Report of the Special Coordinator on the Implementation of the Quick Start Package

May 2001

III. The QSP in Working Table II

III.1 Trade (2 projects)

The two projects included in the QSP were supporting the work of the Working Group on Trade Liberalization and Facilitation. These projects, which include technical assistance funded by UK and Switzerland, and logistical assistance provided by the US, have been very successful. Their implementation has proceeded well and made possible the preparation of a Memorandum of Understanding between countries of the region, which will be signed in June. This MoU will initiate concrete steps with regard to intra-regional trade liberalization. This is a typical example where limited resources can have an important effect.

III.2 Regional Infrastructure Projects (34 projects)

Infrastructure projects make up the biggest share of the financial commitments within the QSP. On the other hand, they are also the most time consuming to implement. This has repeatedly contributed to some unrealistic expectations. Disbursement rates in infrastructure are generally much slower than in other project categories as they go in parallel with the construction. Some delays occurred nonetheless (see below), albeit project development is in general satisfactory. The QSP includes 34 infrastructure projects (including 9 studies). The study on power system interconnection for BiH was considered redundant and therefore cancelled.

Thanks to a good coordination of donors and creditors, all the necessary funds have been initially secured (EURO 1.237 million), except EURO 30 million for one project. 15 out of 25 construction projects have started, nine in which physical work is ongoing. Calls for tender have been launched, and are progressing according to schedule. These 15 projects represent around 75% of the total commitment for the infrastructure QSP. For the remaining 10 projects, further efforts are needed to overcome obstacles to their implementation. Of these, 7 projects (confirmed commitment of EURO 311 million) are not facing any serious difficulty but are just delayed due to different reasons (lack of legislation on land expropriation, missing agreement on project details, etc.). The three remaining projects (in BiH, Croatia and Bulgaria) need further elaboration or funding.

While a quicker implementation was generally expected by beneficiary countries, the implementation of the infrastructure projects is generally satisfactory. There is no doubt that the inclusion of these projects in the QSP has increased the speed of their implementation. However, some deadlines could not be met. The reasons being time consuming, but often inevitable, procedures and local difficulties in the implementation. Missing legislation on land expropriation as a precondition for starting infrastructure projects is a typical example for regular delays.

In the course of the implementation of infrastructure projects, it became obvious that some projects were not advancing fast enough. Therefore, high level meetings were called by the SCSP between regional and IFI representatives to address the main issues. It became obvious that the reasons for the delays were to be found both on the recipient side (bureaucratic obstacles, missing legislation etc.) and on the donors side (burdensome procedures, loose monitoring of progress, etc). The basic lesson was that even more frequent and comprehensive monitoring was required in order to minimize delays.

Concerning the studies, progress has been made in several areas. The Air Traffic Infrastructure Regional Study has been completed under the authority of the EIB. The Transport Infrastructure Study, co-sponsored by the EC and the EIB, has made satisfactory progress and a first draft will be presented in July 2001. In the meantime, the EC and the EBRD have been preparing guidance papers for the transportation, energy and water sectors. These papers will be presented at the forthcoming WT II meeting in Tirana. The Energy Sector Studies, which are under the leadership of the EC, are presently under review. The Power System Interconnection Study for BiH has been cancelled because sufficient information is now available to proceed without the study. The SEE Electrical Technical Support Project, which has been added following the WT II meeting in Istanbul (October 2000), is being implemented by Canada.

III.3 Investment Compact (1 project)

The implementation of the Compact was included in the QSP. Its secretariat in the OECD received excellent support from 14 different countries (firm commitments EURO 1.5 million, disbursements EURO 0.6 million), which allowed the first and second phase of the implementation to be completed. Phase 3 (implementation of reforms) is now under way. The major challenge is to strengthen and revive the Country Teams.

III.4 Private Sector Development (12 projects)

EBRD as the lead agency in this field has put together a comprehensive program, consisting of twelve specific Regional Initiatives. These Initiatives are divided into two types of programs: the promotion of Cross Border Trade and Investment and regional coverage of SME Support. They attracted total pledges of EURO 356 million at the RFC. Out of this amount EURO 253 million was pledged by the IFI's themselves, EURO 102 million by donors (grants). By the end of March 2001, more than EURO 190 million had been committed. The more advanced and well-defined initiatives are already having an impact on the ground including especially the EBRD's Trade Facilitation Programme and the IFC's South Eastern Europe Development. Micro-enterprise Banks are now established in Bosnia Herzegovina, Kosovo, Albania, and are under preparation in FYR Macedonia, Romania and FRY. According to the EBRD, the Stability Pact has had a very definite impact by generating incremental resources to the operations and programs and a higher concessional element in the field of Private Sector Development.

III.5 Vocational Education and Training (2 projects)

Two projects received pledges for an amount of EURO 0.9 million but only the project "Training Programme for Business related Administrative Bodies" was funded and is now under satisfactory implementation. Partly as a result of the small donor interest for this sector, the Chairman of Working Table II decided to integrate these projects into Working Table I Task Force for Education and Training. As the only project financed by the QSP is in the field of private sector development, Vocational Education and Training could be part, when appropriate, of various Working Table II initiatives.

III.6 Environment (4 projects)

Out of four projects, which received pledges, two projects (country assessment studies carried out by UNEP) have been fully implemented; the implementation of another UNEP led project concerning the clean up of environmental hotspots in FRY is under implementation. The fourth project (Regional Environmental Reconstruction Program coordinated by the European Commission and FYR of Macedonia) is under way but has suffered from slow rates of disbursement.

III.7 Social Dimension (5 projects)

Although the social dimension has only started to develop as a Stability Pact activity after the March 2000 Funding Conference, four fully funded projects were subsequently included in the Quick Start Package. As they are all fully funded, their implementation is under way.

Special Coordinator of the Stability Pact for South Eastern Europe