Document of The World Bank FOROFFICIALUSEONLY ReportNo: 33987-RO PROJECTAPPRAISALDOCUMENT ONA PROPOSEDLOAN INTHEAMOUNT OFEURO 110.0MILLION (US$130.0MILLIONEQUIVALENT) TO ROMANIA FOR A JUDICIAL REFORMPROJECT November 22,2005 PovertyReductionandEconomic ManagementUnit Europeand CentralAsia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwisebe disclosedwithout World Bank authorization. CURRENCY EQUIVALENTS Exchange Rate Effective September 23,2005 Currency Unit = RomanianLei (RON) RON2.80 = US$1 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS BEEPS Business Environment and Enterprise Performance Surveys CAS Country Assistance Strategy CFAA Country Financial Accountability Assessment COA Chart of Accounts CPS Country Partnership Strategy DIEFP Department for Implementation of Externally FinancedProjects ECRIS Electronic Case Registration and Information System EU EuropeanUnion FMR Financial Management Report GOR Government of Romania IBRD InternationalBank for Reconstruction and Development HCCJ HighCourt of Cassation and Justice JHA Justice and Home Affairs MoPF Ministry of Public Finance M O J Ministry of Justice NM National Institute of Magistrates NSC National School of Clerks PPlBL Public and Private Institution BuildingLoan RON Romanian Lei SCM Superior Council of Magistracy S I L Specific Investment Loan USD US Dollar WB World Bank Vice President: Shigeo Katsu Country Managermirector: Owaise Saadat / Anand Seth Sector Manager / Director: Deborah L.Wetzel / Cheryl W. Gray Task Team Leader: Irina L.Kichirzina ROMANIA JudicialReformProject CONTENTS Page A. STRATEGICCONTEXTAND RATIONALE ................................................................. 5 1. Country and sector issues.................................................................................................... 5 2. Rationale for Bank involvement ......................................................................................... 9 3. Higher level objectives to which the project contributes .................................................. 11 B. PROJECTDESCRIPTION ............................................................................................... 11 1. Lendinginstrument........................................................................................................... 11 3. Project development objective and key indicators............................................................ 11 4. Project components ........................................................................................................... 12 5. Lessons learned andreflectedinthe project design.......................................................... 14 6. Alternatives considered and reasons for rejection ............................................................ 15 C IMPLEMENTATION . ........................................................................................................ 16 1. Institutional and implementation arrangements ................................................................ 16 2. Monitoring andevaluation of outcomeshesults................................................................ 17 3. Sustainability...................................................................................................................... 18 . . . 4. Critical risks and possible controversial aspects............................................................... 18 5. Loadcredit conditions and covenants............................................................................... 19 D. APPRAISAL SUMMARY ................................................................................................. 20 1. Economic and financial analyses ...................................................................................... 20 2. Technical........................................................................................................................... 21 3. Fiduciary ........................................................................................................................... 22 4. Social................................................................................................................................. 24 5. Environment...................................................................................................................... 24 6. Safeguard policies............................................................................................................. 25 7. Policy Exceptions and Readiness...................................................................................... 26 Annex 1:Countryand Sector or ProgramBackground ......................................................... 27 Annex 2: Major RelatedProjectsFinancedbythe Bankand/or other Agencies .................40 Annex 3: Results Framework and Monitoring ........................................................................ 43 Annex 4: Detailed Project Description ...................................................................................... 50 Annex 5: Project Costs............................................................................................................... 58 Annex 6: ImplementationArrangements ................................................................................. 59 Annex 7: FinancialManagementand DisbursementArrangements ..................................... 62 Annex 8: ProcurementArrangements ...................................................................................... 66 Annex 9: Economic and Financial Analysis ............................................................................. 74 Annex 10: Safeguard Policy Issues ............................................................................................ 77 Annex 11:Project Preparationand Supervision ..................................................................... 80 Annex 12: Documentsinthe Project File ................................................................................. 81 Annex 13: Statement of Loans and Credits .............................................................................. 82 Annex 14: Country at a Glance ................................................................................................. 84 Annex 15: Map No .33469.......................................................................................................... 86 A. STRATEGICCONTEXTAND RATIONALE 1. Countryandsector issues (a) General context Romania i s the second largest country in Central and Eastern Europe, after Poland, in terms of population (22.5 million), with an area of sq/km 238,390. After a decade of relatively poor reform performance, Romania has, over the past four years, significantly improved its economic performance. The economy has begun to stabilize, growth has increased to approximately 4.5 to 5 percent, and poverty has recently declined. Growth has been driven primarily by increased investments and exports. Similar to economic reforms, institutional reforms started slowly during the early transition period and have accelerated since 2000. When the Romanian Government embarked on an ambitious economic development program aimed at enhanced economic growth, reduction of poverty and successful integration into the European Union, it realized that sustained progress in growth and investment required institutional reforms to complement economic reforms. A weak judicial system, poor accountability, and widespread perception of corruption in particular were seen as negatively impacting the business environment and therefore private sector investment and growth. Improvements in public administration generally, and in the justice sector in particular, became a main focus of the Romanian Government's reformplan. The prospect of EU accession has been a driving force in much of the recent reform efforts. The EU opened accession negotiations with Romania in early 2000 and were successfully concluded on December 14, 2004. The Accession Treaty was signed on April 25, 2005, and the ratification process by all 25 EUmember states is underway. The treaty envisages accession on January 1, 2007. Consistent with other EU candidate countries, the European Union and its accession process have exerted a tremendous influence on the direction, pace and progress of legal and judicial reform in Romania. This project i s designed to accelerate progress toward accession and compliment the EU assistance in the area ofjudicial reform. (b) Judicial reform efsorts Since the start of democratic reforms in 1992, the Romanian judiciary has made significant progress in the transition from an instrument of a socialist state to a public institution that protects and promotes the rule o f law, democracy and serves the needs of a market economy. The Romanianjudiciary started at a low baseline when reform efforts were launched. The Romanian court system was characterized by: (i)highly centralized administrative control of the Ministry of Justice; (ii) undue interference of the prosecutors in court proceedings (particularly in civil cases); (iii)archaic methods of case filing and case processing; (iv) shortage of judges and court personnel; (v) low professional level of 5 judges: (vi) limited access to constantly changing legislation, and (vii) poor working conditions for judges and court personnel. These conditions led to a consistently increasing case backlog and public mistrust inthe court system. The business community also viewed the courts as lacking in independence and efficiency. At the outset of the reform effort, these difficult conditions led to tension between the judicial community and the Ministry of Justice, which in turn, delayed systemic reform efforts. As a result, in the early transition period, efforts at legal reform were focused primarily on drafting and quickly adopting new laws and regulations required to build a market economy. Throughout this early period fundamental legal institutions, including the courts, remained unchanged. The main focus of these legislative efforts was to create a de-politicized judiciary, free from state control, which could act as a bulwark for newly-won political and civil rights and be a trusted adjudicator of disputes. During 2000-2004, the Government launched a number of important initiatives aimed at achieving this goal. In October 2003, constitutional amendments were adopted through a national referendum which introduced important changes in the judicial area. These included: (i) enshrining the principles of the judiciary as an independent branch of power, and the right to a fair trial within a "reasonable time"; (ii) transformation of the Supreme Court of Justice into a High Court of Cassation and Justice (HCCJ), responsible for ensuring the consistent interpretation and implementation of laws throughout Romania; and (iii)revised composition and mandate of the Superior Council of Magistracy (SCM) which would strengthen its role as an institutional guarantor of judicial independence. The three organic laws adopted in summer 2004 - on the Superior Council of Magistracy, on the Statute of Magistrates and on Judicial Organization - introduced further changes in the status of magistrates and overall outlook of the judiciary aligned with the European standards, ensuring independent, transparent and merit-based selection of judges. This three-law package, which came into force in September 2004, has laid down a necessary basis for broad systemic reforms in the justice sector, and the new Government formed inJanuary 2005 re-confirmed its commitment to the reform process. Further amendments to the judicial laws were introduced in July 2005 (Law No. 247/2005 on Reforms in the Areas of Property and Justice, Official Journal No. 63, July 22, 2005). These amendments, inter alia, further elaborated the status of economic managers in courts, introduced provisions for stronger accountability of judges, required examinations for court presidents and provided for eventual transfer of budgetary responsibility from the Ministry of Justice to the judicial branch - the High Court of Cassation and Justice. In December 2004, Romania concluded negotiations for admission into the European Union(EU). The Justice and HomeAffairs chapter (JHA) was the last issue to be agreed upon after two years and seven months of difficult negotiations. However, until 2007, when the entry date was set, Romania i s under 11 specific commitments regarding the reforms that must be accomplished, seven of which relate to the JHA chapter. 6 The new judicial leadership, including the newly elected SCM (in December 2004) and the Minister of Justice (appointed in January 2005) prepared a Strategyfor the Reform of the Judiciary 2005-2007and an Action Plan which were approved by the Government in March 2005. The following are the key issues that the Strategy addresses: (i) Guaranteeing effective independence of the judiciary; (ii) Combating corruption within the judiciary and ensuring transparency of the act ofjustice; (iii) Increasing the efficiency and accountability of the judiciary; (iv) Guaranteeing free access to justice; (v) Strengthening the penitentiary system, according to European standards; (vi) Strengthening the institutional and legislative framework in the field of internationaljudicial cooperation. Although independence of the judiciary remains an important issue in Romania, reform efforts are also gradually shifting towards ensuring accountability and efficiency of the court system. The last couple of years have brought a great deal of advancement in the reform of the judiciary in Romania. The constitutional amendments of 2003 and adoption of new organic laws significantly re-defined the legislative framework of the court system, firmly asserting the principles of judicial independence and introducing some structural changes in the court system. However, significant improvements in court performance have not yet become apparent. Legislative changes have to be effectively implemented; judicial institutions empowered by the new laws (particularly, the SCM) mustdevelop their administrativecapacity to productively use these new powers; the new role and status of judges envisioned by the organic laws must be realized through the acquisition of new judicial skills and a strengthened accountability mechanism; and ultimately, the existing court infrastructure must be significantly upgraded to adequately respond to the increased demand for judicial services and the enhanced status of the judiciary in a society based on rule of law. (c) Remaining challenges to be addressed by theproject: (i) Strengthening the institutional capabilities of the main judicial institutions remains one of the current priorities. S C M has acquired important responsibilities under the new organic laws for appointment, promotion, training and disciplining of judges, as well as for a number of court administration matters, but it has a weak administrative capacity to implement these functions. This presents a challenging task to the SCM to develop a well-functioning administrative apparatus staffed with qualified experts, which would be capable of fulfilling the new functions. The organizational structure of the SCM has been mainly defined andthe administrative staff of the S C M has grown to 139 positions. However, the SCM i s facing the task of training its new staff in the area of policy planning, human resources, resource allocation, budgetary planning, performance evaluation, etc. Departments and units within the SCM do not have clearly defined responsibilities and there i s still uncertainty about some issues which continue to be handled by the MOJ. 7 This requires a significant institution-building program, extensive training for the SCM's leadership and staff, and a quick upgrading of its technological capacity. The Ministry of Justice i s also affected by the structural changes introduced by the organic laws on the judiciary. Some of the Ministry's staff has moved to the SCM. The M O J bears primary responsibility for planning and execution of the budget for the court system, as well as for court infrastructure and equipment. The MOJ needs to strengthen i t s administrative capacity to manage the court system's budget and to exercise overall administrative oversight of the courts. Development of a comprehensive system of tracking expenditures, conducting analysis of required resources and monitoring their use i s one of the short-term priorities in this respect. Introduction of the position of economic managers in courts, which will interact with courts, SCM as well as the MOJ, will also require certain adjustments in the MOJ's functions. Lastly, the institutional capacity of the judicial training institutions - National Institute of Magistrates (NIM) and National School of Clerks (NSC) - also require improvements. (ii) Increasing efficiency of courts: reducing duration of court proceedings and improving quality ofjudgments. The duration of court proceedings represents a critical issue. Many courts, particularly in big cities, have excessive backlogs, which seriously undermines the ability of litigants to obtain a final judgment within a reasonable time. The quality of judgments also remains a problem: the proportion of cases overturned on appeal i s about 30%. Analysis of the justice sector has shown that the primary reasons for slow court proceedings and inefficient work of courts are: (i)inadequate court organization where judges spend too much time on administrative tasks; (ii)inadequate number of court personnel and qualified clerks; (iii)a poor understanding and use of court managers; (iv) a deficient legal framework regulating the civil and criminal procedure rules; and (v) less advanced case management. Reform measures included in the recent Judicial Reform Strategy and Action Plan mainly focused on addressing these deficiencies, and the project will support their implementation. (iii) Accountability and integrity of the judiciary: the need to step up anti- corruption efforts and develop performance monitoring mechanisms. Public opinion surveys in Romania indicate that the courts are not well trusted, and it i s widely accepted that there i s considerable corruption. The Bank's corruption diagnosis, carried out in 2002, indicates that courts are the second lowest-ranking institution in the country (after custom offices) in the public's level of confidence,' highlighting the fact that the court system i s unable to deliver decisions in a timely and efficient manner which, in turn, weakens the business environment and hampers Romania's progress toward EU accession. The joint EBRD-World Bank Business Environment and Enterprise Performance Surveys (BEEPS), carried out in 2002 and 2005, have indicated some improvement in perception of the judiciary in 2005 b y the business community, but still 50% of the Romanian firms consider the courts a problem in doing business, and 'World Bank,Diagnostic Surveys of Corruption in Romania (2002). 8 70% assess the courts as corrupt (for more details see Attachment to Annex 1).The latest EU progress report (2005) on Romania has also highlighted corru tion as one of the "areas of serious concern requiring immediate action from Romania". P Inorder to improve public trust inthejudiciary, the court system shouldhave an adequate accountability and performance monitoring system. Romanian courts have few measures to judge how well they are performing, and neither the court presidents nor the leadership of SCM or MOJ, nor the parliament or the public can reasonably judge the effectiveness of a court's operation. Performance measurement in the judicial system i s done primarily on an individual basis and i s limited to reviewing judges' ability to interpret and apply the law, the quality of decisions and the timeliness of actions. There i s a clear need to develop indicators of performance measurement and accountability. Such work has been recently initiated by the SCM, with Bank financing (from the PPJBL) and technical advice. Transparency and effective monitoring are also crucial for further decentralization of budget responsibilities in the judicial system, and eventual transfer of the main budgetary powers from the MOJ to the judiciary. (iv) Court infrastructure and working conditions have to be significantly upgraded. The general atmosphere of the majority of Romanian courts i s crowded, chaotic, lacking security features and adequate space and access for the public. Many of the court buildings, particularly the first instance courts, are in a deplorable condition. Court proceedings are delayed for months due to the unavailability of trial rooms. Security arrangements are mostly inadequate, and public access areas are either limited or absent. Deteriorated court buildings and inadequate technological support are among the reasons for poor performance of the courts. Reforms to the judicial system cannot be implemented in a poor physical environment because the operation of an independent and respected judiciary depends on adequate physical facilities for functional efficiency, security, and the proper separation of functions. Considerations include basic physical conditions such as structural, mechanical and environmental conditions, as well as space planning and design to ensure adequate space to house staff, equipment and records. The functional relationships of these spaces are equally critical for efficiency, transparency and security, and designs that are inefficient or opulent waste investment and operations resources. The project's main focus i s on increasing the efficiency and accountability of the judiciary, which should in turn result in a reduced case backlog, speedier court proceedings andmore transparent acts of justice. 2. Rationalefor Bank involvement The World Bank's mission 3s to promote economic growth and reduce poverty in its member states. One of the critical lessons from the East Asian financial crisis and the transition process in Eastern Europe and the former Soviet Republics was that, without EuropeanCommission,Romania: 2005 ComprehensiveMonitoring Report, SEC(2005) 1354, Brussels, October 25,2005 9 the rule of law, economic growth and poverty reduction can be neither sustainable nor equitable. The Bank's numerous reports on economic development and transition over the past decade have increasingly stressed the critical importance of well-functioning institutions to economic growth, social development and poverty red~ction.~Among the biggest challenges for the transition countries in Eastern and Central Europe has been the re- orientation or re-creation of legal andjudicial institutions, which in the early 1990s were ill-suited to the needs of a market economy. The Bank's assistance was initially targeted more heavily towards the development of specific commercial laws and regulations than on reform of implementing and enforcing institutions. Starting from the rnid-gos, the focus of the Bank's assistance has gradually shifted towards supporting judicial reforms, and the Bank has started putting more resources toward increasing the efficiency and effectiveness of courts and other legal institutions, including supporting the introduction of modern facilities, case management practices, information sharing, training of judges and other court personnel, and stronger mechanisms to ensure transparency and accountability. The EU accession timetable underscores the scale and urgency of the agenda Romania must adopt for timely EU accession. Although substantial efforts are underway, there remains a significant unfinished and un-financed agenda. Romania's efforts in the judicial reform area have been supported through a range of financial instruments. These include the EU-financed CARDS and PHARE programs, limited bilateral assistance and World Bank-financed projects, including the Programmatic Adjustment Loan (PAL), Public and Private Institution Building Loan (PPIBL), JDF Grant for Legislative Drafting, etc. The Romania PAL program has been supporting reforms in core public sector institutions, including the judiciary. In line with PAL-1conditionality (which was approved by the Board in September 2004), the Romanian parliament adopted three organic laws on the judiciary which redefined the appointment of judges, judicial career development and court administration, and limited the Prosecutor General's powers to interfere into the judicial process. The reform program also launched a comprehensive restructuring process of the Romanian court system, the initial phase of which - conducting a Study on Romanian Court Rationalization- was financed with PPIBLfunds, While EU assistance will continue to focus on technical assistance and legislation harmonization, the Bank's proposed loan will support critical investments in court infrastructure, court administration reform, and institutional development. The Bank i s well positioned to assist the Government inthese efforts because of the experience gained through similar projects in different regions, as well as its deep involvement in the process of institutional reforms in Romania in the past decade supported through inter- linked adjustment, investment and technical assistance operations. See WorldBank, From Plan to Market (WorldDevelopmentReport, 1996); World Bank, Building Institutionsfor Markets (WorldDevelopmentReport, 2002); World Bank, Economic Growth in the 1990s: Learning from a Decade of Reform (1994); World Bank, Doing Business, 2005; World Bank, Judicial Systems in Transition Economies, 2005; etc. 10 The Bank has also gained valuable experience in providing assistance to EU candidate countries for building EU acquis compliance in various sectors, and has developed an effective mechanism of cooperation with the EU institutions on both policy and operational levels. These factors put the Bank in a unique position to provide substantial and timely financial and technical support to Romania for successful implementation of its judicial reform program and fulfillment of its EUaccession commitments. 3. Higher level objectives to which the project contributes The new Country Partnership Strategy (CPS) for Romania for FY06-09 (to be presented to the Board in the third quarter of FY06) identifies successful integration and social cohesion with the EUas a main theme of the Bank's support for the upcoming years. In support of the overarching objective of Romania of convergence with the EU, the CPS i s founded on the three main priorities: (i) achieving sustainable and equitable private sector led high growth; (ii)upgrading fiscal management systems and reducing fiscal vulnerabilities; (iii)enhancing governance and upgrading public institutions, including judiciary. The project would contribute to achieving CPS priority goals through supporting structural reforms in the judicial system. Establishment of an independent and efficient judiciary i s one of the core EU requirements in the context of Romania's accession. In fact, whether Romania will demonstrate sufficient progress in judicial reform and anti- corruption efforts will largely determine the ultimate date of Romania's accession to the European Union. Development of a dynamic private sector will also depend on the speed of judicial reforms. Many dimensions of court performance matter for doing business. Yet, in Romania, a large number of firms rate the courts as slow, ineffective, corrupt and not capable of enforcing laws (see Attachment to Annex 1). Lastly, effective legal and judicial institutions are essential for guaranteeing equitable delivery of basic social services and social protection assurance for the vulnerable, while still developing efficient markets. B. PROJECTDESCRIPTION 1. Lendinginstrument The Project i s a Specific Investment Loan (SIL) of Euros 110 million (US$130 million equivalent), with project implementation over a 4.5 year period. 2. Project development objective and key indicators The project's development objectives are: (i) increase efficiency of the Romanian to courts, and (ii)to improve accountability of the judiciary which should result in reduced corruption and more transparent act of justice. In order to reach the goals of efficiency 11 andaccountability, the following areas require support under the project: (i) upgrading of court infrastructure and automation; (ii) administration reform, includinga program court of case delay reduction and reorganization of internal working arrangements in courts; and (iii)institution buildingfor the mainjudicial governing bodies (e.g. SCM, HCCJ and MOJ). Key indicators to measure success are the following: (i) improved capacity of the court system to adjudicate disputes (in terms of fairness, speed, affordability and ability to enforce decisions); (ii) improved court facilities, in line with international standards; (iii) improved public image of the judiciary; and (iv) enhanced competence, professionalism and integrity of judges and court staff. The project activities will be monitored through an established set of indicators (see Annex 3). 3. Project components Component 1: Court InfrastructureRehabilitation ($90.0 million) The project will support the rehabilitation and limited new construction of prioritized court buildings, and the development of uniform space planning and design standards for court facilities. Rehabilitation and construction will provide improved public access and rationalization of court facilities, structural and environmental upgrading, enhanced security features and technological capacity and plan revisions required for the judiciary to function with efficiency and independence. Court rehabilitation and construction will also mitigate one of the obstacles to the public's respect for the court system. Duringproject preparation, MOJcarried out a thorough assessment of the existing court buildings, and selected a number of high priority buildings which require urgent rehabilitation. The selection process was based on criteria and methodology agreed with the Bank, which included, inter alia, such factors, as: caseloads in particular courts, number of judges, geographical distribution, technical conditions and seismic resistance of the buildings. The selection process was conducted in a participatory manner, and various stakeholders, including judges and court personnel, were consulted. The project will provide assistance for physical rehabilitation o f about 25 court buildings. The project will also support the development of a schematic design manual that will serve the judicial system in the long term, as well as in the initial investments. Component 2: Strengthening of the Administrative Capacitv of Courts ($11.05 million) The project will assist the Romanian courts to adopt modern administration techniques to increase their productivity, improve the quality of their services and restore confidence in the judiciary. The following activities are proposedto be the focus of this component: 0 Development and implementation of a program to reduce case delays and backlogs; 12 Development of a framework for economic management of the courts, including regulatory and organizational arrangements for economic managers and training; Optimization of courts' operational processes, including transfer of non- adjudicative tasks from judges to court personnel, and upgrading the functioning o f case registries, archives, recording of court proceedings, court statistics and case monitoring. Component3: Court InformationSvstem($21.5million) The Government's Information Technology (IT) Strategy, approved in July 2005, anticipates development of a comprehensive Resource Management System (RMS) for the judicial system. (Operational level case management systems are being implemented under EU financing.) The RMS will cover financial, physical, and human resource management functions for the entire justice sector. It will also cover management support functions, both reporting and analytic. The RMS would support management functions at the level of the individual courts, as well as at the MOJ, SCM, and the HCCJ. The system will operate over the EU/Government funded wide area network and will obtain reporting information from the court-level operational systems. The use of industry standard technologies and interfaces specifications will minimize compatibility issues. The RMS would serve approximately 5,000 users, comprising 20-25 individuals at each of the roughly 200 judicial facilities, and approximately 200 individuals at the MOJ, SCM, and HCCJ. Technical support will be coordinated at the level o f the second instance courts. Component4: InstitutionalDevelopmentof JudicialInstitutions ($6.61million) This component would provide assistanceto the followingjudicial institutions: SCM - in the area of development of long-term judicial policies, monitoring judicial performance, and public communications; M O J - in the area of capital investment planning, judicial statistics, human resources management, budget planning and internal and external communications; NIM-inthe area of development of new qualification tests for judges' selection and promotion; development of training courses and curricula; NSC - in the area of strategic planning; development of certain training courses and delivery of training through distance learning programs and other innovative methods; HCCJ-in the area of budget planning and IT upgrading. This component would also provide funding, to develop and implement specific tools for monitoring project results, including public surveys and court user surveys. A comprehensive baseline survey will be carried out immediately after loan effectiveness in 13 order to provide a snapshot for the current reality. The baseline survey methodology would be based on the monitoring indicators, and would also use the data provided by BEEPS. Two more surveys would be carried out over the 4 `/2 year project implementation period. In addition, court user surveys, which are smaller and quicker efforts, as well as relatively inexpensive, would be carried out in order to monitor the backlog and processing standards in the busiest courts. 4. Lessons learned and reflected inthe project design The following lessons have been taken into account in the design of this project. Importance of analytical and diagnostic work. Sector research and analyses (legal and judicial sector assessments) are critical to the technical quality of project design, but also contribute to the establishment of solid Bank-Client relationships; they are essential to ensure clients' ownership of - and commitment to - project^.^ The project design has been primarily built on the analysis of Romania's institutional reforms, including legal and judicial areas, undertaken by Bank staff since 2002: Legal and Judicial Systems in Romania: a World Bank Diagnostic Review (2002); Romania: Diagnostic Surveys on Corruption (2002); Romania: Building Institutions for Public Expenditure Management, Chapter 4: Judiciary, the Beginning of Budget Reforms (2002). A Study on Romanian Court Rationalization (2005) was conducted by the Romanian Government in connection with the PAL implementation and has provided the most recent data and analysis of the court system that benefited the project design. In the course o f preparation and dissemination of the above-mentioned reports, the Bank has engaged in an active dialogue with the Government, judicial community and civil society on challenges and priorities of the institutional reforms in Romania; this has undoubtedly contributed to buildingconsensus and support for the project among various constituencies. Strong policy dialogue and appropriate policy framework for investments. A strong policy dialogue between the Bank and the Government i s critical to success of an investment operation which has, as its prerequisite, the willingness o f the Borrower to undertake substantial reforms in the sector. Some of the Bank's ambitious investment projects in the legal sector have failed because they were not supported b y a comprehensive policy framework laying the ground for sustainable reforms. InRomania, major policy changes in the judicial sector are supported through the Bank-financed Programmatic Adjustment Loan (PAL) - the largest inter-sectoral policy reform tool of the Romania program. PAL-1, approved and disbursed in 2004, has supported measures aimed at strengthening structural and operational independence of the judiciary; introduction of the position of economic managers in courts and launching rationalization of the court system (see Annex 2 for more details). PAL-2 i s programmed for second half of FY06. World Bank,Legal and Judicial Reform in Europe and Central Asia, OED (2002); World Bank,Legal and Judicial Reform: Observations, Experiences and Approach of the Legal Vice Presidency (2002). 14 The need to link increased independence of the judiciary with strong accountability. Analysis of the legal and judicial reform lessons in the ECA region indicates that independence and accountability must go hand in hand to ensure honesty and quality in the judiciary.' Businesses, in particular, want courts that are fair and honest, strong enough to enforce their decisions, fast and affordable. Yet reforms that might strengthen one dimension - such as independence - may weaken another - such as accountability, at least in the short run. A push for accountability should be a central pillar of judicial strengthening programs. This i s particularly important in the Romanian context, where public perception of the judiciary as corrupt and inefficient i s high. The project will support a range of activities aiming at improved accountability of the judiciary, including: re-designing court facilities to improve public access to court services and records, development of a comprehensive performance evaluation mechanism for judges and court personnel, strengthening SCM capacity to enforce ethical and professional standards of judges' behavior; publicizing the results of performance evaluation of courts, conducting regular court users' survey to provide feedback onjudges' performance, etc. The need to improve efficiency of courts. Analysis of surveys on businesses' perception of courts inE C A countries indicate that judicial reform efforts inmost of the transitional countries have given primacy to establishing judicial independence over ensuring efficiency and accountability.6 Excessive case backlogs and slow court proceedings directly affect firms' and investors' trust in the judicial systems. The project places a strong emphasis on increasing efficiency of the courts and, to this end, will support a program of actions aimed at reducing case delays. Measurement of judicial performance. The experience of earlier legal and judicial reform projects has highlighted the importance of adequate measurement of judicial performance. The capacity of public institutions to use empirical data for policy decisions i s weak in most transitional countries, and courts are no exception. In the meantime, comprehensive and transparent court statistics and performance indicators are a critical tool in improving courts' performance and fighting corruption. The project will support development andimplementation of a comprehensive performance monitoring system for the judiciary, systemic use of surveys, public opinions on court's performance, and strengthening of the capacity of the SCM and other judicial institutions to collect, systematize and utilize statistical data for monitoring judicial performance and ensuring integrity of judges. 5. Alternatives considered and reasons for rejection The project team considered two different designs during project identification, which were rejected during project preparation. They included: (i)the use of the sector-wide approach (SWAP) for the proposed project; and (ii) expansion of the project support beyondthe judiciary, to include the areas of legal education andlegal profession. World Bank, Judicial Systemsin Transition Economies: Assessing Past, Looking to the Future (2005) Ibid. 15 The SWAP design was rejected for the project due to the relatively weak institutional capacity o f project agencies to implement fiduciary policies required for SWAP operations. Furthermore, the level of expenditure management in the justice sector, particularly for mid- and long-term investments, needs further improvement before a SWAP type operation can be effectively implemented. Therefore, it was decided that the project use the sectoral investment loan implementation approach that would integrate specific investments modules, which will aim at strengthening the public procurement andfinancial management capacity of the MOJandother project stakeholders. Expanded scope of the project. It is widely acknowledged in international development community that law and justice i s holistic, multifaceted and requires an integrated approach. For example, the quality of legal services provided by licensed attorneys has an impact on the effectiveness and efficiency of the judiciary: good legal service can reduce time and costs of disposition, increase the quality of court outcomes, avoid unnecessary litigation and reduce corruption. Similarly, investments in judicial training might not yield required results if basic legal education i s inadequate and does not provide future judges with fundamental knowledge and skills. However, Bank-financed legal reform projects with a wide agenda (e.g. including legal drafting, court reform, support to bar associations and legal education) do not have a high degree of success. Such projects involve too many institutions (e.g. courts, ministries of justice, law schools, educational authorities, bar associations, etc.), where a coordinated approach i s difficult and . eventually hampers project implementation. This also requires multi-disciplinary teams on the Bank side which unduly complicates project supervision efforts. The project's coordinating body often fails to maintain equal focus on various project components involving different players and project modalities, so some parts of the project lag behind in implementation. In light of this, it has been decided to maintain the project focus on the court system, where the undergoing fundamental changes require financial and technical support that the Bank i s well positioned to provide. This i s also justified by the fact that financial assistance to the Romanian Bar Association and some legal education institutions have been providedby other bilateral and multilateral donors. C. IMPLEMENTATION 1. Institutionalandimplementationarrangements The Loan Agreement will be signed between the World Bank (IBRD) and Romania, represented by the Ministry of Public Finance (MOPF). The main implementing agencies under the project will be the Ministry of Justice (MOJ) and the Superior Council of Magistracy (SCM). At the policy level, a Project Steering Committee (PSC) will be constituted, comprised of representatives from MOPF, MOJ, SCM, HCCJ and the Director of DIEFP.The PSC will be responsible for overseeing project implementation and making decisions on significant implementation or policy issues. The PSC will meet at least quarterly to review quarterly and annual progress reports and annual work programs, and will ensure 16 coordination and synergies of the project with the other programs in the justice sector funded b y external donors. MOJ will take full responsibility for all technical aspects of the project implementation, including procurement, financial management and monitoring. M O J has established a new department - Department for Implementation of Externally Financed Projects (DZEFP) which would be responsible for day-to-day implementation work, including procurement of goods, works and consultants' services, disbursement of funds and financial management, audit, and control, monitoring and reporting. This Department i s an integral part of the MOJ structure; while primary responsibility of this Department during the first 3-4 years will be implementation of the Bank-financed project, it will eventually assume responsibility for other capital investment projects inthe justice sector, thus taking full advantage of the experience gained by the Department's staff with respect to the Bank-financed project. DIEFP would also report to the PSC on a regular basis (see Annex 6 for more details). SCM will be responsible for implementation of the court administration and institution building components (except for MOJ part), and will be assisted by DIEFP with respect to procurement, financial management and other technical aspects of project implementation. SCM and M O J will enter into an internal agreement defining their respective responsibilities and coordination mechanism. The Working Groups within SCM, established for implementation of the PAL and PPIBL, will continue functioning and will provide substantial input in project implementation, including preparation of the terms of reference (TORS) and subsequent carrying-out of technical assistance for the court administration and institution building components of the project. In addition, an Evaluation Committee will be established for evaluating the bids submitted for various project activities. The Evaluation Committee could comprise representatives from different implementing agencies (e.g. SCM and MOJ). 2. Monitoring and evaluation of outcomeshesults SCM and MOJ will be responsible for overall monitoring of the project. The DIEFPwill be responsible for consolidating information provided by various project counterparts, as well as from courts, in order to track progress against the monitoring plan. This information will be provided regularly to PSC and the Bank. There will be a comprehensive evaluation of progress against project indicators on an annual basis. A comprehensive baseline survey will be carried out immediately after loan effectiveness in order to provide a snapshot for the current reality. The baseline survey methodology would be based on the monitoring indicators, and would also use the data provided by BEEPS. Two more surveys would be carried out over the 4 ?hyear project implementation period. In addition, court user surveys, which are smaller and quicker efforts, as well as relatively inexpensive, would be carried out in order to monitor the backlog andprocessing standardsin the busiest courts . The results of the public opinion surveys and annual progress reports will be used for analyzing the intermediate outcomes of the project and adjusting project activities or priorities, if needed. The results of 17 monitoring will be widely publicized not only within the judicial community, but for the general public as well. 3. Sustainability The process of project development has been largely collaborative. The high degree of consensus in Romania on the need for judicial reforms, especially in light of the planned EUaccession, will be critical for the continuedsustainability of the reformprocess. Even after the planned 2007 date for EU accession, it will be important for reform efforts not to lapse, and for continued momentum to push forward on other critical justice sector issues, Bank's support to policy reforms in the judicial system, provided through Programmatic Adjustment Loans, lays the ground for continued and sustainable implementation of these reforms inthe mediumto long term. The project will contribute to sustainability of initiated policy reforms and investments in the judicial sector in the following ways: (a) the loan conditionality requires the Government to provide adequate funding for operation and maintenance of renovated court buildings and IT equipment and systems; (b) the project will build in-house capacity at MOJ to implement capital investments and large judicial projects, through support to DIEFP; and (c) judicial institutions (SCM, MOJ, HCCJ) will have better capacity to develop and implement long-term judicial policies and base them on empirical analysis. 4. Criticalrisksandpossiblecontroversialaspects Risk RiskMitigationMeasure Rating Lack of sufficient Clear definition of responsibilities between SCM and cooperation between MOJ with regard to particular components of the project. S MOJ and SCM, the two .A joint Project Steering Committee will be established main implementing with representativesof the MOJ, SCM and other agencies, agencies and responsible for overall project oversight and strategic beneficiaries under the decisions. project Close supervision by the Bank duringimplementation. The difficulty in meeting @Adequatefunding requirements will be regularly sustainable funding discussedwith the Romanian Government at the time of M requirements for the budget formulation. operation and @Loanconditionality requiringthe Government to provide maintenance of the sufficient fundingfor operation and maintenance. remodeled courts, R M S and ITsystems within the courts The difficulty in The DIEFP will be staffed with experienced specialists recruiting and retaining recruitedthough a competitive process and with adequate M qualified staff for project salaries. Some of the DIEFPstaff will be transferred from implementation their current positions at the MOJ; for positions where expertise i s lacking in-house, a competitive process will be followed to hire experts. 18 Limited absorption It is expectedthat disbursements underthe loan will be at capacity of the their peakduring the third andfourth years of M beneficiaries who will implementation,and will not overlap with disbursements also receive EUfunds of the EUPHAREprogram2004-2006.Most of the procurement and disbursementwork will be done under S within the project architects and procurementspecialist,including an implementation period international procurement advisor. Close monitoring by the Bank andcritical assessment of mid-termtargets for this component during a Mid-Term M Key: S -- substantial; M-moderate;N- negligible 5. Loan conditions andcovenants Condition of Effectiveness: Establishmentof the Project Steering Committee (PSC) in a manner satisfactory to the Bank. Legal Covenants: 0 The Borrower will maintain, duringproject implementation, DIEFPwithin M O J with adequate staffing and resources which will be responsible for technical aspects of project implementation. 0 The Borrower will maintain, duringproject implementation, PSC with adequate staffing and terms of reference. 0 The Borrower will ensure that SCM carries its responsibilities with respect to court administration and institution buildingcomponents (except for M O Jpart) in close collaboration with M O J (with DIEFP assistance) and inaccordance with agreed upon arrangements between SCM and MOJ, satisfactory to the Bank, 0 The Borrower will maintain a financial management system acceptable to the Bank. The project's financial statements, withdrawal applications and Special Account will be audited by independent auditors acceptable to the Bank and on terms of reference acceptable to the Bank. The annual audited statements and audit report will be provided to the Bank within six months of the end of each fiscal year. 0 The Procurement Plan prepared b y the Borrower i s updated on an annual basis and approved by the Bank. 0 The Borrower will carry out the project in accordance with the Environmental Management Plan (EMP), including mitigation measures specified in the EMP. 19 Sufficient counterpart co-financing funds are allocated in the M O J annual budget, as well as the funds for maintenance associated with renovation of the court buildingsand introduction of the RMS. An annual progress report of project implementation shall be provided to the Bank by October 31 of each year throughout the execution of the project, commencing from October 31, 2006, and including an annual work program and updated procurement plan for the following year. A mid-term review will be conducted on April 1,2009. D. APPRAISAL SUMMARY 1. Economic andfinancialanalyses Implementation of the project i s expected to increase the efficiency and accountability of the judiciary and improve access to judicial services. The benefits from improvements in judicial performance will be both economic and social. It i s difficult to precisely quantify the social and economic benefits of an improvedjustice system but a review of available data suggests that they are significant. Economic benefits. Improved delivery of judicial services and other project outputs would help lower the costs of doing business in Romania, as well as the time now required for litigation and case disposal. In the absence of efficient courts, fewer investments and business transactions take place. Courts serve businesses best when they are efficient and fairs7 World Bank studies have identified a number of factors which increase the efficiency of courts and therefore contribute to improvement of business climate: (i)establishing information systems in the courts; (ii)transferring non-contentious matters (like registration of businesses from courts to administrative bodies; (iii) reducing procedural complexity; and (iv) establishing small-claims courts and specialized commercial courts*. Although it i s hard to quantify the benefits resulting from improved court services, these studies demonstrate a direct link between improved court services and increase in economic development and growth. The project will support a number of measures to increase the efficiency of the courts and the productivity of judges (including some of the measures identified above). Specifically, improved court facilities, better administrative arrangements within courts and automated case management process, simplified procedural rules and a comprehensive Resource Management System for the entire justice sector will contribute to the efficiency of the court system: these and enhancement o f business confidence in courts would improve the investment climate inRomania. The project will also contribute to a more efficient use for public resources allocated for the judicial system. The budget for the judicial system has been steadily increasing in the 'World ~~ Bank,Doing Business in 2005: Removing Obstaclesto Growth (2005), p.60. Ibid. Also, World Bank, Doing Businessin 2004: Understanding Regulation (2004). 20 past five years. Only in 2005, the operating budget for the justice system increased b y about 45% to EUR 443.5 million, and an increase of 26% i s expected in the judicial budget for 2006. Similarly, the number of judges has increased by about 25% in the last ten years. However, this did not result in visible improvements in court operations: the case backlogs remain high and court proceedings exceedingly long. Recent analysis (Study on Romanian Court Rationalization) indicates that the rationalization of the court system and operational processes within courts i s required as a matter of priority. Efficiency gains resulting form project outcomes will allow resources for the Romanian judiciary to be used in a more cost-effective manner, eventually permitting reductions in administrative expenses. Greater automation of court processes will allow more cases to be resolved in less time, permitting public resources to be better used for the required services. 2. Technical The project will support the application of international design standards for judicial facilities with an emphasis on operational efficiency and cost effective construction. The project will: 0 Develop and apply uniform, space and design standards for modest, functional and flexible court buildings that can be maintained at a reasonable cost now and into the future; 0 Ensure energy efficiencies and incorporate buildingfeatures to reduce short-term andlong-term costs andto meet environmental goals; 0 Achieve these results at a life cycle cost that can be sustained by the Romanian Government. Cost effective design will be achieved (and knowledge transferred with the participation of local officials and construction professionals) using a methodology such as value analysis or value engineering, stressing the linkage between essential functions to be performed in a building and the building costs, particularly the cost of construction or reconstruction and the long-term costs associated with ongoing operations such as maintenance, energy usage and periodic replacement of specific building components. The training to be provided to local practitioners and court officials, along with the Design Standards Manual that i s to be produced under the project, i s expected to have an impact on court design and construction inRomania well into the future, after the project has been completed. Construction will conform to the latest Romanian buildingcode, which has been updated to meet more stringent seismic mitigation requirements. Under the Bank-supported Hazard Risk and Emergency Preparedness Project, the code i s being further updated to apply more cost-effectiveness for retro-fitting existing buildings and, where timing permits, the lessons learned in that process may be applied where appropriate in the structural design of courts. The project will also provide modern technology and equipment in support of enhanced court security and efficient court communications and operations. 21 Inaddition, the project will help address another challenge: automation of the process for receiving, collating and analyzing, in a timely manner, information on its expenditures andreceipts for the entire justice system (RMS).The switch to an automated system from a manual system i s usually a major change-management issue. The new systems and technology would require that staff be trained intheir operation and maintenance. 3. Fiduciary (a) FinancialManagement The financial management arrangements of the project are generally sound. The significant strengths that provide a basis for reliance on the project financial management system include: (i)the simple funds' flow under the project and centralized financial management arrangements; and (ii)the satisfactory MOJ accounting and reporting software system. In order to strengthen financial management arrangements for the project, the following actions have been taken by MOJ: 0 Appointment of project finance manager and accountant. 0 Development of project financial management manual. 0 Creating of project-specific accounting ledgers. Development of formats of FMRs and audit TORs. Implementing Entity The newly established DIEFP within M O J will be responsible for the financial management aspects of the project. DIEFPincludes a finance team comprising a financial manager and an accountant. The project finance team will work closely with the existing Budget, Finance and Accounting Department of MOJ. The first Country Financial Accountability Assessment (CFAA) for Romania was finalized in December 2003 and concluded that the overall fiduciary risk associated with the public financial management and financial accountability arrangements of the Romanian government administration i s considered to be moderate, with the systems for accounting, financial reporting and internal control representing the areas with higher risks and budgeting, cash management and external audit and Parliamentary oversight representing the lower risks. The implications of the CFAA for this project have been addressed by the following -actions: A detailed review of the systems was performedfor the implementingentity; - The implementing entity (MOJ) set up a distinct project-specific accounting ledger; -- Project-specific format of the FMRsand audit TORs have beenpreparedby MOJ; Project accounting staff has been appointed; - Project financial statements will be audited by an independentauditor annually. 22 As of the date of this report, the Borrower is incompliance with its audit covenants of the Bank-financed projects including the General Cadastre and Land Registration Project (P034213) which has beenpartly implementedby the MOJ. The format of the FMRs and financial reports and of the audit TORShave been agreed upon. Funds Flow Project funds will flow inrespect of each of the sources of project financing as follows: (i) The Bank loan, by direct payments or via the Special Account (SA), which will be replenished on transactional methods usingStatements of Expenditure; and (ii) Government counterpart contribution, via dedicated Treasury project accounts. A Special Account will be opened at a commercial bank and on terms and conditions acceptable to the Bank. Foreign currency amounts will be exchanged as needed in local currency (RON), to cover eligible expenditures payments in local currency to suppliers from the Special Account into a local currency transfer account that will be opened at a commercial bank and on terms and conditions acceptable to the Bank. Government counterpart contribution payments will be made from separate Treasury project accounts, being sub-accounts of MOJ's main budgetary Treasury account. These contributions will be received monthly in accordance with normal budget procedures. (b) Procurement Procurement activities under the project will be carried out by DIEFP. The internal recruitment has started and initial support i s provided by the existing MOJdepartments. The key issues and risks concerning procurement for implementation of the project include insufficient staff for the initial implementation stage and overall weak capacity within the MOJ to carry out procurement for large investment projects. However, appointment process for procurement specialists for DIEFP has started, and selection of an international procurement advisor will be launched shortly after loan effectiveness. MOJ has also initiated a broader effort for reforming procurement practices of the Ministry: it recently carried out a review of the status of procurement activities during the period 2001-2004 within the Ministry, with assistance o f an external consultant financed by the IDF Grant for Strengthening the Institutional Capacity for Legal Drafting and Regulatory Management (P077765). The assessment provided a number of recommendations aimed at improving procurement and contract implementation processes and procedures within the Ministry, and these recommendations have been discussed at the workshop. 23 For strengtheningprocurement capacity for the project, the following measureshave been agreed upon: Completing the recruitment process for procurement staff at DEFT as soon as possible. 0 Training in procurement for the existing MOJ staff as well as for new-comers. 0 Recruitment of an international procurement consultant to support the initial period of project implementation activities andon- the-job training of staff. 4. Social Good government and independent and effective judiciary are essential to equitable delivery of basic social services and social protection assurance for vulnerable groups. Legal and judicial reform provides a natural mechanism to protect the rights of individuals, and particularly, the poor and minorities. Inparticular, the social impact of the project can becategorized as follows: 0 better access of the population to justice: both in terms of physical accessibility (rehabilitation of court houses in some remote areas, improved public access areas in court buildings), and the cost of judicial services (e.g. increased court efficiency results in reduced time and procedural steps for a court case thus reducing the cost of legal services); 0 more effective protection of citizens' rights and freedoms, including vulnerable groups of the population (through reducing the time for judicial process, achieving more transparency for the judiciary and eliminating sources for corruption); 0 better access for citizens to information about their legal rights and obligations and means for their protection (e.g. through a public outreach program, court users' survey and public opinion polls). There will be no need for resettlement, or private land acquisition. During the implementation of the project, social monitoring and consultation will be an integral part of review o f the ongoing activities. 5. Environment OP/ BP4.1: The environmental safeguard policy of the Bank is applicable to this project because of the rehabilitation and limited new construction of court buildings. The project has been assigned a category B rating. An environmental framework review has been conducted to assess the application of Romanian environmental laws, permits and construction practice and to compare them with the standard requirements of the Bank's environmental safeguards. The findings of this review have been reflected in an environmental management plan (EMP) addressing the key issues. The EMP i s included in the legal agreements. The EMP has been developed fully in line with Bank's, Romanian and EUEnvironment acquis requirements. The EMP has been discussed at the project preparation workshop in Bucharest on October 4, 2005, posted on the MOJ's 24 website and distributedto the courts involved inthe project. It was also sent to the Bank's Infoshop. Romania's forthcoming membership in the European Union has required the need to harmonize national legislation with the acquis communitaire. The environment acquis i s one of the most extensive Chapters and updates/revisions are expected to occur over the course of this project's implementation to align fully with EU practice. Generally this will involve a further expansion of existing public participation mechanisms, a greater reliance on up-front screening of investments, and a stronger reliance on environmental permitting systems (fewer triggered EIAs). EU CARDS funds are being spent on Environmental Impact Assessment Guidelines and training at the national level, The environmental framework review concluded that the construction proposed under this project would not trigger a full ex-ante Environmental Impact Assessment under either Romanian laws or Bank policies. The type of environmental impacts of concern are localized in nature and are more adequately addressed through buildinglenvironment permits and good construction practice, as well as specific mitigation measures described in the EMP. Issues to be addressed through these instruments include proper waste management and disposal of construction debris (including asbestos), proper waste water treatment; heating and fuel system assembly, dust andnoise control, sensitivity of designs to cultural settings, and cultural heritagekhance finds procedures. In practice, these issues will be addressed through a series of local permits detailed in the environmental framework review, through contractor site supervisor oversight, through the local municipality requirements, and through the unit in the MOJ responsible for the court facilities and rehabilitation. The supervision strategy for the project would include a special mid-term review of construction contracts financed by MOJ in this period to post-review the application of environmental safeguards and attention to environmental issues. 6. Safeguard policies The planned civil works under court infrastructure component will not involve any land acquisition andor physical relocation. Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP4.01) [XI [I Natural Habitats (OP/BP 4.04) [ I [XI Pest Management (OP 4.09) [I [XI Cultural Property (OPN 11.03, beingrevised as OP 4.11) [I [XI Involuntary Resettlement (OP/BP 4.12) [ I [XI Indigenous Peoples (OD 4.20, being revised as OP 4.10) [I [XI Forests (OP/BP 4.36) [I [XI Safety of Dams (OP/BP4.37) [I [XI Projects in Disputed Areas (OP/BP/GP 7.60) 11 [XI Projects on International Waterways (OP/BP/GP 7.50) 11 [XI 25 7. Policy Exceptions and Readiness There are no exceptions required from Bank policies. Two procurement packages (one for technical assistance and one for civil works) will be prepared and ready for issuance to potential bidders shortly after loan effectiveness. 26 Annex 1:CountryandSector or ProgramBackground ROMANIA: JudicialReformProject 1. Organizationof the JudicialSystem The Romanian legal system has its basis in the Napoleonic Code and other French models. The communist judicial system, introduced after the Second World War, essentially continued in the civil law tradition, although strongly amplifying its deference to the executive. The principle of unity of power precluded a separate and independent judiciary; law and legal institutions were instruments of unitary state-party control, and lacked democratic legitimacy. Moreover, the prosecutors' body (prokuratura) was developed as the main legal arm of the communist state; prosecutors had broad powers to control legality of activity outside of the judicial system and to apply sanctions, leaving a limited sphere of activity to judges. Interference of the executive and prosecutors with judicial decision-making was common, and so-called "telephone justice" was widespread. Military courts formed a parallel system of justice that enjoyed a higher status in society. The legacies of communist rule continue to have a profound impact on the Romanianjudiciary today. The current court system in Romania follows a four-tiered pyramid structure: district courts Gudecatorrii),county courts (tribunals), courts of appeal, and the High Court of Cassation and Justice. Thejudecatorii hear low-level criminal and civil cases. Most cases that originate injuecatorii, have an intermediate appeal inthe tribunal, and a final appeal in the courts of appeal. Tribunals also act as a court of first instance for administrative and commercial law cases, including bankruptcies and the more important civil and criminal cases. Courts of appeal were introduced in 1993; these courts are divided into four specialized sections: for criminal, civil, commercial and administrative cases. They act as courts of first instance for serious criminal and civil matters, and hear appeals from the tribunals. Jurisdiction of the High Court of Cassation and Justice (HCCJ) was substantively changed by a new organic Law on Judicial Organization of 2004. In addition, Romania has three specialized courts: Constitutional Court, Court of Accounts and military courts. The new Law on Judicial Organization of 2004 provided for establishment of four types of specialized courts: for commercial matters, juvenile and family matters, labor and social matters, and for administrative-fiscal matters. The original proposal was to establish four specializedcourts ineach county (Romaniahas 46 counties) which would result in about 168 specialized courts nationwide. However, more thorough statistical analysis -- carried out as part of the Study on Romanian Court Rationalization- showed that establishment of specialized commercial tribunals would be justified only in 21 counties, and specialized labor tribunals - in only four counties. Subsequently, the decision was made to establish specialized panels of judges in those courts where there i s a higher demand for such types of cases, and to do more analysis on the needs for future specialized courts. 27 Up until 2000, the Romanian court system was characterized by highly centralized administrative control by the Ministry of Justice; undue interference of the prosecutors in court proceedings, particularly, in civil cases; archaic methods of case filing and case processing, shortage of judges and court personnel and low professional level of judges, limited access to constantly changing legislation, and poor working conditions for judge and court personnel. As a result, the case backlog has been consistently increasing, public trust of the court system was low, the business community was increasingly dissatisfied with the courts which were not considered either independent or quick, and an increasing tension between the judicial community and the Ministry of Justice was blocking any effective attempts to improve the situation in the court system. 1. The Government's Reform Program During2000-2003, the Government launched a number of important initiatives aimed at reforming the judiciary and strengthening rule of law in the country. In October 2003, constitutional amendments were adopted through a national referendum which introduced important changes in the judicial area. These include: (i) enshrining the principles of the judiciary as an independent branch of power, and the right to a fair trial within a "reasonable time"; (ii) transformation of the Supreme Court of Justice into a High Court of Cassation and Justice (HCCJ), responsible for ensuring the consistent interpretation and implementation of laws throughout Romania; and (iii)revised composition and mandate of the Superior Council of Magistracy (SCM) which would strengthenits role as an institutional guarantor of judicial independence. The main focus of the reforms in 2003-2004 was in creating an independent and de- politicizedjudiciary, free from state control, which could act as a bulwark for newly-won political, and civil rights and be a trusted adjudicator of disputes. The three organic laws adopted in summer 2004 - on the Superior Council of Magistracy, on the Statute of Magistrates and on Judicial Organization - introduced further changes in the status of magistrates and overall outlook of the judiciary aligned with the European standards, ensuring independent, transparent and merit-based selection of judges. This three-law package, which came into force in September 2004, has laid down the necessary basis for broad systemic reforms in the justice sector, and the new Government formed inJanuary 2005 re-confirmed its commitment to the reformprocess. The new Government of Romania, which took office in January 2005, has consistently stressed that ensuring an independent, impartial, reliable and efficient judiciary i s a crucial element in its strategy to improve economic growth, reduce poverty and meet the requirements for successful entry into the European Union. The latest manifestation i s the Government's Strategyfor the Reform of the Judiciary 2005 -2007which considers the observance of the following principles as essential for a modemjudiciary: 0 Strengthening of the rule o f law; 0 Guaranteeing genuine separation and balance between the state powers, by strengthening the independence of the judiciary; 28 Improving the protection of human rights; 0 Implementing European best practices related to the functioning of the judiciary; 0 Ensuringthe transparency of acts ofjustice; 0 Strengthening the dialogue with the civil society and involving it in the reform of the judiciary; 0 Ensuring the basis for judicial cooperation for the integration within the European area of freedom, security andjustice; and 0 Ensuring full institutional and legislative compatibility with the judicial systems inEurope and with the acquis communautaire. The Strategy and Action Plan represent a significant step forward in the plans to create an independent, professional and effective justice system. The Action Plan i s being implemented according to schedule, with comprehensive monitoring mechanisms consisting of an inter-institutional commission coordinated b y the Ministry of Justice and a series of working groups within SCM. In line with the priorities outlined in the Strategy and Action Plan and in an attempt to further accelerate the reform process, further amendments to the judicial laws were introduced in July 2005. Significant changes introduced by the amendments are: The appointment o f court presidents and chief prosecutors based on examinations and the removal from leading positions due to failure to prove efficiency in this position; The evaluation ofjudges' activity every 3 years by an SCM commission; The promotion procedure undertaken based on a contest organized by the SCM through NIM; Starting with January 1, 2008, the competences of the Ministry of Justice regarding the administration of the budget of the courts of appeal, tribunals, and courts of first instance taken over by the HighCourt of Cassation and Justice; The obligation of recording the court sessions through technical video or audio devices applicable starting July 12006, andthe court clerks' obligation to register all statements during court proceedings; Representation of judges and prosecutors in the SCM was partially changed, in order to ensure a wider representation for lower level courts and prosecutors' offices; The SCM's members are held accountable vis a vis judges and prosecutors, who selected them, for the activities carried out during their mandate; The SCM will be under the obligation to provide reasons for its decisions regarding the career of judges and prosecutors; these decisions shall be appealed to the High Court for Cassation and Justice; The full-time workload for all members of the SCM (starting with the next mandate). The project will provide financing in a number of critical areas identified in the Strategy and Action Plan and will complement the resources committed by the Government, EUand other donors. 29 2. The EUAccession Process In early 2000 the EU opened accession negotiations with Romania, which were successfully concluded on December 14, 2004. The Accession Treaty was signed on April 25, 2005, and the ratification process by all 25 EUmember states is underway. The treaty envisages accession on January 1, 2007. ). However, the Justice and Home Affairs chapter (JHA) was the last issue to be agreed upon after two years and seven months of difficult negotiations. Until 2007, when the entry date was set, Romania i s under 11 specific commitments regarding the reforms that must be accomplished, seven of which relate to the JHA chapter. As in other EUcandidate countries, the European Union and its accession process have exerted a tremendous influence on the direction, pace and progress of legal and judicial reform inRomania. One of the political criteria for membership in the EU, as underlined by the EU Copenhagen EuropeanCouncil in 1993, required "the candidate country to have achieved stability of institutions guaranteeing [...] the rule of law [...I".The Brussels European Council (June 2004) underlined in this respect that particular attention should be paid by Romania to improving its judicial and administrative capacity in order to be ready for accession by January 2007. The EU, in its regular reports on Romania, has consistently stressed that the establishment of an independent, honest, reliable, transparent and efficient judiciary i s of paramount importance. This requires substantial financial resources and a clear long-term political commitment, as well as an efficient use of physical and financial resources, a sufficient number of well-qualified staff, objective and transparent recruitment, evaluation and promotion procedures relying on national standards established b y the Superior Council of the Magistracy, effective sanctions for inefficiency and the prosecution of criminal offenses, adequate and modern equipment, distribution of cases to magistrates and public prosecutors according to objective and transparent procedures, acceleration of court proceedings, reduction of the number of pending cases to avoid unreasonable delays, adequate public information on the progress of cases, and timely measures to ensure the adequate enforcement of court decisions. The EU 2005 Comprehensive Monitoring Report, issued on October 25, 2005, has acknowledged Romania's progress in a number of areas o f judicial reform, including: a new comprehensive Strategy and Action Plan; amendments to the judicial laws passed in July 2005 which provided a stronger focus on judicial accountability and managerial responsibility in the court system; establishment of specialized sections in courts; successful implementation of a random case assignment system; institutional strengthening of SCM; reduction of a case backlog in the HCCJ and improved performance of the NIMS9 EuropeanCommission, Romania: 2005 Comprehensive Monitoring Report, SEC (2005) 1354, Brussels, October 25,2005. 30 However, while stating that "reforms in the justice sector are broadly on track", the report has also identified a number of areas which require immediate attention: (i) the workload of judges remain very high, and the administrativeburden needs to be shifted fromjudges to economic managers and clerks; (ii) slow court proceedings and a high ratio of court decision overturned on appeal; (iii) general material conditions in courts and the level of automation; (iv) insufficient funding for NIM and NSC; and (v) poor enforcement of judgments in civil cases. The report also emphasizes the need to address corruption within the judiciary "which suffers from low public confidence". lo 3. Policy reforms inthejustice sector supported by the Bank financed Programmatic Adjustment Loan (PAL) Recognizing that reforming core public sector institutions and processes were required in order to meet the EU accession requirements by 2007, the Government embarked on an ambitious reform program focusing, inter alia, on reforming the judiciary, strengthening the rule of law and supporting transparency and anti-corruption measures in the public sector. Upon Government's request, in 2002 the Bank initiated a series of Programmatic Adjustment Loans (PALS)to support this program. In the judicial sector, the PAL program provided the most radical steps towards addressing the underlying policy deficiencies. The PAL conditionality for the justice sector focused on five major areas: (i)institutional independence of the judiciary; (ii) accountability; (iii)enhancing efficiency; (iv) budgetary autonomy; and (v) professionalism of judges and court personnel. The following matrix describes how specific policy actions would contribute to the reform objectives over a three-year period: Table 1:Programmatic Adjustment Loan (PAL) - Policy matrix for Judicial Sector: Objectives PAL-1actions PAL-2 actions PAL-3 actions 2003-04 2004-05 By end 2006 Strengthening of the Enactmentof Establishment of a Developmentof new institutional independence legislative permanently disciplinaryprocedures of thejudiciary amendments to functioning for judges enhance the powers administrative administeredby SCM. of the Superior structure of SCM, with Council of adequate staffing, Magistracy(SCM) budget andfunctions. Introductionof modified procedures for selectionand appointment ofjudges, including adoptionof Regulationsfor qualification exams andpromotiontests for judges and developing institutional capacity within SCM andNIM loIbid, p.13. 31 to conduct such examsltests Increasing accountability Enactment of Development of a 1 Implementationof the o f the judiciary and legislative transparent and systemfor monitoring developing ajudicial amendments to objective system for judicial performance, performance evaluation eliminate the process monitoringjudicial including regular mechanism o f "extraordinary performance (reliable publication ofjudicial appeal" by the indicators for performance indicators Prosecutor General measuring caseloads against court perjudgekourt, time decisions enteredinto processing standards, force (resjudicata) reverse through appeal rates, etc.) Adoption of new merit-based regulations by the SCM on the criteria andthe evaluation procedures for magistrates' professional activities. Enhancing efficiency of Launch of a study on Completion of the Implementation of the the court system through a rationalization of study and adoption of strategy for improving organizational the court system a strategy on rationalizationof the structure of the court Enactment of rationalizationo f the court system.. system and improving legislative provisions court system. court administration for introducing economic manager Adoption o f the positions in courts. regulations defining selection criteria and appointment procedures for economic managers, their functions and responsibilities, and employment of economic managers in tribunals, Appeal Courts and HCCJ. Strengthening budgetary Adoption o f Implementation o f the autonomy of thejudiciary regulations action plan for implementing the Law strengthening the on Judicial budgetary managemen Organization and the function of courts and Law on the SCM SCM. defining the specific responsibilities o f the courts and SCM in the preparation and implementation of court budgets. Development o f an action plan to strengthen the capacit) of SCM and the courts to prepare and implement budgets, and maintainfinancial management systems. 32 The first phase - PAL-1 was approved by the Board in September 2004 and has been fully disbursed. As part of the conditionality of PAL-1, the Romanian justice system underwent a number of important structural changes, including adoption of the three organic laws in June 2004: Law no. 303/2004 on the Status of Magistrates; Law no. 304/2004 on the Judiciary andLaw no. 317/2004 on the Superior Council of Magistrates. The three-law package was intended to significantly improve the independence and effectiveness of judiciary. The SCM was empowered with full responsibility over the recruitment, career development and disciplinary actions against judges and prosecutors. The Minister of Justice, by law, would have no influence on the judges' career. The Prosecutor General's powers to interfere into the judicial process were significantly limited through a legislative provision which eliminated his power of "extra-ordinary appeal'' against court decisions which have entered into effect. The Government has initiated a comprehensive overview of the court system; and the Study on Romanian Court Rationalization was conducted with the financial assistance from the Bank. The position of economic managershas beenintroduced in a numberof courts. PAL-2 i s currently under preparation and i s scheduled to be submitted to the Board for approval in 2006. The focus of policy measures under PAL-2 is primarily on increasing efficiency o f the courts and enhanced accountability of judges. While required legislative and institutional measures in this area will be implemented under PAL-2, the proposed investment project will provide necessary financing for implementing introduced policy changes, such as training, IT support and technical advice. 4. The Unfinished ReformAgenda to be Supported under the Project Despite the progressachievedso far, there remains a number of crucialissues which need to be addressed and require urgent consideration, as identified by various Government papers (see its Action Plan), the EU (i.e. Progress Reports, EU Common Position) as well as Bank documents (i,e.' PAL evaluation report, Study on Romanian Court Rationalization, Legal and Judicial Systems Assessment): (a) Strengthening the institutional capabilities of the main judicial institutions. The current legal framework ensures absolute independence for the judicial governing body - the Superior Council of Magistracy" (the Law no.317/2004 on the Superior Council of Magistracy). Restructuring and empowering o f the SCM has been one of the main focuses of the recent legislative changes in Romania since SCM i s entrusted with guaranteeing independence of the judiciary. In Romania, a legacy of subordination of the judiciary to state interests and to the party apparatus, and exploitation of the judiciary by the state as an official device to validate such prerogatives, i s very strong and continues to cloud how judges and the court system are perceived. The degree o f independence of the judiciary from the political authorities i s traditionally assessed by: (i)the ways in which judges are appointed, transferred, promoted or dismissed; (ii) the level of judicial self-governance; and (iii) level of the budgetary autonomy. ''Alljudges and prosecutors in the Romanian court system are considered "magistrates" and are members of the "magistracy". 33 Based on the Law on SCM, the SCM assumes full responsibility for the recruitment, career development and disciplinary sanctions of judges and prosecutors. The SCM coordinates as well the National Institute of Magistrates, the institution in charge with the initial and continuous training of magistrates, as well as the National School of Clerks, the training institution for court clerks. The efforts o f the judiciary to ascertain full budgetary responsibilities under the new organic laws on judicial system adopted in 2004 failed, and the Ministry of Justice has kept the right to formulate the budget for the court system and submit it for the parliament's approval. Furthermore, the Ministry remains primarily responsible for allocating budgetary resources within the court system and monitoring its implementation. However, the important changes that have been introduced by the new Law on Judicial Organization include: (i) the obligation of the M O J to consult with the S C M on budgetary drafts and obtain its consent; (ii) the right of the SCM to manage its own budget andthe budget of the NIMwhich i s subordinated to the SCM.12 In sum, the SCM has acquired important responsibilities under the new organic laws for appointment, promotion, training and disciplining of judges, as well as for a number of court administration matters, but it has a weak administrative capacity to implement these functions. This presents a challenging task to the SCM to develop a well-functioning administrative apparatus staffed with qualified experts which would be capable of fulfilling the new functions. In the past, the SCM -- which comprised sitting judges and court presidents -- did not even have an adequate staff to prepare agenda and minutes of its regular meetings, and those functions were primarily handled by the MOJ staff. In the past year, the SCM has expanded its administrative staff which now includes 130 positions (out of 139 planned in its organization charter). The organizational structure of the SCM has been mainly defined, however, the SCM i s facing the task of training its new staff in the area of policy planning, human resources, resource allocation, budgetary planning, performance evaluation, etc. Departments and units within the SCM do not have clearly defined responsibilities and there i s still uncertainty about some issues which continue to be handled by the MOJ. This requires a significant institution building program, extensive training for the SCM's leadership and the staff and a quick upgrading of its technological capacity. The Ministry of Justice i s also affected by the structural changes introduced by the organic laws on judiciary. Some of the Ministry's staff has gradually moved to the SCM. The M O J bears primary responsibility for planning and execution of the budget for the court system, as well as for court infrastructure and equipment. The M O J i s also responsible for most of the international development programs for the judiciary, including EU Phare programs. MOJ needs to strengthen its administrative capacity to manage the court system's budget and to exercise overall administrative oversight of the l2 The amendments to the organic laws of 2005 provide that budgetary authority for the court system will be transferred to the High Court of Cassation and Justice in2008. However, there is an ongoing debate whether this policy change has a valid basis and can be effectively implemented inthe short-term future, and these legal provisions might be amended again. Among EU8 countries, only Hungary and Lithuania have transferred budgetary responsibility from the Ministry of Justice to the judicial system. 34 courts. Development of a comprehensive system of tracking expenditures, conducting analysis of required resources and monitoring their use i s one of the short-term priorities in this respect. Introduction of the position of economic managers in courts, which will interact with courts, SCM as well as the MOJ, will also require certain adjustments in the MOJ's functions. Lastly, the institutional capacity of the judicial training institutions - NIM and NSC - also require improvements. (b) Increasing efficiency of courts: reducing duration of court proceedings and improvingquality ofjudgments. The duration of court proceedings also represents a critical issue. Like in many other transitional countries, an initial explosion of cases in Romania dates back to early 9Os, particularly, in the civil and commercial areas and has its roots in the economic and political changes, including fundamental changes in ownership systems and transition to a market economy. These generated a large number of disputes about property rights and restitution, privatization, bankruptcy, land issues and damage compensation. Despite the increasing demand on the court system, the courts remained under-funded, poorly managed, and, in addition, the best qualified legal professionals hadmovedto better-paid private sector jobs. When the focus of the reformist governments finally switched from re-writing laws and constitutions to strengthening independent and efficiently functioning court systems, the initial attempt was to increase the capacity of the court system through influx of more judges or establishment of more courts. The number of judges in Romania has increased from 1992to 2002 by 25 percent. However, this has not resultedin significant decreases in case backlogs. Further analysis has shown that the primary reasons for slow court proceedings and inefficient work of courts are: inadequate court organization where judges spend too much time on administrative tasks, inadequate number of court personnel and qualified clerks, a poor understanding and use of the court managers, a deficient legal framework regulating the civil and criminal procedure rules, and less advanced case management. Reform measures included in the recent Judicial reform Strategy and an Action Plan have mainly focused on addressing these deficiencies. The quality of judgments also remains a problem: the proportion of cases overturned on appeal decreasedfrom 2002 to 2003, but there continues to be an overturn rate of 30% of the civil judgments that are appealed, which i s quite substantial. It appears that this i s caused by the heavy workload of judges, their limited access to case law and new legislation, poor quality and inconsistency o f legislative acts, inadequate technological support, poor circulation of information within the judicial system, and insufficient training and specialization. Judicial decisions are also often criticized for not being consistent in terms of interpreting legislation in a consistent manner b y courts of various jurisdictions. Ensuringunity and consistency of judicial decisions i s the responsibility of the HCCJ; and the Court has introduced a number of measures in this respect, including publishing its decisions and interpretations of laws. However, the large workload of the 35 HCCJ and a lack of more cohesive standards for judicial review, besides a formal criteria of objective, grounded, court decisions, have not resulted in significant improvement in the consistency of court decisions. (c) Accountability and integrity of the judiciary: the need to step up anti- corruption efforts and develop performance monitoring mechanism. Public opinions surveys in Romania indicate that the courts are not well trusted. It i s widely accepted that there i s considerable corruption. The Bank's corruption diagnosis indicates that courts are the second lowest-ranking institutions in the country (after custom offices) inthe public's level of ~onfidence.'~More than 50% of the respondents of the Bank's survey, and nearly 70% o f enterprises believe that all or most of the judiciary i s corrupt. One in five households that had been involved in a court case reported paying a bribe; roughly half paidin the form of gifts and half in cash. The most often cited reasons for bribery in the court system are to speed up the trial or to assure that a certain person would be assigned to the case. Systemic corruption within the judiciary has also been highlighted - as one of the main obstacles to successful EU accession -- in a number of EU Regular Reports. Under pressure from the international community, as well as domestic NGOs and civil society, the Government has initiated a number of measures to curb corruption in the judiciary andother areas of public administration. In order to prevent discretionary re-assignment of cases by court presidents, a random case distribution system was introducedabout two years ago, and i s now being usedin all courts in the country, supported also by necessary technological means. SCM has taken a more proactive role in investigating public complaints or indications of corruptive behavior of judges, and a number of disciplinary proceedings has increased in the past years. In May 2005, SCM adopted a new Code of Ethics for Judges and Prosecutors, and a Code of Ethics for Court Clerks. Audio recording of criminal proceedings has been introduced in courts of all jurisdictions to ensure integrity of court records. Inorder to improve public trust inthejudiciary, the court system should have an adequate accountability and performance monitoring system. While independence should be respected and protected, this i s not to say that the judiciary should be free from accountability. Romanian courts have few measures to judge how well they are performing, and neither the court presidents nor the leadership of SCM or MOJ, nor the parliament or the public can reasonably judge the effectiveness of a court's operation. Performance measurement in the judicial system i s done primarily on an individual basis and i s limited to reviewing judges' ability to interpret and apply the law, the quality of decisions and the timeliness of actions. There i s a clear need to develop indicators of performance measurement and accountability. This i s a key step that needs to be taken for developing an effective accountability mechanism. Such work has been recently initiated by the SCM , with the Bank's financing (from the PPIBL) and technical advice. Transparency and effective l3 World Bank (2001), DiagnosticSurveys of CorruptioninRomania. 36 monitoring is also crucial for further decentralization of budget responsibilities in the judicial system, and eventual transfer of the main budgetary powers from the MOJ to the judiciary . All project components aim at contributing to an overall goal of increasingaccountability and reducing corruption inthe Romanianjudiciary: (a) Newly rehabilitated court buildings will provide better public access by expanding trial rooms and public access areas. Court registrars would be re-designed in accordance with new planning standards which would allow unconstrained access of court users to court materials, forms, records and archives. (b) Improving efficiency in the operation of courts and reducing delays in case processing will be a necessary component of any attempt to clean up corruption in the judiciary. Development of a cadre of professional economic managers in courts would bringmore transparency into court operations, allocation of resources and accounting for results. Development of a comprehensive statistical system and of a performance monitoring mechanismwould also contribute to enhanced accountability of the judiciary. (c) Judicial accountability can be maintained through consistent enforcing of judicial codes of conduct and reprimanding judges who do not conform to the established standards. Inthis respect, strengthening of the institutional capacity of the SCM and other judicial bodies i s of paramount importance. (d) The qualityof equipmentandinfrastructurevaries considerably from court to court but i s often inadequate. The general atmosphere of the majority of Romanian courts i s crowded, chaotic, lacking security features and adequate space and access for the public. Deteriorated court buildings, inadequate technological support, limitedaccess to case law, lack of information about new legislation, poor circulation of information within the judicial system and insufficient training and specialization are among the reasons for poor performance of the courts. Reforms to the judicial system cannot be implemented in a poor physical environment because the operation of an independent and respected judiciary depends on adequate physical facilities for functional efficiency, security, and the proper separation of functions. Considerations include basic physical conditions such as structural, mechanical and environmental conditions, as well as space planningand design to ensure adequate space to house staff, equipment and records. The functional relationships of these spaces are equally critical for efficiency, transparency and security, and designs that are inefficient or opulent waste investment and operations resources. The case and document management system i s now operational in some courts, but it needs to be further developed and introduced countrywide. The Project will assist the Government in addressing these issues. It i s based on the Government's reform agenda, in line with the EU requirements for Romania's membership in the European Union and provides the follow-up to the policy decisions taken by the Government inthe context of the PALprogram. 37 Attachment to Annex 1 Romania BEEPS-at-a-Glance The EBRD-World Bank Business Environment and Enterprise Performance Survey (BEEPS) i s ajoint initiative of the European Bank for Reconstruction and Development and the World Bank. The BEEPS has been carried out inthree rounds in 1999,2002, and 2005 and covers virtually all of the countries of Central and EasternEurope and the former Soviet Union, as well as Turkey. The BEEPS covers a broad range o f issues about the businessenvironment, and this note presents some simple indicators for the judicial sector. Use of Courts Legal Framework Summary Assessments Percent of firms that have been to court in Percent of firms stating that information on Percent saying the functioning of the the past three years laws is easy to obtain judiciary is a problem doing business 70% 50% 40% 40% 30% 30% 60% 20% 20% 10% 10% 0% 50%. 0% Rom SEE ECA Rom SEE ECA Rom SEE ECA Percent of firms that have used courts to Percent of firms stating that Percent saying they are confident the legal solve an overdue payment (of those firms implementation of laws is consistent and system will uphold property and contract with overdue payments) predictable rights lOOY0fl-------~ 50% 40% 30% 50% 20% 25% 10% 0% 0% Rom SEE ECA Rom SEE ECA Rom SEE ECA Judicial Assessments-Over Time Percent of firms agreeing that ... Judicial Assessments-Across Countries Percent of firms agreeing that , , . All Firms All Firms able to enforce its able to enforceits decisions decisions affordable affordable quick quick honestluncorrupted honesthncorrupted fair and impartial 0Rom-2005 fair and impartial I HRom-2002 4 4 1 o% I ~ ~. OSEE-2005 ORom-2005 0% 25% 50% 100% 50% 75% 100% HECA-2005 25% 75% 38 l- Firmsthat Use Courts Firmsthat Use Courts able to enforce its able to enforceits decisions decisions affordable affordable quick I quick I i honesffuncorrupted honesffuncorrupted fair and impartial fair and impartial 0Rom-2005 aRom-2002 ooA 25% 50% 75% 100% USEE-2005 0% 25% 50% 75% 100% [3Rom-2005 ECA-2005 39 Annex 2: Major Related ProjectsFinanced by the Bank and/or other Agencies ROMANIA: Judicial ReformProject This investment project has emerged as a natural continuation of the Bank's earlier support for the reforms in the judiciary, particularly, through the following instruments: Programmatic Adjustment Loan (PAL) (P008791: Latest ISR -DO Rating: S IP Rating: S ) The Government structural reform program, to be supported through a series of Programmatic Adjustment Loans during 2004-2007, focuses on three main objectives: (i) establishing solid economic growth, (ii) reducing poverty and (iii) the European Union. The program i s joining divided into two parts. Thefirst part focuses on reforming core public sector institutions and processes, including judiciary, civil service, policy formulation, transparency rules and public expenditure management. Thesecond targets the public-private interface and includes such areas as: privatization, energy sector, mining and infrastructure, business environment, labor markets and capital markets. With respect to the justice sector, the PAL program provides support for strengthening of the institutional independence of the judiciary through the enhanced role of the Supreme Council of Magistracy; increasing accountability of judges for timeliness and quality of their work; a more efficient organization of the court system; and improving the system of court financing. PAL-1 was approved by the Board in September 2004 and has been fully disbursed. PAL-2 i s currently under preparation and i s scheduled to be presented to the Boardin 2006. Public and Private Institution Building Loan (PPIBL) (P069679): Latest ISR -DO Rating: S, IP Rating: S The goal of the Private and Public Sector Institution BuildingLoan Project (PPIBL) i s to provide the required technical assistance to implement the policy measures supported by the PALS, including reforms in the justice sector. PPIBL has financed a Court Rationalization Study; technical assistance, IT equipment and training for SCM; development of regulations for economic managers and budgetaryplanning; and assistance to NIM. Management (P077765): Latest GRM-DO Rating: MS, IP Rating: MS IDF Grant: Strengthening the Institutional Capacity for Legal Drafh'ng and Regulatory The Grant has been fully disbursed and closed in September 2005. The objective of the Grant was to assist the Romanian agencies involved in legal drafting and regulatory management to develop their institutional capacity in legislative drafting and regulatory management. The activities included: developing an effective framework for legal drafting, including design of regulatory impact assessments (RIA); as well as strengthening budget and capital investment management for the court system. Other Partners During the preparation of the project, the various donors supporting the judicial sector in Romania have met on a regular basis and synchronized their activities as far as the volume of 40 their assistance as well as their respectivetiming are concerned. The Government's Strategy for the Reform of Judiciary for 2005-2007 and the Action Plan serve as an effective tool for rational allocation of external resourcesin support of various reform activities. The European Union has been one of the major donors in the Romanian justice sector even before the accession negotiations started in 2000, mostly through EU PHARE programs. The most recent PHARE program is Sector Programme 2004-2006 in an amount of EUR 45.73 million (designed to cover implementation activities during 2005-2009). The Bank has held intensive discussions with the Romanian counterparts, as well as with the EC Delegation in Bucharest to ensure that the Bank loan would not overlap with the activities to be financedfrom the PHARE program 2004-2006, and the Bank loan would target the areas which are of true importance for the reform process. Unlike many other sectors in Romania, the court system will not directly benefit from the EUstructuralfunds which will become available after the accession date of January 1, 2007. Therefore, the Bank loan with the implementation period ending in October 2010, and the EU PHARE program ending in 2009, might well be the last major external investmentsinthe court system. A more detailed descriptionof various donors' activities follows: EuropeanUnion 1.PHARE2002 (a) Project R002/IB/JH-09 Twinning "Strengtheningthe Functioning of the RomanianJudiciary and its representativebody - Superior Council of Magistrates" (EUR 750,000; 2003-2005). The project aims at contributing to the improvement of the operationof the Romanianjudicial system by enhancing the institutional capacity and functioning of the SCM and strengthening of the independenceof the Judiciary. (b) Project RO-02/IB/JH-lO Twinning "Follow up to the assistance for the national Institute of Magistracy and for the Training Centre for Clerks and Other Specialized Personnel" (EUR 900,000; 2004-2005) (c) Project 2002/000-586.04.17 "Support for the improvement and the enforcement of legislation andjudicial decisions on bankruptcy" (EUR 1,550,000 2004-05).The project provides assistance to MOJ in assessing the existing bankruptcy system and in proposing amendments to the bankruptcy legislation. 2. EUPHARE2003 (a) PHARE RO 2003/005-551.04.15 "Further strengthening the institutional capacity to fight against corruption" (EUR 2,000,000;2004-2006). The program will include two components: (i) Strengthening the institutional capacity of the National Anti-corruption Prosecution Office (NAPO); and (ii) provision of IT support to NAPO. (b) PHARE 2003/005-551.04.16 "Assistance to the reform of juvenile justice in Romania" (EUR 2,000,000; 2004-06). 41 (c) PHARE 2003/005-55 1.04.17 "Support for the improvement of the penitentiary system activity'' (EUR 4,000,000 2004-2006). 3. EUPHARE 2004--2006 The program, in an amount of EUR 45.73 million, will focus on four major areas: (a) Strengtheningjudicial independence through support to SCM (EUR 3.15 million); (b) building a professionaljudicial system: through support to NIMand NCS (EUR 2.5 million); (c) improving the administration and access to justice, including promotion of mediation and legal aid system (EUR 3.5 million); and (d) efficient management system - primarily through completing court automation process (EUR 36.58 million). USAID/ABA CEELI 1.Rule of Law program ($800,000) - assistancefor development and implementation of ethical standards and norms, support to SCM in areas of codes of ethics and judicial evaluation (June 2003-May 2005). 2. Rule of Law program ($1.06 million) - assistance, on a pilot basis, in implementation of random case assignment system, development of ADR, judicial independence and institution- building(May 2000- May 2003). 3. Stability Pact Anticorruption Initiative ($70,000) - training for judges on interpretation of anti-corruption laws, Freedom of Information Act (FOIA) Act, and on ethics; publication of the reports and FOIA manual. 4. Program for 2005-2006: assistance in criminal justice ($450,000); technical assistance to MOJ and SCM ($350,000). NetherlandsGovernment 1. Assistance to the penitentiary system ( $ E m 2.0 million; 2005-2007). 2. Strengthening training capacity of NJM(EUR490,OOO; 2000-2003) 3. Assistance in the area of juvenile justice (2003-2005). 4. The constitutional impact of accession at the national level of the Candidate Countries (Regional Programme - 2002-2005). U.K.Government 1. Strengthening the institutionof probation inRomania. 2. Specialization for judges/lawyers on refugee-related issues - training of judges andlawyers on the new procedures regarding asylum seekers in Romania and developing a resource library on refugee issues. 3. Assistance in the area ofjuvenile justice. 4. Development and promotion of mediation inRomania. 42 Annex 3: ResultsFrameworkandMonitoring ROMANIA: JudicialReformProject ResultsFramework For monitoring progress with implementation of the Strategy for the Reform of the Judiciary, 2005-2007, and of the Action Plan, the Government of Romania has established a Monitoring Commission which includes: the Minister of Justice, the President of SCM, the president of the High Court of Cassation and Justice, the Prosecutor General, directors of NIM and NSC, one representative from the legal profession, one representative of Magistrates' Associations, and one representative of the Ministry of Public Finance. In order to support the Monitoring Commission, a Technical Working Group has been established comprising representatives of SCM, MOJ, NIM, NSC and the Ministry of Public Finance. The Commission meets every quarter, or upon request. For each session, the Technical Working Group prepares a quarterly progress report, which allows monitoring of progress under the Strategy on a continued basis. These arrangements have been in place since March 2005, and a number of the Monitoring Commission's meetings have taken place already, some of them attended by the President of Romania. In addition to these sector-wide monitoring mechanisms, the SCM and the MOJ will be responsible for overall monitoring of the project. The DIEFP will be responsible for consolidating information provided by various project counterparts, as well as from courts, in order to track progress against the monitoring plan. This information will be provided regularly to the Project Steering Committee and the Bank. There will be a comprehensive evaluation of progress against project indicators on an annual basis. For these purposes a public opinion survey will be conducted by an independent organization and financed under the project. The results of the public opinion survey and annual progress reports will be used for analyzing the intermediate outcomes of the project and adjusting project activities or priorities, if needed. The results of monitoring will be widely publicized not only within the judicial community, but for the general public as well. Successful monitoring of the project will require strengthening of the statistical and information management procedures in both the SCM and MOJ, which i s also supported by the project (within Court Administration and Institutions Buildingcomponents). Financial Monitoring Reports (FMRs) will be prepared semi-annually, as described elsewhere in this PAD. An annual external audit will also be conducted. 43 PDO ProjectOutcomeIndicators Use ofProjectOutcome Information (i) To increase efficiency of the (i)Improved capacity of the 'rovide evaluation of project Romania courts, and (ii) to court system to adjudicate esults in strategiesand action improve accountability of the disputes (in terms of fairness, )lamto Government for judiciary which should result in speed, affordability and ability to issessingthe need and design of reduced corruption and more enforce decisions); uture investments. transparent act ofjustice. (ii) improved court facilities, in line with international standards; (iii)improved public image of thejudiciary; (iv) enhanced competence, professionalism and integrity of judges and court staff. IntermediateOutcomes IntermediateOutcome Use of Intermediate Indicators OutcomeMonitoring Component 1 Court Infrastructure Rehabilitation (a) renovated court buildings -- about 10renovated court YR3-4: Correlation between with better accommodations for buildings increasedefficiency of court trials, public access and security -- increased No. of court proceedings and the use of features proceedings per weeumonth due renovated buildingswill be used to availability of trial rooms for adjusting design standards (monitored court by court) andtargeted buildings, if (b) new design standardsfor -30 % inreduction of case necessary. court buildings reflectingbest delays due to space limitations internat. practices and cost -- new design standards YR3-4: Successful efficiency principles developed and adopted by MOJ, implementation of new design along with a schematic design standards will be rolled out to manual other court buildings Component 2: Strengthening of the administrative capacity of courts (a) improved case management -- new case management YR3-4: Iftargets for introducing processes; techniques are used by 30% of new case management techniques courts; are not met, it might require (b) effective integration of -- case backlog is reducedby additional training efforts under economic managerswithin 35%; the project, or other measures; courts' structure; -- length of court proceedings i s reduced by average 30%; YR2-3: Slow decrease incase (c) new internal working -- economic managers emdoved backlog mav indicatethat other 44 irrangements within courts through competitive process in neasures incourt administration whereby nonjudicial tasks are sourts of all levels; Irerequired. transferred formjudges to court -- about 50%. of economic Zlerks; managers trained; r'R2-3: successful integrationof -- about 50% of economic :conomic managers within courts (d) public communication managers with satisfactory ihouldlead to greater efficiency strategy is adopted by SCM performance ratings; )fcourt operations andreleaseof -- case registration and other non- udges and court presidents of judicial tasks are transferred from ion-judicial tasks. judges; -- public communication strategy fR2-4: effective public i s adopted and implemented :ommunication strategy should ead to improvedimage of the udiciary (will be monitored hroughpublic surveys) Component3: Integrated Resource Management System for the Judiciary No. of court managers with an Y1: A formally agreed technical (a) development of a resource integrated view of up-to-date and requirements specification for the management system for courts; accurate information regarding ResourceManagement System resource use, resource (RMS). availability, and court operations performance (court specific). Y2: RMS Implementation contract signature. No. of key offices at the national level (MOJ, SCM, HCCJ) with Y3: RMS Prototype an integrated view of up-to-date demonstration(s). and accurateinformation regarding resource use, resource Y4-5: RMSnational roll-out to availability, and court operations courts and executive level performance (inthe aggregateas agencies. well as court-specific). About 50% of court records stored in fire and waterproof (b) upgraded archive system for devices. Y1: A formally agreedtechnical courts requirements specification. Y2: Archive systemsupply contract signature. Y2-Y3: Nationaldelivery of archive devices. Component4: Institutionaldevelopment of judicial institutions 45 (a) Organizational structure of -- SCM effectively assumes YR2-4: Indicatorsof SCM's SCM i s completed and fully functions of budget planning, performance will be used for functional: policy formulation and adjusting specific assistance for performance monitoring; SCM under the project. (b) MOJ's capacity incapital -- 50% of administrative investment planning i s improved; personnel of SCM trained; YR2-4:Improvements in -- 50% of MOJpersonnel trained; performance of NIMand NSCC (c) New tests and qualification -- new examination procedures will be monitored through users' exams procedures are usedby are successfully piloted by NIM; surveys and adjustments in NIM; -- new strategy for NSCC is project activities might be adopted and implemented; required (d) National School of Clerks' -- 30% increase intraining capacity is enhanced. delivery by NSCC; -- 80% of positive evaluation of NSCC training by court presidents 46 aFk E 8 MaE: 00 d f - .-s I a 4 0 8% 8% $ 8% g 8 vl a P 8 P 48 $ a 8 8 8 8 8 0 N 2 0 i- 0 N 8 Annex 4: DetailedProjectDescription ROMANIA: JudicialReformProject Component 1: Court InfrastructureRehabilitationComponent($90.0 million) There i s a clear link between the project's development objective-increasing the efficiency of the court system-and the rehabilitation of the judiciary's physical infrastructure. Reforms to the judicial system cannot be implemented in a poor physical environment because the operation of an independent and respectedjudiciary depends on adequate physical facilities for functional efficiency, security, and the proper separation of functions. Considerations include basic physical conditions such as structural, mechanical and environmental conditions, as well as space planning and design to ensure adequate space to house staff, equipment and records. The functional relationships of these spaces are equally critical for efficiency, transparency and security, and designs that are inefficient or opulent waste investment and operations resources. Security within the court system and its facilities has obvious multiple implications for the functioning of the judiciary, and has been largely mishandled in the old regimes. The safety of the public involves the proper handling of the movements of criminal convicts into and within the building and in courtrooms, as well as safety during crowded high- profile court hearings. The safety of all witnesses, especially protected witnesses, i s critical to fair hearings. The safety ofjudges and court personnel has serious implications for the integrity of judges and the work of the court. The potential for intimidation of judges and other personnel influences case assignments and the handling of corrupt or high profile cases. Easy access to judges through encounters in public areas facilitates corrupt practices. There are several important approaches to these problems, but the proper functional planning of the courts i s a critical foundation. Perhaps equally important to the project's objective i s the public image of the judicial system. Especially in a country that has undergone transition from authoritarian control and a period of disrespect for liberal judicial traditions, the physical conditions of court buildings and the way the public and officials are treated in them clearly proclaim community values with regard to justice, and either bolster or undermine citizens' respect for the judiciary. Finally, the cost-effective use of investment resources demands a set of planning standards that codify the elements of a national consensus on how the judiciary should function. To support the project's development objective, and because investment in institution- building-training, information technology, case management and public access-cannot succeed in a marginal physical environment, the project will provide substantial assistance both in physical rehabilitation and in the establishment of sound long-term court planning and design concepts, with guidelines establishing space requirements and cost and environmental objectives. Infrastructure rehabilitation, particularly where facilities have been neglected or are severely limited, i s costly. Previous judicial reform projects in the Europe and Central Asia Region have included infrastructure components 50 that represent about half of total project funding. In contrast, the higher proportion of funding for infrastructure envisaged for this project reflects: (i)more highly developed a investment capacity in the MOJ; (ii)the higher costs of civil works in a country that i s moving to EU accession with the related regulatory environment and higher standard of living; and (iii)the larger size of the country and its population, which leads to proportionately more civil works incomparison to the costs of institution building. Generalphysical conditions A wide range of physical conditions can be found in the Romanian court system. Very few recently built court buildings are modern and even opulent in comparison to those of many industrialized countries, but the most common condition i s characterized by severe overcrowding, and in many cases, long-term "temporary" facilities that are physically deteriorated, and inappropriate from the standpoint of security and an efficient, independent judiciary. There i s a general shortage of trial rooms in busy courts, which leads to undue delays in scheduling court hearings. The working conditions of judges and clerks, and the lack of adequate public space presents a depressing and potentially dangerous environment. Judges' offices are severely overcrowded, with many judges forced to share small desks in shifts and leaving almost no room for basic resources, files and equipment. Public areas are either limited or nonexistent, so citizens and litigants cannot get adequate access to court information and files. Court files and other materials are kept in inadequate and unsafe conditions, vulnerable to fire, misplacement and other hazards, presenting a serious threat to the integrity of court documentation. Security arrangements in most court buildings are highly inadequate and in some cases, clearly put the public and court personnel at highrisk. Virtually all court buildingsrequire extensive up-grading of structural and basic technical infrastructure in order to function at minimally acceptable levels. Seismic conditions in Romania and the recent refinement and updating of earthquake standards for the country require structural strengthening of virtually all public buildings. The needed investments in information technology for the courts cannot effectively be made without addressing these problems. Governmentprogram The Government of Romania i s undertaking a program of construction and rehabilitation but a lack of funding has limited this work to a few high-profile buildings such as the Palace of Justice (through a bi-lateral guaranteed loan) and a few regional courts. Feasibility studies - the first step in the design of public facilities under Romanian public expenditure law - have been completed for the rehabilitation, expansion, or new construction for 25 courts, but the limited state budget funding has put these on hold. A small technical unit in the MOJ's infrastructure department i s implementing these activities. The Government program i s now budgeted at about $30 million over the next four years, and is too low to enable the Government to address many additional court infrastructure needs which, while less dramatic, represent serious constraints on the progress of judicial reform. When matched with the Government's program, the Bank 51 project will allow MOJ to move more quickly on a much broader range of court construction needs. Design Standards Some essential court design principles reflecting soundpractices appear to have been, for the most part, historically accepted in the Romanian system. These include (i) separation of key functions; (ii)security zones, and (iii)openness to public access where appropriate, including case archives. However, in spite of the fact that these principles are accepted in Romania, they are difficult to follow in over-crowded and temporary court facilities as well as in many older buildings. Many court buildings were built for other uses and have in the past been adapted for judicial functions, and over the years modified in inappropriate ways, resulting in inefficient and counter-productive layouts. Government experience with recent court construction indicates that because of the lack of coherent design standards, new designs have been implemented without sufficient regard for cost-effective construction and operations. Standards are needed to define minimum space and circulation requirements, as well as appropriate materials and detailing to ensure a long-term cost-effective investment. The componentwillfinance. (i)Rehabilitation and new construction of priority court buildings throughout Romania, to serve the objective of an independent, transparent and efficient judiciary and to meet enhanced standards of security, fire-life safety, accessibility and seismic resistance, as well as to improve the poor public image of the judicial system. The court buildings to be included have been selected through a prioritizing process based on criteria that were agreed by stakeholders in the judicial system in Romania. These include the degree to which each court meets requirements for: Current structural and seismic codes; Adequate space (degree of crowding of staff and functions); Circulation traffic flows, access, security, zoning of functions; Technical infrastructure (climate control, supervision and data systems, etc.); Geographical distribution (ensuring national coverage and court accessibility); Case load and type of court; Expected position in court restructuring program, and Status of Feasibility Study documentation andeconomic analysis A transparent process of evaluating and weighting resulted in a "short list" comprising about 25 buildings (of which 5 are new constructions) with a total investment value (estimated cost of design and works) of about $100 million. The estimated costs for the proposed investments range from less than $600,000 to over $10 million, with the average at about $3 million. The list represents major capital investments, which together with the ongoing Government program would eventually meet 54% of Romania's major capital investment needs incourt infrastructure. 52 (ii) Development of design standardsbased on international practice The absence o f planning standards and programmatic instructions as a basis for physical design remains an important gap in the infrastructure rehabilitation process. These standards are essential to enable reform concepts to be put into practice. The project will support the development of a schematic design manual that would serve the judicial system in the long term as well as inthe initial investments. The M O J i s committed to establishing court planning and design standards, to ensure that new investments meet fundamental principles of functional appropriateness and efficiency, and therefore included the development of standards in its request for Technical Assistance under the proposed project. Standards for space design and quality of finishes i s required both for ensuring that courts function efficiently and safely according to modern principles of an independent judiciary, and to control costs, maximize the use of funds and reach a fair and rational distribution of resources among potential investments. National design guidelines and carefully established space programming standards would provide clearer parameters for local authorities and design architects. The MOJ understands the importance of obtaining agreement on such standards prior to the selection of architects, and the need for consensus among judges, court staff and the legal profession. Based on experience with other Judicial Reform projects in the region, a program of review and discussion through workshops led by an experienced international court design facilitator, and attended by key stakeholders i s extremely beneficial. A two-stage process allowing for the development of standards early during implementation was agreed with the MOJ. Initial work has been started providing for a design review and preliminary guidelines, and to set the stage for a deeper review, consensus buildingand detailed design manual funded under the Loan. MOJ capacity and Capacityof ConstructionIndustry The level of investment for infrastructure rehabilitation requested by the Borrower and proposed by the team i s substantial, and will require, in addition to efficient implementation management, good construction industry capacity. Romania has been undergoing an expansion of its construction industry due to strong private sector investment, and has also attracted foreign contractors, some of which have established permanent offices in Bucharest. The capacity of both the construction industry and the M O J to implement the program was assessedduring Appraisal and found to be adequate, given the proposed strengthening of the MOJ, and establishment of the DIEFP. Nonetheless, implementation must be rigorously monitored in order to effectively carry out this rehabilitation program within the Loan period. To this end, the MOJ has agreed construction management and technical auditing oversight, in addition to the supervision arrangements outlined below, by an independent international firm. In addition, the MOJ has an experienced construction and maintenance unit in the Capital Investments Department that will require a degree of strengthening in order to address the new challenges presented by the project. A new Deputy Secretary General with strong experience in investment prioritizing and implementation has taken over responsibility for the Capital Investments Department, and has a strong vision for its efficient 53 management and the cost-effective use of resources. The proposed subcomponent for Planning and Design Standards will provide support for this objective. Construction supervision i s regulated by the Romanian regulations and entails the assignment of independent site engineers. These will be in addition to MOJDIEFP site supervisors. See Annex 6 for a full description of project implementation arrangements. Feasibility Studies for most candidate structures have been completed, and some designs have been completed as well. Under grant funding, the designs will undergo review through a process related to the development of the Planning and Design standards subcomponent Component 2: Strengthening of the Administrative Capacity of Courts ($11.05 million) This component aims at assisting the Romanian courts to adopt modern administration techniques to increase their productivity, improve the quality of their services and restore confidence in the judiciary. The scope of the component was discussed at two meetings with SCM representatives and reflects proposals submitted by the SCM to the Bank team. The following activities are the focus of the Court Administration component: (a) Development and carrying out of a program to reduce case delays and backlogs. Initially, a comprehensive assessment would be carried out for identifying causes of delayed court proceedings and excessive case backlogs. Specific actions identified by the assessment would be financed under the project which would include, inter alia: revisions of Civil Procedural and Criminal Procedural Codes, design of active case management techniques and procedures, development of time standards for various types of cases, development of monitoring processes, promoting out-of-court settlement mechanism, etc. (b) Development of a framework for economic management of the courts, including regulatory and organizational arrangements for economic managers. An institute of economic managers was introduced by the new judicial laws in summer 2004, and some basic provisions regarding selection, recruitment and trainingof economic managers have been established by the latest amendmentsto the judicial laws in July 2005. However, a more systemic approach i s necessary for defining an overall concept of economic managers, their functions and responsibilities, and their relationship with court presidents, economic-financial departments of courts, as well as with MOJ and SCM officials. The project would assist in developing secondary regulations for economic managers (from recruitment guidelines to detailedjob description); training of economic managers and court presidents and preparation of manuals and other facilitating materials for day-to-day work of economic managers. (c) Optimization of courts' operational processes. The project would assist in re- designing internal working arrangements within a court with the aim of relieving judges from administrative and non-judicial tasks and strengthening capacity of courts' non-judicial personnel to handle court's operational functions, including 54 case registries, archives, recording of court proceedings, court statistics and case monitoring, etc. (d) Public Education / Information. Strengthening the SCM's and courts' capacity in the area of public information and external relations: this would include development of a comprehensive communications strategy for SCM, training for SCM and court's public relations personnel, development of guidelines on relations with the mass media, publication of materials promoting legal awareness in general and awareness about the ongoing judicial reform efforts. Component3: CourtInformationSystem($21.5 million) The MOJ's "IT Strategy for the Reform of the Judiciary 2005-2009", approved by the Government in July 2005, specifies a number of information systems initiatives to support the conduct of judicial processes and the management of the judicial system. Broadly speaking, the IT Strategy anticipates EU and Government funding for the information systems initiatives to support court operations. These include case and electronic document management, as well as intranetjinternet access to legal and case- related information (for the judicial personnel and the public). EU and Government funding will also provide for the network and computing platform, upon which the MOJ will roll out these operational systems to all courts inRomania (by the end of 2005). The IT Strategy anticipates World Bank financing for a comprehensive Resource Management System (RMS) for the judicial system. The RMS will cover financial, physical, and human resource management functions. It will also cover management support functions, both reporting and analytic. The RMS would support management functions at the level of the individual courts, as well as at the MOJ, SCM, and the HCCJ. The system will operate over the EU/Government funded wide area network and will obtain reporting information from the court-level operational systems. The use of industry standard technologies and interfaces specifications will minimize compatibility issues. The MOJ will technically operate the RMS. Access controls and data structures will be aligned to serve each entity's roles and responsibilities. An inter-agency body will govern the MOJ's service levels for the operation and management of the network, system and information stores. The inter-agency body will also govern evolution of the system. This may include, for example, functional enhancements or changes in the structures of information and authorizations, in response to changes in roles and responsibilities. In addition, the same system governance body should govern the evolution of the operational level systems. This may include updates and enhancements to the ECRIS software, for example, in response to changes legal procedures andor other judicial practice reforms arising from the work of the SCM. Technical support to the first instance courts will be coordinated at the level of the second instance courts. The MOJ will provide technical support from the national level. 55 The IT Strategy envisions distance learning capabilities delivered over the wide area network. Among other things, this could augment the NIM's and NSC's capacity to deliver training services. Given the large amount of training associated with the implementation of the resource management system and the overlap with the target audiences, the MOJ i s considering incorporating NIM and NSC-linked distance learning facilities into the Bank-financed, resource management system initiative. The M O J anticipates using a single-responsibility contract to obtain the resource management system. This contract would cover: (a) detailed requirements analysis; (b) configuration and customization of a standard, enterprise resource management "ERP" software package and related on-line analytic processing "OLAP" software; (c) hardware and software supply/installation; (d) system integration; (e) management, operational, and technology training; (f) system testing and validation; and (8) maintenance and technical support. The resource management system would serve approximately 5,000 users, comprising 20-25 individuals at each of the roughly 200 judicial facilities, and approximately 200 individualsat the MOJ, SCM, and HCCJ. Prior to the acquisition of the resource management system, the M O J plans to elaborate more completely its information systems strategy and planning. This Bank-financed activity will take the IT Strategy as a point of departure and, employing formal systems analysis methodologies, analyze and document the key business processes in the judicial system and the corresponding information flows. These analyses will be combined with technological considerations, including system performance, security, and business- continuity considerations, to develop an overall systems architecture and "sub-system" descriptions. These, in turn, will inform actions plans for implementation and maintenance of the set judicial information systems (including the Bank-financed resource management system). The system descriptions and actions plans, in turn, will drive the detailed systems requirements specifications. These, in turn, form the basis of the relevant tender documents. In addition, the M O J anticipates that the consulting firm would assist the M O J in supervising the procurement process for the resource management system, as well as assist inthe supervision of its implementation. The EU/Government funded activities will lead to a shift to the production of electronic records over time. They will allow the capture of the existing paper records in electronic form (for improved access and safe back-up). However, the need to properly store and manage the inventory of paper will remain for many years - both inthe transition period, as the records are scanned, as well in the long term, for legal documentation purposes. Accordingly, there i s a pressing need to upgrade the physical management and protection of the paper records - while they remain stored in the courts and when they are eventually moved to a central archive (i.e., after electronic storage and access i s proven reliable). The project will finance proper archival filing cabinets (Le,, fire and water proof, locking, wheeled cabinets) for courts. Subject to further requirements and cost analysis, investments of US$20-30 thousand per court, would lead to approximately US$ 5 million for the court system. 56 Component4: InstitutionalDevelopmentof JudicialInstitutions($6.61million) This component would provide assistance to the followingjudicial institutions: SCM - in the area of development of long-term judicial policies, monitoring judicial performance, and public communications; MOJ - in the area of capital investment planning, judicial statistics, human resources management, budget planning and internal and external communications; NIM- in the area of development of new qualification tests for judges' selection and promotion; development of training courses andcurricula; NSC - in the area of strategic planning; development of certain training courses and delivery of training through distance learning programs and other innovative methods; HCCJ-in the areaof budget planning and IT upgrading. This component would also finance, among other things, specific tools to monitor project results, including public surveys and court user surveys. A comprehensive baseline survey will be carried out immediately after effectiveness in order to provide a snapshot for the current reality. The baseline survey methodology would be based on the monitoring indicators. Two more surveys would be carried out over the project implementation period. In addition, court user surveys, which are smaller and quicker efforts, as well as relatively inexpensive, would be carried out in order to monitor the backlog and processing standards in the busiest courts. 57 Annex 5: Project Costs ROMANIA: Judicial ReformProject Government World Bank Total Project Cost By Component andor Activity financing financing Project Cost U S $million U S $million US$ million Court InfrastructureRehabilitation 14.9 85.0 99.9 II of Strengthening the Administrative Capacity Courts II I I I I 11.05 I 11.05 I Integrated ResourceManagement System for the Judiciary 26.6 21.5 48.1 Institutional Development of Judicial Institutions 1.2 6.61 7.81 TOTAL BASELINE COST 42.7 124.16 166.86 Physical Contingencies 5.0 5.0 I Total Proiect Costs I I I I 42.7 I 129.16 I 171.86 World Bank Loan 130.0 58 Annex 6: ImplementationArrangements ROMANIA: JudicialReformProject The project will not create new institutions but will support the existing government and judicial entities by setting up implementation structures within these entities. The Ministry of Justice (MOJ) will take full responsibility for all technical aspects of the implementation, monitoring, financial management, as well as procurement. At the policy level, aProject Steering Committee (PSC) would be constituted, comprised of representatives from the Ministry of Finance, the Ministry of Justice, the Superior Council o f Magistrates, the National Institute of Magistracy (NIM),and the High Court of Cassation and Justice. The Project Steering Committee will be responsible for overseeing project implementation and making decisions on significant implementation or policy issues. The PSC will meet at least quarterly to review quarterly and annual work programs, and will ensure coordination and synergies of the project with the other programs in the justice sector funded by external donors. The MOJ will take full responsibility for all technical aspects of the project implementation, including procurement, financial management andmonitoring. M O J has established (Government Resolution No. 1125/2005) the Department for Implementation of Externally Financed Projects (DZEFP) which would be responsible for day-to-day implementation work, including procurement of goods, works and consultants' services, disbursement of funds and financial management, audit, and control, monitoring and reporting. This Department i s an integral part of the MOJ structure; while primary responsibility of this Department during the first 3-4 years will be implementation of the Bank-financed project, it will eventually assume responsibility for other capital investment projects in the justice sector, thus taking full advantage of the experience gained b y the Department's staff with respect to the Bank-financed project. DIEFPwill also report to the Project Steering Committee on a regularbasis. SCM will be responsible for implementation of the court administration and institution building components (except for MOJ part), and will be assisted by DIEFP with respect to procurement, financial management and other technical aspects of project implementation. S C M and MOJ will enter into an internal agreement defining their respective responsibilities and coordination mechanism. The Working Groups within SCM, established for implementation of the PAL and PPIBL, will continue functioning and will provide substantial input in project implementation, including preparation of the terms of reference (TORS)and subsequent carrying-out of technical assistance for the court administration and institution building components of the project. In addition, an Evaluation Committee will be established for evaluating the bids submitted for various project activities. The Evaluation Committee could comprise representatives from different implementing agencies (e.g. SCM and MOJ). 59 DIEFP Staffing and Structure The core staffing of the DIEFP will include: a Director, a Deputy Director, 2 architects, 2 civil engineers, 1legal advisor, 2 procurement specialists 2 financial specialists, an IT specialist, 2judicial specialists (from SCM) and 1administrative assistantjinterpreter. At the beginning of the project, a core staff - about 6-7 people- will be hiredor seconded to DIEFP, and the numberwill increase towards the end of the first year of implementation, with an increased scope of procurement, technical and financial work. It i s currently envisioned that some staff will be transferred to DIEFPfrom the existing departments of MOJ (e.g. Department for Capital Investment, ITDepartment, etc.), and some staff will be hired through a competitive process to provide particular expertise which i s currently lacking at the Ministry. Due to the two-pronged nature of the Project, the DIEFPwill include 2judicial specialists who will be liaisons for the SCM. These specialists will have the following functions intheir respective areas of expertise: Prepareheview technical specifications for the TORSandprocurement packages related to the respective sub-components. Ensureconsistency between the activities and policies of the Project and those of their respective sectors; - Participate in contract evaluation and negotiation committees; - Contribute to the accomplishment of the implementation policies and procedures of the SCM sub-projects developed within the project; Follow the progress accomplishedduring the implementation of the SCM sub-projects; Supervise and monitor the ongoing contracts related to the SCM. Working Groups at the SCM, established for implementation of the PAL and PPIBL, will continue functioning and will closely cooperate with the MOJ's DIEFPon the activities supported by the project. It is also envisionedthat several Regional Project Coordinators will be appointedin several courts outside of Bucharest who will be serving as liaisons with DIEFP. This i s particularly important for the Court Infrastructure component of the project. 60 ImplementationArrangementsChart 7 WorldBank T (5 members) I I Special Account Ministry of Finance represented by at least Secretary of State Ministry of Justice represented by at least secretary of state SCM represented by president High Court of Cassation and Justice representative d l DIEFPDirector I I $ I Co actors 13-15 staff members Designers 1Director Builders 1Deputy Director Training providers 2 Architects 2 civil engineers 1legal advisor + 2 procurement specialists 2 financial specialists 2 IT specialists 2judicial specialists (1from SCM) 1administrativeassistandinterpreter 1' Tender Committees \L ConsultancyEntity Public works IT Site engineers Continuous training I MinistryofJustice Superior Councilof Magistrates Working Groups Specialized departments Specialized departments Courts of Appeal National Institute of Magistrates Tribunals National School of Clerks 61 Annex 7: FinancialManagementandDisbursementArrangements ROMANIA: JudicialReformProject FinancialManagement 1. Summary Country Issues. The first Country Financial Accountability Assessment (CFAA) for Romania was finalized in December 2003 and concluded that the overall fiduciary risk associated with the public financial management and financial accountability arrangements of the Romanian government administration i s considered to be moderate, with the systems for accounting, financial reporting and internal control representing the areas with the higher risks and budgeting, cash management and external audit and Parliamentary oversight representing the lower risks. The implications of the CFAA for the project have been addressedby the following actions: - A detailedreview of the systems was performed for the implementing entity (MOJDIEFP); - The implementing entity will set up a distinct project-specific accounting ledger; - Project accounting staff will be appointed; - The format of the F M R s and audit TORSwill be agreed with the implementing entity; - Project financial statements will be audited by an independent auditor annually. Strengths and Weaknesses. The significant strengths that provide a basis of reliance on the project financial management system include: (i) the simple funds' flow and centralized financial management arrangements; and (ii)the satisfactory M O J accounting and reporting software system. There are no significant weaknesses of the project financial management system. Implementing Entity. The newly established Department for Implementation of Externally Financed Projects (DIEFP) within MOJ will be responsible for the financial management aspects of the project. Its fiduciary capacity has been strengthened. The Loan Agreement will be signed between the World Bank (IBRD) and Romania, represented by the MoPF. Funds Flow. Project funds will flow in respect of each of the sources of project financing as follows: (i)theBankloan, bydirectpaymentsor viathe SpecialAccount (SA), which willbe replenished on transactional methods usingStatements of Expenditure; and 62 (ii)Governmentcounterpartcontribution, viadedicatedTreasuryprojectaccounts. A Special Account will be opened at a commercial bank and on terms and conditions acceptable to the Bank. Foreign currency amounts will be exchanged as neededin local currency (RON), to cover payments for eligible expenditures in local currency to suppliers. Government counterpart contribution payments will be made from separate Treasury project accounts, being sub-accounts of MOJ's main budgetary Treasury account. These contributions will be received monthly in accordance with normal budget procedures. Staffing. DIEFP will include a finance team comprising a financial manager and an accountant. The project finance team will work closely with the existing MOJ Budget, Finance and Accounting Department. Accounting Policiesand Procedures. The project's accounting books and records will be maintained on an accrual basis and denominated in Romanian L e i (RON) with the exception of the books and records in respect of the Special Account which will be maintained inthe currency of the IBRDLoan. DIEFP will built upon the existing MOJ accounting procedures and internal controls to ensure that all project procedures and controls are adequately documented, contract monitoring and invoice payment procedures are put inplace. 2. Audit Arrangements Internal Audit. M O J has recently established its internal audit department. It i s anticipatedthat the internal audit department will review the project's financial management arrangements. The internal audit department will include in the annual work program the Project, as part of MOJ's overall activities. However, the internal audit department has, so far, relatively limitedexperience, being recently established. As the recently established MOJinternal audit department continues to develop, the project will rely to the extent possible on it for the internal audit of the project. External Audit. As of the date of this report, the Borrower is incompliance with its audit covenants of the Bank- financed projects. The Project will be audited annually both b y an audit firm and on terms of reference acceptable to the Bank. The terms of reference for the audit will be agreed by November 10, 2005, and will be attached to the Minutesof Negotiations. The audit scope will include the project's books and records as maintained by the implementingentity, all withdrawal applications, and the Special 63 Account. The audited project financial statements together with the auditor's opinion thereon will be provided to the Bank within six months of the end of the reporting period, beingthe fiscal year. Inaddition, the RomanianCourt of Accounts (CoA), the country's supreme audit institution, will continue to perform ad hoc external audits of the implementing entity, including of this project. The CoA will perfom an operational review of the project to look at the specific issues related to governance, efficiency and performance, as the CoA has performed such an operational review and has presented its Performance Audit Report on the General Cadastre and LandRegistration Project in May 2005. The most recent audit report prepared by the CoA, dated 2004 and covering FY 2003 for M O J has been reviewed. Most of the points raised by the CoA have been satisfactorily addressed by MOJ and there are some remaining points in the course of being addressed by some of the MOJ's subordinated entities, before the CoA will confirm that MOJ discharged its obligations inrespect of the execution and reporting of the budget. 3. Disbursement Arrangements Bank funds will be disbursedeither as direct payments, or to the Special Account which will be replenished under the transactional disbursement procedures. Withdrawal applications for the replenishments of the SA will be sent to the Bank monthly, or when about a third of the initial deposit in the SA has been utilized, whichever comes first. All replenishments for transactions above the prior-review threshold will be fully documented. Supporting documentation for all transactions, including completion reports, goods received noted and acceptance certificates will be retained b y the implementing entity and made available to the Bank during project supervision. There i s no plan to move to forecast-based periodic disbursements. Allocation of Loan Proceeds ExpenditureCategory Amount inEuros FinancingPercentage (1) Civil Works 65,900,000 85% (2) Goods, including supply and installation of 24,600,000 100% information services (3) Consultants' Services 9,900,000 100% andAudits (4) Design andconstruction 5,750,000 100% supervision services under Component 1 (5) Training and study tours 1,400,000 100% (6) Unallocated 2,450,000 100% Total 110,000,000 64 4. ReportingandMonitoring Project management-oriented Financial Monitoring Reports (FMRs) will be used for project monitoring and supervision. The DIEFP will produce the project's F M R s every calendar quarter and the reports will be submittedto the Bank within 45 days after the calendar quarter-end. The formats of the FMRs and financial reports have been agreed upon. 5. Information Systems MOJhas inplace a modern accounting software system implemented by a Romanian software firm. A project specific ledger will becreatedwithin the existing system to allow the project department to record distinctly the operations of the project usingthe existing chart of accounts, with a limited customization of the existing accounting software system. The project-specific accounting ledgers have been created. 6. SupervisionPlan During project implementation, the Bank will supervise the project's financial management arrangements in two main ways: (i) review the project's quarterly financial monitoring reports (FMRs) as well as the project's annual audited financial statements and auditor's management letter; and (ii)during the Bank's supervision missions, review the project's financial management and disbursement arrangements (including a review of a sample of withdrawal applications and movements in the Special Account) to ensure compliance with the Bank's financial management requirements. 65 Annex 8: Procurement Arrangements ROMANIA: Judicial ReformProject A. General Procurement for the project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers'' dated May 2004, and the provisions stipulated in the Loan Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loan the different procurement methods or consultant selection methods, the need for pre- qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually, or as required, to reflect the actual project implementationneeds andimprovements in institutional capacity. DIEFP within MOJ will be responsible for the implementation, monitoring, financial management, as well as procurement. DIEFPwill open a Special Account ina commercial bank inconditions satisfactory to the Bank, and will be responsible for maintenance of the financial management system for each of the component. Inparticular, DIEFPwill have the followingresponsibilities: - Implementation of the respective project components (inclose coordination with SCM); - Implementation monitoring, including compliance with the relevant Bank policies, and evaluation; - Procurement and financial management; - Development of Terms of Reference for the activities under their jurisdiction (SCM will develop TORSfor Court Administration and Institution BuildingComponents); - Preparation of biddingdocuments and contracts for works, goods and consultancy services; -- Evaluation of bids; Signing of the contracts; - Supervision of the contractors; - Certification of delivered products; - Makingpayments to the contractors from the respective Special Account; - Managingthe Special Accounts andmonitoring of financial flows resulting from the contracts. DIEFP Staffing and Structure DIEFPwill include 2 procurement specialists, as well as civil engineers and architects who will be primarily focusing on the Court Rehabilitation component. DUIEF" also plans to hire an international procurement advisor. Procurement specialists will receive training on the Bank's procurement policies and procedures. 66 Procurementmethods(TableA) Thresholds The following procurement methods and thresholds are agreed. (i) andEquipment:GoodsandequipmentcostingEuro250,000equivalentandmoreper Goods contract would be procured through International Competitive Bidding (ICB). Goods estimated to cost less than Euro 250,000 equivalent per contract each may be procured through National Competitive Bidding. Small contracts for supplies and minor equipment such as but not limited to furniture, locally manufactured IT hardware and software, stationeries, printing of public campaign materials etc, estimated to cost less than Euro 75,000 equivalent each may be procured under shopping on the basis of three written price quotations obtained from suppliers. In the procurement of IT hardware and software by shopping, when soliciting bids, the firms operating in Romania registered to the Bank's Web site should be solicited in addition to the other available firms. (ii) Works:CivilworksestimatedatEuro3.0millionequivalentandabovepercontract Civil would each be procured through ICB, and civil works of less than Euro 3 million equivalent per contract may be procured on the basis of National Competitive Bidding(NCB). It is agreed that works contracts to cost less than Euro 3.0 million be awarded through NCB considering the experience gained by Romania in dealing with large contracts under other projects financed by the Bank and other IFIs (e.g. Bucharest Water Supply Project, Roads Rehabilitation Project, Petroleum Sector Rehabilitation Project, EIB financed flood infrastructure rehabilitation project and etc.), as well as provisions of similar projects recently approved by the Bank (e.g. RuralDevelopmentProject, Forestry Sector Development, Hazard RiskMitigation). NCB would be acceptable subject to the conditions that Bank's standard NCB document for ECA region be used, a point system of evaluation would not be used; domestic preference would not be applied; international bidders would not be excluded from bidding; and the draft NCB bidding documents would be prepared and submitted to the Bank for review and no-objection before the first two NCB tenders are issued. N o bids would be rejected at the bid opening. All bids submitted on or before the deadline for submission of bids would be opened and read out at public bid opening. Successful bidders will be selected by post qualification procedure whereas local and international bidders shall demonstrate availability of obtaining securities and reasonable access to credit; experience in similar works, availability of technical staff and etc. Bid evaluation criteria shall be pre-disclosed to bidders; and technical specifications shall be clearly written. Minor works estimated to cost less than Euro 75,000 each may be procured on the basis of three written price quotations and the contract awarded to the lowest priced bidder who has the necessary experience and financial resources to complete the works successfully. Bank's standard and sample bidding documents and evaluation reports would be used. 67 (iv) Consultant Services, T A and Training: Consultant's services would be selected in accordance with the Bank Guidelines, andfor this project, would include Quality and Cost Based Selections (QCBS), Consultant Qualifications (CQ), Fixed Budget Selection (FB), Least Cost Selection (LCS), and Individual Consultants (IC). QCBS selection over Euro 150,000 equivalent would be advertised in Development Business on line version and DG-market (Gateway) and in local media (one newspaper of national circulation or the official gazette, or /and electronic portal of free access). a national newspaper andor official Gazette for expressions of interest, from which a short list of six firms would be drawn. For contracts estimated to cost less than Euro 150,000 equivalent short lists may be based solely on national firms unless international firms expressed interest. The contracts for preparation of designs and auditing would be procured following the LCS method. Contracts estimated at less than Euro 100,000 equivalent each for legal advice, study tours, quality control, and publicity campaigns would be procured following the Selection based on Consultant's qualification (CQ). Individual consultants would be selected in accordance with Part V of the Consultants Guidelines. Training for the DIEFP staff would be conducted in accordance with a biannual training program that the DEFT would submit to the Bank for its agreement before implementation. Prior Review The following prior review requirements would be applicable: Goodsand Civil Works All ICB packages and the first two Shoppinglminor works and NCB packages as stipulated inthe Procurement Plan. Consulting Services The packages stipulatedinthe Procurement Plan. Post Review All contracts not subject to the Bank's prior review would be subject to ex-post review, on a selective basis. One out of five contracts for goods, works, technical services and consulting services would be subject to ex-post review. Supervision missions would include a procurement specialist especially in the first year, whose main responsibility would be to conduct ex-post reviews of the procurement process and documentation, and provide his or her findings. B. Assessmentof the DIEFP'scapacity to implement procurement. Country Specific Issues The Joint Procurement Assessment Mission (JPAM) conducted in 2004 by the Bank and the E C concluded that the overall procurement risk assessment i s high. The JPAM identified among major issues the non-uniform application of the law and different procurement practices, problems with the execution and contract administration. 68 ImplementingDepartment(DIEFP) Procurement activities will be carried out by the MOJ DIEFP. The internal recruitment of procurement and other specialist has started, and the first procurement specialist i s expected to be hired before loan effectiveness. Initial support i s being provided by other units within the MOJ, including the Capital Investment and Budget PlanningDepartments. An assessment of the capacity of the implementing entity to implement procurement actions for the project has been carried out by the Bank in August - September 2005. The assessment reviewed the proposed organizational structure for DIEFP and the interaction between the staff responsible for procurement at the MOJ's relevant central unitsfor administration and finance. The key issues and risks concerning procurement for implementation of the project include: limited procurement staff for the initial implementation stage and overall weak capacity within the MOJ. However, appointment process for procurement specialists for DIEFP has started, and selection of an international procurement advisor will be launched shortly after loan effectiveness. MOJ has also initiated a broader effort for reforming procurement practices of the Ministry: it recently carried out a review of the status of procurement activities duringthe period 2001-2004 within the Ministry, with assistance of an external consultant financed by the IDF Grant for Strengthening the Institutional Capacity for Legal Drafting and Regulatory Management (P077765). The assessment provided a number of recommendations aimed at improving procurement and contract implementation processes and procedures within the Ministry, and these recommendations have been discussed at the workshop. For strengthening the procurement capacity for the project, the following measures have been agreed: 0 Complete the recruitment process for procurement and financial management staff as soon as possible. 0 Training inprocurement for the existing staff as well as for new-comers; 0 Recruitment of the procurement consultant to support the initial period of project implementation activities and on the job training of staff. The overall project riskfor procurement is high. C. ProcurementPlan The Borrower developed a procurement plan for project implementation which provides the basis for procurement methods. This plan has been agreed upon between the Bank and the Borrower. It will be available in the project's database and in the Bank's external website. The Procurement Plan will be updatedin agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements ininstitutional capacity. 69 Table A: Project Costs by Procurement Arrangements (US$ million equivalent) 6,290,140 3* Services 12,486,204 0.00 0.00 18,776,344 (12,486,204) (0.00) (6290,140) (0.00) (18,776,344) 0.00 0.00 0.00 0.00 0.00 ~ 4. Miscellaneous (0.00) (0.00) (0.00) (0.00) (0.00) 5. Front-endfee 0.00 0.00 0.00 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.00) Total 110,506,210 32,493,728 6,466,540 17,400,000 166,866,478 (98,988,842) (24,544,618) (6,466,540) (0.0) (130,000,000) "Figures inparentheses are the amountsto be financedby the Bankloan. D. Frequency of Procurement Supervision In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agency has recommended supervision missions every 6 months to carry out post review of procurement actions. E. Detailsof the Procurement Arrangements Involving International Competition 1. Goods, Works, andNon ConsultingServices (a) List of contract packages to be procured following ICB and direct contracting: 1 2 3 4 5 6 7 8 9 Ref. Contract No. of Procureme Domestic Review Expected Expected Expected No. (Description) contracts nt Preference by Bid Contract Contract Method Bank opening signing completion date 1. Works 1.2 Tulcea 1 ICB N Prior (TL)Tribunal 1.3 Orsova 1 ICB N Prior 06-May 06-Jun OS-May (MM)Tribunal 1.4 Iasi (IS) Palace 1 ICB N Prior O6-Nov 06-Dec 09-Jun of Justice 70 1.5 ITurda (CJ) 11 ICB N FIC 1.6 Arges,Pitesti 1 ICB N 1.7 II(AG)Tribunal I1 Sibiu (SB) 1 ICB N Tribunal ICB N (BZ)Tribunal Oradea ICB N (BH)Palaceof ICB N Prior =I= 1.11 Dolj 1 ICB N Prior (DJ)Tribunal 2. Goods 2.1 Procurement Prior of Furniture 2.2 IT support for 1 Prior new case Imanagement I system 2.3 IEquipmentfor I 1 Prior courts (printers, scanners, copy machinesetc) 2.4 Integrated 1 Prior 07-May 07-J~l 09-Jun RMS-Supply & installation 7- of I S 2.5 Archival 1 Prior O6-Nov 06-Dec OS-Jun Storage I Cabinetsfor Court records 2.6 Distance 1 Prior Learning Facility for NSC (b) ICB contracts and all direct contracting will be subject to prior review by the Bank. 2. Consulting Services 1 2 3 4 5 6 7 8 Ref. Descriptionof No. of Selection Review Expected Expected Expected No. Assignment contract method by the proposal contract Completion S Bank submission signing date Date date 71 - Prior 06-Jan 06-Apr 07-Apr ~ 1. New Technical 5 Design for court rehab - 2. Independent 1 Prior 06-Jan 06-Apr 10-Apr Technical -Assessment MonitoringJReview 3. to 1 Prior 06-Jan 06-Mar 06-J~l -identify causesfor case delays 4. T A for revisionof Prior 06-Mar 06-May 07-May Civil Procedure Code and other related laws & regulations - 5. TA for revisions to QCBS Prior 06-Mar 06-May 07-May CC, CPC and other -related regulations - 6. Design of QCBS Prior 06-Apr 06-Jun 07-0ct regulatory and organizational framework for -economic managers 7. Training of 4 QCBS 06-May 06-Jun 07-Dec economic managers and court -presidents 8. Assessment to I QCBS Prior 06-Jun 06-Sep 08-Jan determine functional - standardsof court operations 9. Training ofjudges 4 QCBS O6-Nov 06-Dec 08-Jan and court personnel - 10. Highlevel system QCBS Prior 06-Jan 06-Apr 07-Apr analysis for RMS - 11. Support to the QCBS Prior 06-Mar 06-Jun 06-Dec SCM - Statistical - Development and monitoring 12. Supportto the QCBS Prior 06-Jun 06-Sep 07-May SCM - PR Communications - strategy development 13. Supportto the MOJ 1 QCBS Prior 07-Jan 07-Mar 07-0ct - Internal and external - communications 72 14. Support to the MOJ I 1 IQCBS I PriorI 07-JanI 07-Mar - Statistical development 15. -Support to the MOJ 1 QCBS Prior 06-0ct 06-Dec Budgetary planning 16. Support to the MOJ 1 QCBS Prior 06-Dec 07-Mar - Legislative drafting 17. Support to the NIM 1 QCBS Prior 06-Jun 06-Sep - LSAT- PhaseI1 18. Support to the NSC 1 QCBS Prior 06-Jun 06-Sep - Distance learning feasibility study 19. Support to HCCJ- 1 QCBS Prior 06-Sep Dec.-06 07-Dec inbudgetary Planning I Support to HCCJ- 1 QCBS 06-Sep 06-Dec 07-Dec inIT area II 73 Annex 9: Economicand Financial Analysis ROMANIA: Judicial ReformProject The benefits from improvements in judicial performance are both economic and social. Implementation o f the project i s expected to increase the efficiency and accountability of the judiciary and improve access to judicial services, It i s difficult to quantify the social and economic benefits of an improvedjustice system but a review of available data suggests that they are significant. Economic benefits. Improved delivery of judicial services and other project outputs would help lower the costs of doing business in Romania, and reduce the time now required for litigation and case disposal. Courts serve businesses best when they are efficient and fair: in the absence of efficient courts and predictable judicial decisions, fewer investments and business transactions take place14. World Bank studies have identified a number of factors which improve the efficiency of courts and therefore contribute to improvement of business climate: (i) functional judicial information systems; (ii) transfer of non-contentious matters (like registration of businesses) from courts to administrative bodies to reduce the judicial caseload burden; (iii) simplified judicial procedures and processes; and (iv) establishing small-claims courts and specialized commercial courts15. Although it i s hard to quantify the benefits resulting from improved court services, these studies demonstrate a direct link between improved court services and increase in economic development and growth. Direct benefits include increased efficiency, reduced costs of litigation, speedier case disposition, improved collection of outstanding tax liabilities, increased confidence in, and access to the judiciary, as well as transparent conduct of judges and other personnel. Indirect benefits include more predictable and uniform application of the rule of law, strengthened business confidence, a more stable investment climate, an increase in the number of cases filed in court and an alternative dispute resolution mechanism. Taken as a whole, these factors could contribute to a more level playing field for business, spur investment, and promote economic growth. Project benefits also include financial gains from more efficient management of the judiciary's resources. Strengthening the judiciary's instruments of fiscal control also provide important benefits: more effective budget formulation, minimizing idle cash balances; performance improvements in collection of fees and charges levied by the judiciary for some of the services it provides; more effective implementation of judicial budget allocations; greater transparency in financial management. These are important benefits but also more difficult to measure. Also difficult to quantify are the benefits from the expected future reductions in the informal payments that may now be occurring. Implementing the new judicial resource management system (RMS) and streamlining associated budget preparation and implementation procedures would result in more effective management 14World Bank,Doing Business in 2005: Removing Obstacles to Growth (2005),p.60. l5World Bank,Doing Business in 2004: Understanding Regulation (2004). 74 of judicial financial resources and efficiencies in judicial budgetary transactions, including ensuring that judicial resources are spent on items for which they have been approved. More efficient execution of judicial budgetary transactions would also reduce delays in payments to creditors (beyond the period stipulated in contracts) and would eventually reduce the cost of goods and services to the judiciary. The budget for the judicial system has been steadily increasing in the past five years: in 2005 alone, the operating budget for the justice system increased by about 45% to EUR 443.5 million, and an increase of 26% i s expected in the judicial budget for 2006. Similarly, the number of judges has increased by about 25% in the last ten years. However, this has not yet resulted in visible improvements in court operations: case backlogs remain high and court proceedings exceedingly long. Recent analysis (such as the Court Rationalization Study) indicates that the rationalization of the court system and operational processes within courts i s required as a matter of priority. Efficiency gains resulting from project outcomes will allow resources for the Romanianjudiciary to be used in a more cost-effective manner, possibly permitting reductions in administrative expenses. Greater automation of court processes will allow more cases to be resolved in less time, permitting public resources to be betterused for delivering required services. All of the above benefits emanate from the renovation and rehabilitation of judicial infrastructure, the associated development of judicial information systems, the proposed judicial resource management system, the building of institutions, and system re-engineering for the higher courts and selected pilot sites. The rehabilitation of judicial infrastructure will have a direct impact on the delivery of judicial services. More importantly, the systems reform will result in more efficient operations inthe courts and will benefit society at large. It is noteworthy that judicial concern also ranks high in the perception of business and civil society at large. In one of the recent surveys Romanian entrepreneurs were asked to judge on scale of 1- 10 the importance of different mechanisms for contract enforcement. Table below shows the results of that work. As it indicates, while the promise of future business and trust are more important considerations, to Romanian businesses courts are by no means insignificant. Table: How RomanianFirmsEnforceContracts 1 0 9 8 7 6 5 4 3 2 1 0 Future Trust Courts Social Pribate business relations dispute rnechs At the same time, only 20% of firms assess the courts as "quick", 30% -- as "fair an d impartial", and 43% -- as "able to enforce its decisions" (see Attachment to Annex 1"BEEPS-at- a-Glance"). A strong and accountable justice system, where access to the judiciary i s widespread and judicial integrity beyond reproach, facilitates a stable investment climate and stronger 75 economy. In addition to all these are the substantial benefits that accrue to society as a result of swifter resolution of corruption charges, fairer application of the rule of law, and more predictable and uniform interpretationof business laws The project will support a number of measures aiming at increasing efficiency of courts and productivity of judges (including some of the measures identified above). Specifically, improved court facilities, better administrative arrangements within courts and automated case management process, simplified procedural rules and a comprehensive resource management system for the entirejustice sector will contribute to the efficiency of the court system: these and enhancement of business confidence in courts would improve the investment climate in Romania. 76 Annex 10: Safeguard Policy Issues ROMANIA: Judicial ReformProject The project was rated as a Category B for the environmental assessment safeguard due to the planned civil works to take place under the project. Znvestment activities. The main physical investment component of the project i s Component 1 (Court Infrastructure Rehabilitation) which includes rehabilitation of about 20 existing court buildings and a construction of 5 new buildings. The project will also establish court planning and design standards, which will include environmental aspects, to ensure that new investments meet fundamental principles of functional appropriateness and efficiency of court buildings and to serve as a guide for controlling costs, Agreed national design guidelines and carefully established space programming standards would provide clearer parameters for local authorities and design architects. Environmental framework review. The review has been conducted to assess the application of Romanian environmental laws, permits and construction practice and to compare them with the standard requirements of the Bank's environmental safeguards. The findings of this review will be reflected in an environmental management plan (EMP) addressing the key issues and to be included in the legal agreements. The EMP has been developed to be fully in line with Bank requirements, the EUEnvironment acquis requirements as well as the local Romanian systems. Environmental risks. The immediate impact of the proposed investment activities on the environment would be limited. Potential adverse environmental impacts are summarized below and are restrictedin scope and severity: - Dust andnoise duringconstruction activities; - Inappropriate disposal of construction debris; - Unsafe handling of hazardous building materials (e.g. asbestos), if any are encountered; - Unsafe practices during operation of the building; - Possiblenegative impacts on buildingswith cultural importance; These risks are anticipated in advance of project implementation and addressed by local regulations and direct mitigation activities in the design, planning and construction supervision process as well as during the operation of the facilities. Environmental Management Plan. In order to ensure that there are no adverse environmental impacts from this work, an Environmental Management Planhas been prepared: Environmental Impacts Mitigation Measures Institutional Component Responsibility 77 Physical Contamination from Protection of soil surfaces Contractor waste materials during construction; control and daily cleaning of construction sites; provision of adequate waste disposal services. Water Clogging of drainage Special attention to Contractor works Introduction of hazardous wastes Air Quality Dust during Dustcontrol by water or Contractor construction other means to keep dust down if problem i s evident Noise Noise disturbance Restrict construction to Contractor duringconstruction or certain hours operation Social Riskof construction The buildingsite will be Contractor Landscape debris dumped into nearby water bodies; Disposal of construction waste: except for paint of wood, all other buildingmaterials are non hazards (lime, cement and sand plaster, concrete, glass, ceramics-electrical and sanitary, fabric insulated copper wiring, cast iron sanitary pipes, galvanized water pipes, etc) l6 Supervision to be done by DIEFP staff or other authorized MOJ staff. 78 Human Health Construction accidents Specially designed Contractor Handling of asbestos systems for material handling/disposal of hazardous wastes Issues related to new construction: The sites for new construction have been identified, and are locatedinexisting developedurban areas. The land i s government-owned and new landi s not to be acquired from private owners, nor i s resettlement envisaged in order to have access to the land for construction. There are no illegal occupants on the sites inquestion. No cultural or historical assets will be negatively affected by the new construction. 79 Annex 11:Project Preparation and Supervision ROMANIA: Judicial ReformProject Planned Actual PCNreview 03/3 1/2005 03/3 1/2005 Initial PID to PIC 04/16/2005 05/02/2005 Initial ISDS to PIC 04/16/2005 09/23/2005 Appraisal 09/26/2005 10/03/2005 Negotiations 10/24/2005 11/09/2005 Board/RVP approval 12/15/2005 Planned date of effectiveness 03/22/2006 Planned date of mid-term review 04/01/2009 Plannedclosing. date 04/01/2011 Key institutions responsible for preparation of the project: Ministry of Justice, Superior Council of Magistracy Bank staff and consultants who worked on the project included: Name Title Unit Irina Kichigina Sr. Counsel, TTL LEGEC Frances Allen Operations Analyst LEGJR Ruxandra Costache Legal Associate LEGEC Hans-Jurgen Gruss Chief Counsel LEGEC Vladislav Krasikov Sr. Procurement Specialist ECSPS Craig Neal Sr. Public Sector Specialist ECSPE Eric Peterson Architect, Consultant ECSPE Dory Reiling Senior Counsel LEGJR Bank funds expended to date on project preparation: 1. Bank resources: US$89,548 2. Trust funds: 3. Total: US$89,548 Estimated Approval and Supervision costs: 1. Remaining costs to approval: US$47,442 2. Estimatedannual supervision cost: $120,000 80 Annex 12: Documentsinthe Project File ROMANIA: Judicial ReformProject Bank Assessments: Legal and Judicial Systems inRomania: a World Bank Diagnostic Review, January 2002 Study on Romanian Court Rationalization, by Terry R. Lord and Jesper Wittrup, March2005 Government Documents: Strategyfor the Reform of the Judiciary 2005-2007 Action Planfor the Implementation of the Strategy on the Reform of the Judiciary 2005-2007 IT Strategyfor the Reform of the Judiciary 2005-2009 Guidelines on the Structure and Functioning of Project Implementation Units 81 Annex 13: Statementof Loansand Credits ROMANIA: JudicialReform Differencebetween expected andactual Original Amount in US$Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Ong. Frm.Rev'd PO87807 2005 MINE CLOSURE, ENV & SOCIO-ECO 120.00 0.00 0.00 0.00 0.00 120.00 0.10 0.00 REG (CRL) PO86949 2005 MAKIS AGRIC SUPPT SERVS (CRL) 50.00 0.00 0.00 0.00 0.00 49.93 2.50 0.00 PO86694 2005 ECSEEAPL #1 (CRL) 84.30 0.00 0.00 0.00 0.00 79.61 0.00 0.00 PO83620 2005 TRANSPORTRESTRUCTURJNG 225.00 0.00 0.00 0.00 0.00 225.00 0.00 0.00 PO78971 2005 HEALTH SEC REF2 (APL#2) (CRL) 80.00 0.00 0.00 0.00 0.00 78.52 3.04 0.00 PO75163 2004 HAZ MITE 150.00 0.00 0.00 0.00 0.00 147.64 3.64 0.00 PO81950 2004 HAZARD MITIGATION (GEF) 0.00 0.00 0.00 7.00 0.00 6.63 0.75 0.00 PO43881 2004 IRRIGREHAB 80.00 0.00 0.00 0.00 0.00 79.10 6.90 0.00 PO81406 2003 ELEC MARKET 82.00 0.00 0.00 0.00 0.00 75.98 -14.15 0.00 PO73967 2003 RURALEDUC 60.00 0.00 0.00 0.00 0.00 45.35 -1.83 -1.15 PO69679 2003 PPIBL 18.60 0.00 0.00 0.00 0.00 16.11 -2.49 0.00 PO67367 2003 FORESTDEVT 25.00 0.00 0.00 0.00 0.00 23.88 4.53 0.00 PO68062 2003 ENERGY EFF(GEF) 0.00 0.00 0.00 10.00 0.00 7.00 8.95 0.00 PO57960 2002 RURAL DEV (APL #1) 40.00 0.00 0.00 0.00 0.00 31.92 14.42 0.00 PO66065 2002 AG POLLUTIONCONTROL(GEF) 0.00 0.00 0.00 5.15 0.00 1.27 0.07 0.00 PO68808 2002 SDF 2 (APL #2) 20.00 0.00 0.00 0.00 0.00 7.19 -12.81 1.49 PO56891 2001 RURAL FIN(APL #1) 80.00 0.00 0.00 0.00 0.00 47.42 47.42 -15.58 PO08783 2001 SOC SECTDEV (SSD) 50.00 0.00 0.00 0.00 0.00 39.45 39.45 0.00 PO56337 2000 MINE CLOSURE 44.50 0.00 0.00 0.00 0.00 16.34 16.34 4.34 PO43882 2000 AGR SUPPORT SERVS 11.oo 0.00 0.00 0.00 0.00 1.85 1.85 0.05 PO44176 1999 BIODIV CONSV MGMT (GEF) 0.00 0.00 0.00 5.50 0.00 1.30 1.30 0.47 PO34213 1998 GEN'L CADASTRE 25.50 0.00 0.00 0.00 0.00 13.22 13.22 7.95 PO39250 1997 ROADS 2 150.00 0.00 0.00 0.00 0.00 13.36 13.36 0.00 Total: 1,395.90 0.00 0.00 27.65 0.00 1,128.07 146.56 - 2.43 ROMANIA STATEMENTOF IFC's HeldandDisbursedPortfolio InMillions of US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 1999 Ambro 2.33 0.00 0.00 0.00 2.33 0.00 0.00 0.00 2003 Arctic 12.92 0.00 0.00 0.00 12.92 0.00 0.00 0.00 2002 Banc Post 0.00 8.00 2.00 0.00 0.00 8.00 2.00 0.00 2003/04 BancaComerciala 0.00 111.00 0.00 0.00 0.00 111.00 0.00 0.00 2001 Banca Romaneasca 2.63 0.00 0.00 0.00 2.63 0.00 0.00 0.00 82 2005 BancaTiriac 27.42 0.00 0.00 0.00 27.42 0.00 0.00 0.00 2001 ICME 9.48 0.00 0.00 0.00 9.48 0.00 0.00 0.00 1998 KruppCompa 0.76 0.00 0.00 0.33 0.76 0.00 0.00 0.33 2004 Mindbank 0.00 0.00 7.00 0.00 0.00 0.00 7.00 0.00 2002/03/04 ProcreditRomania 10.00 0.00 0.00 0.00 5.00 0.00 0.00 0.00 2004 RZB Romania 40.00 0.00 0.00 0.00 40.00 0.00 0.00 0.00 2003 Ro-Fin 5.00 0.00 0.00 0.00 2.21 0.00 0.00 0.00 2004 Romanian-Amer... 3.00 0.00 0.00 0.00 3.00 0.00 0.00 0.00 1994/01 Romlease 1.78 0.00 0.00 0.00 1.78 0.00 0.00 0.00 2004 Transilvaniabank 25.84 0.00 0.00 0.00 25.89 0.00 0.00 0.00 Totalportfolio: 141.16 119.00 9.00 0.33 133.48 119.00 9.00 0.33 Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic. 2005 BanvitRomania 0.02 0.00 0.00 0.00 2003 Ro-FinMortgage 0.00 0.00 0.00 0.00 2005 UnicreditLeasin 0.01 0.00 0.00 0.00 Totalpendingcommitment: 0.03 0.00 0.00 0.00 83 Annex 14: Countryat a Glance ROMANIA: JudicialReform Europe & Lower- POVERTY and SOCIAL Central middle- Romania Asia income Development diamond' 2003 Population,mid-year(millions) 21.7 473 2,655 Lifeexpectancy GNIper capita (Atlas method, US$) 2260 2,570 1,480 GNI(Atlas method, US$billions) 49.2 197 3,934 Average annual growth, 1997-03 Population (%) -0.6 0.0 0.9 Labor force (4 0.1 0.2 12 GNI Gross M o s t recent estimate (latest year available, 1997-03) per primary capita nrollment Poverty (%ofpopulation belownationalpover?yline) 25 Urbanpopulation (%of totalpopulation) 56 63 50 Lifeexpectancyat birth (pars) 70 69 69 Infant mortality (per 1000live biflhs) 20 31 32 Child malnutrition ("A of children under5) 11 Access to improvedwater source Access to an improved watersource (%ofpopulafion) 58 91 81 Illiteracy(%ofpopulation age 54 2 3 10 Gross primaryenroliment (%of school-agepopulation) 99 103 lt2 -Romania Male DO 104 113 Lomr-middle-incomegroup Female 98 102 111 ~ KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1983 1993 2002 2003 Economlc ratios' GDP (US$ billions) 26.4 45.7 57.0 Gross domestic investmentlGDP 28.9 23.1 24.6 Exportsof goods and services/GDP 23.0 35.4 36.3 Trade Gross domestic savingslGDP ........ 24.0 17.3 16.8 Gross national savingslGDP .. 242 19.7 162 Current account balance/GDP .. -4.5 -3.3 -5.8 Domestic interest paymentslGDP 0.5 12 1.4 savings Investment Total debt/GDP .... 16.2 34.3 39.8 Total debt service/exports 152 6.3 19.0 7.5 I PresentvalueofdebffGDP 33.2 Present value of debffexports 913 Indebtedness 1983-93 1993-03 2002 2003 2003-07 (average annualgrowth) GDP -3.1 0.7 4.3 4.9 5.O -Romania GDP percapita -3.3 12 7 2 5.2 5.O Lomr-middle-incoine group STRUCTURE of the ECONOMY 1983 1993 2002 2003 Growth of Investment and GDP (%) (%of GDP) Agriculture 22.6 13.1 13.0 30 T Industry .... 42.1 38.1 37.9 Manufacturing .. 28.7 31.5 Services .. 35.3 48.8 49.1 Private consumption 63.7 76.0 70.8 Generalgovernment consumption P.3 6.6 P.4 Imports of goods andservices ...... 28.0 412 44.1 1983-93 1993-03 2002 2003 (averageannualgrowth) Agriculture 1.4 -1.5 -3.9 3.0 industry -4.3 0.9 7.2 4.6 Manufacturing 30 Services 1.5 5.6 5 2 15 Private consumption .. 3.2 3.0 7.3 0 Generalgovernmentconsumption -0.3 2.1 4.6 1 98 99 00 01 02 Gross domestic investment 0.3 7.3 9 2 O3 II Imports of goods and services ...... I 119 P.1 34.4 -Exports -Inports 84 PRICES and GOVERNMENT FINANCE 1983 1993 2002 2003 Dornestlc prices lnflatlon (%) I (%change) 200 T Consumer prices 256.1 22.5 15.3 Implicit GDP deflator -0.4 227.4 24.2 19.2 Government flnance (%of GDP,includes current grants) Current revenue 33.2 29.6 29.9 98 99 00 01 02 03 Current budgetbalance 4.3 0.6 1.3 Overall surpius/deficit -0.4 -2.6 -2.2 j j l a l TRADE 1983 1993 2002 2003 (US$ millions) Export and import levels (US$ mill.) Total exports (fob) 4,892 t3,876 l7,618 Textiles 959 1,782 2262 Metais 574 1,181 1,482 Manufactures 2,858 9,851 2,534 Total imports (cif) 6,522 7,862 23,983 Food 964 1,V4 1,737 Fuelandenergy 1,872 2,272 2,615 I Capitalgoods 1,432 5,111 7.0l7 Eqort price index(1995=WO) 79 79 97 98 99 00 01 02 03 Import price index(l995=WO) 70 71 mExports mlmports Terms of trade (895=WO) 114 111 BALANCE of PAYMENTS 1983 1993 2002 2003 (US$ millions) Current account balance to GDP ( O h ) Eqorts of goods and services e239 5,691 16,223 20,646 Imports of goods andservices x),369 6,934 18.825 25,W Resourcebalance 1,870 -1243 -2,602 -4,467 Net income -71) -145 -459 -705 Net current transfers 0 214 1,536 1,861 Current account balance 1,130 -l,l74 -1,525 -3,311 Financingitems (net) -1,538 1,PO 3,327 4,445 Changes in net reserves 378 54 -1,802 -It34 Memo: Reserves includinggold (US$ millions) 956 7,306 9,364 Conversion rate (DEC,local/US$) 760.0 33,055.5 33200.1 EXTERNAL DEBT and RESOURCE FLOWS 1983 1993 2002 2003 (US$ millions) :omposition of 2003 debt (US$ mill.] Total debt outstandingand disbursed 9,29 4,282 (5,680 22,686 IBRD 1,742 403 2,773 2,296 IDA 0 0 0 0 G:2,771 A: 2,296 Total debt service 1,875 363 3,133 3,673 iBRD 220 19 196 214 IDA 0 0 0 0 Compositionof net resource flows Official grants 0 99 259 0 Officialcreditors 317 743 143 16 Privatecreditors -P3 167 2,060 1,967 Foreign direct investment 0 94 1144 0 Portfolio equity 0 0 21 0 F:13.667 World Bank program Commitments 0 PO 340 222 E. Bilateral Disbursements 362 189 335 t31 .,.- IBRD B IDA D Othermltilaleral - F. Private Principal repayments x)2 0 P O 145 C-IMF G Short-tern - 85 22°E 24°E 26°E 28°E UKRAINE ROMANIA To To Uzhhorod To To Ivano-Frankivs'k SELECTED CITIES AND TOWNS COUNTY (JUDET) CAPITALS To To NATIONAL CAPITAL ROMANIA Balti 48°N BOTOSANI RIVERS Satu Mare Siret MARAMURES Botosani MAIN ROADS SATU MARE SUCEAVA RAILROADS Baia Mare C Suceava M Somes a Prut COUNTY (JUDET) BOUNDARIES r o To To BISTRITA- p l Chisinau INTERNATIONAL BOUNDARIES a I A S Id To To NASAUD Bistritat a Iasi Budapest Oradea Zalau Dej h Bistrita v SALAJ i Piatra- i To To 30°E HUNGARY a Neamt Chisinau a C L U J n Roman To To B I H O R Budapest Mures MOLDOVA Cluj- MURES NEAMTM Vaslui Napoca Gheorgheni t TTīrgu īrgu Husi Mures HARGHITA s .Bacau Cri sul Turda Alb Miercurea- B A C A U V A S L U I Cuic Gheorghe Siret A L B A Gheorghiu-Dej Arad A R A D To To Birlad Subotica Brad Alba Mures Lulia Medias 46°N COVASNA Deva S I B I U UKRAINE BRASOV Sfīntu Sfīntu VRANCEA SERBIA B Timisoara Gheorghe Tecuci Lugoj Hunedoara Sibiu GALATI AND a T I M I S Timis HUNEDOARA Moldoveanu Focsani (2,544 m ) Brasov MONTE- n Petrosani Galati n i a n NEGRO a l v a s ARGES A l p s BUZAU Buzau Braila To To Resita y t n VĪLCEA VĪLCEA Novi Sad r a Tulcea CARAS - T Buzau G O R J Rimnicu Vilcea PRAHOVA SEVERIN Targu Jiu BRAILA Targoviste Ploiesti T U L C E A Jiu Pitesti DĪMBOVIT DĪMBOVITA a Danube Orsova Drobeta- j Turmu Sererin ur W a l a c h i a IALOMITA Ialomita Black Arges BUCURESTI u Slobozia Slatina MEHEDINTI BUCHAREST Fetesti r To To Sea Nis Craiova O L T b Navodari Olt CALARASI Calarasi TELEORMAN Medgidia 0 25 50 75 100 Kilometers 44°N D O L J GIURGIU Danube CONSToANTA Constanta Caracal D 44°N 0 25 50 75 Miles Calafat Alexandria Giurgiu NOVEMBER Mangalia Turnu Magurele ur IBRD This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank 33469 2004 Group, any judgment on the legal status of any territory, or any To To To To endorsement or acceptance of such boundaries. Sofiya BULGARIA 24°E To To To To Shumen To To Veliko Turnovo ur Shumen Varna Varna 30°E