**" 0**

" b

**0**

" b "

**0**

**1992**

TT3"

5"
b

2T

""" ib

o

b

o

o

o

H
""To

" 2 6 "

0

4

**101.5**

**1992**

b"

**0**

**0**

1.5

**"0**

**""0"**

**0**

**0"**

"b"

**0**

**"b"**

0

**b**

0

**'"'"15"**

**1992**

b"

b"

b""

1.5

**0**

**0**

**0**

**0**

"""b"

**0**

**"9.5**

b""

0

b

**9**

**20**

**1993**

1.5
TÔ3"

b"

26"

""' b"

o

"0

**b**

**b**

**31**

**""** **0**

**_..** **.....**

" To

l

**100**

**1993**

b "

b

2

0 "

b"

. . . . . „ _

0 "

"~ b"

__ ^

""" b

**0**

**"** **0**

**" 0**

"T"6"

**18**

**1994**

"""" b
""'o
"""' "o

24""

T 5:5

0

""" b"

2 9 "

0

" 0

16.5

__ Q .

**0**

**"" 0**

**0"**

**85**

**1994**

**" 0 "**

**0**

b

**5**

**"5.5"**

14.5 **"**

**""** **b**

**b"**

**"** **b"**

**"""""'b**

0

0

" " 0

0"

4.5"""

**29.5**

**1995**

3
To
" b

**16**

12"

**0**

**0"**

36

0

" 0

6

" 5

2

"O

'2

**92**

0

"0"

2
""Ô"

"2.5"

0

**9.2**

**"~0**

**b**

"875

**0**

"9T2

**b"**

**"0**

**32.5"**

**Total**

**" 2 7 "**

**""""78.5**

**0**

**T11.5**

**74.5"""**

**19**

b "

73.5"

**0** **"""**

**"'""** **0**

136

**" " 1 5**

" 3 1

**10**

**7**

**582.8**

**1995** **Total**

1.3 **1.3**

**1.3**

**0**

**0"**

10.5

**5.5"**

**"17**

**"** **0**

**9.2**

(")

**"" 0"**

**8.3**

**0**

**"92"**

**0"**

**34**

**95**

Note: Latvia entered the Phare Programme in 1992

**1993**

**0**

**2.5"**

**"0**

b

" "b"

**0**

**"0"**

**0**

b"

**0**

**0**

**0**

'22.5

"2T"

**1994**

... ___

"b""

b "

**6**

14.5

b"

16.5

**0**

**0**

**0**

**"** **"" 0**

**""" 0**

**0**

r

**39**

**1995** **Total**

5.5 5.5

**"0"** **0**

**0**

"375"

"b"

**""0"**

**0**

**19**

**"** **"0**

**0**

**"9.6**

**"** **"0"**

**"4.4"**

**" 0**

**0**

**42**

5.5

**0**

**"** **0**

13.5"

1

14.5

**"** **0**

35.5

"" " b"

0

T9.1

b"

4.4

0

"32.5

**T26**

Note: Lithuania entered the Phare Programme in 1992

Poland

Romania

Slovakia

**Funds allocated by sector 1990-1995**

Public institutions and administrative reform

Agricultural restructuring

Civil society and démocratisation

Education, training and research

Environment and nuclear safety

Financial sector

Critical aid

Infrastructure (energy, transport, telecom.)

Approximation of legislation

Consumer protection

Private sector development and enterprise support

Integrated regional measures
Social development and employment

Public health

Other

**Total**

**Funds allocated by sector 1990-1995**

Public institutions and administrative reform

Agricultural restructuring
Civil society and démocratisation

Education, training and research

Environment and nuclear safety

Financial sector

Critical aid

Infrastructure (energy, transport, telecom.)

Approximation of legislation

Consumer protection

Private sector development and enterprise support

Integrated regional measures
Social development and employment

Public health

Other

**Total**

**Funds allocated by sector 1990-1995** **1990** **1991** **1992** **1993**

Public institutions and administrative reform 10 7.5 972 27

Agricultural restructuring 100 **"TT** **T8** 30

Civil society and démocratisation 0 **b** **" 0 "** "b"
Education, training and research 2.8 14.5 42 "45"
Environment and nuclear safety 22 35 18 "0
Financial sector 2 16 4.7 21

Critical aid 0 0 0" "b"

Infrastructure (energy, transport, telecom.) 6 10 26.4 63"
Approximation of legislation 0 0 0 0
Consumer protection 0 0 0 ""5"
Private sector development and enterprise support 38 56 74.5 7
Integrated regional measures 0 0 0 "b"
Social development and employment 0 18 7.2 " b

Public health 0 20 " _0_ 0"

Other 0 3 0 27

**Total** **180.8** **197** **200** **225**

**1993** **1994** **1995**

27 21.5 **"** **2""**

30 2.5 13

"b" 0 b
"45" "39 "37
"0 12 22

21

**1994**

21.5

2.5

0

"39

b

"37

Total

"7772 " "

T8b;5

b

180.3

"Ï09

65.7

0

29072

0

" ""'5 "

193.5

0"

"3472 "

"20

30

**,185.6**

7.5

**"TT**

**b**

**1992**

972

**T8**

**" 0 "**

13

22

0

"0"

91"

"b"

"b"

63"

0

""5"

7

"b"

" b

12

22

0

"93.8

0

0

9

0

9

0

b

**208.8**

0

9

0

0

b

" 0

174

0

34

0

10

_0_

0"

"34.3"

**9**

**b**

b"

**b**

o
"o

275

22

**1343**

**1991** **1992** **1993** **1994** **1995** **Total**

**1990**

**b"**

o

15.5

0

b

b

"b

o

o

ô

0"

0 0

**b** **o**

**b** **b**

**b** **b"**

**b** **b**

**b"** **b**

**b** **b**

0 0

0

32

22

**0**

**0**

**"0**

40"

**0**

15"

**0**

20

**152**

10

**5**

**0**

**18**

**b**

**0**

"979

**0**

**0**

**"b**

**" 7 b**

0

0

b

" 2 7

**139.9**

_2J6_

0.5"

5

3

"0"

8.2

"b

o

T472"

1.5"

""2.4"

2"

0.6

**46**

19.6

**81**

5

96

"" 5

5

"81.7

72

0

0

133.4

0

15

25

69

**607.7**

**0**

10

**0**

**18**

**b**

0

**b"**

**38**

**0**

**"b"**
"o"

o

o

o

o

**66**

**1990** **1991** **1992** **1993**

**0**

**'** **"5"**

**"b**
"o""
"o"

**1995** **Total**

**" T** **""'"'** _**9**_

10.6

0.5

19

**1**

8

0

19.7

" " 0

0

373.2

"T.5"

10.9

2
"ÏÔ.6"

**126**

9.6

0

'"" 5"

37

**" b**

o

o

25

0

" " 0

"2374

0

"0

0

0

100

**1994**

**4**

**"""""5**

b

9

b

**5**

**"b "**

**6.5**

**0**

**0**

**0 "**

**0**

**"5.5 "**

**0**

**5**

**40**

5

**b**

o

"19"

b

**"3"**

**0**

**5**

**40**

Note: prior to 1993 funds were provided to Czechoslovakia

37

**Slovenia**

**Funds allocated by sector 1990-1995**

Public institutions and administrative reform

Agricultural restructuring
Civil society and démocratisation

Education, training and research

Environment and nuclear safety

Financial sector

Critical aid

Infrastructure (energy, transport, telecom.)

Approximation of legislation

Consumer protection

Private sector development and enterprise support

Integrated regional measures
Social development and employment

Public health

Other

**Total**

**Former-Yugoslavia**

**1990** **1991**

**"To"**

**b"**

**(T**

**1992** **1993**

**1995**

b""

b

2T5"

0

0

" 0

"7"T""

"0

0 "

3

**b**

**"TT**

**" b**

**~7"6**

**25**

**Total**

**"TT**

**""""""" 0**

**0**

13.9

**0**

**0**

**0**

13.4

0

0

15.5

**"""" 0**

**4.4**

**""""" 0**
Tl .8"

**69**

**1994**

**" 0**

b"

b""

**"5.5""**

b"

o

b "

"6"

" o "

o "

12.5

" o "

0" "

0

**b "**

**24**

2.3

**__.**

0
" b "

" b

_**o**_

**"** **b"**

**o**

_o_

" b "

o

"TT

"TT

"375"

**"b"**

b

"o

**" b**

**"To"**

**"o**

**b**

**"b"**

" b " **To"**

To" **To"**

**6.7** **7.5**

**"9"** **11**

To"

**7.5**

**11**

Note: Slovenia entered the Phare Programme in 1992

**Funds allocated by sector 1990-1995** **1990** **1991**

Public institutions and administrative reform 0 0

Agricultural restructuring 0 0
Civil society and démocratisation 0 0
Education, training and research 0 6
Environment and nuclear safety _0_ 0

Financial sector 0 0

Critical aid "TTbTT" 7 T "

Infrastructure (energy, transport, telecom.) 0 0

Approximation of legislation 0 0
Consumer protection 0 0
Private sector development and enterprise support 0 0
Integrated regional measures 0 0

Social development and employment 0 0

Public health 0 0
Other 0" Ô
Total 3 0 7 1 T 3 7 Ï "

**Multi-country programmes**

**1992** **1993**

0

0"

b"

0

0"

0"

T"7".7"" **25**

"0

"0"

0

" 0

**0**

**0**

**"25"'**

**b**

**0"**

**"0"**

**"b"**

**0**

**0**

**"0"**

**0"**

**47.7**

0

**" b**

**0**

**0**

**0**

**" b**

**0**

**0**

**"25"**

**1994**

**""""** _**2**_

**0**

**O**

**0**

**"b"**

**"0**

" 23

0

0 "

""" "" 0"

" " O "

0

0

**" b "**

**"0 "**

**2 5 "**

**1995** **Total**

0 2

0 0

"O" 0

0 6

0 0
" 0 **()"**

T5" 158

" 0 **0"**
**""()** **0"**

2

0

0

6

0
**()"**

158

**0"**

**0"**

**0**

**0**

**0**

**0**

**"** **0**

**0**

**166**

**Funds allocated by sector 1990-1995** **1990** **1991**

Public institutions and administrative reform 0 11

Agricultural restructuring 0 0
Civil society and démocratisation 0 0

**1992** **1993** **1994** **1995**

0

""875"

"20"

0

"0

70.5

"""Ô

0

**" 5**

0

b

b"

**"0**
**TÔ4**

**28.1**

2375

**.........**

0

**25**

0

**"b"**

**13**

**13**

b"

"b"

**31**

**b"**

0

**" b"**

**""4"**

**"0**

**0"**

**0**

**86**

**Total**

47.5""

" b

" b"

115.7

T22.5

0

51"

160.5

0"

0

" 55.5"""

"24.8

0

0

" 1.5

**"579**

Education, training and research

0

213

1.5

0

**"24"**

**"46"**

**"0"**

**" 0 "**

**35"**

**"b"**

0
3

6.5

_o_

_0'_

_**Q**_

**116"**

0

2078"

""20"

0

24

**" b**

**0**

"27.5

**10**

"b"

**0**

**b"**
**TÎ23**

Environment and nuclear safety Financial sector 0 0 2375 **.........**

Critical aid 51 **"** **b**

Infrastructure (energy, transport, telecom.) 0 **0**
Approximation of legislation 0 **"0**
Consumer protection 0 **0**
Private sector development and enterprise support 0 **20"**
Integrated regional measures 0 **473"**
Social development and employment _0_ **"b"**

Public health " F b"

Other " 0 L5

**Total** **7273** **88.T**

**"** **b**

**0**

**"0**

**0**

**20"**

**473"**

**"b"**

38

**Other programmes**

**Funds allocated by sector 1990-1995** **1990** **1991** **1992** **1993** **1994** **1995** **Total**

Public institutions and administrative reform 0 0 0 0 3 0 3

Agricultural restructuring 0 0 0 0 0 0 0
Civil society and démocratisation 0 0 5 10 10 JO 35
Education, training and research _0_ 0.4 0 9.9 7 17.8 35.1

Environment and nuclear safety 0 0 0 0 23 20 43

Financial sector 0 0 0 0 0 0 0

Criticalaid 0 0 0 0 0 0 0

Infrastructure (energy, transport, telecom.) 0 0 0 0 2 0 2
Approximation of legislation 0 0 0 0 0 0 0
Consumer protection 0 0 0 0 4 2 6
Private sector development and enterprise support 0 0 0 0 21 74 95
Integrated regional measures 0 0 0 0 0 32 32
Social development and employment _0_ 0 0 0 0 20 20

Public health " b 0 TT 0 6 0 6

Other 13.4" 10 "38.6 54^9 4 3 . 5 " 674 227.8

**Total** **13.4** **10.4** **43.6** **74.8** **119.5** **243.2** **504.9**

**39**

#### sector Phare funding by

**Agricultural restructuring** **Civil society** **and** **démocratisation**

```
             1990 1991 1992 1993 1994 1995 Total 1990 1991 1992 1993 1994 1995 Total

```

5

0

4.5

0

0

0

0

0

0

2.5

0

5

0

0

0

0

10

0

0

0

0

0

30.5

0

0

30

5

3

0

0

0

0

0

5

0

0

0

0

10

0

0

13

10

2.6

0

0

0

0

Albania

Bulgaria

Czech Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

Former Yugoslavia

Multi-country programmes

0

16

0

0

0

0

20

0

0

100

0

0

0

0

0

0

25

0

0

0

0

13

0

0

17

34

0

0

0

0

0

89

15

10

0

0

0

0

5

0

0

18

32

0

0

0

0

0

**80** **78.5** **17** **40.6 441.1**

Albania

Bulgaria

Czech Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

Former Yugoslavia

Multi-country programmes

J)ther

**Total**

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

10

10

30

56

4.5

0

0

0

78.5

0

0

180.5

81

10.6

0

0

0

0

0

1.2

0

0

0

0

0

0

0

0

5

0

0

0

0

10

16.2

0

0

0

0

0

0

0

0

0

0

0

0.5

0

0

0

10

**10.5**

0

1.2

0

4

0

0

0

0

0

0

5

0.5

0

0

0

35

15.7

Other 0

**Total** 136

(in ECU million)

**Approximation** **of** **legislation** **Consumer protection**

**1991** **1992** **1993** **1994** **1995** **Total** **1990** **1991** **1992** **1993** **1994** **1995** **Total**

Albania

Bulgaria

Czech Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

Former Yugoslavia

Multi-country programmes

Other

**Total**

Albania

Bulgaria

Czech Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

Former Yugoslavia

Multi-country programmes

Other

**Total**

**40**

**1990**

**0**

**Critical** **aid** **Environment** **and** **nuclear safety**

```
              1990 1991 1992 1993 1994 1995 Total 1990 1991 1992 1993 1994 1995 Total

```

10

20

0

0

0

0

0

0

0

0

34.3

0

0

7.1

0

10

0

0

0

0

0

0

0

0

0

9.9

0

0

25

0

0

**44.9**

0

0

0

0

0

0

0

0

0

0

0

0

0

25

0

50

0

0

0

0

0

0

0

0

0

22

0

0

47.7

0

0 0

**25 392.7**

Albania

Bulgaria

Czech Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

0

5

0

0

0

0

0

0

0

0

15.5

0

0

77

25

0

0

0

0

0

0

0

0

81.7

0

0

158

51

Albania

Bulgaria

Czech Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

Former Yugoslavia

Multi-country programmes

0

3.5

0

30

0

20

27

0

0

22

0

0

0

0

0

0

19

0

5

0

0

10

0

0

35

(I

0

0

0

23.5

3.3

15.6

0

0

0

0

0

0

0

0

0

0

0

0

20

0

5

0

0

2.5

0

15.5

5.5

1

12

0

0

0

0

13

3.3

61.1

0

35

2.5

20

74.5

5.5

1

109

5

1

0

0

122.5

Former Yugoslavia 30.2

Multi-country programmes 51

Other 0

**Total 101.7**

0 0

**71.4 119.7**

Other 0 0 0 23 43

**Total** **102.5** **92.5** **90** **38.9** **77.5** **82** **483.4**

0

Other

0

23

0

**Education,** **training** **and** **research** **Financial sector**

```
              1990 1991 1992 1993 1994 1995 Total

```

```
1990 1991 1992

```

**1993** **1994** **1995** **Total**

```
 17.8 35.1

147.1 746.3

```

Albania 0 0 35

Bulgaria 0 10 0

Czech Republic 0 0 0

Czechoslovakia 0 0 0

Estonia 0 0 0

GDR 0 0 0

Hungary 5 14 0

Latvia 0 0 0

Lithuania 0 0 0

Poland 2 16 4.7

Romania 0 0 5

Slovakia 0 0 0

Slovenia 0 0 0

Former Yugoslavia 0 0 0

Multi-country programmes 0 0 0

Other 0 0 0

**Total** **7** **40** **44J**

**0**

**0**

**0**

**0**

**0**

**0**

**0**

14.5

14.5

22

**0**

**5**

**0**

**0**

**0**

**0**

**56**

2.5

17.5

8

0

1.5

0

26

2

2.5

45

18

5

3.5

0

20.8

9.9

2.4

12

5.5

0

4.5

0

24

5

6

39

37

9

5.5

0

13

7

3.5

21

8

0

4.2

0

16

2

3.5

37

18

5

2.6

0

8.5

9.6

63.5

21.5

38

11.2

1

111.5

10.5

13.5

180.3

96

19

1.3.9

6

115.7

105

15

**0**

**0**

**0**

**0**

**19**

**17**

14.5

65.7

**5**

**8**

**0**

**0**

**0**

Albania

Bulgaria

Czech Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

Former Yugoslavia

Multi-country programmes

Other

0

0

0

4

0

1

7.5

0

0

2.8

0

0

0

0

21.3

0

**36.6**

0

5

0

9

0

0

17

0

0

14.5

10

0

0

6

28.1

0.4

**90 140.5 162.2 169.9**

**0** **0**

**40.5** **249.2**

**41**

35

**0**

**0**

**0**

**0**

**0**

**0**

2.5

**0**

**0**

**0**

**3**

**0**

**0**

**0**

1.2

8

0

25

1

0

21

1.5

1.5

42

13

0

2.3

0

24

0

**Infrastructure** **Public health**

```
              1990 1991 1992 1993 1994 1995 Total 1990 1991 1992 1993 1994 1995 Total

```

**0** **0** 2 0 2

**96.8 114.9 326.4** **457** _**3**_ **1,044.7**

23

62.6

25

0

6

0

29

0

16.5

93.8

25

6.5

6

0

31

5

0

36

9.2

19

91

38

8.2

7.4

0

70.5

Albania 0

Bulgaria 0

Czech Republic 0

Czechoslovakia 0

Estonia 0

GDR 0

Hungary 0.8

Latvia 0

Lithuania 0

Poland 6

Romania 0

Slovakia 0

Slovenia 0

Former Yugoslavia 0

Multi-country programmes 0

Other _0_

**Total** **6.8**

**0**

**5**

**0**

**II**

**0**

**0**

7.5

**0**

**0**

**10**

**9**

**0**

**0**

**0**

**0**

**0**

**42.5**

4.4

21

**0**

**10**

**0**

**0**

**0**

**0**

**0**

26.4

**0**

**0**

**0**

**0**

35

**0**

13.9

**9**

**0**

**0**

**0**

**0**

**0**

**0**

63

**0**

**5**

**0**

**0**

24

34 61.4

48 150.5

91 125

0 21

6

10.5

0

0

0

0

10

0

0

0

0

0

0

0

0

(I

**26.5**

7

0

0

0

0

0

0

0

0

0

0

0

0

0

0

6

**13**

13

25.5

0

0

0

0

10

0

0

20

25

0

0

0

_ 6

To **1.5**

II

0

73.3

9.2

35.5

290.2

72

19.7

13.4

0

160.5

Albania

Bulgaria

Czech Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

Fonner Yugoslavia

Multi-country programmes

Other

total

20

25

0

0

0

0

0_

**45**

0

15

0

0

0

0

0

0

0

0

0

0

0

0

0

0

**15**

**0**

**0**

2

0

**Private sector development and enterprise**
**support** **Public institutions and administrative reform**

**1991** **1992** **1993** **1994** **1995 Total** **1990** **1991** **1992** **1993** **1994** **1995 Total**

0 0

20 22.5

0 0

39 31

0 0

0 0

45.5 II

0 0

0 9.5

74.5

40

0

0

0

3

0

5.8

17.2

16

0

2.8

0

27

1.3

5.5

77.2

Albania

Bulgaria

Czech Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

Former Yugoslavia

Multi-country programmes

Other

**Total**

42

**1990**

0

0

0

0

0

0

0

0

0

0

0

0

0

10

0

0

0

0

0

0_
**To**

0

0

1

0

9.1

0

6

8.3

9.6

9

0

14.2

3

0

5

74

7

51.5

28

70

17.1

0

136

8.3

19.1

193.5

133.4

33.2

15.5

0

55.5

95

1.2

16

0

0

0

0

1.5

0

0

27

10

0

0

0

10

0_

**65.7"**

9.6

25

3

**"81.9**

4.6

1.2

11

0

0

0 0

0 3

0 1.3

0 5.5

21.5 2

Albania

Bulgaria

Czech Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

Fonner Yugoslavia

Multi-country programmes

JDther

**Total**

0

0

8

0

0

7.5

0

0

0

0

11

0

**26.5**

27

0

0

0

31

0

0

7

70

19

0

0

27.5

0

0

3

0

0

8

0

16.5

0

0

9

23.4

0

12.5

0

0

**21**

0

0

0

0

0

0

14.5

0

0

9.2

0

0

0

0

1.5

0

**25.2**

0 19.6

5 9

0 0

0 2

0 47.5

_0 _ 3

**24\6** **233.9**

**64 180.5 191.5 194.5** **93.4 139.2 863.1**

**Social development** **and** **employment** **Other sectors**

```
             1990 1991 1992 1993 1994 1995 Total 1990 1991 1992 1993 1994 1995 Total

```

**0**

**0**

14

**0**

**0**

**0**

**0**

**0**

**0**

**9**

**0**

**5.5**

**0**

**0**

**0**

**0**

**28.5**

4.4

**0**

**0**

**30**

**9**

**0**

**4**

13.5

9

0

20

0

6.7

0

0

**0**

**0**

**2**

**0**

**2.9**

**0**

**2**

**9.2**

4.4

**0**

**0**

2.4

4.4

**0**

**0**

**20**

**47.3"**

**0**

**6.5**

24

**15**

**2.9**

**0**

**31**

**9.2**

4.4

34.2

**15**

10.9

4.4

**0**

**0**

**20**

**177.5**

Albania

Bulgaria

Czech Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

Former Yugoslavia

Multi-country programmes

Other

**Totaf**

0 **0**

**35.5** **48.2**

0

2.5

0

15

0

0

0

0

0

18

0

0

0

0

0

0

0

0

0

0

0

26

0

0

7.2

**15**

**0**

**0**

**0**

**0**

0

0

0

0

1.5

0

0

4.5

1

0

0

5

0

0

0

43.5

**55.5**

7

0

3

0

0

0

2

0

0

0

0

0.6

7.6

0

0

Albania

Bulgaria

Czech Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

Former Yugoslav îa

Multi-country piogrammes

Other

**Total**

**0**

**0**

**0**

**20**

**0**

**0**

**0**

**0**

**0**

**3**

22

**0**

**0**

**0**

**1.5**

**10**

**56.5**

**0**

**0**

**0**

**0**

**0**

14

**0**

**0**

**0**

**0**

**0**

**0**

**0**

**0**

**0**

13.4

**"27.4"**

38.6 54.9

**135.2 180.9**

0

1.5

**8**

**0**

10.5

**0**

**1**

**16**

22.5

**27**

**27**

**5**

**7.5**

**0**

**0**

67.4 227.8

**87.6** **543**

4.3

11.4

1.5

II

50

21

14

7

34

32.5

30

69

10.6

21.8

0

1.5

**Integrated regional measures**

```
             1990 1991 1992 1993 1994 1995 Total

```

8.5

0

0

0

0

0

15

0

0

0

0

1.5

0

0

24.8

32

**81.8**

Albania

Bulgaria

Czech Republic

Czechoslovakia

Estonia

GDR

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

Former Yugoslavia

Multi-country programmes

Other

**Total**

0

0

0

0

0

0

0

0

0

0

0

0

0

0

4.3

0

4.3

0

0

0

0

0

0

10

0

0

0

0

0

0

0

6.5

0

**T6.5**

8.5

0

0

0

0

0

5

0

0

0

0

1.5

0

0

0

32

**47**

#### Phare financial performance

1995 saw Phare continuing to improve its financial
performance. Phare has reached a situation where the
contracting in a given year is at the same level as the
commitments in that year.

It is hoped that further efforts to be taken in 1996 to
streamline procedures and to decentralise Phare
effectively will enable these levels of contracting to be
sustained and increased.

The financial performance of the Phare Programme is
indicated by the levels of funds committed, contracted and
paid and the relationship between these three over time.

The total amount of funds committed, contracted and paid
for each of the years 1990 - 1995 are shown in Figure 1.
The cumulative funds committed, contracted and paid
over the same period are shown in Figure 2.

**Committed funds**

1995 saw the Phare Programme maintaining the high
percentage of the Phare budget actually committed. As
with previous years, this was close to 100 per cent at 99.4
per cent of the 1995 budget.

**44**

**Fig. 1** - **Funds committed, contracted and paid**
**1990-1995 (in ECU million)**

```
                                    "3" o

 1990 1991 1992 1993 1994 1995

```

- commitments • contracts payments

**Fig. 2** - **Cumulative funds committed, contracted and**
**paid 1990-1995 (in ECU million)**

**1992**

I commitments - contracts payments

**Contracted funds**

Phare's increase in the amount of funds contracted

continued during 1995 with the largest contracted amount
(ECU 1,142.9 million) of any year since the Programme
began.

The improvement in contracting can be attributed to the
following three factors

- decentralisation - implementation structures in each of
the partner countries are now in place and the efforts
made in 1994 to standardise procedures, most notably
through the distribution of the Decentralised
Implementation System procedures manuals, started to
bear fruit in 1995. Accordingly, 1995 was the first year
in which the contracting level was higher among the
Programme Management Units (PMUs) than in
Brussels.

- improved programme quality - improvements in
programme design, especially in 1994, led to a faster
execution of programmes and more efficient and
effective contracting.

- implementation review - during the first half of 1995, a
systematic and detailed follow up of all programmes
was undertaken. Through this process, programmes
were reviewed, difficulties in implementation identified
and measures designed to speed up implementation.
This resulted in higher contracting levels.

**Funding procedure**

As part of the Phare Programme, there are three steps
which take the annual budget approved by the
Budgetary Authority through to the point where
projects are implemented and funds disbursed.

Phare has a financial management procedure which
matches this process.

**Commitment**  - Each year a Phare budget is agreed,
indicating the funds which the Commission is prepared
to commit through the Phare Programme in each
country. Country operational programmes are then
designed and financing proposals prepared. Once these
financing proposals have been given a favourable
opinion by the Phare Management Committee and
decided by the Commission, the relevant funds
associated with these proposals are said to have been
'committed'. Phare must commit its entire annual

budget within the year to which that budget applies.

The budget year to which the contracts signed in each
calendar year refer can be seen in Figure 3.

**Fig. 3** - **Contracts concluded by calendar year**
**(in ECU million)**

^ I M 5 _ 3

**1990** **budget** **1991 budget** **1992 budget** **1993 budget** **1994 budget** **1995 budget**

98.4% **99.0%** **81.1%** 59.6% 46.6% 21.1%

% contracted as of 31.12.95

contracted in 1990 • contracted in 1991

- contracted in 1992 - contracted in 1993

- contracted in 1994 - contracted in 1995

- not yet contracted

**Contracting** - Once funds have been committed,
tenders are issued so that the activities outlined in the

operational programmes can be put into practice. As
soon as a tender has been successfully completed and a
contract signed, the relevant funds are said to have been
'contracted'. Contracting is a key measure of the
implementation of the Programme, as it is via the
contracts that Phare funding is unlocked and real
implementation on the ground can start.

**Payment** - Payment is the final stage of the funding
process. It takes place over the period of each contract,
reflecting the completion of each component of the
project. As projects may take several years, payments
are often spread over the same time. It is for this reason
that payments always lag behind the committed and
contracted amounts.

**45**

**Paid funds**

Payments in 1995 were 85.3 per cent of the budgeted
amount. This was lower than the 1994 level of 99 per cent
mainly because of two specific factors

- the suspension of ECU 20 million of macro-economic
aid to Albania, and

 - the difficulties in implementing cross-border cooperation.

Nonetheless, payments increased in 1995 by 5.5 per cent
over 1994.

Given the high level of contracting in 1995 and,
previously, in 1994 it is anticipated that levels of
payments will rise as these contracts run their course.

The budget year to which the payments in each year relate
can be seen in Figure 4.

**Cumulative contracts and payments as a**
**percentage of cumulative commitments.**

These are important indicators. In the first place, they
demonstrate the extent to which Phare has cut down the

time taken between committing funds and issuing the
necessary contracts. This is therefore a measure of the
efficiency of Phare procedures. Secondly, they
demonstrate the time taken between issuing the contracts
and paying the funds. This is a both a measure of Phare's
efficiency and an indicator as to the efficiency of project
management on the ground.

It is therefore encouraging that both ratios continued to
improve in 1995. Cumulative contracts as a percentage of
cumulative commitments grew 10 per cent from 1994 to
62 per cent, and cumulative payments also showed a
respectable increase of 3 per cent to 53%. The ratios over
time are shown in Figure 5.

**46**

**Fig. 4** - **Payments in each budget year**
**(in ECU million)**

**1990 budget** **1991** **budget** **1992 budget** **1993 budget** **1994 budget** **1995 budget**

98.3% 92.3% 77.9% 54.5% 30.4% **5,5%**

% paid as of 31.12.95

paid in 1990 paid in 1991  - paid in 1992

- paid in 1993 - paid in 1994 - paid in 1995

- not yet paid

**Fig. 5** - **Cumulative contracts and payments**

**1990-1995** (%)

```
          1990 1991 1992 1993 1994 1995

```

Cumulative contracts

as percentage of 31.0 36.0 44.0 48.0 52.0 62.0

cumulative

commitments

Cumulative payments

as percentage of 35.0 36.0 39.0 43.0 50.0 53.0

cumulative

commitments

#### Major programmes launched in 1995

**Agriculture**

Agricultural and rural development programme
Poland ECU 13 million

Agricultural and rural development programme
Hungary ECU 10 million

Agricultural and rural development programme
Romania ECU 10 million

Agricultural programme
Bulgaria ECU 5 million

Agriculture and land registration programme
Slovakia ECU 2.6 million

**Cross-border cooperation**

Cross-border cooperation programme
Baltic Sea region

Cross-border cooperation programme
Czech Republic

Cross-border cooperation programme
Hungary

Cross-border cooperation programme
Slovenia

Cross-border cooperation programme
Slovakia

Cross-border cooperation programme
Poland

Cross-border cooperation programme
Czech Republic

Cross-border cooperation programme
Albania

Cross-border cooperation programme
Bulgaria

Cross-border cooperation programme
Albania

Cross-border cooperation programme
Slovenia

ECU 14 million

with Austria

ECU 6 million

with Austria

ECU 7 million

with Austria

ECU 3 million

with Austria

ECU 4 million

with Germany
ECU 49 million

with Germany
ECU 25 million

**Education and health**

Higher education reform programme
Romania ECU 8 million

Programme for social safety and health
Estonia ECU 2.9 million

Strategic measures for achieving
reform targets (SMART)
Poland ECU 7 million

Vocational education and training,
education reform, science and technology
Bulgaria ECU 9 million

**Energy**

Conventional energy programme
Bulgaria ECU 5 million

Conventional energy programme
Romania ECU 21 million

Energy infrastructure development programme
Slovenia ECU 4.4 million

Energy programme
Hungary ECU 4 million

**Environment**

with Greece

ECU 9 million

with Greece

ECU 23 million

Environment programme
Hungary

Environment programme
Poland

Water management programme
Hungary

**Infrastructure**

ECU 7 million

ECU 18 million

ECU 5 million

with Italy

ECU 9 million

with Italy

ECU 3 million

Infrastructure development programme
Estonia ECU 5 million

Infrastructure development programme
Latvia ECU 6.2 million

**47**

Infrastructure development programme
Lithuania ECU 9.5 million

Infrastructure development programme
Slovakia ECU 5.2 million

Infrastructure investment programme
Czech Republic ECU 60 million

Programme for technical support
for the telecommunications and posts sector
Romania ECU 12 million

Public investment financing programme
Lithuania ECU 5.5 million

Transit facilitation programme
Hungary ECU 8 million

Transport and communications programme
Hungary ECU 17 million

Transport infrastructure programme
Poland ECU 22 million

Transport programme
Albania

Transport programme
Bulgaria

Transport programme
Romania

ECU 16 million

ECU 20 million

ECU 5 million

Privatisation programme
Hungary ECU 5 million

Regional development and steel reconversion programme
Hungary ECU 5 million

Regional development programme (STRUDER II)
Poland ECU 20 million

Small and medium-sized enterprise programme
Poland ECU 3 million

Tourism programme
Hungary ECU 1 million

Tourism programme (TOURIN III)
Poland ECU 6 million

**Public institution and administrative reform**

European integration programme
Estonia ECU 2.8 million

European integration programme
Latvia ECU 1.3 million

European integration programme
Lithuania ECU 5.5 million

European integration programme
Slovakia ECU 5.55 million

Framework programme for the approximation
of national law to EU law

Bulgaria ECU 2 million

Human resources development programme
Czech Republic ECU 2 million

Human resources development programme
Lithuania ECU 4.4 million

Institutional and human resources development

programme
Slovenia ECU 4.4 million

Institutional and human resources development

programme
Latvia ECU 9.2 million

Programme for human resources development
Estonia ECU 2.7 million

Public administration reform programme
Hungary ECU 3 million

**Private sector development and enterprise**
**restructuring**

Banking sector programme
Latvia ECU 2.5 million

Economic development programme
Lithuania ECU 9.6 million

Economic reform programme
Estonia ECU 6.1 million

Economic reform programme
Latvia ECU 8.3 million

Economic reform programme
Slovenia ECU 7.6 million

Foreign investment promotion programme
Czech Republic ECU 1 million

Private sector development programme
Slovakia ECU 18.7 million

**48**

Programme for institutional integration
with the EU

Czech Republic

Safe society programme
Poland

**Social development**

Social assistance programme
Hungary

Social protection, labour markets
and health programme
Slovakia

**Multi-country programmes**

Community action for cooperation in
the field of economics (ACE)

Cooperation in distance education

Cooperation in higher education

Democracy programme

Environment project preparation
facility

Facility to support approximation of
environmental legislation

Intellectual property programme

Interregional cooperation

programme

Know-how programme for
preparation for integration into
the internal market

Link inter-European
NGO programme (LIEN)

ECU 5 million

ECU 2 million

ECU 2 million

ECU 4.4 million

ECU 10 million

ECU 10 million

ECU 3.5 million

ECU 10 million

ECU 15 million

ECU 10 million

ECU 2 million

ECU 2 million

ECU 18.5 million

ECU 10 million

Multilateral cross-border

programme

Partnership programme

Programme for the energy sector

Programme for the environment

Programme for telecommunications
and posts

Programme to facilitate transit

Programme to promote
the establishment and development
of joint ventures
(JOP extension)

Quality assurance programme

Regional industrial property

programme

Social protection reform programme
for the Europe Agreement countries

Trade development programme

Trans-European cooperation scheme
for higher education (TEMPUS II)

Transport programme

**Others**

General technical assistance facility
Albania ECU 7 million

Local community development programme
Albania ECU 8.5 million

Technical assistance fund

Czech Republic ECU 3 million

**49**

ECU 12.95 million

ECU 10 million

ECU 9 million

ECU 20 million

ECU 7 million

ECU 30 million

ECU 50 million

ECU 30 million

ECU 4 million

ECU 10 million

ECU 5 million

ECU 98.1 million

ECU 11.5 million

ISSN 0254-1475 • Com (96) 360 final - DOCUMENTS • EN • Catalogue number: CB-C0-96-363-EN-C
ISBN 92-78-07160-9 - Office for Official Publications of the European Communities L-2985 Luxembourg

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