92197 Social Sphere: Concentrating Efforts on Hot Spots April 20, 2004 How to alleviate the impact of market transformations on the most vulnerable strata of the population? What, in general, a new strategy and social protection mechanisms should be in Ukraine? These questions have been for quite some time in the focus of great attention of the World Bank experts. Cooperation with the Government of Ukraine in this area was initiated as far back as in 1997. Economic recession continued in Ukraine, causing the living standard of an average Ukrainian to go down. Arrears on wages and other payments were increasing and high inflation and barter were not yet overcome. However, further postponing reforming of the social sphere had become simply impossible. The World Bank fist project in this area – the Social Protection Support Project (April 1997 – June 2000) had a rather modest budget of $US 3 million, but it had a considerable social effect. The point in question was to improve the administering of the Program of the Public Housing and Utilities Subsidies (PHUSP), which was in force at that time in Ukraine and caused many complaints due to cumbersome (non-automated) system of processing applications, lack of experience among the staff, absence of operational communication between relevant local and regional agencies and the Ministry of Labor and Social Policy of Ukraine. Time had passed, and somehow imperceptibly for a detached on-looker, the process of granting subsidies ceased to be time-consuming and sluggish and turned into a properly organized procedure. Thus, there was one “hot spot” less in the social sphere. The next project – the Social Investment Fund Project – approved by the Board of Executive Directors of the World Bank on December 4, 2001, is, perhaps, one of the most successful projects today. Generally speaking, the history of relations between the Ukraine and the World Bank provides quite a number of examples of constructive cooperation. However, the above-referenced project is of particular interest because not only officials or experts from Ukraine’s capital city, but also residents from remote towns and villages, who until recently have suffered from their everyday problems (poor water supply and waste water pipes, old school or, say, absence of gas supply) are involved in the community activities. These people began to display initiative, to submit their proposals and received required organizational and financial support for putting their initiatives into practice. Understandably, implementation of such socially important measures in certain localities cannot be free for both the state budget and average residents of a village or town – we all know what is the attitude to somebody else’s, “gratuitous” money. Therefore, it was planned that over one quarter of the total amount of the Social Investment Fund, i.e. $US 19.88 million, will constitute the state budget funds and local communities money. The remaining portion, $US 50.21 million, will be loaned by the World Bank. This loan will be provided at a LIBOR-based standard rate for 20 years, including a five-year grace period. The project has been under implementation for the third year, but its impact on the building up of the social sphere has already begun to be felt in several regions. It is expected that during the six years of this joint Ukraine-World Bank activities, over 500 microprojects can be implemented aimed at supporting the residents of poor or depressed areas, citizens with specific problems, children from unhappy families, and the like. And at the national level, it is necessary to refine the principles of providing such poverty-targeted assistance and self-aid by involving the public at large in these activities. In December 2002, the Board of Executive Directors of the World Bank approved yet another important project – TB/AIDS Epidemic Control Project for Ukraine (the total cost of the project is $US 72 million, of which amount $US 60 million is the World Bank loan). The project will soon become effective. It is assumed that four years are a sufficient period for implementing the effective National Tuberculosis Control Strategy, as well as the HIV/AIDS Epidemic Control Program mostly designed for work among high-risk groups. Finally, the Government will receive the necessary leverage and considerable financial resources to stabilize the situation regarding these two diseases – the situation that has been characterized as an epidemic for several years now. A great package of measures has been planned – not only in the area of diagnostics and treatment. Actually, many people in Ukraine are well aware that the spread of tuberculosis and, to a greater extent, AIDS cannot be stopped without a large-scale educational campaign, comprehensive public information on threats to people’s lives, as well as exercising control over the spread of diseases in the penitentiary system. Three projects of the World Bank are simultaneously at different stages of preparation – this is a kind of basis necessary for further activities during 2004 and subsequent years. The first of the above-mentioned projects, pertaining to reforming the social assistance system, will envisage, in particular, strengthening of the social protection bodies at the regional level, a broader application of information technologies, monitoring of poverty, and a great number of public information measures. The second project relating to educational system reforming will be first and foremost aimed at general-education secondary school (and not in the last place, at rural school), and, possibly, at vocational training. The basic idea is that high-quality education should become equally accessible to everyone. And the third but not the least in this number is the Project for Pension Reform and Improvement of Administration of Social Insurance System in Ukraine. Its primary objective is to provide preconditions for introducing mandatory fully-funded pension insurance in our state, as well as a single completed and consistent system of collecting and administering contributions to social funds. There are many projects and large-scale plans in store, which is fully consistent with the social benchmarks outlined by the new Country Assistance Strategy for Ukraine for the period of 2004 to 2007.