EU members - Poland, Hungary, Czech Republic, Slovenia, Estonia, Slovakia, Latvia, and Lithuania.

These countries have improved services, as well as the capacity and financial viability of sector institutions. Tariffs are sufficient to operate and maintain existing systems. There is also sufficient inflow of capital from domestic and foreign sources for expansion and renewal of the system, due to the countries' macroeconomic performance, availability of funds, efficiency of the utilities and the regulatory and policy environment. The main challenge is to continue institutional improvements and to mobilize the enormous resources needed to maintain European Union standards, particularly for wastewater treatment.

EU accession countries - Romania, Bulgaria, Croatia, Turkey.

Tariffs in these countries cover operation and maintenance costs but capital for renewal and expansion of the system is inadequate. However, sector reform and the investment environment are not yet conducive for large inflows of foreign or domestic capital. In some countries, rural connectivity lags seriously behind and requires additional capital that governments cannot fiscally afford. Another challenge is to mobilize the enormous resources needed to address problems relating to wastewater treatment.

The post-conflict countries of the Balkans – Albania, Bosnia and Herzegovina, Macedonia, and Serbia and Montenegro.

With World Bank assistance, steps have been taken towards post-war recovery and development. Although these countries have very competent human resources, they require policy reform, institutional reorganization, the adoption of modern methods of management and capacity building. Investments in solid waste management and wastewater treatment are needed.

Russia, Ukraine, Belarus,Kazakhstan . The water and sanitation sector in the capitals and large cities is in relatively good condition and renewal funds are flowing. Nevertheless, there is need to consider aggressive sector reforms to enable utilities to generate internal cash for renewal. Modern methods of management have not yet been adopted. Severely deteriorating systems in secondary cities and rural communities require attention. The ability to mobilize resources is in some cases very limited.

The Caucasus and Central Asia - Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, Uzbekistan. These countries face a particularly challenging battle. Service provision has declined dramatically outside the capital cities; in many smaller cities and rural areas it has all but collapsed. The ability to mobilize resources for the sector is severely limited as government budgets are constrained and the household income is low. Continued IFI involvement is essential to keep the system from collapse.