PARAGUAY

	FY 1998 Actuals	FY 1999 Estimate	FY 2000 Request
Development Assistance	$5,625,000	$4,694,000	$5,225,000
Economic Support Funds	$500,000	$800,000	$1,000,000

Introduction

Paraguay's emerging democracy is very fragile and is facing difficult political, social, environmental, and economic demands. The U.S. Government's main policy objective in Paraguay is to consolidate and strengthen democracy in an effort to help preserve stability in the region. Environmental degradation and high population growth are also key U.S. regional and global interests.

The Development Challenge

Paraguay has taken important steps since its transition to democracy began in 1989. Despite earlier accomplishments, the transition has been inconsistent and needs to be consolidated. Democratic institutions remain weak and confidence in the government is extremely low. The Executive Branch now seeks to balance participative democracy against the political forces that attempted a coup in 1996. Paraguay also faces issues of rampant corruption, modernizing the state, and tackling socio-economic and environmental problems.

In national elections in May 1998, a new President and Congress were democratically elected with 81% of eligible voter participation. USAID greatly assisted the Electoral Tribunal prepare and carry out these successful, transparent national elections. An effective legal and regulatory framework, supported by a professional judiciary, is fundamental to Paraguay's continuing democratic and economic development. Key legislation to strengthen judicial reform, such as a modern Criminal Code and new Criminal Procedures Code, was enacted in 1998 with USAID support. These represent a major structural reform of Paraguay's criminal justice system. Paraguay is developing innovative activities with local governments to provide services to their communities through the decentralization of basic public services, starting with primary health care and sanitation services. Consolidating these decentralization initiatives will remain a significant objective in the near future.

Paraguay has one of the highest deforestation rates in the world which, if unabated, will leave the country with no significant remaining forests by 2010. Moreover, intensive, unsustainable exploitation of land, water, and wildlife resources continues, posing a major threat to the survival of characteristic local and regional ecosystems. Conservation of Paraguay's unique natural resources is critical to the country's long-term sustainable development. Models are being developed to set aside protected areas to decrease the deforestation rate and rationalize land use through a national reserve program.

The country's maternal mortality rate and estimated annual population growth rate (2.6%) are among the highest in the hemisphere. Less than one-third of women of reproductive age have access to family planning and reproductive health services. Per capita income is highly skewed with the bottom half of the Paraguayan population receiving only 10% of the national income. USAID is supporting reforms in health and voluntary family planning with selected assistance to reproductive health initiatives that reach poor women and rural populations.

Although experiencing slow economic growth, Paraguay has a relatively low level of international debt and is current on debt payments. This is not a significant issue for U.S. concern. Nevertheless, the state of the country's democratic institutions--such as the Electoral Tribunal, key GOP Ministries, the Judicial System and the recently formed local governments--as well as NGOs and political parties indicate that substantial time and effort are still required to complete the transition to a fully-functioning democracy. Thus Paraguay is not a candidate for graduation from U.S. development assistance in the near term. However, important aspects of USAID's population and environmental special objectives will be achieved by FY 2000.

Other Donors

The Inter-American Development Bank (IDB), World Bank, and United Nations Development Program (UNDP) are major multilateral contributors. The United States is the fifth largest bilateral donor after Japan, Germany, the European Union (EU) and Spain. USAID continues to leverage other donor resources and encourage greater donor coordination. The development of a joint reproductive health initiative is underway with the Japanese under auspices of the U.S.-Japan Common Agenda. USAID has joined forces with the Pan American Health Organization (PAHO) to deepen health sector reform and begin the decentralization of primary care services. Extensive coordination amongst donors is being carried out to expand environmental protection activities.

FY 2000 Program

Strengthening of participatory democracy is the cornerstone of the USAID program, as well as Paraguay's highest priority. Although Paraguay has been able to hold free and fair elections, results from a comprehensive post-election evaluation indicate that to ensure continued success in this area the electoral code must be modified. Appropriate technical assistance will be provided to the Congress, Electoral Tribunal, and political parties to develop a consensus on the necessary modifications and reform the regulatory framework. This activity will be complemented by electoral education programs by NGOs and civic organizations which include programs that reach traditionally marginalized groups, such as youth and women. Activities to strengthen and integrate political parties fully into the democratic process will continue, as will activities to improve access to strengthened judicial systems. Support to improve civil-military dialogue will be encouraged through the establishment of joint working groups on security issues. USAID will promote the introduction of alternative dispute resolution centers to increase access to justice at both the municipal and national levels. USAID also plans to introduce activities to increase transparency in public management. Health decentralization activities that are underway will be folded into a broadened health sector reform process.

In the environmental sector, USAID will fund activities to support the development of public and private reserve areas, build local management capacity, and develop economic alternatives to deforestation. This includes assisting the largest national park in the Chaco region under USAID's Parks in Peril program which is being managed under an innovative public/private partnership. FY 2000 funding is estimated at $525,000 and will be used to coordinate and leverage the larger resources available from other donors.

In population, USAID support of $2.3 million in FY 2000 will increase voluntary family planning through the introduction of quality public sector services and strengthened private sector information systems and services, including an innovative contraceptive social marketing program. Funding will also be provided through the premier family planning NGO in Paraguay to improve services at public and private health clinics.

PARAGUAY

FY 2000 PROGRAM SUMMARY
($000s)

USAID Mission Director: F.Wayne Tate

USAID Strategic and Special Objectives	Economic Growth & Agriculture	Population & Health	Environment	Democracy	Human Capacity Developmnt	Humanitarian Assistance	TOTALS
S.O. 1 Improved Democratic Institutions - DA - ESF	--- ---	--- ---	--- ---	2,700 1,000	--- ---	--- ---	2,700 1,000
Sp.O. 1 Improved Management of Protected Areas - DA	---	---	525	---	---	---	525
p.O. 2 Increased Use of Voluntary Family Plan-ning Services - DA	---	2,000	---	---	---	---	2,000
Totals - DA - ESF	--- ---	2,000 ---	525 ---	2,700 1,000	--- ---	--- ---	5,225 1,000

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ACTIVITY DATA SHEET

PROGRAM: Paraguay
TITLE AND NUMBER: Improved responsiveness and accountability of key democratic institutions, 526-S001
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCES: FY 2000: $2,700,000 DA; $1,000,000 ESF
INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: FY 2000

Summary: The transition to a democratic society in Paraguay is still fragile and uncertain. Since emerging from a 34 year dictatorship in 1989, Paraguayan society has been expecting to reap the economic and social benefits of democracy. After ten years, many Paraguayans are unsure if democracy will deliver the promised better life and some are yearning for an authoritarian government to return. The purpose of this objective is to strengthen Paraguay's nascent democracy by improving government responsiveness and accountability through the creation of an effective judiciary, an independent functioning electoral system, transparent local governments with decentralized services based on wide citizen participation and an active, responsible civil society.

Key Results: Four key intermediate results were concluded necessary to achieve this objective: (1) Free and fair elections need to be held with wide national participation and acceptance to assure and instill confidence in the basic democratic processes; (2) Participatory and better functioning sub-national governments need to be created since the common citizen's most direct contact with government is through municipal and provincial governments; (3) Access to justice is key to people's belief in a democratic society as well to encouraging economic development; (4) Civil-military dialogue is required so that the military understands its new role in a democracy and to ensure appropriate civilian oversight of the military.

Performance and Prospects: Performance over the past year has been better than expected. USAID has been improving the responsiveness and accountability of key democratic institutions by carrying out a series of activities which features institutional strengthening and human resource development. The results of surveys carried out in 1996 and 1998 showed a statistically significant increase in the population who believe the national government is responsive to their needs. Technical assistance was provided to the recently established Election Tribunal to create a new voter registry, inform voters of electoral procedures, supervise the work of new local and regional tribunals and councils, and successfully conduct the May 1998 national elections with an impressive nationwide turnout of 81%. The elections were declared to be free and fair by international and national observers, as well as the political parties. Surveys taken after the municipal elections of 1996 and the national elections of 1998 reveal that 75% of those surveyed believed the elections were clean. The perception of free and fair elections demonstrated a statistically significant increase.

Currently, the Executive Branch represents the interests of a minority, populist wing of the Colorado Party that is inclined to espouse the policies promoted by General Oviedo. There have been a series of institutional impasses based on the Presidential decree to free Oviedo and reinstate many officers involved in the coup attempt to active military duty. This political impasse that has resulted at the national level is part of the country's evolving democratic process and has affected some of USAID's initiatives related to State modernization. Despite these unsettled issues USAID has continued to strengthen and consolidate democratic principles at the local level, create an informed and active civil society, and instill an independent judiciary and electoral tribunal. Other key activities such as the USAID-sponsored program to enhance civil-military dialogue also continue. The congressional leadership, key politicians, academics and top military officers are beginning to engage in serious discussions on the roles of the military in a democracy and review proposed defense legislation and a draft of a national defense strategy.

Support has also been provided to the Congress to enact a new criminal code and criminal procedures code (two of the four major legal reforms targeted by USAID), which modernized the judicial sector by moving to an accusatorial and oral process judicial system. The Supreme Court and the Office of the Attorney General are receiving training and technical assistance to assume their roles under the new laws. Additional support is still needed to assist the judiciary and legislature more transparently fulfill their governmental roles and to fight corruption in public administration. The introduction of alternative dispute resolution centers at the municipal and national levels should increase access to justice and improve citizen perceptions of their nascent democracy.

Local governments are receiving training in administration, budgeting, and transparent financial management and are part of a USAID-sponsored policy dialogue on decentralization. Based on the National Health System Law, which USAID supported, the decentralization of primary health care services is being implemented in about 10% of the country's municipalities. This is being carried out as a fundamental component of health sector reform and will gradually be expanded nationally. Citizen groups are beginning to play a greater role in defining local priorities and are participating in community-wide public hearings. Ten communities have also carried out local planning exercises to develop long-term municipal development plans based on community priorities.

Possible Adjustments to Plans: In 1999, the Mission will present a new Strategic Plan that will begin in FY 2001. New programming directions will be reflected in that plan.

Other Donor Programs: USAID has taken the lead in encouraging the donor community to support democracy, especially with the IDB. Using USAID-initiated studies, the IDB has designed $80 million in complementary projects to help modernize the State, to strengthen the judicial branch for $13 million and provide assistance to the congress estimated at $500,000. They also are executing a $17 million municipal strengthening project aimed mainly at designing new urban cadasters. The Organization of American States (OAS) has worked closely with USAID in election assistance and has spent approximately $800,000 since 1996 to support the electoral process. USAID is now moving ahead with a joint Pan American Health Organization (PAHO)-USAID initiative to reform and modernize the health sector which could possibly leverage up to $1 million of funding. Selected Government of Paraguay Ministries, such as such of the Ministries of Health and Finance, provide substantial, complementary support to USAID-sponsored initiatives.

Principal Contractors, Grantees, or Agencies: USAID implements activities through several U.S. private non-profit companies and international and local NGOs. U.S. principal contractors and grantees are the International Foundation for Electoral Systems, Development Alternatives Inc., and the National Center for State Courts. Local NGOs and grantees include the Information and Resources Center for Development, the Paraguayan Center for Economic Liberty and Social Justice, and Alter Vida.

Selected Performance Measures:

	Baseline	Target (2000)
Population who believe that the national government is responsive to their needs	39% (1996)	50%
Population that consider the elections clean	45% (1993)	65%
Registered voters who vote (in national elections)	69% (1993)	80%
Number of target sub-national governments with joint community project implemented	2 (1996)	17
Number of key legal reforms enacted by Congress	0 (1996)	4

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ACTIVITY DATA SHEET

PROGRAM: Paraguay
TITLE AND NUMBER: Improved management of an expanded protected areas system, 526-SpO1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $525,000 DA
INITIAL OBLIGATION:FY 1996 ESTIMATED COMPLETION DATE: FY 2000

Summary: USAID contributes to the sustainable development of Paraguay by promoting environmentally sound practices of natural resources management. A significant percentage of the land in the country is owned by large private landowners who use the land for unsustainable agriculture and livestock practices. USAID is engaging landowners to join conservation initiatives and is providing examples of sustainable economic alternatives for land use. Additionally, USAID is working closely with the government sector that is responsible for the management and preservation of protected areas by strengthening their institutional capacity and promoting the joint implementation of programs with local NGOs. The purpose of this special objective (SpO) is to improve both public and private management of Paraguay's protected areas.

Key Results: Three key intermediate results were concluded necessary to achieve this objective: (1) create new reserve areas with sustainable management plans. Through two local NGOs, a private reserve program has been established which is providing models for effective conservation that is compatible with income generating activities. (2) Improve the local human capacity to manage and understand the importance of protected areas. (3) Promote economic alternatives to deforestation for sustainable land use in protected areas. Important components of this plan include wildlife management, ecoturism and forestry projects.

Performance and Prospects: Performance over the past year has been as expected, although Paraguay, with one of the highest rates of deforestation in the world, continues to lose 10% of its remaining forest cover every year, threatening the future of unique regional ecosystems. Because environmental problems aggravate poverty and complicate the transition to democracy, it is imperative that Paraguay develop and implement sustainable land use models and preserve the last remnants of these important ecosystems. USAID activities include the protection of important public and private natural reserve areas, and the development and implementation of sustainable models for management of natural resources. Three models have been developed to date that will permit greater conservation of Paraguay's unique ecosystems. The models organize a private natural area in several zones, some of which are dedicated to ecosystems protection and some to sustainable use of natural resources. This way, private landowners can contribute to ecosystems conservation and obtain profits at the same time. USAID's management models are proving to be successful in keeping areas from degrading.

Paraguay placed an additional 211,000 hectares under public protection in 1998 based on the USAID-sponsored plan for a national protected areas system. The country's largest national park has been incorporated into USAID's Parks-in-Peril program, which includes an innovative public/private system for park management. This is the GOP's first experience in managing a park with the private sector.

Environmental education remains a challenge and programs are currently being conducted in three key reserve areas. These have demonstrated a measurable positive impact in the reserves and in their buffer zones. Ten viable economic alternatives to traditional agricultural and livestock grazing have been implemented to demonstrate that deforestation in not the only way to earn profits from forested land. Some examples are: reforestation, agriculture under forest cover, sustainable forestry and eco-tourism. With these activities, landowners are engaged in profitable and environmentally appropriate initiatives. Activities are on track to meet the expected results for this SpO by FY 2000.

Possible Adjustments to Plans: The Mission is scheduled to develop a new Strategic Plan that will begin in FY 2001. New programming directions will be reflected in that plan. Ecoregional conservation initiatives involving neighboring countries will be promoted.

Other Donor Programs: Other donors continue to be highly involved in the conservation of natural resources activities in Paraguay, in close coordination with USAID. All donors are working directly with the GOP and in most cases also with local NGOs. UNDP is involved in the protection of ecosystems of regional and global importance in Paraguay through a $9 million project. The Japanese International Cooperation Agency is trying to diminish the severe deforestation problem that Paraguay faces with a $7 million forestation project. The German Cooperation Agency is implementing a $3.8 million effort to elaborate a National Action Plan for the protection of natural resources. The European Union is supporting a $18 million Sustainable Development Project for the Occidental Region of the country.

Principal Contractors, Grantees or Agencies: USAID implements activities through The Nature Conservancy, a U.S.-based organization, and two local NGOs, the Moises Bertoni Foundation and the Desdel Chaco Foundation.

Selected Performance Measures:

	Baseline (1996)	Target (2000)
Number of models of biodiversity conservation and sustainable use of natural resources implemented	2	6
Number of communities engaged in education and sustainable development activities	1	10
Number of economic alternatives (e.g. reforestation) implemented on private properties	4	15

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ACTIVITY DATA SHEET

PROGRAM: Paraguay
TITLE AND NUMBER: Increased use of Voluntary Family Planning Services, 526-SpO02
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 2000: $2,000,000 DA
INITIAL OBLIGATION: FY 1996 ESTIMATED COMPLETION DATE: FY 2000

Summary: In 1994, the Government of Paraguay (GOP) made reproductive health and family planning a priority. The Ministry of Health's reproductive health plan endorses reproductive health activities and establishes a variety of goals aimed at fighting the country's very high maternal mortality rate and estimated annual population growth rate (2.6%). The country is now struggling with major reforms in health, education, and family planning services. The purpose of this special objective (SpO) is to increase current contraceptive prevalence by expanding access and use of voluntary family planning services that reduce maternal mortality and unwanted pregnancies, especially targeting poor women, rural populations and other marginalized groups.

Key Results: Three intermediate results were concluded to be necessary to achieve this SpO: (1) Expanding access to reproductive health services by offering these services through existing public and private facilities which do not currently provide them, rather than establishing new facilities; (2) Improving the quality of reproductive health and family planning services by establishing a range of modern family planning methods by providers with adequate technical and managerial skills; and (3) Promoting sustainability of providers by increasing efficiency and reducing the costs of family planning programs.

Performance and Prospects: Performance over the past year has been better than expected. A national reproductive health survey has demonstrated that contraceptive prevalence for women between the ages of 15 and 49 using modern methods has gone from 35% in 1990 to 41% in 1996. This upward trend is expected to continue and reach the target of 50% prevalence by the end of FY 2000. Couple-years of protection is expanding as a result of contraceptives supplied by the Ministry of Health and the Paraguayan Center for Population Studies (CEPEP), the primary local NGO supporting family planning services. Activities to assist the private sector organize cost-effective services are being carried out through local NGOs and U.S. cooperating agencies. USAID's support for expanded access to family planning services includes the expansion of community-based and alternative distribution systems, including an innovative contraception social marketing program, to reach underserved rural and marginal urban areas. In addition, program efficiency and sustainability are addressed through training and technical assistance in contraceptive logistics management, specialized clinical training, financial and program management, and closer coordination between the public and private sector.

USAID is also introducing the concept of model quality service delivery in certain regions which more directly addresses specific community needs. This model includes a basic package of selected family planning services for the community and establishes minimum service delivery conditions which assure quality family planning. The number of quality service delivery points has been expanding quite rapidly.

Possible Adjustments to Plans: USAID will develop a new Strategic Plan that is scheduled to begin in FY 2001. New programming directions will be reflected in that plan.

Other Donor Programs: The GOP National Reproductive Health Council includes members from the public and private sectors and donor community. The Council is active in organizing and coordinating all population and family planning activities. The United Nations Population Fund provides public sector support and spent $1 million between 1994 and 1997 to purchase contraceptives. The World Bank is working on integrated women's care and has provided training for family planning. The total amount of their five-year project is $30 million. The IDB has a maternal and child health care project for $28 million. Family planning activities are only a small part of the project. The International Planned Parenthood Federation also provides support of $300,000 per year to its local affiliate. The Mission is coordinating activities with the Japanese Government under the U.S.-Japan Common Agenda to identify potential areas of cooperation in reproductive health.

Principal Contractors, Grantees or Agencies: USAID implements the program through the following U.S.-based organizations: Population Services International, Management Sciences for Health, Access to Voluntary and Safe Contraception, Family Health International, John Hopkins University, the Center for Disease Control, the University of North Carolina, and John Snow Inc.

Selected Performance Measures:

	Baseline (1996)	Target (2000)
Contraceptive prevalence for women 15-49 using modern methods	41%	50%
Couple years of contraceptive protection (Ministry of Health and CEPEP)	107,000	156,000
Quality service delivery points providing services in priority regions	0	15

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