34881 Report on Activities of the European Commission / World Bank Office for South East Europe 2003 Office for South East Europe European Commission / World Bank 4 rue du Trône Brussels, Belgium 1000 http://www.seerecon.org December 2004 This is a publication of the Joint Office of the European Commission and the World Bank, which was set up to support the European Commission and the World Bank in their joint role as coordinators of international assistance for the reconstruction and development of South East Europe (SEE). All donor financial data presented in this report can be considered official. The economic and political analyses, interpretations, and conclusions expressed in this paper, however, are entirely those of the authors and should not be attributed in any manner to the European Commission, the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply on the part of the European Commission or World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. Printing: European Commission Front cover photo: Danube River, Belgrade, Alexander Rowland European Commission Headquarters, Brussels World Bank Headquarters, Washington, DC B-1049 Brussels 1818 H Street, NW Tel: (32 2) 299 11 11 Washington, DC 20433 USA Fax: (32 2) 295 01 38/39/40 Tel: 1 (202) 473 1000 http://europa.eu.int Fax: 1 (202) 477 6391 http://www.worldbank.org THE EUROPEAN COMMISSION AND WORLD BANK The European Commission The European Commission is the executive body of the European Union. The European Commission initiates draft legislation and presents legislative proposals to Parliament and the Council; implements the European legislation (directives, regulations, decisions), budget and programs adopted by Parliament and the Council (including assistance programmes); and represents the European Union on the international stage and negotiates international agreements, chiefly in the field of trade and cooperation. The World Bank The World Bank is a development institution whose mission is to fight poverty and improve living standards for people in the developing world and transition countries. It provides loans, policy advice, technical assistance, and knowledge-sharing services. IBRD and IDA ­ together called the "World Bank" or "the Bank" ­ are owned by member countries that carry ultimate decision making power. The World Bank Group today consists of five closely associated institutions: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Center for Settlements of Investment Disputes (ICSID). OFFICE FOR SOUTH EAST EUROPE EUROPEAN COMMISSION / WORLD BANK At a special high-level meeting of governments and international agencies to review the international community's response to the Kosovo crisis, held in Washington on April 27, 1999, it was decided to give the EU and the World Bank joint responsibility to co-ordinate work on assessing the needs and mobilizing support for the Balkans region. As a consequence, the Joint Office for South East Europe (the Office) was set up in 1999 to support the European Commission and the World Bank in their joint role as coordinators of international assistance for the reconstruction and development of South East Europe (SEE)1. The Summary of Joint Office work over 2003-4 work of the Office is underpinned by three core · One donor meeting ­ Serbia and Montenegro interrelated functions: (i) facilitating European (November 2003) Commission / World Bank / Donor Cooperation; (ii) · Two reports on the status of donor pledges ­ aid mobilization and monitoring aid flows to South Serbia and Montenegro (September 2003) and East Europe; and (iii) communicating and overall assistance to the region (April 2004) transferring knowledge and information to both the · Four Infrastructure Steering Group meetings countries of the region and the international including three project status reports (May and community. November 2003; January and May 2004) · Three High Level meetings on Transport in The Office has played an instrumental role in the South East Europe preparation of and follow up to donor conferences2 · Report to Working Level Steering Group on and two regional conferences, supporting the work overall donor aid flows to SEE past and of the High Level Steering Group3 in the prospects · Regular consultations to enhance cooperation mobilization and subsequent implementation of between the European Commission and the international assistance. In particular, the Office has World Bank on Albania, Bosnia and developed a database to trace donor pledges, Herzegovina, Croatia, Macedonia and Serbia commitments and disbursements. It has established and Montenegro, including Kosovo, to ensure close working relations with a large number of the best possible coverage of priority areas for bilateral donors, and with all the multilateral lenders reform and to avoid a duplication of efforts that are active in SEE (Council of Europe · Maintenance and development of the Seerecon Development Bank, EIB, EBRD, World Bank). The website Office plays a key role in the coordination between the European Commission and the World Bank of activities in SEE across sectors. The Office maintains an up-to-date website (http://www.seerecon.org) recording events and developments in SEE, drawing on a large variety of sources. Furthermore, the Office provides the secretariat function to the Infrastructure Steering Group (ISG). Finally, the Office participates in many international events on issues of South East Europe and also cooperates closely with the Stability Pact structures. 1 The countries of South East Europe as defined by the Stability Pact include Albania, Bosnia and Herzegovina, Bulgaria, Croatia, fYR Macedonia, Moldova, Romania, and Serbia and Montenegro. 2 Since mid 1999, one or more donor conferences were held for Albania, Kosovo, Macedonia, and Serbia and Montenegro. 3The High Level Steering Group (HLSG) is co-chaired by the Commissioner for Economic and Financial Affairs of the European Commission and the President of the World Bank. Their membership includes the Finance Ministers of Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, the United States and the Presidency of the European Union as well as the Managing Director of the IMF, the President of the European Investment Bank, the President of the European Bank for Reconstruction and Development, the Special Coordinator of the Stability Pact for South Eastern Europe and the Deputy Secretary-General of the United Nations. The work of the HLSG is supported by the Working Level Steering Group, comprising representatives of its members. TABLE OF CONTENTS Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 South East Europe in Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 List of Joint Office Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Timeline of Donors Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Chapter 1. International Assistance to the Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1. General Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2. Overall Assistance Flows to the Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3. Aid Mobilization, Monitoring and Donor Conferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 a. Kosovo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 b. former Yugoslav Republic of Macedonia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 c. Serbia and Montenegro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Chapter 2. From Reconstruction to Longer Term Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Section 1. The Country Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 1. The Agenda of the European Union and of the World Bank Agenda for South East Europe: Policy and Frameworks a. The Guiding Framework of European Union Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 b. The Guiding Framework of World Bank Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Section 2. The Regional Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 a. Regional Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 b. Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 c. Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 d. Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Chapter 3. Transferring Knowledge and Communication on South East Europe . . . . . . . . . . . . . . . . . . . . . . . 35 Country at a Glance Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Acronyms and Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 List of Internet Links to Joint Office Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 ACKNOWLEDGEMENTS This report was largely written by the staff of the Joint Office. Other sources have been referenced at the end of the report. By nature of its work, the Joint Office is in contact with the many ministries and institutions that are involved with the development of South East Europe. We would like to thank the ministries and development agencies working on South East Europe of Austria, Belgium, Canada, Denmark, Finland, Germany, Greece, Ireland, Italy, Japan, Luxembourg, The Netherlands, Russia, Spain, Sweden, Switzerland, United Kingdom and United States of America. In addition the Joint Office extends thanks to the European Commission, Council of Europe Development Bank, European Bank for Reconstruction and Development, European Investment Bank, and the World Bank. INTRODUCTION This is fourth edition of the Joint Office Annual report and covers main activities in 2003 as well as key events up to August 2004. As with previous editions, this report puts the work of the Joint Office (the Office) in the context of the evolving agenda of the countries. Much has happened in South East Europe in the period covered by this report. Accession negotiations are now completed with Bulgaria and close to completion with Romania. The aim for both countries is to join the EU on January 1, 2007. The Western Balkan countries, namely Albania, Bosnia and Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, and Serbia and Montenegro4 made progress under the Stabilization and Association Process (SAp), which remains the central instrument towards their European integration. On June 18, 2004, Croatia was awarded candidate status and the European Commission is preparing the Opinion on the application of the former Yugoslav Republic of Macedonia for EU membership. Negotiations with Albania on a Stabilisation and Association agreement are making progress and efforts by Bosnia Herzegovina and Serbia and Montenegro to fill the conditions for opening negotiations on such an agreement are continuous. The Stabilisation and Association process entails far reaching economic, legislative and regulatory reforms, as well as the development of adequate institutional capacity. It set guiding principles for continuing support to the Region. The European Council in Thessaloniki in June 2003 has enriched it with elements inspired from the accession instruments, which have been applied with success to the new Member States. Overall, the region has made good progress across a broad front over the last year. Reforms are underway in the public administration, economic growth continues, democratic institutions and market economies are being created and strengthened. The ability of all countries to maintain macroeconomic stability and sustain reforms has been the foundation on which progress has been built. For the Region at large, growth has been above 4 percent in real terms since 2000. Strengthening regional cooperation has also been very evident over the last few years. Following the signing of the Memorandum of Understanding on Trade Liberalisation and Facilitation (MoU) in June 2001, the countries of South East Europe have made significant progress and development of a network of bilateral free trade agreements and steps to address non-tariff barriers. Similarly, memoranda of understanding have been signed by the countries of the region for the transport sector, to develop a `Core Regional Transport Network' (signed in June 2004) and for the energy sector, to create an integrated energy market in South East Europe by 2005 (signed in Athens in December 2003). Despite these achievements, the region continues to face major challenges in sustaining stability and reaching the overriding goal of stronger ties to the rest of Europe. As outlined in the Commissions' Stabilization and Association process Third Annual Report, 2004, the overarching challenge faced by all countries of the region is to build strong, fully functioning states, which are capable of delivering on the needs of their citizens. In this context, a key priority is the fight against organized crime and corruption. In addition, administrative and judicial reforms have been slow and implementation capacity and enforcement of legislation weak. Progress in these areas will be essential for assuring the rule of law, generating confidence in state institutions, encouraging private investment and bringing the countries closer to EU membership. ********** The mandate of the Joint Office for the South East Europe of the European Commission and the World Bank has recently changed to adapt to the new agenda, looking even more intensively towards sustainable development and closer integration to Europe. While the Office continues to identify and monitor global funding for SEE through regular polling exercises with bi- and multilateral donors, the primary focus of work has altered. The Joint Office business plan, which covers the period until the end of 2005, places emphasis on enhancing information flows and facilitating improved cooperation between the World Bank and the European Commission, at the level of both Headquarters and local representation, in areas critical to 4These five countries are often referred to as the countries of the "Western Balkans". 1 the process of EU integration (Stabilization and Association process and/or Accession process) and to the economic and social development agenda of the SEE countries. The office will also continue to promote sector dialogue on infrastructure (transport, energy, environment) and institution-building activities (public sector development, private sector development), as well as continuing to support the work of the Regional Infrastructure Steering Group for South East Europe (ISG). This report demonstrates the shift in focus. Chapter 1 provides information on the level and development of past and expected international assistance in the region. It shows a continuous support of the international community, with some significant shifts, however, in the geographical coverage and the nature of assistance. Joint Office data show a decline in grant assistance to SAA/PRSP countries, reflecting both the phasing out of reconstruction assistance and increased grant flows to SEE accession countries. In the coming period, the World Bank also anticipates a shift in lending from concessional (IDA) financing to blend status (IDA/IBRD) in several SAp countries. As regional aid flows decline, enhanced donor cooperation will be even more important. Where available, Chapter 1 also provides some highlights of the impact of the exceptionally high international assistance which has been mobilized in immediate post-conflict situation through Donor's conferences to support the reconstruction and economic recovery of Kosovo (Serbia and Montenegro, under regulation 1244 of the UN Security Council), Serbia and Montenegro and the former Yugoslav Republic of Macedonia. Chapter 2 provides information on the basic principles underlying the support of the European Union and of the World Bank to the countries' own reform agenda and highlights some aspects of the coordination between both institutions. Special attention is devoted to the support provided to the regional cooperation agenda in key sectors such as transport, energy and environment describing major progress realized in these areas to foster regional integration and integration to the European Union. 2 South East Europe in Numbers Selected Indicators General Indicators Selected Economic Indicators Selected Social Indicators Country e e iont *a eu d v ta *y ec Area om om res vres nte Bi m For opulaP acerfuS Incl Incl pitaCr bteDl bteDl alV ddeA y *hrt nda nda litat pe ionataN ionataN naretxEla naretxEla reutl ncatc or M ploy bor curi goods( goods( pexE nta m La neU s s Ag st st e Inf os os Tot Tot Lif Gr Gr porxE por Im thousand Per, 1000 % of total millions sq. km $ billions $ $ millions % GNI % GDP $ millions $ millions Years live births Labor force millions South East Europe 2002 2002 2002 2002 2002 2002 2002 2002 2002 2002 2002 2000-02 2002 Albania 3 29 4.6 1,450 1,312 20 25 915 2,076 74 22 22.7 1.6 Bosnia and Herzegovina 4 51 5.4 1,310 2,515 34 18 1,417 4,751 74 15 .. 1.9 Bulgaria 8 111 14.1 1,770 10,462 79 13 8,286 9,287 72 14 19.4 4.1 Croatia 4 57 20.3 4,540 15,347 76 8 10,545 12,709 74 7 15.2 2.1 Macedonia, FYR 2 26 3.5 1,710 1,619 37 12 1,364 2,156 73 22 31.9 1.0 Moldova 4 34 1.7 460 1,349 79 24 871 1,283 67 27 7.3 2.2 Romania 22 238 41.7 1,870 14,683 37 13 16,223 18,825 70 19 6.6 10.7 Serbia and Montenegro 11 102 11.6 1,400 12,688 102 15 3,241 6,857 75 16 22.3 3.9 Total: All 58 648 102.9 1,774 59,975 58 42,862 57,944 72 17 27.5 Total: SAP Countries1 24 265 45.4 1,892 33,481 74 17,482 28,549 74 16 10.5 Total: Bulgaria & Romania 30 349 55.8 1,860 25,145 45 24,509 28,112 71 18 14.8 EU Accession Candidates Bulgaria 8 111 14.1 1,770 10,462 79 13 8,286 9,287 72 14 19.4 4.1 Romania 22 238 41.7 1,870 14,683 37 13 16,223 18,825 70 19 6.6 10.7 Turkey 66 775 173.3 2,490 131,556 77 13 54,617 55,046 70 35 10.6 33.7 Total 96 1,124 229.1 2,386 156,701 68 13 79,126 83,158 70 30 10.5 48.5 EU Member States Austria 8.0 83.9 192.10 23,860 .. .. 2 108,865 104,594 79 5 3.6 3.8 Belgium 10.0 31.0 237.10 22,940 .. .. 1 213,811 203,106 79 5 6.9 4.3 Czech Republic 10.0 78.9 56.00 5,480 26,419 46 4 45,562 47,159 75 4 7.3 5.7 Cyprus 0.8 9.3 9.37 12,320 .. .. .. .. .. 78 .. .. .. Denmark 5.0 43.1 162.60 30,260 .. .. 3 82,768 72,394 77 4 4.3 2.9 Estonia 1.0 45.1 5.70 4,190 2,852 86 5 5,504 6,119 71 10 12.6 0.8 Finland 5.0 338.2 124.20 23,890 .. .. 3 51,347 39,952 78 4 9 2.6 France 59.0 551.5 1,362.10 22,240 .. .. 3 392,362 365,576 79 4 8.9 27.0 Germany 82.0 357.0 1,876.30 22,740 .. .. 1 721,017 643,327 78 4 8.6 41.1 Greece 11.0 132.0 123.90 11,660 .. .. 7 30,091 41,997 78 5 9.6 4.6 Hungary 10.0 93.0 53.70 5,290 34,958 62 4 42,599 44,104 72 8 5.8 4.9 Ireland 4.0 70.3 90.30 23,030 .. .. 3 114,169 91,385 77 6 4.2 1.7 Italy 58.0 301.3 1,100.70 19,080 .. .. 3 313,931 300,688 78 4 9 25.7 Latvia 2.0 64.6 8.10 3,480 6,690 85 5 3,828 4,728 70 17 12.8 1.3 Lithuania 3.0 65.2 12.70 3,670 6,199 50 7 7,492 8,258 73 8 13.8 1.8 Luxembourg 0.4 2.6 17.52 39,470 .. .. .. .. .. 78 .. .. .. Malta 0.4 0.3 3.68 9,260 .. .. .. .. .. 78 .. .. .. Netherlands 16.0 41.5 377.60 23,390 .. .. 3 262,898 244,133 78 5 3.1 7.5 Poland 39.0 323.3 176.60 4,570 69,521 38 3 56,777 63,177 74 8 19.9 19.9 Portugal 10.0 92.0 109.10 10,720 .. .. 4 36,864 45,857 76 5 5.1 5.2 Slovak Republic 5.0 49.0 21.30 3,970 13,013 62 4 17,174 18,843 73 8 18.6 3.0 Slovenia 2.0 20.3 20.40 10,370 .. .. 3 12,764 12,452 76 4 5.9 1.0 Spain 41.0 506.0 596.50 14,580 .. .. 3 188,552 196,780 78 5 11.4 18.1 Sweden 9.0 450.0 231.80 25,970 .. .. 2 105,298 89,903 80 3 5.2 4.8 United Kingdom 59.0 242.9 1,510.80 25,510 .. .. 1 404,794 436,634 77 5 5.1 29.6 Total 450.6 3,992.2 8,480.2 18,820 77 Source: World Bank Development Indicators 2004 * Note: Corresponding averages for Total External Debt, Life Expectancy at Birth and Infant Mortality are weighted 1 Stabilization and Association Process (SAP) countries include Albania, Bosnia and Herzegovina, Croatia, FYR Macedonia, Serbia and Montenegro 3 Office for South East Europe European Commission/World Bank Joint Office Staff (August 2004) Special Representative of the World Bank Group Franz Kaps for South East Europe Reconstruction (fkaps@worldbank.org) Special Advisor, Western Balkans Ollivier Bodin European Commission (ollivier.bodin@cec.eu.int) Communications Associate Alexander Rowland (arowland@worldbank.org) Information Analyst Srdjan Popovic (spopovic@worldbank.org) Junior Professional Associate Sabine Simmross (ssimmross@worldbank.org) Team Assistant Bridget Harrison-Dowd (bharrisondowd@worldbank.org) Short Term Consultant Julia Tomova (jtomova@worldbank.org) Intern Antonio Rodriguez (Antonio.Rodriguez-de-Lievana@cec.eu.int) 4 Office for South East Europe European Commission/World Bank Donors Meetings South East Europe 5 co-chaired World Bank / European Commission from April 1999 Timeline April 20-21, 1999, Brussels Consultative Group Meeting Bulgaria May 5, 1999, Paris Consultative Group Meeting fYR Macedonia May 26, 1999, Brussels Consultative Group Meeting Albania May 20-21, 1999, Brussels Donors Conference Bosnia and Herzegovina Opening of Joint Office July 28, 1999, Brussels First Donors Conference Kosovo 6 November 19, 1999, Brussels Second Donors Conference Kosovo March 29, 2000, Brussels Regional Funding Conference December 12, 2000, Brussels Donor Coordination meeting Federal Republic of Yugoslavia February 25-26, 2001, Pristina Donors Meeting Kosovo March 1, 2001, Brussels Consultative Group Meeting Albania June 29, 2001, Brussels Donors Conference Federal Republic of Yugoslavia October 25-26, 2001, Bucharest Second Regional Conference March 15, 2002, Brussels Donors Meeting for fYR Macedonia November 5, 2002, Brussels Donors Coordination Meeting Kosovo November 18, 2003, Brussels Donors Coordination Meeting for Serbia and Montenegro September 22-23, 2004, Sarajevo Consultative Group Meeting for Bosnia and Herzegovina 5Information on meetings can be found on the website: http://www.seerecon.org 6Kosovo, Serbia / Montenegro ("Kosovo") 5 CHAPTER 1. INTERNATIONAL ASSISTANCE TO THE REGION 1. General Overview The South East European Region consists of seven countries: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the former Yugoslav Republic of Macedonia, Moldova, Serbia and Montenegro, and Romania7. This diverse region contains approximately 58 million people with a regional GNI per capita of about US$1780, which is about half the level of the five Central European countries who recently joined the EU. Romania is the largest and most highly populated of these countries and fYR Macedonia is the smallest at approximately one tenth the land area of Romania. Similarly, the levels of per capita income also vary widely, from a low of $ 1,310 in Bosnia and Herzegovina8 to $4,540 in Croatia. Excluding Croatia, the average GNP per capita falls to $1,424 (69% lower than Croatia ­ see Table 1) Table 1. Land, Population and Economic Size Total Area Population 2002 Gross National GNI per capita (thousand sq km) (million) Income 2002 (Atlas $) Albania 29 3 4.6 1,450 Bosnia and 51 4 5.4 1,310 Herzegovina Bulgaria 111 8 14.1 1,770 Croatia 57 4 20.3 4,540 FYR Macedonia 26 2 3.5 1,710 Moldova 34 4 1.7 460 Romania 238 22 41.7 1,870 Serbia and 102 11 11.6 1,400 Montenegro Total 648 58 102.9 1,774 Source: World Bank Development Indicators, 2004 The decade between 1989 and 1999 was one of transition and conflict, with rapidly deteriorating living standards, exacerbated by the social and economic burden of a large number of displaced persons and refugees, increasing unemployment, damaged infrastructure (eg, inter alia roads, bridges, housing and energy supplies and transmission). The problems were compounded by weak and slow structural reform policies and fragmented and isolated markets. In addition, distances to western European markets were large and transport links were not well established. After the Kosovo war, the international community decided to intensify its effort to the region by focusing primarily on the following elements: · Offer a clear European prospective though the Stabilisation and Association process driven by the European Union, subject to progress made by the countries towards European standards in the political and economic area. · Promote regional cooperation though the establishment of the Stability Pact. In the economic area, cooperation on trade, energy, transport and environment were put particularly high on the agenda. · Provide in a coordinated way substantial assistance to help the concerned countries to rapidly move from a post-conflict reconstruction agenda to an agenda of economic transition and integration to Europe. Since 1999, the economic performance of the region has improved remarkably, while not yet fully satisfactory. The region as a whole has experienced a period of uninterrupted growth (apart from fYR 7Moldova is also a member of the Stability Pact 8Moldova is the poorest country in Europe with a GNP per capita of $460 7 Macedonia, whose economy contracted in 2001, due to civil conflict during that year ­ see Table 2). In general, growth rates have started to converge over the last couple of years. Inflation was brought down to a regional average of around 21% in 2001 to 8.5% in 2002 and around 6% in 2003. These improvements can largely be attributed to increased political stability and to the stabilization policies pursued by the countries. This is encouraging for the region; if the external environment remains favorable and the countries continue with market oriented reforms, the European Commission indicates that the Western Balkans9 countries have the potential to grow at an even faster rate over the medium term. Table 2. Macroeconomic Performance 2000-2003 GDP growth (%) Inflation (CPI%) 2000 2001 2002 2003 2000 2001 2002 2003 Albania 7.3 7.6 4.7 6.0 0 3.1 5.2 2.4 Bosnia and Herzegovina 5.9 3.7 3.5 4.6 5.3 3.1 0.5 0.8 Bulgaria 5.4 4.0 4.0 5.0 10.4 7.5 5.8 3.0 Croatia 2.9 3.8 5.0 4.2 6.2 4.9 2.2 2.5 FYR Macedonia 4.5 -4.5 0.3 3.0 5.8 5.5 1.9 3.0 Moldova 2.1 6.1 7.2 5.0 31.3 9.8 5.3 6.3 Romania 1.8 5.3 4.7 4.9 45.7 34.5 22.5 16.1 Serbia and Montenegro 5.0 5.5 4.0 3.0 69.9 91.1 21.2 11.3 Serious economic and social weakness remain, however, to be overcome. Foreign trade continued to increase, with imports generally outpacing exports. For the Western Balkans, this has resulted in high trade deficits, averaging an expected 28% of GDP in 2003. The region's main trading partner is the European Union, accounting for around half of the exports made by Western Balkan countries (ranging from about 45% for Bosnia and Herzegovina to 80% for Albania), and the trade deficit would seem to indicate that these countries have yet to take full advantage of the asymmetric trade liberalization measures granted by the EU10. The social situation remains also far from satisfactory. Unemployment in all countries is high, particularly in fYR Macedonia, Bulgaria, Albania and Bosnia and Herzegovina. Even taking into account the existence of possibly large informal markets and associated unrecorded employment, this poses serious challenges to the societies, in particular because it usually impacts most heavily on young people and minorities. Moreover, all countries of the region are characterized by low incomes and high levels of poverty. According to World Bank poverty assessments carried out over the last few years, the level of poverty in the region as a whole averages around 17.5%, with some 20-25% of the population in several of the countries living below the poverty line. Living standards are particularly low in rural or isolated areas, and for minority groups, low- skilled workers and the unemployed. 2. Overall Assistance Flows to the Region The data collected by the Joint Office provide a good overview on international assistance flows to the region since 2001. The donors are asked to report on new commitments for technical assistance, investment finance, adjustment loans and undesignated budget support, excluding humanitarian assistance and IMF loans. The exercise covers the "beneficiary countries" of the Stability Pact ­ e.g. the countries of the Stabilisation and Association process (Albania, Bosnia and Herzegovina, Croatia, FYR Macedonia, Serbia and Montenegro (including Kosovo), the two SEE accession countries, Bulgaria and Romania, as well as 9 The western Balkans covers the following countries: Albania, Bosnia and Herzegovina, Croatia, fYR Macedonia, Serbia and Montenegro and Kosovo (Serbia and Montenegro). See European Economy. European Commission Occasional papers. No. 5, January 2004, `The Western Balkans in Transition'. 10Bulgaria and Romania's bilateral trade relations with the EU are governed until EU membership by existing `Europe Agreements', which aim at establishing a free trade area and foresee a gradual liberalization of trade restrictions by both parties. 8 Moldova. During the last exercise, completed in April 2004, twenty-three donors11 reported to the Joint Office on their commitments in 2003, twenty12 for 2004 and sixteen13 for 2005. The results presented here do not take into account the fact that Croatia having since June the statute of an accession country will have access to the pre-accession facilities of the EU, resulting in an significant increase of EU assistance in 2005. The results show continued high assistance flows to the region (expected overall levels for 2004-2005 are in the order of 7-7.7 billion, with a peak in 2005), but with major shifts in terms and composition. Data suggest that there has been a move from predominantly bilateral and EU financing (with higher grant elements) toward higher lending at less concessional terms by International Financial Institutions (IFIs). Table 3: Assistance to South East Europe 2001-2005 by type of donor in billion South East Europe Actual Estimates Donor 2001 2002 2003 2004 2005 Bilaterals + EC 3.9 (60%) 3.7 (55%) 3.2 (50%) 3.3 (47%) 3.0 (39%) IFIs 2.6 (40%) 3.0 (45%) 3.3 (50%) 3.7 (53%) 4.7 (61%) Total 06.4 (100%) 06.7 (100%) 06.5 (100%) 07.0 (100%) 07.7 (100%) With respect to the Stabilisation and Association process (SAp) countries, the data indicates ­ as previous pollings did, too ­ a sharp decline in per capita grant assistance between 2002 and 2003, partly due to phase- out of reconstruction assistance, and suggests that this is a tendency to remain over 2004 and 2005. On the other hand, in terms of levels of loan assistance, after some fluctuations and a generally flat pattern in 2001- 2003, the 2004-2005 period will see a sharp comparative increase in loans; this also reflects an increase in per capita income. In the coming period, the World Bank anticipates a shift in lending from concessional (IDA) financing to blend status (IDA/IBRD) in several SAp countries. In this context debt sustainability poses a real challenge for their future growth. Table 4: Per Capita Assistance to SAp and SEE Accession Countries 2001-2005 in billion South East Europe Actual Estimates % growth 2001 2002 2003 2004 2005 Region 2001-2005 SAP Countries Grants 82 83 62 57 44 -47% Loans 66 75 58 80 83 27% SEE Accession Countries Grants 36 38 40 53 58 60% Loans 42 47 71 64 86 104% South East Europe (all) Grants 61 58 51 54 51 -16% Loans 49 57 61 67 81 64% Looking at the South East Europe (SEE) EU accession states, Bulgaria and Romania, per capita grant assistance shows opposite trends, with marked progressive growth between 2001 and 2003, and expected 1118 bilateral donors, the European Commission and four international financial institutions (EIB, EBRD, the World Bank and the Council of Europe Development Bank). 1215 bilateral donors, the European Commission and four international financial institutions (idem). 1311 bilateral donors, the European Commission and four international financial institutions (idem). 9 further increase in 2004 and 2005. The prospects are that for the first time in 2005 grant assistance to the SEE accession states will reach higher per capita levels than grant assistance to the SAp countries. The growing amount of EU grants flowing into Bulgaria and Romania reflect progressive increase of EU pre- accession assistance to get the countries ready for membership in the Union by 2007. In terms of loans available to these states primarily through International Financial Institution (IFI) financing, there has been a dynamic development over 2001-2003, and this tendency is expected to continue in 2004 and 2005. Chart 1. Donor Assistance 2001-2005, by sub-region (SAp countries / SEE accession countries) Donor Assistance 2001 - 2005 by Sub-Region, Actual and Estimates, in Euro billion 5.0 4.3 3.9 4.0 3.6 3.3 3.5 3.3 3.1 2.9 3.0 2.4 2.5 SAP Countries SEEAccession Countries 2.0 1.0 0.0 2001 2002 2003 2004 2005 As indicated earlier, some of the changes in the levels of grant assistance to the region, particularly SAp countries, can be partially explained by the fact that financing was initially being provided primarily for reconstruction assistance. In the aftermath of the Kosovo conflict, the international community and beneficiary countries focused on identifying and meeting immediate post-conflict reconstruction needs. The Joint Office supported this effort by organizing several high level Donors Conferences between 1999 and 2003. 3. Aid Mobilization, Monitoring and Donor Conferences Donor conferences have proved to be very efficient mechanisms for mobilizing and coordinating assistance in post conflict situations, such as in South East Europe. They have: · mobilized the beneficiary government to prepare, usually with the assistance of the European Commission and the World Bank, a credible program for reconstruction; · ensured an efficient information flow from beneficiary governments to the donor community; and, · helped to set up a transparent benchmarking system for the monitoring and follow-up of pledges made at the conferences and resulting commitments. These features were of particular importance while administrative capacities within beneficiary governments are put under particular stress in post-conflict situations. Over the last few years, this modus operandi has been applied previously to the following SEE countries / entities: Kosovo, fYR Macedonia and Serbia and Montenegro. As a follow-up to donors meetings, the Joint Office regularly monitored the status of pledged funds by commitments, contracts and expenditure and has made this information available to donor and beneficiary governments. For specific post-conflict support, donors fully committed the 2.214 billion requested for 14Based on a November 1999 exchange rate. US$ amount is 2.3 billion. 10 Kosovo from 1999-2003 for the Reconstruction and Recovery Program. By the end of 2003, donors had committed approximately 3.5 billion to meet the requirements of Serbia and Montenegro, with a further 1.1 billion expected to be committed by the end of 2004. To support the recovery of fYR Macedonia from the 2001 political and security crisis, the donor community has committed 297 million against a base funding requirement of 256 million. These results are explained in sections 3 to 5, and a summary can be found in Box 1. In the following sections (3a-3c), an overview of international assistance and, as available, the impact of this assistance in the former Yugoslav Republic of Macedonia, Serbia and Montenegro including Kosovo will be provided. This selection does not imply that substantial assistance is not being provided to the other countries of South East Europe (Albania, Bulgaria, Croatia, Moldova and Romania). The limitation in coverage to these countries reflects the special way assistance has been mobilized in post-conflict situation and the work done by the Joint Office as a follow up to the donors conferences organized and co-chaired by the European Commission and the World Bank. Box 1: Donor Aid Flows registered by the Joint Office (in EUR billions) Post Conflict/Exceptional Assistance Amounts Post Conflict/Crisis Area Name of Assistance Program Timeframe Requested Committed Kosovo Reconstruction and Recovery Program 1999-2003 2.2 2.6* Serbia and Montenegro Economic Recovery and Transition 2000-2004 4.67 4.62** (excluding Kosovo) Program fYR Macedonia Balance of Payments, Reconstruction, 2002 0.256 0.297 Implementation of Framework Agreement *Committed and expected to be committed until end 2003 as reported by donors in November 2002 and March 2004. Includes 134 million for peace implementation activities not included in the Reconstruction and Recovery Program. **Committed and expected to be committed until end 2004 as reported by Donors in November 2003. 11 3a. Kosovo Reconstruction and Economic Development Needs Since the end of the Kosovo conflict in mid 1999, Kosovo's reconstruction and The Role of the Joint Office recovery has proceeded well, due to the The Joint Office organized four donors meetings for Kosovo, which were efforts of the people of Kosovo, the co-chaired by the European Commission and the World Bank. These efforts of the United Nations Interim meetings provided a forum to share information among the donor Administration in Kosovo (UNMIK), community, UNMIK, and at the latest meeting, with the newly formed and the strong support of the donor Kosovo government, on Kosovo's priority needs and donor financial assistance. The last donors meeting, held in November 2002, took stock community. These efforts began in July of the progress made since 1999 and the medium term challenges ahead. 1999, when a donor meeting was held to Since the end of the Kosovo crisis, the Joint Office has tracked overall mobilize aid to meet the humanitarian donor flows to Kosovo. Three updates on new and expected pledges and and other emergency needs of Kosovo. commitments have been produced by the Office since 1999, including This was quickly followed by the five updates on the status of those pledges. In carrying out these development of a reconstruction and activities, the Joint Office worked with the donor coordination unit within the Ministry of Finance and Economy. As the needs set out for recovery program for Kosovo, prepared reconstruction and recovery in Kosovo's emergency post conflict phase by the World Bank and the European have been fully financed, the Joint Office ceased its detailed monitoring Commission in November 1999. The of donor assistance to Kosovo in 2003. Instead, the Joint Office has been program had an estimated total cost of playing a key role in terms of the coordination of World Bank and $2.3 billion over the years 1999-2003 European Comission on strategic documents and assistance and and provided a framework for donors to implementation of donor funded programs. help finance post conflict reconstruction and rehabilitation on a gradually diminishing basis, while putting Kosovo on a path to self sustaining economic growth. The strategy had three main objectives: (i) to develop a thriving, open and transparent market economy; (ii) to establish transparent, effective and sustainable local institutions; and, (iii) to mitigate the impact of the conflict and the legacy of the 1990s. Financing Mobilized against Needs Donor meetings were jointly chaired by the European Commission and the World Bank in July and November 1999, February 2001 and November 2002 to take stock of progress in Kosovo's reconstruction and recovery, encourage coordination and share information on assistance priorities and future needs. Following these donor meetings, there has been considerable progress with the reconstruction effort. Between 1999 and 2003, the international donor community successfully mobilized support for Kosovo and a total of 1.96 billion of donor funds had been spent by the end of 2003 (see chart below15). Donor Commitments and Expenditure for Kosovo 3000 2500 2596 n 2332 ioll 2000 1981 1960 1921 Mi ORUE1500 1363 1554 1000 944 500 632 288 0 1999 2000 2001 2002 2003 Committed Spent 15This data is based on Joint Office Note on Donor Assistance to Kosovo as of December 31, 2002 (June 2003). 2003 data come from the Joint Office Regional Polling exercise 2003 and the World Bank's Kosovo Economic Memorandum 12 Impact of Donor Assistance as available Donor assistance for reconstruction, recovery and budget support has been instrumental in helping restart Kosovo's economy and has yielded impressive results. GDP growth, reflecting high levels of public and private investment, reached 21 percent during the initial reconstruction boom in 2001. Growth has since slowed to approximately 4 to 5 percent per annum, which reflects the transition from significant reconstruction efforts to a more normal development environment. Growth has been dependent especially on generous donor assistance for reconstruction, and remittances from the Kosovo diaspora. According to recent estimates, 2003 GDP per capita was about US$790, about twice as high as in the mid-1990s. In addition to these positive developments, data from the Ministry of Economy and Finance show that there has been much achieved as a result of international assistance, including more than a thousand kilometers of roads repaired and an increasing availability of energy supply. Schools and health clinics have also been constructed throughout Kosovo, thereby ensuring that basic infrastructure for health and education services are largely in place: Table 5: Outcome Indicators of Infrastructure Reconstructed and Repaired 1999 2000 2001 2002 2003 Total Km. of road 0 487 926 36 26 1,475 No. of houses 0 11,782 5,828 2,074 0 19,684 No. of schools 81 89 110 99 80 459 No. of health care centers 10 28 46 18 73 175 No. of household hours with electricity (million) 4.0 4.6 5.1 5.6 5.5 24.8 m2 landmines cleared (million) 4.7 27.5 0.2 0.3 0 32.7 Source: Donor Coordination Unit, MOEF. Further Information: European Commission: Federal Republic of Yugoslavia: Country Strategy Paper 2002-2006 (http://www.europa.eu.int/comm/external_relations/see/fry/csp/02_06_en.pdf) World Bank: Kosovo Transitional Support Strategy (2004) (http://siteresources.worldbank.org/INTKOSOVO/Resources/TSS_Final.doc) Poverty Assessment, Vol. 1 (2001) (http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/ 2002/02/02/000094946_0201230401191/Rendered/PDF/multi0page.pdf) Poverty Assessment, Vol. 2 (2001) (http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/ 2002/02/02/000094946_0201230401192/Rendered/PDF/multi0page.pdf) Kosovo Economic Memorandum (2004) (http://siteresources.worldbank.org/INTKOSOVO/Data and Reference/20243120/ KEM-5-17-2004 with amendments.pdf) 13 3b. Former Yugoslav Republic of Macedonia Reconstruction and Economic Development Needs In early 2001, violence erupted between Macedonian government forces and ethnic Albanian rebels in the northwest region of fYR Macedonia. The six month political and security crisis which followed imposed significant costs on the economy as a whole, as well as more severe costs in the regions where fighting took place. In addition to humanitarian consequences of the conflict, country-wide costs included trade disruption, the collapse of business confidence and interest by foreign investors, the heavy fiscal burden of security expenditures, and the general fall in incomes. Output contracted by 4.5 percent as opposed to a forecast GDP growth of 6 percent16. The fighting also destroyed assets, such as houses, other buildings, livestock, machinery and vehicles, and public infrastructure, such as electricity distribution networks and water supply. These costs were estimated in a Damage Assessment report17. A Framework Agreement concluded in Ohrid in August 2001 ended the six month long political and security crisis in fYR Macedonia and called upon the European Commission and the World Bank to mobilize donor support for three areas: · macro-financial assistance, including budget support and direct balance-of payments support for 2002; · rehabilitation and reconstruction in areas affected by the conflict; and, · measures to be undertaken as part of the implementation of the Framework Agreement. These three areas together generated financing needs of about 256 million18 or US$ 228 million, as shown below in Table 6. A Donor Conference to mobilize this financing took place in March 2002 after Constitutional amendments, as envisaged in the Framework Agreement, had been adopted by parliament and a new law on local self government passed. Table 6. Financing Needs in fYR Macedonia in Euro in USD Balance of Payments and Budget Support 1 185 165 Reconstruction 2 45 40 Implementation of the Framework Agreement 3 25 23 Total 256 228 1 This amount includes around US$ 2 million budget support disbursed in end-2001. 2 Including reconstruction of damaged housing only to cap of 100 m per house. 3 Excluding US$ 1.8 million recurrent costs included in the 2002 Budget. Financing Mobilized against Needs In early 2003, the Joint Office carried out a survey of donors on the status of their pledges as of December 31, 200219. Results showed that there had been positive developments in all three areas for which financing had been sought: · Balance of Payments: donors reported 84.3 million as having been disbursed by the end of 2002, of which 33 percent were loans and 67 percent were grants. · Reconstruction and Rehabilitation: donors had committed slightly more (91.2 million) than pledged in March 2002 (85.8 million). Financial flows were well targeted to specific sectors, in particular Housing and Electricity where needs were greatest. This reflects the work carried out by the government to match pledged funds to specific requirements 16World Bank Country Assistance Strategy for the Former Yugoslav Republic of Macedonia, August 14, 2003. 17European Commission / International Management Group (IMG) Damage Assessment in the Former Yugoslav Republic of Macedonia, November 2001. 18The exchange rate to convert US$ to Euro is the average rate during December 2001. 19A report on the results can be found on www.seerecon.org. 14 · Framework Agreement: In February 2003, the government adopted an Action Plan for the Implementation of the Framework Agreement. As of December 2002, firm commitments were 33 million in 2002. The needs outlined at the donors conference were therefore met and/or exceeded. For this reason, the Joint Office ceased detailed monitoring of the original pledge at the end of 2002. However, more recent and separate reporting by donors to the Joint Office indicate that total assistance to the country is running at around 306 million in 2004, with expected commitments in the order of 288 million in 2005. Impact of Donor Assistance as available Reconstruction for housing, where most of the physical reconstruction costs were incurred, were coordinated by UNHCR for the least damaged houses and the International Management Group (IMG) and the EC for more damaged houses. Reconstruction activities started immediately after the The Role of the Joint Office conflict, and have been largely successful. By the end of The Joint Office has been involved in donor May 2004, a total of 96 percent of the damaged / coordination at a EC/IFI headquarters and donor destroyed houses eligible for reconstruction had either capitals rather than local level. Together with the been rehabilitated (mainly category I & II) or were under European Commission and the World Bank, the rehabilitation (mainly category III & IV)20. The Joint Office organized the March 2002 donors rehabilitation process covered 58 villages in 20 meeting for Macedonia, provided the pledge information to the government, and joined the municipalities. In the electric power sector, most of the European Commission in Skopje for discussions on repairs in the distribution system, representing the vast follow up to the donors meeting. The Joint Office majority of the financing needs in the sector, have been also carried out a donor polling exercise to completed. In addition, of the 75,000 people believed to determine how much of the pledged funds were have fled their villages in 2001, 95 percent had returned by committed, contracted and spent in 2002 as a follow the end of 2003. up to the donors meeting. The Joint Office continues to play an important role in the coordination between the World Bank and the European The European Agency for Reconstruction21 has also Commission on overall strategic issues and reported that in 2001 electricity was reconnected to assistance. 150,000 users; benefiting some 49 villages in the Tetovo, Kumanovo and Aracinovo areas. In 2002, the construction of a 4 km Tetovo bypass on the E65 motorway, which links Albania and Bulgaria, was completed. In addition, the construction of a dual carriage motorway (Negotino-Demir Kapija ­ E75), with a length 5.3 km was completed mid-December 2002. The third phase of construction has also started on the 16 km stretch of the E75 motorway (Negotino-Demir Kapija), which links Austria with Greece and should be completed by 200522. . Although recovery of the economy was slower than expected, with investment remaining low and imports surging against low exports, by 2003 fYR Macedonia registered a 3 percent growth in its GDP. Only two years previously, the economy had contracted by almost 5 percent. In addition, domestic peace has been largely re-established and the original NATO protective force and subsequent EU-led military operation (Concordia) was replaced with an EU-led police mission known as Operation Proxina, launched on December 15, 2003. This marked the end of the international military presence in the field following the crisis in 2001. 20Housing Sector ­ Introduction / Brief Summary, May 31, 2004, International Management Group 21The European Agency for Reconstruction is responsible for the management of the main EU assistance programmes in Serbia and Montenegro (the Republic of Serbia, the Republic of Montenegro, UN-administered Kosovo) and the former Yugoslav Republic of Macedonia. 22European Agency for Reconstruction: Annual report to the European Parliament and the Council, January to December 2003; June 7, 2004 15 Further Information: European Commission: Former Yugoslav Republic of Macedonia: Country Strategy Paper 2002-2006 (http://www.europa.eu.int/comm/external_relations/see/fyrom/csp/02_06_en.pdf) Stabilization and Association Agreement with the former Yugoslav Republic of Macedonia (http://www.europa.eu.int/comm/external_relations/see/fyrom/saa/saa03_01.pdf) Former Yugoslav Republic of Macedonia: Stabilization and Association Report 2004 (http://www.europa.eu.int/comm/external_relations/see/sap/rep3/cr_fyrom.pdf) World Bank: Country Assistance Strategy for the Former Yugoslav Republic of Macedonia 2004-2006 (2003) (http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/ 2004/01/23/000012009_20040123110437/Rendered/PDF/265130rev.pdf) Country Economic Memorandum: Tackling Unemployment (2003) (http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/ 2003/09/24/000090341_20030924132048/Rendered/PDF/266810MK.pdf) Public Expenditure and Institutional Review (2002) (http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/ 2002/04/26/000094946_02041304004840/Rendered/PDF/multi0page.pdf) 16 3c. Serbia and Montenegro Reconstruction / Economic Development needs Following the outbreak of the Kosovo conflict, the State Union of Serbia and Montenegro23, and particularly the Republic of Serbia, was in the grip of a severe economic crisis. A decade of international isolation, poor economic management and deterioration of the enterprise, financial and infrastructure sectors, had seen Serbia and Montenegro's GDP fall to around 40 percent of its value at the beginning of the decade, and the number of poor had doubled. Foreign trade had also declined, with recorded exports and imports in 2000 being 43.1 and 68.9 percent of 1989 levels respectively. In January 2001, Serbia's new government launched an ambitious program to tackle these problems and aimed at a rapid transition to a market economy, the normalization of relations with foreign creditors, and integration with regional, EU and world markets. The government programme focused on three main pillars: · prudent macroeconomic policies; · market-oriented structural reforms; and, · mobilization of significant financial and technical support from donors. In order to mobilize external financing for Serbia and Montenegro, a donors conference, organized by the Joint Office, was held in June 2001. At the conference, donors pledged against a set of requirements which had been outlined in a medium-term Economic Recovery and Transition Program (ERTP), published in May 2001, which outlined a comprehensive structural reform agenda, including sectoral policy reforms, priority public investments, as well as identifying urgent balance of payments / budget needs for 2001. It did not cover humanitarian assistance needs. The ERTP outlined external financing estimates, on a commitments basis, of nearly US$ 4 billion (4.67 billion24) over four years, including a requirement of US$1.25 billion (1.46 billion) for 2001. This conference was followed up by a donor coordination meeting, organized by the Joint Office and held in Brussels in November 2003. At this meeting, participants discussed presentations by Serbia and Montenegro on the progress achieved in stabilizing the political and economic situation and on the challenges ahead in sustaining a viable reform path towards EU integration. Financing Mobilized against Needs The June 2001 Conference, donors pledged a total of US$1.28/1.50 bn, fully meeting the Conference and ERTP target of US$1.25 bn for 2001. Of this total, a significant portion was indicatively committed to quick- disbursing budget support. The participants recognized that strong progress had been made toward establishing and implementing an ambitious economic reform agenda by the authorities. Latest data from donor governments were provided at the November 2003 donor coordination meeting and indicate that as of October 30, 2003, donors had committed a total of 3.5 billion to Serbia and Montenegro, of which 2.2 billion had been contracted and 1.2 billion spent (for the period 2001-2003). This meant that 30 percent of commitments have been disbursed. In addition, donors reported that they expect to commit a further 1.12 billion to Serbia and Montenegro in 2004 ­ see Table 7. 23Formerly the Federal Republic of Yugoslavia. 24Using June 2001 EC budget execution rate (original amount $3,904.10 million). The exchange rate has altered by approximately 15% since this time. 17 Table 7. Summary of external assistance to Serbia and Montenegro 2001-2004 (in millions) 2001 2002 2003 2004 TOTAL Expected - - - 1,124 1,124 Commitments Firmly 1090 1365 1049 - 3,503 Committed Contracted 839 807 551 - 2,197 Spent 358 518 320 - 1,196 These figures do not include amounts that were indicated at the December 2000 Urgent Assistance The Role of the Joint Office donor coordination meeting, when donors announced In the context of their overall donor co-ordination new humanitarian assistance amounting to responsibilities for South Eastern Europe, the European Commission and the World Bank worked closely with approximately 410 million (all of this has been the new government to co-ordinate donor activity for disbursed). Serbia and Montenegro. Following a meeting of the High Level Steering Group of Finance Ministers in Paris in The information from the Joint Office's Serbia and November 2000, the Joint Office organized a Donor Co- Montenegro donor database complements the regular ordination Meeting in Brussels on December 12, 2000. reporting of the Aid Coordination Unit in the Republic Together with the European Commission and the World Bank World Bank, the Joint Office organized the June of Serbia's Ministry of International Economic 2002 donors meeting for Serbia and Montenegro, and Relations (MIER). The two databases are not exactly provided the pledge information to the government. This the same for two main reasons: first, data collected by was followed by the organization of a Donor MIER is differently sourced because their information Coordination meeting, held in November 2003. The Joint is collected locally (from embassies and agencies in Office also carried out three donor polling exercises to Serbia and Montenegro). Second, MIER data also determine how much of the pledged funds were committed, contracted and spent in 2001, 2002 and 2003 employs different terminology to categorize as well as expected commitments for 2004. information25. Impact of Donor Assistance as available Over the last three years, the republic of Serbia has implemented a very successful stabilization program, which has brought down inflation and stabilized the exchange rate. According to the latest available data, Serbia and Montenegro's economic performance since the beginning of reforms has been good, with twelve month inflation declining from 113.5 percent at end 2000 to 7.8 percent at end 2003. Real GDP growth shifted from highly negative rates in 1999 to 5 percent in 2000, and since then has continued to grow at an average rate of 4.2 percent. Official foreign reserves rose from an estimated US$516 million at end 2000 to US$3.55 billion at end 2003, thus covering 4.4 months of import26. Substantial capital inflows from donors and other sources, as well as improvement in the management of public finances, have played an important role in helping to establish this macroeconomic stability, especially during the initial stages. In addition, donor assistance has helped to repair a large amount of infrastructure. Initial work in 2000 and 2001 focused on provision of energy supply and heating oil. Efforts were spearheaded by the European Agency for Reconstruction and key achievements have been27 (please note, however, that this is only a partial covering of donor financed activities in Serbia and Montenegto): 25For example, for MIER the term `Disbursed' implies money that has actually reached the Serbian economy, according to the line ministries. For the Joint Office, the equivalent term `Spent' will imply the amount which has left the accounts of donor governments to procure goods, works or services. 26Serbia and Montenegro ­ Serbia Economic Memorandum, World Bank report No. 29258-YU, June 2004 27European Agency for Reconstruction: Annual report to the European Parliament and the Council, January to December 2003; June 7, 2004 18 · Rehabilitation of 4 power plants ­ Kolubara, Kostolac, TENT A, TENT B (37 million); · Overhaul of Nikola Tesla thermal power plant (Unit A - 305 MW); · Replacement of 110 km of overhead power lines; · Provision of spare parts for coal/hydro-electric facilities; · In Montenegro, electricity distribution equipment was delivered, installed and commissioned within three transformer stations; · Creation of the Serbian Assistance Fund for Energy, together with USAID, which financed electricity imports to Serbia. A substantial portion (70 percent) of Serbia's Winter 2000-2001 electricity needs were imported by the EU, with a total cost of 45 million; and, · "Energy for Democracy" program (2000-2001), which provided diesel and heating oil for 60 municipal heating systems (covering 80 percent of the population) for schools and for hospital and public health and administration buildings heating supply. For road transport, the European Union has also financed the repair and reconstruction of the Sloboda Bridge, destroyed by NATO intervention in 1999. The bridge carried the bulk of the road traffic crossing the Danube at Novi Sad. The project, which has a total cost of 41 million, is expected to be completed in June 2005. In Montenegro, the EU has funded the resurfacing of 20km of road between Podgorica and the harbour town of Bar, the stabilisation of four landslips and two road tunnels, and the construction of a concrete gallery to protect road users from falling rocks. EU funds have also been used to rehabilitate the road linking the capital Podgorica and its airport, together with construction of the 'Union Bridge' across the River Moraca in Podgorica (co-funded by the Municipality). In addition, the World Bank's Transport Rehabilitation Project will provide for maintenance of 240km of roads over the next 3 years, particularly in Macva and Kolubara region The EBRD and EIB funded Railway Rehabilitation and Reconstruction Programme, will repair 62.1 km railway sections along Pan-European Corridor X, and 79.3 km on the railway line Belgrade-Podgorica-Bar, including the refurbishment and upgrading of signalling and safety equipment, telecommunication and electrical systems, and the supply of equipment, spare parts and machines for track maintenance. As of August 2004, most of the work on some 6 tunnels and 19 bridges had been completed, along with the reconstruction of the 22km Kusadak- V. Plana railway line. In addition, more than half of the 26km Resnik ­ Valjevo railway line had been completed, and two new locomotives had been purchased28. Further Information European Commission: Serbia and Montenegro: Stabilization and Association Report 2004 (http://www.europa.eu.int/comm/external_relations/see/sap/rep3/cr_s-m.pdf) Federal Republic of Yugoslavia: Country Strategy Paper 2002-2006 (http://www.europa.eu.int/comm/external_relations/see/fry/csp/02_06_en.pdf) World Bank: Transitional Support Strategy Update for Serbia and Montenegro (2004) (http://siteresources.worldbank.org/INTSERBIA/Resources/TSS-update2004.pdf) Serbia and Montenegro: Recent Progress on Structural Reforms (2003) (http://siteresources.worldbank.org/INTSERBIA/Resources/ SaM_Recent_Progress_on_Structural_Reforms.pdf) 28Information provided by Serbia's Ministry of International Economic Relations 19 CHAPTER 2. FROM RECONSTRUCTION TO LONGER TERM DEVELOPMENT Section 1: The Country Agenda Over the last two years, the region as a whole has made significant progress across a broad front. The progressive restoration of peace and security, along with the perspective of drawing South East Europe closer to the European Union through the Enlargement process and the Stabilisation and Association process (SAp) have considerably improved the economic and political outlook of the The Role of the Joint Office region. The overall picture is one of a The Joint Office has been heavily involved in efforts of the World Bank region that is shifting from a phase of and European Commission to mobilize and coordinate external aid to SEE. emergency reconstruction to one of a The overall Joint Office objective is to facilitate donor coordination in the area of economic development of the countries of South East Europe as a medium term economic and institutional contribution to peace and stability in the Region and to assist in fostering reform program. regional cooperation for the well being of SEE population. To this effect, Joint Office has supported greater regional cooperation through the As explained Chapter 1, the countries of organization of regional conferences, various donor coordination South East Europe continue to rely on mechanisms that contribute to the flow of aid to the region. substantial international support to meet As the countries of the region move out of the reconstruction phase, the the ambitious challenges of EU focus of the Joint Office is changing. The need to continue monitoring integration and economic and social financial commitments and disbursements to the region is now less of a development. Some of them, in view of priority than the need to provide effective donor coordination on key aspects of the SAp. their low income, are still eligible for limited funds from the International In this context, following the release, on March 30, 2004, of the European Development Association and receive Commission's third Report on the Stabilisation and Association Process for assistance from the World Bank and the South East Europe and country-specific SAp reports on Albania, Bosnia IMF in preparing and implementing their and Herzegovina, fYR Macedonia and Serbia and Montenegro, together with proposals for European Partnerships with the five SAp countries Poverty Reduction Strategies (PRSPs, see (including Croatia) which were subsequently endorsed by the EU Council 1b). of Ministers in June 2004, the Joint Office organized a series of audio/video-conferences between the EC and the World Bank aimed at With the framework for medium term presenting the SAp Reports and the European Partnership proposals to the World Bank and at allowing for enhanced consultations between the two development centering on the prospect of institutions concerning their assistance programming for the SAp countries. EU integration, all the countries are now The audio/video conferences helped identify the need for close pursuing their own national reform coordination between the two institutions, as well as other main donors, processes, encompassing social, economic (including at sector level) as regards their respective policy matrixes, and financial reform and a stabilization portfolios and conditionality for assistance in order to avoid overburdening of the countries' administrations. Frequent visits by senior World Bank agenda, in close cooperation with the officials and technical staff to Brussels and beneficiary countries contribute European Commission, the International to improved coordination of EU and World Bank assistance. Financial Institutions, bilateral donors and the IMF. In the process of establishing a coherent domestic agenda, the countries of the region continue to face many challenges, and need to be encouraged and supported in the context of the SAp. The World Bank and the European Commission are strongly committed to continue to closely cooperate to ensure coherence and complementarity of their assistance to the countries of the region, by consulting each other systematically on conditionality, targets and monitoring tools, especially but not exclusively in the context of the WB Country Assistance Strategies and EC Country Strategy Papers. They also cooperate on regional infrastructure and energy, a process which also involves other IFIs and bilateral donors (see section 2), have started to work on the environment / water sector and are investigating ways of improving the coordination of public sector reform in SEE. They pursue common objectives to build up strong and transparent institutions and administrative capacities capable of implementing EU standards and delivering public services efficiently. In addition, the EC and the World Bank work alongside other donors with the aim of helping them to direct their financial support most efficiently towards the priorities of the reform program of the countries. The Joint Office increasingly facilitates as an interlocutor developments on the joint agenda for economic development, reform and closer integration with the EU as laid out in the following sections. 21 1. The Agenda of the European Union and of the World Bank for South East Europe: Policy and Frameworks 1a. The Guiding Framework of European Union Support The European Union's policy towards South East Europe is anchored in two policy strategies - accession to the European Union, involving Bulgaria and Romania and since June 2004 Croatia, and the Stabilization and Association Process for the countries of the Western Balkans, Albania, Bosnia and Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia and Serbia and Montenegro. Bulgaria and Romania have an indicative date for joining the EU - January 1, 2007. The two countries have signed Accession Partnerships with the EU, which identify concrete aims and priorities for the two countries to follow in order to comply with the EU accession criteria, and constitute the policy framework of their relations with the Union. Negotiations are closed with Bulgaria. Accession talks with Croatia will be launched officially at a bilateral intergovernmental conference in early 2005.The European Commission reviews on a regular basis the achievements made by the applicants in the course of the accession process and prepares annual Regular Reports in which their performance is evaluated and recommendations are given on the follow-up logic of the negotiations for membership. The European Union provides assistance for Bulgaria and Romania through the budget lines of the PHARE programme (general accession aid for adopting the body of community legislation - acquis communautaire), and the EU pre-accession funds ISPA (transport and environment) and SAPARD (agriculture). The two countries receive together approximately 900 million per year in pre-accession aid. They are eligible for loans from the European Investment Bank. Starting in 2005, Croatia will also have access to these pre- accession instruments. The EU policy framework for relations with Albania, Bosnia and Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia and Serbia and Montenegro is the Stabilization and Association Process (SAp). The SAp is designed to support the domestic reform processes, which these countries have embarked upon. The Stabilisation and Association process is a long-term commitment to the region both in terms of political effort and financial and human resources. It is a step-by-step approach based on aid, trade preferences, dialogue, technical advice and, ultimately, contractual association relations. The SAp provides a framework for the development of privileged political and economic relations between these countries and the EU. The rationale for the SAP was set out by the European Commission in May 1999 and was officially sealed at an EU/Balkans Summit held in Zagreb in November 2000. To review the political and economic reforms implemented by the respective governments under the SAp, the European Commission prepares yearly reports. Among the assessment criteria are: Democracy and the Rule of Law, Human Rights and Protection of Minorities and Regional Cooperation as well as Current Economic Situation, Existence of a Free Market Economy and Structural Reforms and Management of Public Finances. At the Thessaloniki European Council in June 2003 an "Agenda for the Western Balkans" was adopted, which includes an enrichment of the current SAp through the provision of new European Integration Partnerships. Inspired by the pre-accession process and tailor-made to each country's needs, these partnerships identify, on a regular basis, priorities and obligations to be fulfilled. EU financial assistance will be directed to the priorities set out in the partnerships. The first decision on those Partnerships have been adopted by the Council of Ministers of the European Union in June 2004. Each country draws up a national action plan for implementation of the partnerships, which will provide a clear agenda against which to measure progress. The cornerstone of the Stabilisation and Association Process is the conclusion of specific bilateral agreements (Stabilisation and Association Agreements (SAA)) between the EU and each of the five countries, designed to draw them closer to the EU. Once a country demonstrates ability to implement a trade and cooperation agreement and meets political standards, it can enter into a SAA agreement with the EU. The SAAs set out rights and obligations in areas such as competition and state aid rules, intellectual property and establishment. They require respect for democratic principles, human rights and the rule of law. Aside from providing a platform for reform, they help prioritize these reforms, align them with EU standards, and 22 monitor their implementation through benchmarks. To help the SAP countries reach their objectives, the EU is by far the largest single assistance donor to the region. Since 1991, the EU has provided more than 6 billion to the Western Balkans through its various aid programmes. And by 2006, that figure will have risen to some 10 billion. The EU's assistance programme CARDS ('Community Assistance for Reconstruction, Development and Stabilisation') supports the countries in pursuing their objectives under the SAP. 4.65 billion have been allocated in its framework for the period 2002-2006. CARDS assistance is implemented in Serbia and Montenegro (including Kosovo) and in fYR of Macedonia by the European Agency for Reconstruction (EAR) and in the other countries by the European Commission (EuropeAid). Table 8. Indicative EU Assistance to the Western Balkans 2002-2004, in millions Country 2002 2003 2004 Total Albania 44.9 46.5 52.5 143.9 Bosnia and Herzegovina 71.9 63 58 192.9 Croatia 59 62 68 189 FRY - Serbia and Montenegro 195 255 210 660 FRY - Kosovo 154.9 50 40 244.9 fYR Macedonia 41.5 43.5 43.5 128.5 Regional Western Balkans 45 35 0 80 Total Western Balkans 612.2 555 472 1639.2 Source: As indicated in the CARDS Strategy papers 2002. Figures for 2002-2004 include allocations from the Integrated Border Management regional envelope, but exclude any allocations for budgetary support 23 1b. The Guiding Framework of World Bank Support As a development institution, the World Bank supports two broad Box 2. Country Assistance Strategies for South East Europe goals in South East Europe: (i) Country Title Date poverty reduction and social Albania CAS 02-05 June 2002 inclusion, and ii) economic and Bosnia and Herzegovina CAS 05-07 September 2004 Croatia CAS 05-08 September 2004 social development, the latter in FYR Macedonia CAS 03-06 September 2003 support of the countries' ambition Serbia and Montenegro Transitional Support Strategy Update February 2004 Moldova CAS Progress Report May 2002 to join the European Union. The Romania CAS 01-04 September 2001 central vehicle for defining the Bulgaria CAS 03-05 May 2002 support of the national reform program of each country is the Country Assistance Strategy (CAS). Based on an assessment of the country's priorities, past portfolio performance and creditworthiness, the CAS sets strategic priorities and determines the level and composition of financial and technical assistance that the Bank seeks to provide the country. The framework for poverty reduction and economic growth are the countries' own Poverty Reduction Strategy Papers (PRSPs), developed by the government through a participatory consultation procedure with civil society. Country Assistance Strategies On average, the CAS normally takes a three-year focus on Bank activities and is developed in cooperation with the government and with civil society. CASs for larger countries are revised more frequently, some annually. It is not, however, a negotiated document. Any differences between the country's own agenda and the strategy advocated by the Bank are highlighted in the CAS document. The main areas of Bank support are usually in the area of macroeconomic stability, private sector development, public sector and governance, human and social development, infrastructure and environment, external aid and donor coordination. Poverty Reduction Strategy Papers In 1999, low income countries (ie, IDA recipient) agreed to prepare participatory Box 3: Poverty Reduction Strategies for South East Europe poverty reduction strategies, which should Country Title Date Published provide the basis of all World Bank and Albania PRSP February 2002 IMF concessional lending. These PRSP Progress Update June 2003 and July 2004 Bosnia and Herzegovina PRSP March 2004 strategies, called Poverty Reduction Serbia and Montenegro PRSP February 2004 Strategy Papers (PRSPs), describe a Moldova IPRSP April 2002 country's macroeconomic, structural and social policies and programs to promote growth and reduce poverty, and associated external financing needs. There are five core principles underlying the development and implementation of poverty reduction strategies. The strategies should be: · country-driven: involving broad-based participation by civil society and the private sector in all operational steps; · results-oriented: focusing on outcomes that would benefit the poor; · comprehensive in recognizing the multidimensional nature of poverty; · partnership orientated: involving coordinated participation of development partners (bilateral, multilateral, and non-governmental); · based on long-term perspective for poverty reduction. PRSPs are prepared by governments through a participatory process involving civil society and development partners, including the World Bank and the International Monetary Fund (IMF). In South East Europe, fYR Macedonia has graduated from the PRSP process over the past year as it has become an IBRD-only country, while the remaining countries, including Moldova, are in the process of implementing their respective PRSPs (Box 3). 24 Within this framework, the World Bank assistance in South East Europe is based on several common elements: · For all countries, World Bank assistance is directed to four key priorities for growth and poverty reduction: macro stability, private sector development, human development and governance; · Selective interventions in infrastructure and environment: responding to country-specific needs to complement the focus above; and · Lead role in mobilization and coordination of external aid: either in collaboration with the EC or on its own (Moldova). Over $3 billion of projects are currently under implementation in the region. Annual new commitments amount to around $800 million. Bulgaria Croatia, fYR Macedonia, and Romania receive loans on IBRD terms whereas Albania, Bosnia- Herzegovina, Moldova, Serbia and Montenegro borrow credits on IDA terms. An exception to this is Kosovo, which is eligible for IDA grants only (it has a special status because it is not a Bank member country). In 2003, fYR Macedonia improved its creditworthiness and became eligible for loans on IBRD terms. Although most of the World Bank support is and will remain at country level, the World Bank, in close consultation with the European Commission and other International Financial Institutions also developed a comprehensive approach to regional development and integration in South Eastern Europe. In February 2004, the World Bank published a new Regional Framework Paper, which complements an earlier paper - "The Road to Stability and Prosperity" ( published in 2000) - by providing a regional framework for the formulation of individual World Bank Group country assistance strategies (CAS), with the objective to ensure that World Bank programs have the greatest impact both at the country and the regional level29. The report concludes that most potential lies in areas where there exist cross-border externalities, economies of scale, or opportunities to "scale up" successful activities across borders, such as in the energy / power sector, transport sector, water resource management, trade facilitation, management of biodiversity and other global public goods. 29The World Bank Group in South Eastern Europe, Regional Framework Paper, February 26, 2004. 25 Section 2: The Regional Agenda Developing and acting on regional perspectives on, inter alia, trade, energy, transport, environment, and water resource management can offer substantial political benefits and large welfare increases to all SEE countries. The historical development of the EU itself demonstrates the importance of establishing such regional, political and economic cooperation. Moreover, a regional approach allows for adequate prioritization of regional infrastructure investments in South East Europe. Regional co-operation is consistent with the EU-led Stabilisation and Association process (SAp), it constitutes an essential element of the SAp and represents a requirement under the Stabilisation and Association Agreements (SAA). During 2003, further progress has been achieved in this area as indicated by the increasing number of bilateral co-operation and trade agreements between and among the countries of South East Europe. At the Thessaloniki EU-Western Balkans Summit, held on June 21, 2003, following the Thessaloniki European Council of June 19-2030, the countries of the region renewed their commitment to enhanced regional cooperation and the promotion of a series of specific objectives and initiatives. Assisting the SEE countries in further enhancing cooperation amongst themselves will require sustained and coordinated efforts by the international community. In this regard, the Stability Pact for South Eastern Europe has played an important role in bringing together the countries of the region and main partners on key regional priorities and for helping them cooperate efficiently under its umbrella31. It is an important forum for consensus building. The Stability Pact is currently led by Special Coordinator Dr. Erhard Busek, former Vice Federal Chancellor of Austria, and is organized through three working tables, which include democratization and human rights (Working Table I); economic reconstruction, development, and cooperation (Working Table II); and security issues (Working Table III). The scope of the Stability Pact is rather broad and addresses issues beyond economic and social development. The Joint Office and the Office of the Special Coordinator of the Stability Pact for South East Europe (hereafter Stability Pact) work closely together wherever their mandates follow similar objectives: helping the countries build a meaningful framework for the development process to move ahead, in organizing donors conferences, and in tracking the overall aid flows for regional projects and programs The Joint Office participates in the Stability Pact's Regional and Working Table meetings. 2a. Regional Infrastructure The development of regional infrastructure in South East Europe ­ connected and compatible with existing and planned trans-European networks in the European Union ­ is important to support overall economic growth, better quality of life and social cohesion in the region. This is recognized by the International Financial Institutions (IFIs) active in the region32, the Stability Pact for South East Europe and the European Commission as they work in close coordination and cooperation in the framework of the Infrastructure 30 The Thessaloniki European Council reiterated its determination to fully and effectively support the European perspective of the Western Balkan countries by further strengthening their privileged relations with the EU, also drawing from the enlargement experience. The Union thereby enriched its framework policy for the Western Balkans ­ the Stabilisation and Association Process, with a prospect for future EU accession. The Thessaloniki European Council looked forward to the EU-Western Balkans Summit scheduled for the next day, June 21, as a major opportunity for the two parties to push ahead with their common goals 31The Stability Pact, launched in June 1999 on the EU's initiative, is a political declaration of commitment and a framework agreement on international cooperation to develop a long term strategy for stability and growth in South East Europe. 32The European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), the World Bank, and the Council of Europe Development Bank. 26 Steering Group for South East Europe (ISG)33 to ensure that both the SEE countries and the international community take a regional strategic approach to infrastructure development. The ISG is chaired by the European Commission; the Joint Office acts as its secretariat. The activities of the ISG are part of an overall effort to integrate the countries of South East Europe amongst themselves and with the EU through developing infrastructure within a regional approach. The work of the ISG is guided by various sector focused strategies, elaborated by its member institutions with the aim to facilitate project design and implementation in South East Europe within a regional approach. These include, inter alia: · `Transport and Energy Infrastructure in South Eastern Europe' (European Commission, October 2001) · `The Road to Stability and Prosperity in South East Europe' (World Bank, March 2000) · `The World Bank Group in South Eastern Europe: Regional Framework Paper' (World Bank, February 2004) · `World Bank Framework for Development of Regional Energy Trade in South East Europe' (World Bank, March 2004) · `Air Traffic Infrastructure Regional Study (ATIRS) for South-Eastern Europe' (EIB, May 2001) · Medium-Term Strategy for the Western Balkans (EIB, June 2003) · `Water Strategy Regional Approach for South Eastern Europe' (EBRD October 2001). As part of its ISG secretariat mandate, the Joint Office plays an important role in monitoring regional infrastructure projects. It initially focused on a set of 34 `Quick Start' regional infrastructure projects, but by the time of the second Regional Conference of October 2001, the Joint Office had screened more than 230 project proposals submitted to the ISG by the countries of the region. The JO listed these projects by sector and included them into a database which is maintained to reflect all decisions taken by the ISG. The regional infrastructure list (May 2004) comprises some 51 projects, with a total cost of 4.1 billion. These 51 projects have financing secured or under preparation with the involvement of bilateral donors or international financial institutions, and were selected according to the agreed criteria of: technical, economical and environmental feasibility; submission by two or more countries of the region; and a marked regional character.34 The Joint Office produces updates at least twice per year of the status of regional infrastructure projects. According to the most recent report, published in May 2004 (see Figure 1), a breakdown by sector shows that transport (particularly road infrastructure) which represents 68% of the overall cost, equivalent to some 2.8 billion, and spread between 34 different projects stands out as the most important sector by level of investment. The energy sector comes second, with a cost of 0.85 billion (20%) for seven electricity projects, and the water and environment sector comes last with four projects and a total cost of 0.32 billion (8%). A further 3 % of the projects are cross-border or trade facilitation projects for a total cost of euro 0.14 billion or 6 projects. 33The ISG was set up in 2001 to give strategic direction to the development of regional infrastructure in SEE. It encompasses the European Commission (EC), the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), the World Bank, the Council of Europe Development Bank and the Stability Pact. The general approach of the ISG was described in a concept paper (`Development of Regional Projects, the Way Ahead') circulated at the Stability Pact Working Table II meeting in Tirana on May 22, 2001. 34The list of projects has mainly been established by merging and consolidating the list of Quick Start infrastructure projects agreed at the Regional Funding Conference held in Brussels in March 2000 in support of the Stability Pact, and the list of regional infrastructure projects presented by the Chairman of the Infrastructure Steering Group at the second Regional Conference held in Bucharest in October 2001. Following the ISG meeting of November 21, 2002 five new projects were included in the list. Two further projects have been included in November 2003, and following the ISG meeting of May 2004, another 5 projects were added. At the same meeting, seven projects were removed from the list of ongoing projects due to their completion. 27 Table 9. Project Summary by Sector Ongoing Regional Infrastructure Projects Sector: as of May, 2004 No. of Projects Cost (M) (%) Transport 34 2,831.27 68.26% Roads 23 1,811.55 43.68% Railways 4 442.00 10.66% Ports and Waterways 4 242.42 5.84% Airports 3 335.30 8.08% Energy 7 852.23 20.55% Electricity 7 852.23 20.55% Gas, Oil and District Heating 0 0.00 0.00% Water and Environment 4 322.40 7.77% Water Supply 0 0.00 0.00% Water Waste 3 222.00 5.35% River Basin Management 0 0.00 0.00% Environment 1 100.40 2.42% Cross Border/Trade Facilitation 6 141.74 3.42% Total 51 4,147.65 100.00% 28 2b. Energy Steady and reliable supply of energy is key to economic and social development. Energy infrastructure in South East Europe still suffers from a number of deficiencies in terms of transmission and distribution capacities as well as losses, wastage and low financial discipline. A strong commitment by the countries of the region to reforms aimed at improving overall energy conservation and efficiency, as well as at strengthening national institutional capacities are necessary in order to improve the balance between energy supply and demand. A regional approach to energy supply can offer significant advantages both in terms of improved utilization of existing supply and production capacities (substantial gains can result from energy trading among the countries of the region and with their neighbors), and optimization of future investment (by offering the right environment to attract international, public and private, investors). The development of regional energy infrastructure is to ensure adequacy and security of supply of energy in the SEE countries, as well as the necessary interconnections of regional interest within South East Europe and the connection between the region and the neighboring systems (for instance the majority of SEE countries are not yet interconnected with the European electrical system UCTE35). The European Commission's `Strategy Paper on Transport and Energy Infrastructure in South East Europe' released in 2001 (see above) sets the stage for providing guidance for future planning exercises in the energy sector in the region and for the identification of priority investment. The energy infrastructure strategy encourages (i) the creation of a modern and efficient energy infrastructure, able to meet demand for electricity, oil and gas in a sustainable way; (ii) the establishment of a South East Europe Regional Electricity Market; (iii) accomplishment of reforms on the national and regional level in the energy sector; and, (iv) decision-making in energy investment on economic grounds. The Strategy Paper argues that the installed power production capacity in the countries of the SEE region is sufficient to meet the region's demand, but operates below its optimum due to a number of technical, physical, administrative and political challenges. It asserts that interconnection between the countries will contribute to overall stability of the transmission network and facilitate increased power transactions. (i) The "Athens Process" ­ Energy Community of South East Europe A major strategic effort has been underway since the release of the EC `Strategy Paper on Transport and Energy Infrastructure in South East Europe' to achieve regional and European integration of the SEE energy market. There has been effective donor coordination on this issue, involving the EC, the Stability Pact, Italy, the United States The Role of the Joint Office Agency for International Development (USAID), the Canadian The ISG continued to monitor progress made on the prioritization of investments in the International Development Agency (CIDA), the German SEE energy sector throughout 2003. In line Development Bank (KfW), EBRD, the World Bank, with regular with its role of secretariat, the Joint Office input from the countries of the region. Interaction between all focused on monitoring the implementation of these parties has culminated in a Memorandum of Understanding the MoU on the South East Europe Regional Energy Market ­ the so-called Athens (MoU) on the "Regional Electricity Market in South East Europe Process ­ and the steps undertaken in its and its Integration into the European Community Internal framework by all stakeholders, including Electricity Market", signed in Athens on 15 November 2002, and donors. It also established a webpage to subsequently revised ­ on 8 December 2003, also in Athens, to facilitate the work of the ISG in the sector. include the creation of an integrated natural gas market in SEE (the "Athens process"). The MoU aims at establishing a Regional Energy Market (Electricity and Gas) in the signatory countries ­ Albania, Bosnia and Herzegovina, Bulgaria, Croatia, fYR Macedonia, Romania, Serbia and Montenegro (including Kosovo) and Turkey ­ with Austria, Greece and Italy acting as `political participants to the process', and Hungary, Moldova and Slovenia as observers. The 2003 MoU laid down the rules and objectives by which an integrated regional energy market in SEE should be established by 2005 and subsequently progressively integrated into the European Community's internal energy market. The Regional Energy Market in South East Europe is to be achieved by approximating the participant states' policies with respect to the energy sector and particularly concerning 35Union for the Coordination of Transmission of Electricity 29 the electricity and natural gas markets. Under the MoU the participants commit themselves to adopting compatible rules and policies related to the development, organization and functioning of the regional electricity and natural gas markets and to establishing common rules, respectively, for the generation, transmission and distribution of electricity, and for the transmission, distribution, supply and storage of natural gas. In 2003, the European Commission organized, together with the Stability Pact, two South East Europe Energy Weeks - hosted by the Italian Government in Rome on March 24-27, 2003 and the Bulgarian Government in Sofia on October 20-24, 2003, respectively. Both events included a series of meetings of the different governing and co-ordination bodies involved in the Athens Process, and combined policy making (meetings of the Permanent High Level Group) with technical decision making (Athens Forum) and donor coordination. Technical studies and reports from donors regarding projects financed in SEE were also presented in the framework of the two Energy Weeks to aid decision-making. Following the signature of the MoU on the South East Europe Regional Energy Market, the World Bank released a strategy document entitled `World Bank Framework for Development of Regional Energy Trade in South East Europe' (March 2004, see above). The publication focuses on risks to the development of the South East Europe Regional Energy Market, ways that these can be addressed, and the role of the World Bank in supporting its establishment. The Framework recommends, in particular, with respect to the role of the World Bank in the process, a phased approach to market opening ­ starting with trading based on bilateral contracts and third party network access, moving to a more sophisticated model only after the institutional framework is sufficiently developed; use of regional benchmarking in the World Bank's policy support work with individual countries; use of a special instrument for finance of investment to support development of the market; support work to assess the economics of SEE gasification and costs of compliance with EU environmental standards; completion of a regional power Generation Investment Study. A discussion on these proposals is ongoing. 2c. Transport Transport infrastructure and facilitation is a cornerstone for economic development. However, inadequate management, insufficient investment, and ­ in some countries ­ direct war damage, have left transport infrastructure in South East Europe in poor condition and have led to serious backlog in construction, maintenance and rehabilitation. Moreover, the break-up of former Yugoslavia, which resulted in the emergence of new independent countries in SEE, led to multiplication of international borders/check-points and decision-making centers for planning, regulating and investing in the transport sector in the region, and therefore created impediments for integrated regional economic development and trade over the past decade. All of the above has resulted in low quality of transport infrastructure in South East Europe, which, coupled with relatively high transport costs, have discouraged foreign investment in the sector, hampered trade flows and therefore limited the international competitiveness of the countries of the region. For several important issues ­ such as planning and prioritizing major transport links, ensuring compatibility of technical standards, regulations and facilitating border crossing procedures ­ a regional instead of a national approach can bring substantial benefits. Establishing adequate transport networks in South East Europe (SEE), linked to and compatible with the trans-European networks, is a joint objective of the countries of the region, and constitutes part of their efforts to integrate into the political and economic mainstream of Europe. Following the extensive planning exercises carried out by the EU in the 1990s to define the trans-European transport networks (TEN) for the Member States and the accession countries ­ a process in which Bulgaria and Romania, as candidates for EU membership, were included at an early stage ­ the need for further planning in South East Europe to involve the five countries participating in the Stabilisation and Association process in the Trans-European Transport network was recognized. This culminated in the June 11, 2004 signature of a Memorandum of Understanding (MoU) on the Development of the South East Europe Core Regional Transport Network (hereafter Core Network). By joining the MoU, together with the European Commission, Albania, Bosnia and Herzegovina, Croatia, fYR Macedonia and Serbia and Montenegro (including Kosovo) committed themselves to cooperate for enhancing the development of a regional transport network in SEE. 30 The MoU provides for reciprocal consultations on The Role of the Joint Office transport policy and for institutional reforms needed Through its role of secretariat to the ISG the JO played an to make investments sustainable, and, opens the important part in steering consensus and interaction among the door to implementing a major infrastructure SEE countries in the area of regional transport. The main focus program. The Core Network includes 4300 km of of the ISG in the area of transport throughout 2003 was to railways across the five SEE countries, 6000 km of secure an agreement on the Core Network, and the Joint Office actively supported its work. Under the guidance of the ISG, in roads, major ports and airports, and, the inland close cooperation with the SEE governments, and prior to the waterways Danube and Sava. The total cost of signature of the MoU, three High Level Meetings on transport1 developing the Core Network has been estimated at between the European Commission, the international financial over 16 billion and 17 priority projects have been institutions and the countries of the region were held in 2003 identified36. The MoU also provides for setting up a with the aim to build consensus among all parties involved in the process. regional mechanism for coordination ­ the Regional Steering Committee, the purpose of which will be to The Joint Office also helped edit a report by the chair of the ISG to the Council of the European Union, entitled supervise and promote the implementation of the `Implementing Regional Transport Priorities in the Western Core Network. Its members are to be senior Balkans' (December 2003), which provided a concise representatives from the signatory countries and the overview of work carried out by the IFIs and the countries of European Commission. The Committee will be the region in planning and prioritizing long and short term assisted by a South East Europe Transport investment on the Core Network. (The document can be found on the Seerecon website.) Observatory (SEETO), headquartered in Belgrade ­ to start working in September 2004 for an initial In addition, the Joint Office organized on November 25, 2003, together with the European Commission and members of the three-year duration. (The Memorandum of Infrastructure Steering Group, a presentation to interested Understanding on the Development of the South donors and SEE neighbor countries on progress made in East Europe Core Regional Transport Network can designing a comprehensive regional transport strategy, as well be found on the Seerecon website.) as on the agenda for its implementation. The EC October 2001 Strategy Paper `Transport and Energy Infrastructure for South Eastern Europe' (see above) laid out the concept of the "Core Network". It was further clarified and elaborated by the TIRS (Transport Infrastructure Regional Study)37 and the REBIS (Regional Balkans Infrastructure Study ­ Transport)38 technical studies of 2002 and 2003, respectively. All these and other studies concluded that efficient planning of public investment in the SEE transport sector requires building up four main blocks: (i) a core regional transport network as a jointly agreed reference for planning investment of regional relevance; (ii) prioritization of investments of regional importance, which are financially affordable and suitable for international financing; (iii) commitment to policy reforms - notably aimed at improving sector management and addressing cross border issues; and, (iv) institutional framework for efficient coordination among the countries of the region. (i) Development of a Core Network for South East Europe To accelerate the implementation of priority investments for the period 2004-2009, a Transport Projects Preparation Facility (TPPF) was launched by the European Commission in October 2003. It is funded under the EC CARDS program and supports project preparation work for EBRD/EIB/World Bank sponsored 36Estimations based on European Commission press release IP/04/737, June 11, 2004. 37The Transport Infrastructure Regional Study (TIRS), completed in March 2002, was undertaken in the context of the Stability Pact for South East Europe. It reviewed the SEE governments' planning exercises for establishing the basic inter-regional infrastructure network and offered a first technical elaboration of a long term development plan for the Core Network, with recommendations on the nature of investments in the various sectors (i.e., rehabilitation rather than development investments, sustainable funding of maintenance, and sector reform issues). The TIRS also provided a multi-criteria assessment of existing transport projects, and a priority ranking of these projects as well as a short/near/and long term investment plan for the region. The study was funded by Agence Française de Développement (AFD). 38 The Regional Balkans Infrastructure Study - Transport (REBIS), completed in July 2003, was conceived as a continuation and deepening of the TIRS. It aimed at assisting the SEE countries in developing coherent strategies for transport infrastructure development and at identifying priority investment in transport infrastructure. The REBIS study estimated a total of 4 billion for upgrading the existing road network to a level compatible with forecasted traffic by 2015 and a total of 12 billion for similarly upgrading the railway network. The study was funded by the European Commission under its CARDS program (Community Assistance for Reconstruction, Development and Stabilisation) and guided by the ISG in close cooperation with the countries of the region. 31 activities in the transport sector in SEE. Various feasibility and other studies which are required to launch identified priority investments will be undertaken in close cooperation with the countries and the financial institutions. Eligible activities include: feasibility studies; project management and implementation capabilities and institutional strengthening. The total value of the investments of which implementation can be facilitated under the instrument is estimated at approximately 200 million. The total budget of the TPPF is 2.7 million. (ii) Trade and Transport Facilitation in South East Europe Program An important ongoing long-term initiative in the transport and trade facilitation sector in South East Europe is the World Bank-led "Trade and Transport Facilitation in South East Europe Program" (TTFSE). The program is the result of collaboration between the SEE countries' governments39, the European Union, the World Bank, the United States and other countries and institutions and aims at fostering and facilitating cross-border trade in the region. TTFSE puts special emphasis on rehabilitation and reconstruction of border crossings, streamlining of customs procedures, institutional strengthening and modernization of border control agencies in line with EU practice. In February 2000, Albania, Bosnia and Herzegovina, Bulgaria, Croatia, fYR Macedonia, and Romania signed a Memorandum of Understanding to strengthen their mutual cooperation to foster trade in the region through a set of coordinated and simultaneous measures under the TTFSE program. Serbia and Montenegro and Moldova joined the program after signing the MoU in November 2001. As of June 2004, all eight national TTFSE projects are under implementation. 2d. Environment Environmental protection has long been recognized as crucial for the sustainable development of South East Europe. As part of their common objective to gradually integrate into the European Union, the countries of the region have committed themselves to compliance with EU environmental laws, standards and policies: the two SEE EU accession states ­ Bulgaria and Romania ­ have already largely harmonized their national legislation with the EU environmental acquis communautaire; of course, implementation of such legislation and regulations remains a major challenge. The countries involved in the Stabilisation and Association process which have recently embarked, in the context of the SAp, on a process of fulfilling EU environment- related regulations as well. The process is very complex and enforcement of environmental legislation is still rather weak in some of them. The need for substantial amounts of investments and institution building to help the countries in their efforts has been identified. Due to the shared legacy of existing problems in the sector across the SEE states, as well as its potentially large cross-border externalities arising from the fact that interventions in environment can have effects well beyond the boundaries of the country in which they are being undertaken, it has been increasingly recognized, by the international community and the SEE countries alike, that a coherent regional approach to environment, allowing for coordinated action in more than one country, can increase the benefits and reduce the costs of environmental programs. With respect to the importance of environment for the overall development of South East Europe and the need for addressing existing problems in the sector through a coordinated regional approach, the mandate of the Infrastructure Steering Group for South East Europe evolved, throughout 2003, to include environment as a key activity area, in addition to energy and transport. A formal decision in this sense was taken at the High Level ISG Meeting held in Brussels on February 6, 2004. The meeting also decided that, initially, the work of the ISG is to be focused on one environmental key-profile sub-sector, namely water resource management. To enhance the cooperation between the countries and the international community in environment, a number of regional initiatives have been established. 39Involved in the TTFSE program are: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, fYR Macedonia, Moldova, Romania and Serbia and Montenegro. 32 Following the decision for inclusion of environment in the activities of the Infrastructure Steering Group, the Joint Office is making efforts to assist the ISG in drawing up the relevant agenda for the environment sector. To this end, it set up a project database providing a detailed overview of the activities of the IFIs and the European Commission in the environment sector, and prepared and uploaded a webpage on environment on Seerecon. 33 CHAPTER 3. TRANSFERRING KNOWLEDGE AND COMMUNICATION ON SOUTH EAST EUROPE The importance of well distributed donor assistance in light of scarce resources was highlighted in the Chapter 1 (Post Conflict Donor Aid Mobilization). It is a balanced relationship, in which donors need to keep the government and the broader donor community informed of their reconstruction activities, and the government needs to ensure that donors receive regular reports on reconstruction progress on the ground. In other words, there is a requirement for transparent aid mobilization through which: · donors and governments may be alerted to gaps in recovery programs; · donors' comparative advantages can be identified and utilized; and, · guidance can be provided to allocate or redirect funding to ensure that it supports priority areas of the economy, institution building and other longer run macro-economic objectives. Taken together, this information exchange contributes directly to the success of reconstruction and economic development in South East Europe To facilitate transparency in the aid mobilization process, the Joint Office plays a key role by making information available on its website and publishing reports, combined with the active participation of the Joint Office in meetings with governments, NGOs, press, researchers, business and civil society. The Office gives speeches in international fora and participates in Stability Pact meetings, particularly on issues arising out of Working Table II. The Seerecon Website In June 1999, the European Commission and the World Bank launched their joint Website on "Economic Reconstruction and Development in South East Europe" (http://www.seerecon.org). At the time, this site was used extensively to provide updates on war damage and economic analyses on the Kosovo crisis as they were issued. It evolved to inform recipient governments and citizens, the donor community and broader interested public on updates of arising development issues, such as regional projects and programs, evolutions relating to economic reconstruction and development in the countries of the region. It continues to evolve to reflect changes in the region and to report on the ongoing work of the international community. To date, the Seerecon site contains a wide range of information related to the economic and social situation in the South East Europe region, including: · A register of donor assistance and information; · A calendar of key international events relating to the reconstruction and development of South East Europe; · Contact details for international organizations; · Background information on each of the countries of the region: including demographic, political and economic data; · Project and program information and reports related to South East Europe · Business and investment opportunities · All background documentation related to Donor Conferences organized by the Joint Office. The Joint Office also publishes the results of the status of pledged funds. In some cases, this information is provided in aggregate form if breakdown diminishes the accuracy of the information, or if donors are required to wait for formal approval from budgetary authorities before making their financing details widely available to the public. In 2002, the Joint Office developed a new strategy for the website to make the site more operational, more focused and easier to navigate. When the site was first launched, the Joint Office provided very wide coverage and hosted information for many institutions active in the region, which had yet to develop their 35 own information tools. Over the years, this has changed dramatically, with many of these institutions (eg, Stability Pact and the European Agency for Reconstruction and Development) developing their own internet sites. It became necessary, therefore, to start refocusing efforts away from content which was better maintained elsewhere, towards concentrating on the work and role of the European Commission and the World Bank in South East Europe, with a particular emphasis on regional sector work (transport, energy, water etc). In addition, the site now reports more directly on the output of the Joint Office (eg, reports on donor assistance to the region, and updates on regional infrastructure projects). The Joint Office also continues to maintain a library of all press releases and key official documents related to South East Europe issued by: the World Bank, the IMF, the European Commission, the EBRD, the EIB and the Stability Pact. These are made available both on a country-by-country basis and as one collective listing. As a first stage of development, in the Summer of 2002 a regional infrastructure section was created to provide details on the Infrastructure Steering Group, and the list of ongoing regional infrastructure projects. This was further developed by the addition of a new section on regional efforts in the energy sector. Although linked to the Regional Infrastructure page, this new part of the site is a whole website in itself, including an electronic library of core documents, publications, and EU legislation relating to the energy sector; information on donor activities; and, a meetings and events schedule. In 2003, the Joint Office completed a full overhaul of the content of the seerecon website and launched a new version in January 2004 (resulting in unusually high traffic to the site that month). The overall aim of the new design is to make the site more operational, so as to effectively facilitate our work and others. The redesign also provides better access to documentation, with a fully searchable database and a new section dedicated to answering general questions on international assistance to South East Europe as well as background information on the economic situation in the region as a whole. This section will be updated fully on an annual basis and is targeted at the `general public'. Website Statistics The Seerecon website is a frequently visited and well used resource. Over the last year, the site has an average of 210,000 hits a month. This translates to around 28,000 visitors using the site every month ­ an average of around 915 people a day. Visitors collectively look at more than 1,800 pages of the site every day. Each month, more than 20,000 documents are downloaded from the site. The graph below displays the average number of people visiting the site on a daily basis for each month since June 2000. Although peak interest in the Seerecon website has coincided with donor conferences organized by the Joint Office, the numbers of people visiting the site has shown steady growth from an average of around 500 people a day in July 2000 to an average of around 800 people a day by April 2004, representing a 60% increase. 36 Visitor Sessions 1800 rsot 1600 si 1400 Vi 1200 yliaD 1000 800 600 400 verageA 200 0 00 00 00-c 1 01 01 r-0 10-c 2 02 02 r-0 20-c 3 03 03 r-0 30-c 4 r-0 Jun- Sep- De Ma Jun- Sep- De Ma Jun- Sep- De Ma Jun- Sep- De Ma A mailing list server was added to the site in February 2000. This provides subscribers with a notification service about key items that have been put on this site. To date, the service has attracted 2,350 subscribers ­ an increase of 1,700 since the Summer of 2000 and an increase of 750 since 2001. Subscribers come from the following types of organization: Business: 30% Government: 14% Int. Organization: 13% NGO: 13% Other: 13% Education: 9% Press: 5% A new mailing list was created in 2004 to cater for those primarily interested in the Energy Community of South East Europe (ECSEE). So far, 498 people have subscribed to this service. These data summarises that generated on a monthly basis by Webtrends, the internet traffic analysis server of the World Bank (data were unavailable for March, September, October and November 2002). 37 COUNTRY AT A GLANCE TABLES Albania at a glance 9/15/04 Europe & Lower- POVERTY and SOCIAL Central middle- Albania Asia income Development diamond* 2003 Population, mid-year (millions) 3.2 473 2,655 Life expectancy GNI per capita (Atlas method, US$) 1,740 2,570 1,480 GNI (Atlas method, US$ billions) 5.5 1,217 3,934 Average annual growth, 1997-03 Population (%) 0.3 0.0 0.9 GNI Gross Labor force (%) 0.8 0.2 1.2 per primary Most recent estimate (latest year available, 1997-03) capita enrollment Poverty (% of population below national poverty line) 25 .. .. Urban population (% of total population) 44 63 50 Life expectancy at birth (years) 74 69 69 Infant mortality (per 1,000 live births) 22 31 32 Child malnutrition (% of children under 5) 14 .. 11 Access to improved water source Access to an improved water source (% of population) 97 91 81 Illiteracy (% of population age 15+) 1 3 10 Gross primary enrollment (% of school-age population) 107 103 112 Albania Male 107 104 113 Lower-middle-income group Female 107 102 111 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1983 1993 2002 2003 Economic ratios* GDP (US$ billions) .. 1.2 4.8 6.1 Gross domestic investment/GDP 36.1 13.2 22.7 .. Trade Exports of goods and services/GDP 18.2 15.4 18.9 .. Gross domestic savings/GDP 33.5 -33.7 -1.4 .. Gross national savings/GDP .. 10.6 14.2 .. Current account balance/GDP .. 1.2 -8.4 .. Domestic Interest payments/GDP .. 0.2 0.4 0.2 Investment savings Total debt/GDP .. 64.0 27.2 25.4 Total debt service/exports 0.0 1.0 3.4 .. Present value of debt/GDP .. .. 18.0 .. Present value of debt/exports .. .. 51.5 .. Indebtedness 1983-93 1993-03 2002 2003 2003-07 (average annual growth) GDP -3.3 6.1 4.7 6.0 .. Albania GDP per capita -4.8 6.5 4.1 5.4 .. Lower-middle-income group Exports of goods and services .. 6.6 5.5 .. .. STRUCTURE of the ECONOMY 1983 1993 2002 2003 Growth of investment and GDP (%) (% of GDP) 60 Agriculture 34.1 54.6 25.3 .. Industry 43.3 22.9 18.9 .. 40 Manufacturing .. .. .. .. 20 Services 22.6 22.5 55.7 .. 0 Private consumption 57.8 119.5 93.0 .. 98 99 00 01 02 03 -20 General government consumption 8.8 14.1 8.4 .. GDI GDP Imports of goods and services 20.8 62.3 43.1 .. 1983-93 1993-03 2002 2003 Growth of exports and imports (%) (average annual growth) Agriculture 1.2 2.2 2.3 .. 60 Industry -8.3 9.7 2.2 .. 40 Manufacturing .. 8.7 0.3 .. 20 Services -4.1 7.0 6.6 .. 0 98 99 00 01 02 03 Private consumption .. 4.9 5.5 .. -20 General government consumption .. 5.5 9.7 .. -40 Gross domestic investment 2.0 12.3 6.1 .. Exports Imports Imports of goods and services .. 5.6 9.8 .. Note: 2003 data are preliminary estimates. This table was produced from the Development Economics central database. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 40 PRICES and GOVERNMENT FINANCE 1983 1993 2002 2003 Inflation (%) Domestic prices 40 (% change) Consumer prices .. 85.0 5.2 .. 30 Implicit GDP deflator 0.0 114.8 6.0 3.9 20 Government finance 10 (% of GDP, includes current grants) 0 Current revenue 50.0 28.5 22.7 .. 98 99 00 01 02 03 Current budget balance 24.7 0.0 -0.1 .. GDP deflator CPI Overall surplus/deficit .. -8.7 -6.3 .. TRADE 1983 1993 2002 2003 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) 342 112 330 .. 2,000 Agriculture .. 20 40 .. Mineral products .. 18 9 .. 1,500 Manufactures .. 1 206 .. 1,000 Total imports (cif) 384 602 1,485 .. Food .. 120 286 .. 500 Fuel and energy .. 85 206 .. Capital goods .. 193 672 .. 0 97 98 99 00 01 02 03 Export price index (1995=100) .. .. .. .. Import price index (1995=100) .. .. .. .. Exports Imports Terms of trade (1995=100) .. .. .. .. BALANCE of PAYMENTS 1983 1993 2002 2003 Current account balance to GDP (%) (US$ millions) Exports of goods and services 354 189 915 .. 0 Imports of goods and services 405 763 2,076 .. 97 98 99 00 01 02 03 Resource balance -51 -574 -1,160 .. -5 Net income 7 34 128 .. Net current transfers 6 555 625 .. Current account balance -38 15 -408 .. -10 Financing items (net) -3 34 443 .. Changes in net reserves 41 -49 -36 .. -15 Memo: Reserves including gold (US$ millions) .. .. 866 .. Conversion rate (DEC, local/US$) .. 102.1 140.2 121.9 EXTERNAL DEBT and RESOURCE FLOWS 1983 1993 2002 2003 (US$ millions) Composition of 2003 debt (US$ mill.) Total debt outstanding and disbursed .. 786 1,313 1,555 IBRD .. 0 0 0 G: 31 F: 35 IDA .. 28 476 583 Total debt service .. 8 58 52 IBRD .. 0 0 0 B: 583 IDA .. 0 3 5 Composition of net resource flows E: 657 Official grants .. 183 105 .. Official creditors .. 61 131 120 Private creditors .. 11 1 -3 Foreign direct investment .. 58 135 .. C: 90 Portfolio equity .. 0 0 .. D: 159 World Bank program Commitments .. 70 88 61 A - IBRD E - Bilateral Disbursements .. 26 79 61 B - IDA D - Other multilateral F - Private Principal repayments .. 0 0 1 C - IMF G - Short-term Net flows .. 26 79 60 Interest payments .. 0 3 4 Net transfers .. 26 76 56 The World Bank Group: This table was prepared by country unit staff; figures may differ from other World Bank published data. 9/15/04 41 Bosnia and Herzegovina at a glance 10/15/04 Bosnia Europe & Lower- POVERTY and SOCIAL and Central middle- Herzegovina Asia income Development diamond* 2003 Population, mid-year (millions) 4.1 473 2,655 Life expectancy GNI per capita (Atlas method, US$) 1,540 2,570 1,480 GNI (Atlas method, US$ billions) 6.4 1,217 3,934 Average annual growth, 1997-03 Population (%) 2.1 0.0 0.9 GNI Labor force (%) 2.3 0.2 1.2 Gross per primary Most recent estimate (latest year available, 1997-03) capita enrollment Poverty (% of population below national poverty line) 20 .. .. Urban population (% of total population) 44 63 50 Life expectancy at birth (years) 74 69 69 Infant mortality (per 1,000 live births) 15 31 32 Child malnutrition (% of children under 5) 4 .. 11 Access to improved water source Access to an improved water source (% of population) .. 91 81 Illiteracy (% of population age 15+) 5 3 10 Gross primary enrollment (% of school-age population) .. 103 112 Bosnia and Herzegovina Male .. 104 113 Lower-middle-income group Female .. 102 111 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1983 1993 2002 2003 Economic ratios* GDP (US$ billions) .. .. 5.6 7.0 Gross domestic investment/GDP .. .. 19.6 19.9 Trade Exports of goods and services/GDP .. .. 24.5 25.2 Gross domestic savings/GDP .. .. -17.1 -14.0 Gross national savings/GDP .. .. -2.5 0.9 Current account balance/GDP .. .. -22.2 -19.0 Domestic Interest payments/GDP .. .. 1.0 0.8 Investment savings Total debt/GDP .. .. 45.8 41.3 Total debt service/exports .. .. 7.1 7.1 Present value of debt/GDP .. .. 29.2 23.8 Present value of debt/exports .. .. 120.8 109.3 Indebtedness 1983-93 1993-03 2002 2003 2003-07 (average annual growth) GDP .. 17.8 5.5 2.7 4.2 Bosnia and Herzegovina GDP per capita .. 15.4 4.4 2.4 3.6 Lower-middle-income group Exports of goods and services .. 23.6 5.3 10.4 6.6 STRUCTURE of the ECONOMY 1983 1993 2002 2003 Growth of investment and GDP (%) (% of GDP) 60 Agriculture .. .. 14.9 14.9 Industry .. .. 32.1 31.9 40 Manufacturing .. .. 15.2 15.1 20 Services .. .. 52.9 52.8 0 Private consumption .. .. 92.3 91.8 98 99 00 01 02 03 -20 General government consumption .. .. 24.8 22.3 GDI GDP Imports of goods and services .. .. 61.2 59.2 1983-93 1993-03 2002 2003 Growth of exports and imports (%) (average annual growth) Agriculture .. .. .. 2.5 80 Industry .. .. .. 2.5 60 Manufacturing .. .. .. 2.5 40 Services .. .. .. 2.2 20 Private consumption .. .. .. .. 0 General government consumption .. .. .. .. 98 99 00 01 02 03 -20 Gross domestic investment .. 35.6 Exports Imports Imports of goods and services .. 11.1 17.9 20.2 Note: 2003 data are preliminary estimates. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 42 PRICES and GOVERNMENT FINANCE 1983 1993 2002 2003 Inflation (%) Domestic prices 15 (% change) Consumer prices .. .. 0.3 0.2 10 Implicit GDP deflator .. .. 1.0 0.9 5 Government finance 0 (% of GDP, includes current grants) 98 99 00 01 02 03 Current revenue .. .. 50.7 49.3 -5 Current budget balance .. .. 6.5 6.5 GDP deflator CPI Overall surplus/deficit .. .. -2.5 0.3 TRADE 1983 1993 2002 2003 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) .. .. 952 1,272 5,000 n.a. .. .. .. .. 4,000 n.a. .. .. .. .. Manufactures .. .. .. .. 3,000 Total imports (cif) .. .. 3,233 3,890 2,000 Food .. .. .. .. Fuel and energy .. .. .. .. 1,000 Capital goods .. .. .. .. 0 97 98 99 00 01 02 03 Export price index (1995=100) .. .. .. .. Import price index (1995=100) .. .. .. .. Exports Imports Terms of trade (1995=100) .. .. .. .. BALANCE of PAYMENTS 1983 1993 2002 2003 Current account balance to GDP (%) (US$ millions) Exports of goods and services .. .. 1,374 1,759 0 Imports of goods and services .. .. 3,428 4,121 97 98 99 00 01 02 03 Resource balance .. .. -2,054 -2,362 -10 Net income .. .. 248 327 Net current transfers .. .. 565 711 -20 Current account balance .. .. -1,241 -1,325 -30 Financing items (net) .. .. 1,282 1,806 Changes in net reserves .. .. -41 -481 -40 Memo: Reserves including gold (US$ millions) .. .. 0 1,785 Conversion rate (DEC, local/US$) .. .. 2.1 1.7 EXTERNAL DEBT and RESOURCE FLOWS 1983 1993 2002 2003 (US$ millions) Composition of 2003 debt (US$ mill.) Total debt outstanding and disbursed .. .. 2,563 2,880 IBRD .. 424 538 540 G: 65 IDA .. 0 726 803 A: 540 Total debt service .. .. 125 151 F: 731 IBRD .. 0 45 43 IDA .. 0 5 6 Composition of net resource flows Official grants .. 32 .. .. Official creditors .. .. .. .. B: 803 Private creditors .. .. .. .. Foreign direct investment .. .. .. .. E: 578 Portfolio equity .. .. .. .. D: 71 C: 92 World Bank program Commitments .. 0 102 23 A - IBRD E - Bilateral Disbursements .. 0 97 35 B - IDA D - Other multilateral F - Private Principal repayments .. 0 23 23 C - IMF G - Short-term Net flows .. 0 74 12 Interest payments .. 0 26 23 Net transfers .. 0 48 -11 The World Bank Group: This table was prepared by country unit staff; figures may differ from other World Bank published data. 10/15/04 43 Bulgaria at a glance 9/27/04 Europe & Lower- POVERTY and SOCIAL Central middle- Bulgaria Asia income Development diamond* 2003 Population, mid-year (millions) 7.8 473 2,655 Life expectancy GNI per capita (Atlas method, US$) 2,130 2,570 1,480 GNI (Atlas method, US$ billions) 16.6 1,217 3,934 Average annual growth, 1997-03 Population (%) -1.0 0.0 0.9 GNI Labor force (%) -0.8 0.2 1.2 Gross per primary Most recent estimate (latest year available, 1997-03) capita enrollment Poverty (% of population below national poverty line) 13 .. .. Urban population (% of total population) 70 63 50 Life expectancy at birth (years) 72 69 69 Infant mortality (per 1,000 live births) 14 31 32 Child malnutrition (% of children under 5) .. .. 11 Access to improved water source Access to an improved water source (% of population) 100 91 81 Illiteracy (% of population age 15+) 1 3 10 Gross primary enrollment (% of school-age population) 99 103 112 Bulgaria Male 101 104 113 Lower-middle-income group Female 98 102 111 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1983 1993 2002 2003 Economic ratios* GDP (US$ billions) 17.0 10.8 15.6 19.9 Gross domestic investment/GDP 32.9 15.3 19.8 21.7 Trade Exports of goods and services/GDP 37.1 38.2 53.1 53.2 Gross domestic savings/GDP 33.1 7.7 13.2 12.0 Gross national savings/GDP .. 5.9 14.9 12.9 Current account balance/GDP 0.2 -10.1 -5.3 -8.4 Domestic Interest payments/GDP 0.6 1.7 2.0 2.0 Investment savings Total debt/GDP 10.3 112.4 72.2 66.7 Total debt service/exports 3.0 6.2 13.4 11.4 Present value of debt/GDP .. .. 69.1 .. Present value of debt/exports .. .. 128.5 .. Indebtedness 1983-93 1993-03 2002 2003 2003-07 (average annual growth) GDP -0.4 1.0 4.9 4.3 5.3 Bulgaria GDP per capita 0.2 1.9 5.5 4.9 8.2 Lower-middle-income group Exports of goods and services -20.7 7.3 7.0 8.0 10.2 STRUCTURE of the ECONOMY 1983 1993 2002 2003 Growth of investment and GDP (%) (% of GDP) 40 Agriculture 14.5 9.9 10.7 10.0 Industry 60.3 32.7 25.6 26.2 20 Manufacturing .. .. 15.4 16.0 0 Services 25.2 57.4 63.7 63.8 98 99 00 01 02 03 -20 Private consumption 50.9 73.5 68.8 69.0 -40 General government consumption 15.5 18.9 18.0 19.0 GDI GDP Imports of goods and services 36.9 45.8 59.8 63.0 1983-93 1993-03 2002 2003 Growth of exports and imports (%) (average annual growth) Agriculture -3.9 6.3 5.5 -1.3 20 Industry -1.5 -0.8 4.6 7.1 10 Manufacturing .. 4.8 6.5 11.2 Services 0.6 -0.8 5.1 3.5 0 Private consumption -0.9 1.3 3.6 6.4 98 99 00 01 02 03 General government consumption -0.4 -0.8 4.9 7.2 -10 Gross domestic investment1 -5.1 8.2 10.3 13.8 Exports Imports Imports of goods and services -23.1 10.3 4.9 14.8 Note: 2003 data are preliminary estimates. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 1. Refers to gross domestic fixed investment. 44 PRICES and GOVERNMENT FINANCE 1983 1993 2002 2003 Inflation (%) Domestic prices 1,500 (% change) Consumer prices .. 72.8 5.8 2.3 1,000 Implicit GDP deflator -0.6 51.1 3.8 2.1 500 Government finance (% of GDP, includes current grants) 0 Current revenue .. 39.4 38.4 40.2 98 99 00 01 02 03 Current budget balance .. -9.3 2.3 2.6 GDP deflator CPI Overall surplus/deficit .. -11.3 -0.6 0.0 TRADE 1983 1993 2002 2003 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) .. 3,726 5,692 7,445 15,000 Consumer goods .. .. 2,002 2,725 Investment goods .. .. 753 1,018 10,000 Manufactures .. .. .. .. Total imports (cif) .. 4,981 7,287 9,923 Food .. .. 218 237 5,000 Fuel and energy .. .. 1,451 1,745 Capital goods .. 1,333 1,823 2,546 0 97 98 99 00 01 02 03 Export price index (1995=100) .. 93 82 92 Import price index (1995=100) .. 95 76 86 Exports Imports Terms of trade (1995=100) .. 99 108 107 BALANCE of PAYMENTS 1983 1993 2002 2003 Current account balance to GDP (%) (US$ millions) Exports of goods and services 9,885 4,898 8,057 10,609 15 Imports of goods and services 9,829 5,841 9,170 12,487 Resource balance 56 -943 -1,113 -1,878 10 Net income -127 -192 -261 -489 5 Net current transfers 109 37 547 692 0 Current account balance 38 -1,098 -827 -1,676 97 98 99 00 01 02 03 -5 Financing items (net) 164 808 1,555 2,572 Changes in net reserves -202 290 -729 -896 -10 Memo: Reserves including gold (US$ millions) .. 960 4,747 6,705 Conversion rate (DEC, local/US$) 0.002 0.0276 2.1 1.7 EXTERNAL DEBT and RESOURCE FLOWS 1983 1993 2002 2003 (US$ millions) Composition of 2003 debt (US$ mill.) Total debt outstanding and disbursed 1,739 12,178 11,245 13,241 IBRD .. 158 958 1,266 A: 1,266 IDA .. 0 0 0 G: 2,662 C: 1,173 Total debt service 300 309 1,121 1,248 IBRD .. 12 78 93 IDA .. 0 0 0 D: 866 Composition of net resource flows Official grants .. 0 142 142 E: 614 Official creditors .. 242 -129 -9 Private creditors .. -34 483 642 Foreign direct investment .. 40 600 1,153 Portfolio equity .. 0 -23 -2 F: 6,660 World Bank program Commitments .. 178 50 218 A - IBRD E - Bilateral Disbursements .. 3 39 185 B - IDA D - Other multilateral F - Private Principal repayments .. 0 37 50 C - IMF G - Short-term Net flows .. 3 2 135 Interest payments .. 12 41 42 Net transfers .. -9 -39 92 The World Bank Group: This table was prepared by country unit staff; figures may differ from other World Bank published data. 9/27/04 45 Croatia at a glance 9/30/04 Europe & Upper- POVERTY and SOCIAL Central middle- Croatia Asia income Development diamond* 2003 Population, mid-year (millions) 4.4 473 335 Life expectancy GNI per capita (Atlas method, US$) 5,500 2,570 5,340 GNI (Atlas method, US$ billions) 24.0 1,217 1,788 Average annual growth, 1997-03 Population (%) -0.8 0.0 1.2 GNI Labor force (%) 0.3 0.2 1.8 Gross per primary Most recent estimate (latest year available, 1997-03) capita enrollment Poverty (% of population below national poverty line) 11 .. .. Urban population (% of total population) 69 63 76 Life expectancy at birth (years) 75 69 73 Infant mortality (per 1,000 live births) 7 31 19 Child malnutrition (% of children under 5) .. .. .. Access to improved water source Access to an improved water source (% of population) 95 91 89 Illiteracy (% of population age 15+) 2 3 9 Gross primary enrollment (% of school-age population) 95 103 104 Croatia Male .. 104 104 Upper-middle-income group Female .. 102 104 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1983 1993 2002 2003 Economic ratios* GDP (US$ billions) .. 10.9 22.8 28.7 Gross domestic investment/GDP .. 15.5 26.7 27.8 Trade Exports of goods and services/GDP .. 52.4 45.3 44.0 Gross domestic savings/GDP .. 14.3 17.9 18.4 Gross national savings/GDP .. 16.2 20.5 18.9 Current account balance/GDP .. 5.8 -8.4 -6.1 Domestic Interest payments/GDP .. 0.9 2.2 2.0 Investment savings Total debt/GDP .. 22.8 67.7 75.3 Total debt service/exports .. 4.9 24.3 17.7 Present value of debt/GDP .. .. 65.9 .. Present value of debt/exports .. .. 122.9 .. Indebtedness 1983-93 1993-03 2002 2003 2003-07 (average annual growth) GDP .. 4.0 5.2 4.7 4.2 Croatia GDP per capita .. 4.7 5.1 6.5 4.5 Upper-middle-income group Exports of goods and services .. 6.3 1.8 10.9 4.8 STRUCTURE of the ECONOMY 1983 1993 2002 2003 Growth of investment and GDP (%) (% of GDP) 40 Agriculture .. 13.8 9.0 8.7 Industry .. 35.8 29.3 29.1 20 Manufacturing .. 30.6 20.1 20.0 Services .. 50.3 61.8 62.2 0 98 99 00 01 02 03 Private consumption .. 62.2 60.7 61.2 -20 General government consumption .. 23.5 21.4 20.4 GDI GDP Imports of goods and services .. 53.6 54.0 53.4 1983-93 1993-03 2002 2003 Growth of exports and imports (%) (average annual growth) Agriculture .. -0.3 0.5 2.7 30 Industry .. 3.4 8.7 5.3 20 Manufacturing .. 3.1 6.7 5.0 10 Services .. 4.8 3.3 5.7 0 Private consumption .. 3.3 7.8 2.1 98 99 00 01 02 03 General government consumption .. -0.1 0.6 0.9 -10 Gross domestic investment .. 6.5 17.3 4.5 Exports Imports Imports of goods and services .. 5.1 8.4 5.4 Note: 2003 data are preliminary estimates. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 46 PRICES and GOVERNMENT FINANCE 1983 1993 2002 2003 Inflation (%) Domestic prices 10 (% change) 8 Consumer prices .. 1,516.6 2.2 1.5 6 Implicit GDP deflator .. 1,466.8 2.7 2.4 4 Government finance 2 (% of GDP, includes current grants) 0 Current revenue .. 36.9 45.0 44.6 98 99 00 01 02 03 Current budget balance .. -0.1 1.6 1.8 GDP deflator CPI Overall surplus/deficit .. -2.0 -3.2 -3.5 TRADE 1983 1993 2002 2003 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) .. 3,910 4,995 6,007 15,000 Raw materials, excluding fuels .. 237 274 329 Mineral fuels and lubricants .. 377 458 560 10,000 Manufactures .. 1,762 2,456 2,953 Total imports (cif) .. 4,620 10,635 13,469 Food .. 266 794 930 5,000 Fuel and energy .. 447 1,310 1,500 Capital goods .. 749 3,682 4,500 0 97 98 99 00 01 02 03 Export price index (1995=100) .. .. 141 120 Import price index (1995=100) .. .. 140 119 Exports Imports Terms of trade (1995=100) .. .. 101 101 BALANCE of PAYMENTS 1983 1993 2002 2003 Current account balance to GDP (%) (US$ millions) Exports of goods and services .. 6,196 10,562 14,324 0 Imports of goods and services .. 5,767 13,047 16,212 97 98 99 00 01 02 03 Resource balance .. 429 -2,485 -1,888 -5 Net income .. -120 -499 -1,096 Net current transfers .. 328 1,076 1,235 Current account balance .. 637 -1,908 -1,749 -10 Financing items (net) .. -171 2,605 4,055 Changes in net reserves .. -467 -697 -2,306 -15 Memo: Reserves including gold (US$ millions) .. 616 5,886 8,192 Conversion rate (DEC, local/US$) .. 3.6 7.9 6.7 EXTERNAL DEBT and RESOURCE FLOWS 1983 1993 2002 2003 (US$ millions) Composition of 2003 debt (US$ mill.) Total debt outstanding and disbursed .. 2,486 15,413 21,573 IBRD .. 89 611 762 A: 762 G: 772 IDA .. 0 0 0 D: 777 E: 1,437 Total debt service .. 325 2,967 2,864 IBRD .. 43 52 86 IDA .. 0 0 0 Composition of net resource flows Official grants .. 0 60 .. Official creditors .. -52 165 196 Private creditors .. 12 2,352 3,922 Foreign direct investment .. 102 591 1,685 Portfolio equity .. 0 -260 837 F: 17,825 World Bank program Commitments .. 0 202 0 A - IBRD E - Bilateral Disbursements .. 1 126 155 B - IDA D - Other multilateral F - Private Principal repayments .. 33 30 58 C - IMF G - Short-term Net flows .. -33 95 97 Interest payments .. 9 22 28 Net transfers .. -42 73 69 The World Bank Group: This table was prepared by country unit staff; figures may differ from other World Bank published data. 9/30/04 47 Macedonia, FYR at a glance 9/15/04 Europe & Lower- POVERTY and SOCIAL Macedonia, Central middle- FYR Asia income Development diamond* 2003 Population, mid-year (millions) 2.0 473 2,655 Life expectancy GNI per capita (Atlas method, US$) 1,980 2,570 1,480 GNI (Atlas method, US$ billions) 4.1 1,217 3,934 Average annual growth, 1997-03 Population (%) 0.4 0.0 0.9 GNI Gross Labor force (%) 0.7 0.2 1.2 per primary Most recent estimate (latest year available, 1997-03) capita enrollment Poverty (% of population below national poverty line) .. .. .. Urban population (% of total population) 60 63 50 Life expectancy at birth (years) 73 69 69 Infant mortality (per 1,000 live births) 22 31 32 Child malnutrition (% of children under 5) 6 .. 11 Access to improved water source Access to an improved water source (% of population) .. 91 81 Illiteracy (% of population age 15+) .. 3 10 Gross primary enrollment (% of school-age population) 99 103 112 Macedonia, FYR Male 99 104 113 Lower-middle-income group Female 99 102 111 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1983 1993 2002 2003 Economic ratios* GDP (US$ billions) .. 2.6 3.8 4.7 Gross domestic investment/GDP .. 17.9 19.7 21.6 Trade Exports of goods and services/GDP .. 46.7 38.0 35.2 Gross domestic savings/GDP .. 9.9 0.5 3.4 Gross national savings/GDP .. 11.1 12.8 15.6 Current account balance/GDP .. -3.2 -8.6 -6.0 Domestic Interest payments/GDP .. 0.1 1.3 0.9 Investment savings Total debt/GDP .. 40.9 42.8 36.7 Total debt service/exports .. 1.4 15.8 11.3 Present value of debt/GDP .. .. 34.7 .. Present value of debt/exports .. .. 87.4 .. Indebtedness 1983-93 1993-03 2002 2003 2003-07 (average annual growth) GDP .. 1.4 0.9 3.1 4.5 Macedonia, FYR GDP per capita .. 0.9 0.7 2.5 3.5 Lower-middle-income group Exports of goods and services .. 4.1 -4.4 14.6 8.6 STRUCTURE of the ECONOMY 1983 1993 2002 2003 Growth of investment and GDP (%) (% of GDP) 20 Agriculture .. 11.8 12.3 12.2 Industry .. 36.8 30.2 30.4 10 Manufacturing .. 28.1 19.1 19.1 0 Services .. 51.4 57.5 57.3 98 99 00 01 02 03 -10 Private consumption .. 69.0 77.1 84.5 -20 General government consumption .. 21.1 22.4 12.0 GDI GDP Imports of goods and services .. 54.7 57.2 53.4 1983-93 1993-03 2002 2003 Growth of exports and imports (%) (average annual growth) Agriculture .. 0.0 -2.0 2.1 40 Industry .. 1.5 -0.6 2.6 20 Manufacturing .. 0.0 0.7 3.1 Services .. 2.1 1.5 6.3 0 Private consumption .. 2.6 11.5 3.1 98 99 00 01 02 03 General government consumption .. 2.5 -7.9 -11.5 -20 Gross domestic investment .. 3.4 8.1 12.2 Exports Imports Imports of goods and services .. 6.8 10.7 8.4 Note: 2003 data are preliminary estimates. This table was produced from the Development Economics central database. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 48 PRICES and GOVERNMENT FINANCE 1983 1993 2002 2003 Inflation (%) Domestic prices 10 (% change) Consumer prices .. 349.8 1.9 0.6 5 Implicit GDP deflator .. 442.1 3.4 1.8 Government finance 0 (% of GDP, includes current grants) 98 99 00 01 02 03 Current revenue .. .. 34.7 32.9 -5 Current budget balance .. .. -2.2 1.3 GDP deflator CPI Overall surplus/deficit .. -13.4 -5.6 -1.4 TRADE 1983 1993 2002 2003 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) .. 1,055 1,116 1,358 2,500 Raw materials .. 65 35 68 2,000 Food .. 116 75 91 Manufactures .. 724 783 891 1,500 Total imports (cif) .. 1,199 1,995 2,324 1,000 Food .. 158 247 269 Fuel and energy .. 179 263 314 500 Capital goods .. 132 408 564 0 97 98 99 00 01 02 03 Export price index (1995=100) .. 81 90 96 Import price index (1995=100) .. .. 81 86 Exports Imports Terms of trade (1995=100) .. .. 112 111 BALANCE of PAYMENTS 1983 1993 2002 2003 Current account balance to GDP (%) (US$ millions) Exports of goods and services .. 1,139 1,364 1,658 0 Imports of goods and services .. 1,251 2,156 2,512 97 98 99 00 01 02 03 Resource balance .. -112 -792 -854 -2 Net income .. -57 -31 -33 -4 Net current transfers .. 86 498 603 -6 Current account balance .. -83 -325 -284 -8 Financing items (net) .. 139 201 440 Changes in net reserves .. -57 124 -156 -10 Memo: Reserves including gold (US$ millions) .. 123 741 936 Conversion rate (DEC, local/US$) .. 23.2 64.4 54.4 EXTERNAL DEBT and RESOURCE FLOWS 1983 1993 2002 2003 (US$ millions) Composition of 2003 debt (US$ mill.) Total debt outstanding and disbursed .. 1,042 1,622 1,725 IBRD .. 151 138 175 G: 67 A: 175 IDA .. 0 293 356 Total debt service .. 16 238 211 IBRD .. 8 13 15 F: 438 IDA .. 0 2 2 B: 356 Composition of net resource flows Official grants .. 3 169 .. Official creditors .. -4 34 56 C: 68 Private creditors .. 0 35 -56 Foreign direct investment .. 0 77 .. E: 354 Portfolio equity .. 0 0 .. D: 267 World Bank program Commitments .. 0 8 20 A - IBRD E - Bilateral Disbursements .. 1 34 59 B - IDA D - Other multilateral F - Private Principal repayments .. 5 6 8 C - IMF G - Short-term Net flows .. -4 28 51 Interest payments .. 3 9 9 Net transfers .. -7 19 42 The World Bank Group: This table was prepared by country unit staff; figures may differ from other World Bank published data. 9/15/04 49 Moldova at a glance 9/15/04 Europe & POVERTY and SOCIAL Central Low- Moldova Asia income Development diamond* 2003 Population, mid-year (millions) 4.2 473 2,310 Life expectancy GNI per capita (Atlas method, US$) 590 2,570 450 GNI (Atlas method, US$ billions) 2.5 1,217 1,038 Average annual growth, 1997-03 Population (%) -0.3 0.0 1.9 GNI Gross Labor force (%) 0.2 0.2 2.3 per primary Most recent estimate (latest year available, 1997-03) capita enrollment Poverty (% of population below national poverty line) 23 .. .. Urban population (% of total population) 46 63 30 Life expectancy at birth (years) 67 69 58 Infant mortality (per 1,000 live births) 27 31 82 Child malnutrition (% of children under 5) .. .. 44 Access to improved water source Access to an improved water source (% of population) 92 91 75 Illiteracy (% of population age 15+) 1 3 39 Gross primary enrollment (% of school-age population) 85 103 92 Moldova Male 86 104 99 Low-income group Female 85 102 85 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1983 1993 2002 2003 Economic ratios* GDP (US$ billions) .. 2.4 1.7 2.0 Gross domestic investment/GDP .. 55.8 21.7 21.7 Trade Exports of goods and services/GDP .. 39.3 52.3 53.7 Gross domestic savings/GDP .. 39.8 -3.4 -12.3 Gross national savings/GDP .. 40.7 14.1 11.5 Current account balance/GDP .. -7.7 -5.6 -9.2 Domestic Interest payments/GDP .. 0.0 2.5 1.7 Investment savings Total debt/GDP .. 11.7 80.0 75.8 Total debt service/exports .. 0.4 20.8 10.2 Present value of debt/GDP .. .. 74.3 .. Present value of debt/exports .. .. 111.3 .. Indebtedness 1983-93 1993-03 2002 2003 2003-07 (average annual growth) GDP -3.3 -1.8 7.8 6.3 4.0 Moldova GDP per capita -3.9 -1.6 8.2 6.7 5.1 Low-income group Exports of goods and services .. 5.7 19.1 20.6 6.3 STRUCTURE of the ECONOMY 1983 1993 2002 2003 Growth of investment and GDP (%) (% of GDP) 40 Agriculture .. 32.5 24.1 22.5 Industry .. 44.0 23.2 24.7 20 Manufacturing .. 36.0 17.0 18.4 0 Services .. 23.5 52.7 52.8 98 99 00 01 02 03 -20 Private consumption .. 44.3 87.4 94.6 -40 General government consumption .. 15.9 16.1 17.7 GDI GDP Imports of goods and services .. 55.4 77.4 87.6 1983-93 1993-03 2002 2003 Growth of exports and imports (%) (average annual growth) Agriculture .. -2.6 3.7 -9.9 40 Industry .. -6.1 3.9 13.4 20 Manufacturing .. 0.5 2.6 12.8 0 Services .. 1.5 7.4 9.5 98 99 00 01 02 03 -20 Private consumption .. 7.5 4.7 19.1 General government consumption .. -7.5 21.0 20.4 -40 Gross domestic investment .. -6.8 19.0 5.8 Exports Imports Imports of goods and services .. 8.9 16.1 30.9 Note: 2003 data are preliminary estimates. This table was produced from the Development Economics central database. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 50 PRICES and GOVERNMENT FINANCE 1983 1993 2002 2003 Inflation (%) Domestic prices 50 (% change) 40 Consumer prices .. 788.5 5.3 11.7 30 Implicit GDP deflator .. 860.5 10.0 13.9 20 Government finance 10 (% of GDP, includes current grants) 0 Current revenue .. 26.8 29.5 31.1 98 99 00 01 02 03 Current budget balance .. -4.1 0.7 1.4 GDP deflator CPI Overall surplus/deficit .. -9.0 -1.8 0.4 TRADE 1983 1993 2002 2003 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) .. 451 666 790 1,500 Live animals and animal products .. 26 39 29 Vegetable products .. 22 106 120 1,000 Manufactures .. 100 135 197 Total imports (cif) .. 631 1,052 1,403 Food .. 39 44 82 500 Fuel and energy .. 279 218 233 Capital goods .. 33 147 214 0 97 98 99 00 01 02 03 Export price index (1995=100) .. .. 91 93 Import price index (1995=100) .. .. 106 113 Exports Imports Terms of trade (1995=100) .. .. 85 82 BALANCE of PAYMENTS 1983 1993 2002 2003 Current account balance to GDP (%) (US$ millions) Exports of goods and services .. 501 870 1,054 0 Imports of goods and services .. 705 1,287 1,720 97 98 99 00 01 02 03 Resource balance .. -204 -417 -666 -5 Net income .. 0 151 323 -10 Net current transfers .. .. 140 144 -15 Current account balance .. -182 -93 -181 -20 Financing items (net) .. 169 115 214 Changes in net reserves .. 13 -22 -33 -25 Memo: Reserves including gold (US$ millions) .. .. 269 302 Conversion rate (DEC, local/US$) .. 0.8 13.6 13.9 EXTERNAL DEBT and RESOURCE FLOWS 1983 1993 2002 2003 (US$ millions) Composition of 2003 debt (US$ mill.) Total debt outstanding and disbursed .. 278 1,329 1,489 IBRD .. 28 186 190 G: 80 IDA .. 0 145 175 A: 190 Total debt service .. 2 231 148 IBRD .. 0 17 18 B: 175 IDA .. 0 1 1 Composition of net resource flows Official grants .. 18 31 .. C: 143 F: 684 Official creditors .. 65 -5 -17 Private creditors .. 0 -36 33 D: 83 Foreign direct investment .. 0 111 .. Portfolio equity .. 0 2 .. E: 134 World Bank program Commitments .. 86 41 54 A - IBRD E - Bilateral Disbursements .. 29 26 18 B - IDA D - Other multilateral F - Private Principal repayments .. 0 9 11 C - IMF G - Short-term Net flows .. 29 18 7 Interest payments .. 0 9 8 Net transfers .. 28 9 -1 The World Bank Group: This table was prepared by country unit staff; figures may differ from other World Bank published data. 9/15/04 51 Romania at a glance 9/20/04 Europe & Lower- POVERTY and SOCIAL Central middle- Romania Asia income Development diamond* 2003 Population, mid-year (millions) 21.7 473 2,655 Life expectancy GNI per capita (Atlas method, US$) 2,260 2,570 1,480 GNI (Atlas method, US$ billions) 49.2 1,217 3,934 Average annual growth, 1997-03 Population (%) -0.6 0.0 0.9 GNI Labor force (%) 0.1 0.2 1.2 Gross per primary Most recent estimate (latest year available, 1997-03) capita enrollment Poverty (% of population below national poverty line) 25 .. .. Urban population (% of total population) 56 63 50 Life expectancy at birth (years) 70 69 69 Infant mortality (per 1,000 live births) 20 31 32 Child malnutrition (% of children under 5) .. .. 11 Access to improved water source Access to an improved water source (% of population) 58 91 81 Illiteracy (% of population age 15+) 2 3 10 Gross primary enrollment (% of school-age population) 99 103 112 Romania Male 100 104 113 Lower-middle-income group Female 98 102 111 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1983 1993 2002 2003 Economic ratios* GDP (US$ billions) .. 26.4 45.7 57.0 Gross domestic investment/GDP .. 28.9 23.1 24.6 Trade Exports of goods and services/GDP .. 23.0 35.4 36.3 Gross domestic savings/GDP .. 24.0 17.3 16.8 Gross national savings/GDP .. 24.2 19.7 18.2 Current account balance/GDP .. -4.5 -3.3 -5.8 Domestic Interest payments/GDP .. 0.5 1.2 1.4 Investment savings Total debt/GDP .. 16.2 34.3 39.8 Total debt service/exports 15.2 6.3 19.0 17.5 Present value of debt/GDP .. .. 33.2 .. Present value of debt/exports .. .. 91.3 .. Indebtedness 1983-93 1993-03 2002 2003 2003-07 (average annual growth) GDP -3.1 0.7 4.3 4.9 5.0 Romania GDP per capita -3.3 1.2 7.2 5.2 5.0 Lower-middle-income group Exports of goods and services .. 11.2 16.9 27.0 7.1 STRUCTURE of the ECONOMY 1983 1993 2002 2003 Growth of investment and GDP (%) (% of GDP) 30 Agriculture .. 22.6 13.1 13.0 Industry .. 42.1 38.1 37.9 15 Manufacturing .. 28.7 .. 31.5 0 Services .. 35.3 48.8 49.1 98 99 00 01 02 03 -15 Private consumption .. 63.7 76.0 70.8 -30 General government consumption .. 12.3 6.6 12.4 GDI GDP Imports of goods and services .. 28.0 41.2 44.1 1983-93 1993-03 2002 2003 Growth of exports and imports (%) (average annual growth) Agriculture 1.4 -1.5 -3.9 3.0 45 Industry -4.3 0.9 7.2 4.6 30 Manufacturing .. .. .. .. 15 Services .. 1.5 5.6 5.2 0 Private consumption .. 3.2 3.0 7.3 98 99 00 01 02 03 General government consumption .. -0.3 2.1 4.6 -15 Gross domestic investment .. 0.3 7.3 9.2 Exports Imports Imports of goods and services .. 11.9 12.1 34.4 Note: 2003 data are preliminary estimates. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 52 PRICES and GOVERNMENT FINANCE 1983 1993 2002 2003 Inflation (%) Domestic prices 200 (% change) Consumer prices .. 256.1 22.5 15.3 150 Implicit GDP deflator -0.4 227.4 24.2 19.2 100 Government finance 50 (% of GDP, includes current grants) 0 Current revenue .. 33.2 29.6 29.9 98 99 00 01 02 03 Current budget balance .. 4.3 0.6 1.3 GDP deflator CPI Overall surplus/deficit .. -0.4 -2.6 -2.2 TRADE 1983 1993 2002 2003 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) .. 4,892 13,876 17,618 30,000 Textiles .. 959 1,782 2,282 Metals .. 574 1,181 1,482 20,000 Manufactures .. 2,856 9,851 12,534 Total imports (cif) .. 6,522 17,862 23,983 Food .. 964 1,174 1,737 10,000 Fuel and energy .. 1,872 2,272 2,615 Capital goods .. 1,432 5,111 7,017 0 97 98 99 00 01 02 03 Export price index (1995=100) .. .. 79 79 Import price index (1995=100) .. .. 70 71 Exports Imports Terms of trade (1995=100) .. .. 114 111 BALANCE of PAYMENTS 1983 1993 2002 2003 Current account balance to GDP (%) (US$ millions) Exports of goods and services 12,239 5,691 16,223 20,646 0 Imports of goods and services 10,369 6,934 18,825 25,113 97 98 99 00 01 02 03 Resource balance 1,870 -1,243 -2,602 -4,467 -2 Net income -710 -145 -459 -705 Net current transfers 0 214 1,536 1,861 -4 Current account balance 1,160 -1,174 -1,525 -3,311 -6 Financing items (net) -1,538 1,120 3,327 4,445 Changes in net reserves 378 54 -1,802 -1,134 -8 Memo: Reserves including gold (US$ millions) .. 956 7,306 9,364 Conversion rate (DEC, local/US$) .. 760.0 33,055.5 33,200.1 EXTERNAL DEBT and RESOURCE FLOWS 1983 1993 2002 2003 (US$ millions) Composition of 2003 debt (US$ mill.) Total debt outstanding and disbursed 9,129 4,282 15,680 22,686 IBRD 1,742 403 2,173 2,296 A: 2,296 IDA 0 0 0 0 G: 2,771 C: 595 Total debt service 1,875 363 3,163 3,673 IBRD 220 19 196 214 IDA 0 0 0 0 D: 2,531 Composition of net resource flows E: 826 Official grants 0 99 259 0 Official creditors 317 743 143 16 Private creditors -123 167 2,060 1,967 Foreign direct investment 0 94 1,144 0 Portfolio equity 0 0 21 0 F: 13,667 World Bank program Commitments 0 120 340 222 A - IBRD E - Bilateral Disbursements 362 189 335 131 B - IDA D - Other multilateral F - Private Principal repayments 102 0 120 145 C - IMF G - Short-term Net flows 259 189 214 -14 Interest payments 118 19 76 69 Net transfers 141 169 139 -82 The World Bank Group: This table was prepared by country unit staff; figures may differ from other World Bank published data. 9/20/04 53 Serbia and Montenegro at a glance 9/15/04 Serbia Europe & Lower- POVERTY and SOCIAL and Central middle- Montenegro Asia income Development diamond* 2003 Population, mid-year (millions) 8.1 473 2,655 Life expectancy GNI per capita (Atlas method, US$) 1,910 2,570 1,480 GNI (Atlas method, US$ billions) 15.5 1,217 3,934 Average annual growth, 1997-03 Population (%) -4.5 0.0 0.9 GNI Gross Labor force (%) -4.9 0.2 1.2 per primary Most recent estimate (latest year available, 1997-03) capita enrollment Poverty (% of population below national poverty line) .. .. .. Urban population (% of total population) 52 63 50 Life expectancy at birth (years) 73 69 69 Infant mortality (per 1,000 live births) 16 31 32 Child malnutrition (% of children under 5) 2 .. 11 Access to improved water source Access to an improved water source (% of population) 98 91 81 Illiteracy (% of population age 15+) .. 3 10 Gross primary enrollment (% of school-age population) 99 103 112 Serbia and Montenegro Male 99 104 113 Lower-middle-income group Female 99 102 111 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1983 1993 2002 2003 Economic ratios* GDP (US$ billions) .. .. 15.7 19.2 Gross domestic investment/GDP .. .. 16.1 17.8 Trade Exports of goods and services/GDP .. .. 20.7 22.2 Gross domestic savings/GDP .. .. -7.0 -5.2 Gross national savings/GDP .. .. 7.2 8.3 Current account balance/GDP .. .. -8.8 -9.1 Domestic Interest payments/GDP .. .. 0.6 1.4 Investment savings Total debt/GDP .. .. 76.0 69.2 Total debt service/exports .. .. 2.8 10.3 Present value of debt/GDP .. .. 77.8 .. Present value of debt/exports .. .. 226.2 .. Indebtedness 1983-93 1993-03 2002 2003 2003-07 (average annual growth) GDP .. 0.5 4.0 3.0 4.3 Serbia and Montenegro GDP per capita .. 3.6 35.7 3.7 .. Lower-middle-income group Exports of goods and services .. 7.8 12.3 27.7 11.8 STRUCTURE of the ECONOMY 1983 1993 2002 2003 Growth of investment and GDP (%) (% of GDP) 40 Agriculture .. .. .. .. Industry .. .. .. .. 20 Manufacturing .. .. .. .. 0 Services .. .. .. .. 98 99 00 01 02 03 -20 Private consumption .. .. 88.7 85.8 -40 General government consumption .. .. 18.3 19.4 GDI GDP Imports of goods and services .. .. 43.8 45.3 1983-93 1993-03 2002 2003 Growth of exports and imports (%) (average annual growth) Agriculture .. .. .. .. 40 Industry .. .. .. .. 20 Manufacturing .. .. .. .. 0 Services .. .. .. .. 98 99 00 01 02 03 -20 Private consumption .. 7.0 6.3 6.5 -40 General government consumption .. -2.8 11.6 4.5 -60 Gross domestic investment .. 9.2 34.4 7.2 Exports Imports Imports of goods and services .. 16.8 26.3 22.9 Note: 2003 data are preliminary estimates. This table was produced from the Development Economics central database. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 54 PRICES and GOVERNMENT FINANCE 1983 1993 2002 2003 Inflation (%) Domestic prices 100 (% change) Consumer prices .. .. 21.2 11.1 75 Implicit GDP deflator .. .. 25.5 6.4 50 Government finance 25 (% of GDP, includes current grants) 0 Current revenue .. .. 43.9 45.1 98 99 00 01 02 03 Current budget balance .. .. 0.6 -0.7 GDP deflator CPI Overall surplus/deficit .. .. -3.4 -4.2 TRADE 1983 1993 2002 2003 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) .. .. 2,412 3,011 10,000 Food .. .. .. .. Other fuel .. .. .. .. 7,500 Manufactures .. .. .. .. 5,000 Total imports (cif) .. .. 6,320 7,809 Food .. .. .. .. 2,500 Fuel and energy .. .. .. .. Capital goods .. .. .. .. 0 97 98 99 00 01 02 03 Export price index (1995=100) .. .. .. .. Import price index (1995=100) .. .. .. .. Exports Imports Terms of trade (1995=100) .. .. .. .. BALANCE of PAYMENTS 1983 1993 2002 2003 Current account balance to GDP (%) (US$ millions) Exports of goods and services .. .. 3,241 4,188 0 Imports of goods and services .. .. 6,857 8,526 97 98 99 00 01 02 03 Resource balance .. .. -3,616 -4,338 -2 Net income .. .. -111 -229 -4 Net current transfers .. .. 2,343 2,818 -6 Current account balance .. .. -1,384 -1,750 -8 Financing items (net) .. .. 2,200 2,517 Changes in net reserves .. .. -816 -767 -10 Memo: Reserves including gold (US$ millions) .. .. 2,038 3,325 Conversion rate (DEC, local/US$) .. .. 64.2 57.5 EXTERNAL DEBT and RESOURCE FLOWS 1983 1993 2002 2003 (US$ millions) Composition of 2003 debt (US$ mill.) Total debt outstanding and disbursed 20,477 12,709 11,922 13,263 IBRD 1,814 1,126 2,251 2,605 IDA 0 0 167 284 G: 2,568 A: 2,605 Total debt service 3,648 56 151 724 IBRD 288 14 75 104 IDA 0 0 1 1 B: 284 Composition of net resource flows C: 917 Official grants 0 1,918 2,328 .. F: 2,174 Official creditors 152 -12 321 788 Private creditors 710 0 32 -320 D: 1,589 Foreign direct investment 18 96 475 .. Portfolio equity 0 0 0 .. E: 3,126 World Bank program Commitments 876 0 203 201 A - IBRD E - Bilateral Disbursements 292 0 159 95 B - IDA D - Other multilateral F - Private Principal repayments 161 12 0 0 C - IMF G - Short-term Net flows 131 -12 159 95 Interest payments 126 2 76 106 Net transfers 4 -14 84 -10 The World Bank Group: This table was prepared by country unit staff; figures may differ from other World Bank published data. 9/15/04 55 ACRONYMS AND ABBREVIATIONS ACU Aid Coordination Unit ODA Overseas Development Assistance BiH Bosnia and Herzegovina OECD Organization for Economic CARDS Community Assistance for Cooperation and Development Reconstruction, Development and OSCE Organization for Security and Stabilisation Cooperation in Europe CAS Country Assistance Strategy PIP Public Investment Program CDAD Central Donor Assistance Database PRIP Public Reconstruction Investment CDF Comprehensive Development Program Framework PRSP Poverty Reduction Strategy Paper CG Consultative Group meeting PSD Private Sector Development EC European Commission Relex External Relations Directorate General ECA Europe and Central Asia of the European Commission EBRD European Bank for Reconstruction and RFC Regional Funding Conference Development RIMS Reconstruction Intervention EIB European Investment Bank Monitoring System ERTP Economic Recovery and Transition SAA Stabilisation and Association Program Agreement EU European Union SAL Structural Adjustment Loan FAO Food and Agriculture Organization SAM Serbia and Montenegro FDI Foreign Direct Investment SAP Stabilisation and Association Process FRY Federal Republic of Yugoslavia SECI South East European Cooperative G8 Group of Eight Initiative G24 Group of Twenty-Four SEE South East Europe GDP Gross Domestic Product SEECP South East Europe Cooperation Process GPRS Growth and Poverty Reduction Strategy SEERECON South East Europe Reconstruction HLSG High Level Steering Group SFRY Socialist Federal Republic of Yugoslavia IBRD International Bank for Reconstruction and Development SME Small and Medium-sized Enterprises IDA International Development Association SP Stability Pact IFC International Finance Corporation TTFSE Trade and Transport Facilitation in South East Europe IMF International Monetary Fund UN United Nations ISG Infrastructure Steering Group UNDP United Nations Development Program JIAS Joint Interim Administrative Structure UNHCR United Nations High Commissioner for MIGA Multilateral Investment Guarantee Refugees Agency UNMIK United Nations Interim Administration MTEF Medium Term Expenditure Framework Mission in Kosovo NATO North Atlantic Treaty Organization WLSG Working Level Steering Group NGO Non-Governmental Organization WB World Bank OCHA Office of the Coordinator of WT Working Table Humanitarian Affairs WTO World Trade Organization OA Official Assistance 56 DEFINITIONS Acquis Communautaire The Acquis Communautaire is the body of laws which binds all the Member States together within the European Union. It is constantly evolving and comprises: · the content, principles and political objectives of the European treaties; · the legislation adopted in application of the treaties and the case law of the Court of Justice; · the declarations and resolutions adopted by the European Union; · measures relating to the common foreign and security policy; · measures relating to justice and home affairs; · international agreements concluded by the European Community and those concluded by the Member States between themselves in the field of the European Union's activities. Adjustment Program A detailed economic program, usually supported by use of IMF resources, that is based on an analysis of the economic problems of the member country and specifies the policies to be implemented or that will be implemented by the country in the monetary, fiscal, external, and structural areas, as necessary, to achieve economic stabilization and set the basis for self-sustained economic growth. Country Assistance Strategy (CAS) The Country Assistance Strategy is the central vehicle for Board review of the World Bank Group's assistance strategy for International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD) borrowers. The CAS describes the Bank Group's strategy based on an assessment of priorities in the country, and indicates the level and composition of assistance to be provided based on the strategy and the country's portfolio performance. The CAS is prepared with the government in a participatory way; its key elements are discussed with the government prior to Board consideration. However, it is not a negotiated document. Any differences between the country's own agenda and the strategy advocated by the Bank are highlighted in the CAS document. Commitment, Firm A firm commitment is a pledge which has been: (1) approved by a national legislative body or multilateral board; and (2) allocated to a specific sectoral program or project. Commitment, Indicative An indicative commitment is a pledge which has legislative approval but is not yet allocated to a specific sector program or project; or a pledge which has been allocated in principle to a particular program or project; however, is pending legislative approval. Comprehensive Development Framework (CDF) The Comprehensive Development Framework takes a holistic approach to development. It seeks a better balance in policymaking by highlighting the interdependence of all elements of development - social, structural, human, governance, environmental, economic, and financial. It emphasizes partnerships among governments, donors, civil society, the private sector, and other development actors. Perhaps most importantly, the country has the lead, both "owning" and directing the development agenda, with the Bank and other partners, each defining their support in their respective plans. Council of the European Union The Council of the European Union is a European Community institution. Its main responsibilities are the following: · the Council is the Community's legislative body; for a wide range of Community issues, it exercises that legislative power in co-decision with the European Parliament; · the Council coordinates the general economic policies of the Member States; · the Council concludes, on behalf of the Community, international agreements between the latter and one or more States or international organisations; · the Council and the European Parliament constitute the budgetary authority that adopts the Community's budget; · the Council takes the decisions necessary for defining and implementing the common foreign and security policy; and 57 · the Council coordinates the activities of Member States and adopts measures in the field of police and judicial cooperation in criminal matters. European Commission (EC) The European Commission is the executive body of the European Union. The President and Members of the Commission are appointed by the Member States after they have been approved by the European Parliament. The European Commission initiates draft legislation and presents legislative proposals to Parliament and the Council; implements the European legislation (directives, regulations, decisions), budget and programs adopted by Parliament and the Council (including assistance programmes); and represents the European Union on the international stage and negotiates international agreements, chiefly in the field of trade and cooperation. European Parliament The European Parliament is the assembly of the representatives of the 370 million European Union citizens. Since 1979 they have been elected by direct universal suffrage and today total 626 representatives, distributed between the European Union Member States by reference to their population. The Parliament's main functions are as follows: · it considers the European Commission's proposals and is associated with the Council of the European Union in the legislative process, in some cases as co-legislator, by means of various procedures; · it has the power of control over the European Union's activities through its confirmation of the appointment of the European Commission (and the right to censure it) and through the written and oral questions it can put to the Commission and the Council; · it shares budgetary powers with the Council in voting on the annual budget, rendering it enforceable through the President of Parliament's signature, and overseeing its implementation; · the Parliament appoints an Ombudsman empowered to receive complaints from European Union citizens concerning maladministration in the activities of the European Community institutions or bodies; and · it can set up temporary committees of inquiry, whose powers are not confined to examining the actions of the Community institutions but may also relate to actions by Member States in implementing Community policies. European Union (EU) The European Union is the result of a process of cooperation and integration which began in 1951 between six countries (Belgium, Germany, France, Italy, Luxembourg and the Netherlands). After nearly fifty years, with five waves of accessions (1973: Denmark, Ireland and the United Kingdom; 1981: Greece; 1986: Spain and Portugal; 1995: Austria, Finland and Sweden; 2003: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia), the EU today has twenty-five Member States. The European Union's mission is to organise relations between the Member States and between their peoples in a coherent manner and on the basis of solidarity. The main objectives are: · to promote economic and social progress (the single market was established in 1993; the single currency was launched in 1999); · to assert the identity of the European Union on the international scene (through European humanitarian aid to non- EU countries, common foreign and security policy, action in international crises; common positions within international organisations); · to introduce European citizenship (which does not replace national citizenship but complements it and confers a number of civil and politic rights on European citizens); · to develop an area of freedom, security and justice (linked to the operation of the internal market and more particularly the freedom of movement of persons); · to maintain and build on established EU law (all the legislation adopted by the European institutions, together with the founding treaties). Group of Twenty-Four (G24) The Intergovernmental Group of Twenty-Four on International Monetary Affairs was established in 1971. Its main objective is to concert the position of the developing countries on monetary and development finance issues. It consists of eight countries from each of the three regions, Africa, Latin America and the Caribbean, and Asia. The G-24 meets twice a year, preceding the Spring and Fall meetings of the Interim and Development Committees of the World Bank and the International Monetary Fund. The plenary G-24 meetings are addressed by the heads of the IMF and the World Bank Group as well as by senior officials of the UN system. International Bank for Reconstruction and Development (IBRD) The International Bank for Reconstruction and Development, frequently called the "World Bank" was established in July 1944 at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire, USA. The 58 World Bank opened for business on June 25, 1946. The World Bank's goal is to reduce poverty and improve living standards by promoting sustainable growth and investment in people. The Bank provides loans, technical assistance and policy guidance to developing-country members to achieve this objective. International Center for Settlement of Investment Disputes (ICSID) The International Center for Settlement of Investment Disputes provides facilities for the conciliation and arbitration of disputes between governments (or constituent subdivisions or public agencies) of ICSID member countries and investors (individuals or companies) that qualify as nationals of other member countries. ICSID does not itself engage in conciliation and arbitration. This is the task of conciliators and arbitrators appointed for each case, generally by the disputing parties. The Center assists in the initiation and conduct of the conciliation and arbitration proceedings, performing a variety of procedural and administrative functions. International Development Association (IDA) The International Development Association is the World Bank Group's concessional lending window. It provides long- term loans at zero interest to the poorest of the developing countries. The mission of IDA is to support efficient and effective programs to reduce poverty and improve the quality of life in its poorest member countries. IDA helps build the human capital, policies, institutions, and physical infrastructure needed to bring about equitable and sustainable growth. IDA's goal is to reduce the disparities across and within countries, to bring more people into the mainstream, and to promote equitable access to the benefits of development. International Finance Corporation (IFC) The International Finance Corporation is the private sector development arm of the World Bank Group and is the world's largest multilateral source of loan and equity financing for private investments in developing countries. IFC finances private sector projects, without government guarantees by investing its own resources and mobilizing funds in international capital markets. It also provides advisory services and technical assistance to governments and businesses. Infrastructure Steering Group (ISG) The Infrastructure Steering Group (ISG) was set up following a meeting of Stability Pact Working Table II (economic reconstruction, cooperation and development) in Tirana in May 2001. The Group consists of experts from the European Commission, World Bank, European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the Council of Europe Development Bank and the Office of the Special Coordinator of the Stability Pact. Its work is part of an overall effort to integrate the countries of South East Europe amongst themselves and to the EU through developing infrastructure within a regional approach, instead of on a national level. International Monetary Fund (IMF) The International Monetary Fund is an international organization of 183 member countries, established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements; to foster economic growth and high levels of employment; and to provide temporary financial assistance to countries to help ease balance of payments adjustment. Joint Interim Administrative Structure (JIAS) Following the conflict in Kosovo in 1999, one of the first tasks of the United Nations Interim Administration Mission in Kosovo (UNMIK) was to re-establish and deliver central and municipal administrative services in the province. For that purpose, UNMIK set up the Joint Interim Administrative Structure (JIAS). Representatives of a broad cross-section of Kosovar society were appointed (later, at municipal level, elected) to jointly administer the province. Multilateral Investment Guarantee Agency (MIGA) The Multilateral Investment Guarantee Agency, a member of the World Bank Group, was created to facilitate the flow of private foreign direct investment to its developing member countries. It does this by providing investment guarantees (insurance) against political risks (i.e., transfer restriction, expropriation, breach of contract, and war and civil disturbance) to foreign private investors in developing countries, and investment marketing services and legal advice to host governments on means to attract foreign investment. A Public Investment Program is an action plan created by the national government often with the assistance of third parties used to guide the development process and demonstrate to potential donors the government's determination. 59 Pledge A pledge is an indication of intent to mobilize funds for which an approximate sum of contribution is indicated. Poverty Reduction Strategy Paper (PRSP) In September 1999, the World Bank expanded its poverty alleviation mandate by promoting the formulation of country strategies to reduce poverty in the developing world. Poor and highly indebted countries are expected to use participatory approaches in preparing Poverty Reduction Strategy Papers (PRSP). PRSPs should be country-driven, comprehensive in scope, partnership-oriented, and participatory. A country only needs to write a PRSP every three years. However, changes can be made to the content of a PRSP using an Annual Progress Report. This poverty-focused framework will be closely linked to the piloting phase of the Comprehensive Development Framework (CDF) and the participatory formulation of Country Assistance Strategies (CAS). Stabilization and Association Process (SAp) In 1999, the European Commission proposed the creation of a Stabilization and Association Process for Albania, Bosnia and Herzegovina, Croatia, Serbia and Montenegro, and the former Yugoslav Republic of Macedonia. The SAp provides a framework for the development of relations between these countries and the European Union (EU). The SAp provides a perspective of European integration to these five countries, but also sets political and economic conditions, such as democracy, respect for fundamental rights, human rights and ethnic minorities, the need for regional co- operation, and the establishment of a market economy. The SAP is designed to bring peace, stability and economic development to the region. It is based on a country-specific approach that takes into account the individual situation of each country enabling some countries to progress faster than others. Stability Pact The Stability Pact for South Eastern Europe was adopted at the European Union's initiative on 10 June 1999. In the founding document, more than 40 partner countries and organizations committed themselves to strengthen the countries of South Eastern Europe in their efforts to foster peace, democracy, respect for human rights and economic prosperity as the means to bring stability to the whole region. Stand-by Arrangement A stand-by agreement is a decision of the International Monetary Fund (IMF) by which a member is assured that it will be able to make purchases (drawings) from the General Resources Account, up to a specified amount and during a specified period of time, usually one to two years, provided that the member observes the terms set out in the supporting arrangement. United Nations Interim Administration Mission in Kosovo (UNMIK) On 10 June 1999, the United Nations Security Council passed Resolution 1244 authorizing the United Nations Interim Administration Mission in Kosovo (UNMIK) to begin the long process of building peace, democracy, stability and self- government in the province. To achieve this goal, UNMIK has been acting as the transitional administration for the region. Working closely with Kosovo's leaders and citizens, the mission performs the whole spectrum of essential administrative functions and services covering such areas as health and education, banking and finance, post and telecommunications, and law and order. World Bank Group (WBG) The World Bank is a development institution whose mission is to fight poverty and improve living standards for people in the developing world. It provides loans, policy advice, technical assistance, and knowledge-sharing services. IBRD and IDA­together the "World Bank" or "the Bank"­are owned by member countries that carry ultimate decisionmaking power. The World Bank Group today consists of five closely associated institutions: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Center for Settlements of Investment Disputes (ICSID). MORE INFORMATION Institutional glossaries are available on the following sites: European Union (http://europa.eu.int/scadplus/leg/en/cig/g4000.htm) and the IMF (http://www.imf.org/external/np/exr/glossary/index.asp). 60 LIST OF INTERNET LINKS TO JOINT OFFICE REPORTS The following reports prepared by the Joint Office are available on its website: www.seerecon.org. Kosovo, Serbia and Montenegro 1. Report on Progress Made in Committing, Contracting, and Spending Pledges to Kosovo as of December 1999 (published March 2000) http://www.seerecon.org/kosovo/documents/kosovo_report_dec_1999.pdf 2. Report on Progress Made in Committing, Contracting, and Spending Pledges to Kosovo as of June 2000 (published September 2000) http://www.seerecon.org/kosovo/documents/kosovoinfonote.htm 3. Statement on Financial Results of Pledges to Kosovo made in July and November 1999 (published March 2001) http://www.seerecon.org/calendar/2001/events/kdcm/statements/jointoffice.htm 4. Report on Progress Made in Committing, Contracting and Spending Donor Pledges to Kosovo, as of December 31, 2000 (published March 2001) http://www.seerecon.org/kosovo/documents/kosovo_report_march_2001.htm 5. Pledges and Commitments to Kosovo as reported to the Joint European Commission/World Bank Office for South East Europe (published April 2001) http://www.seerecon.org/kosovo/documents/kosovo_tables_april_2001.pdf 6. Report on Progress Made in Committing, Contracting and Spending Donor Pledges to Kosovo, as of December 31, 2001 (published May 2002) http://www.seerecon.org/kosovo/documents/kosovo_report_may_2002.htm 7. Note on Donor Assistance to Kosovo as of December 31, 2002 (published June 2003) http://www.seerecon.org/kosovo/documents/kosovo_report_june_2003.htm Serbia and Montenegro: 8. Pledges from June 2001 Donors Conference - Summary Table by Donor in USD http://www.seerecon.org/calendar/2001/events/frydc/fry_summary_usd.pdf 9. Pledges from June 2001 Donors Conference - Summary Table by Donor in Euro http://www.seerecon.org/calendar/2001/events/frydc/fry_summary_euro.pdf 10. Pledges from June 2001 Donors Conference - Summary Table by Sector in USD http://www.seerecon.org/calendar/2001/events/frydc/fry_sectors_usd.pdf 11. Pledges from June 2001 Donors Conference - Summary Table by Sector in Euro http://www.seerecon.org/calendar/2001/events/frydc/fry_sectors_euro.pdf 12. Indications of Donor Support by Sector for the Economic Recovery and Transition Program http://www.seerecon.org/calendar/2001/events/frydc/sector_interest.pdf 13. Report on Progress Made in Committing, Contracting, and Spending Pledges to Serbia and Montenegro as of December 2001 http://www.seerecon.org/serbiamontenegro/FRYreport.pdf 14. Report on Progress Made in Committing, Contracting, and Spending Pledges to Serbia and Montenegro as of December 2002 http://www.seerecon.org/serbiamontenegro/FRYreport.pdf 61 15. Report on Progress Made in Committing, Contracting, and Spending Pledges to Serbia and Montenegro as of September 30, 2003 http://www.seerecon.org/serbiamontenegro/documents/sam_joreport.pdf Former Yugoslav Republic of Macedonia 16. Pledges from March 2002 Donor's Meeting ­ Summary Tables in USD and Euro (published March 2002) http://www.seerecon.org/calendar/2002/events/mdm/pledges.pdf 17. Note on the Status of Pledges made to the former Yugoslav Republic of Macedonia in March 2002, as of December 2002 (published May 2003) http://www.seerecon.org/macedonia/documents/macedonia_status_of_pledges.pdf Regional Infrastructure Activities: 18. Implementation Report on Regional Infrastructure Projects, September 2000 http://www.seerecon.org/infrastructure/documents/infrastructure-oct00.htm 19. Implementation Report on Regional Infrastructure Projects, December 2000 http://www.seerecon.org/infrastructure/documents/infrastructure-jan01.pdf 20. Implementation Report on Regional Infrastructure Projects, March 2001 http://www.seerecon.org/infrastructure/documents/infrastructure-endmarch01.htm 21. Implementation Report on Regional Infrastructure Projects, October 2001 http://www.seerecon.org/infrastructure/documents/sp-qsp-inf.htm 22. Implementation Report on Regional Infrastructure Projects, October 2001 http://www.seerecon.org/infrastructure/documents/infrastructure-oct01.pdf 23. Regional Infrastructure Projects - Status as of June 2002 http://www.seerecon.org/infrastructure/documents/infrastructure-june02.htm 24. Regional Infrastructure Projects - Status as of May 2003 http://www.seerecon.org/infrastructure/documents/infrastructure-may03.htm 25. Regional Infrastructure Projects - Status as of November 2003 http://www.seerecon.org/infrastructure/documents/infrastructure-nov03.htm 26. Regional Infrastructure Projects - Status as of May 2004 http://www.seerecon.org/infrastructure/documents/infrastructure-may04.htm 62