USAID CBJ FY 2002: Dominican Republic

Summary: This activity is helping the Government of the Dominican Republic (GODR) adopt policies that will allow the country to compete effectively in the global economy and broaden participation in both economic growth and the democratic process. Specifically, the program promotes policy reform to enhance economic competitiveness, quality basic education, sustainable management of natural resources and the environment, and rural electrification. In all cases, the policies contribute to sustainable economic growth and should increase economic opportunities for all Dominicans over time.

This activity supports the U.S. national interest of economic prosperity by broadening the economic base, improving the environment for investors, opening markets, and expanding U.S. commercial trade opportunities. Broad-based economic growth also discourages illegal immigration and enhances regional stability. USAID's policy reform dialogue supports Summit of the Americas initiatives in education and the environment.

Key Results: During 2000, the GODR fully or partially adopted six key policies or laws that benefited directly from USAID assistance in their development or adoption - two more than the projected target. The country has also advanced other policy initiatives with USAID assistance.

Fiscal Reform, Financial Market Reform and the Social Security Law: USAID provided technical assistance and training to help draft and enact a Bond Law for the payment of internal domestic debt. USAID technical assistance also contributed to the enactment of the Capital Markets Law in early 2000 that allows public offerings of common stock. USAID provided training, observational travel and technical support to the Senate Commission for Social Security to draft a new Social Security Law. The pension reform part of this law, coupled with the Capital Market Law, will increase savings and mobilize capital for economic growth. The Social Security Law is under debate in the congress.

Environment and Natural Resource Law: A new Secretariat of Environment and Natural Resources is now operating under the Environment and Natural Resources Law signed by the President on August 18, 2000. USAID-funded environmental non-governmental organizations (NGOs) played a key role in both the discussion and passage of this law that establishes a far-reaching legal framework for environmental protection and natural resource management.

National Competitiveness Strategy: Beginning in 1998, USAID joined forces with the GODR and the private sector to foster a more competitive Dominican economy. In August 2000, this collaboration yielded a set of business strategies that will produce a better business climate and promote more sustainable and broad-based economic development. USAID helped develop a National Competitiveness Strategy; a regional competitiveness strategy; a cluster pilot project that integrates the production, marketing, and sales of fruits and vegetables; and a small and microenterprise competitiveness strategy. The National Competitiveness Strategy is a comprehensive set of economic reforms to enhance competitiveness and increase economic opportunities for low-income Dominicans. The Mejia Administration included portions of the Strategy in its economic and social agenda. Key Mejia policy formulators also drew on the Strategy in developing recently approved tax and tariff reform legislation to help reduce fiscal deficits while lowering tariffs to fit World Trade Organization requirements and improving Dominican competitiveness in the Caribbean and Central American markets.

Education: The new Secretary of Education has begun building consensus for further reforms in basic education. USAID contributed to this process by contracting for an independent evaluation of the reforms completed to date. The evaluation and follow-up workshops helped put the issue of improving education quality at the top of the reform agenda. USAID also helped the new Secretariat develop an information technology (IT) strategy and action plan to make the 300 state-of-the-art IT laboratories that currently exist, but are not used, available to students, faculty, and communities. The strategy is now being implemented using Inter-American Development Bank resources.

Energy: The GODR enacted a Hydrocarbon Law at the end of 2000. The law liberalizes gasoline and other petroleum product prices (market rates) and provides incentives for alternative energy development. USAID-funded study tours, technical advisors, and NGOs helped the Ministry of Industry and Commerce and the congress develop and pass the Law. Interest in wind energy is growing as a result of a USAID-financed Wind Energy Assessment completed by the U.S. National Renewable Energy Laboratory. Many private firms, local banks and government organizations have begun designing wind energy projects building on successful USAID-funded NGO pilot demonstration projects.

Performance and Prospects: The Dominican Republic remains one of the Caribbean's fastest-growing economies and continues to improve its prospects for increased international and domestic investment. The Mejia Administration has embarked on several economic and social policy reforms that will spur economic growth and help ensure that poorer Dominicans also benefit from the economic gains.

USAID will support the country's Competitiveness Group by providing technical assistance to help regional private sector groups develop and implement competitiveness plans beginning with initiatives in environmentally sustainable tourism and high-value vegetables. These private sector initiatives will help achieve significant synergies between USAID's competitiveness, environment, and education initiatives. USAID will also assist the GODR to better manage the large domestic debt it inherited, implement its poverty reduction strategy, and develop a rural electrification strategy using renewable energy sources which will help address the energy needs of nearly 25% of Dominicans living off the energy grid.

USAID will help the newly created Secretariat of Environment and Natural Resources establish an environmental status baseline (the last national assessment was in 1981), create environmental norms and standards, develop sub-sector environmental management strategies and policies, and strengthen the new institution. USAID will also work with NGOs to ensure private sector and civil society participation in the policy development process.

The Vice-President and Secretary of Education is requesting USAID assistance in developing a new reform strategy and more directly involving the private sector and communities in improving educational quality. A recently approved 416(b) program under the Global Food for Education Initiative will complement USAID efforts to incorporate the private sector, NGOs, and Dominican communities in education improvement initiatives.

USAID will engage civil society - the media, NGOs, and the private sector - to mobilize support for economic, energy, environment, and education reforms during FY2001. In FY 2002, USAID will expand this program to promote civil society advocacy of social and economic policy reform issues.

In FY 2001, USAID will utilize $1,100,000 in DA funds to help the ecologically-friendly tourism sector and producers of cacao, coffee and other high-value fruits and vegetables become more competitive; $500,000 will strengthen the new Ministry of Environment and Natural Resources and its ability to develop and implement environmental policies. FY 2001 CSD funds ($500,000) will support community and private sector involvement in educational policy reform to improve basic education.

In FY 2002, USAID will utilize DA funds ($1,350,000) to strengthen national competitiveness and support implementation of a rural electrification plan; $150,000 will help improve national park management; and $650,000 will continue support for environmental policy and standards development. Also, $1,000,000 DA will help civil society participate in national policy dialogues in the competitiveness, environment, electrification, and education sectors. FY 2002 CSD funds of $800,000 will support community and private sector involvement in educational policy reform.

Possible Adjustments to Plans: The change in Dominican government makes it necessary to revise the strategic framework. Though the activity's thrust will remain the same, the intermediate results and indicators will be revised. For example, the Education Results Package is being adjusted to respond to the Secretariat's desire to improve the quality of basic education. This change will also require additional CSD resources. In responding to the GODR opportunities and specific requests that coincide with USAID and broader U.S. national interests, some resources must be shifted from the democracy program to this policy program in FY 2002.

Other Donor Programs: : The Inter-American Development Bank, the World Bank, the European Union, Spain, Germany, Japan, Canada, and the World Food Program.

Principal Contractors, Grantees or Agencies: U.S. organizations include: Boston Institute for Developing Economies, Renewable Energy Growth Assistance Entity, National Rural Electric Cooperative Association, the Nature Conservancy, International Resources Group, Falconbridge Foundation, and Creative Associates. Local organizations include: the Santo Domingo Technological Institute and the Pontificate Catholic University Mother and Teacher.

Dominican Republic 517-007

U.S. Financing

(In thousands of dollars)

	Obligations		Expenditures		Unliquidated
Through September 30, 1999	1,200	DA	308	DA	892	DA
	310	CSD	0	CSD	310	CSD
	0	ESF	0	ESF	0	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA
Fiscal Year 2000	1,115	DA	845	DA
	0	CSD	214	CSD
	0	ESF	0	ESF
	0	SEED	0	SEED
	0	FSA	0	FSA
	0	DFA	0	DFA
Through September 30, 2000	2,315	DA	1,153	DA	1,162	DA
	310	CSD	214	CSD	96	CSD
	0	ESF	0	ESF	0	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA
Prior Year Unobligated Funds	0	DA
	0	CSD
	0	ESF
	0	SEED
	0	FSA
	0	DFA
Planned Fiscal Year 2001 NOA	1,600	DA
	500	CSD
	0	ESF
	0	SEED
	0	FSA
	0	DFA
Total Planned Fiscal Year 2001	1,600	DA
	500	CSD
	0	ESF
	0	SEED
	0	FSA
	0	DFA
			Future Obligations		Est. Total Cost
Proposed Fiscal Year 2002 NOA	3,150	DA	935	DA	8,000	DA
	800	CSD	0	CSD	1,610	CSD
	0	ESF	0	ESF	0	ESF
	0	SEED	0	SEED	0	SEED
	0	FSA	0	FSA	0	FSA
	0	DFA	0	DFA	0	DFA

Dominican Republic

Activity Data Sheet

Dominican Republic 517-007

U.S. Financing