world bank albania partnership: country program...

World Bank Albania Partnership:

Country Program Snapshot

April 2016

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RECENT ECONOMIC AND SECTORAL DEVELOPMENTS Albania’s growth continues the upward trajectory begun in 2014. The country suffered from declining foreign inflows following the Eurozone crisis, with exports and remittances falling and shocking the already fragile macro balances in the domestic economy. Growth reached the minimum of 1.1 percent in 2013, as structural, fiscal, and financial vulnerabilities came to the fore. Fiscal consolidation that started in 2014, coupled with a number of important structural reforms, including in public financial management, energy, and pensions, created the conditions for rebounding business confidence and domestic demand. Growth is estimated to have been around 2.6 percent in 2015 and 3.4 percent so far in 2016, and will likely increase to 3.5 percent in 2017. Investment in the Trans Adriatic Pipeline and a hydropower plant in southern Albania will lead the expansion in domestic demand. In addition, improved external demand is expected to contribute to GDP expansion. The improvement of the business climate is expected to boost private investment and consumption on the medium-term horizon through an improvement in financing conditions in the banking system. Figure 1. Economic Sentiment Indicator (R) and Real GDP Growth (L)

Source: Bank of Albania, INSTAT.

Growth prospects for Albania hinge on the implementation of the structural reform agenda on energy, financial management of public investment, and pensions. Reforms in progress are expected to both promote growth and have positive distributional effects. New pension indexation rules and the introduction of a social pension, as well as the determination to compensate for changes to the energy tariffs through the existing social assistance program, are aimed at protecting the real incomes of the poor and the vulnerable. Albania would need to commit to a strong fiscal consolidation in the

medium term for its debt to return to a sustainable path. Large external imbalances have gradually corrected, but external vulnerabilities remain. The current account deficit expanded by 10.1 percent annually in the third quarter of 2015 after declining for the first two quarters, reaching 12.5 percent of GDP. The deterioration was caused by the worsening balance of trade in goods and services and a decline in remittances of 18.1 percent. Still, the overall result for the year is estimated at 11.4 percent. Exports of goods and services dropped by 3.4 percent due to lower oil and minerals prices, despite a large expansion in tourism exports. Total imports contracted by 1.9 percent due to falling merchandise imports. Despite declining in the third quarter (by 4.5 percent), net foreign direct investment (FDI) inflows financed about 70 percent of the current account deficit. The Eurobond issuance of €450 million in early November 2015 complemented the external financing and led to an increase in international reserves, which exceeded five months of imports at the end of the year. Inflation remains low on account of a negative output gap and low external inflationary pressures. Annual average inflation reached 1.9 percent in 2015, below the Bank of Albania’s (BoA) target of 3 percent (± 1 percent). Low external inflation and the negative output gap continue to exert downward pressures on prices. For this reason, the BoA has kept an accommodative monetary position, reducing the main policy rate to a historic low of 1¾ percent in November 2015. Although Treasury bill yields and deposit rates responded quickly, lending rates were falling at a slower pace. The Albanian lek (ALL) appreciated slightly against the euro by 1.4 percent in the last quarter of 2015 compared to the same period of 2014 but continued to depreciate against the U.S. dollar by 9.2 percent, following the regional trend. The real effective exchange rate appreciated by 2.5 percent by the end of the year. Concerned with the high number of nonperforming loans (NPLs) and difficult contract enforcement, banks have limited credit expansion. The banking sector continued to be stable and sound. However, continued risk aversion by banks still plagued by high NPLs has prevented credit growth. Lending requirements for households

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improved in the second half of 2015, but credit to business continued to remain tight, partially due to difficulties with contract enforcement and collateral execution in the court system.

Fiscal Performance Fiscal results remained on track despite a shortfall in revenues. The budget deficit is estimated to have reached 4.5 percent of GDP in 2015, down from 5.9 percent in 2014. This deficit included an arrears clearance of 1.3 percent of GDP. Between January and November 2015, revenues underperformed by 4.2 percent with respect to the revised budget plan. The shortfall was greater in value added tax (VAT) and excise duties and reflected both problems in revenue administration and forecasting issues, such as the under-estimation of tax credits and lower than expected GDP growth, interest rates, and oil prices. However, a spike in non-tax revenues (due to one-off sales of mobile telecom licenses worth 0.4 percent of GDP), interest savings, and an across-the-board under-execution of expenditure (1.2 percent of GDP) kept the overall budget in line with expectations. Public debt continued to rise and reached 72.2 percent of GDP by the end of 2015. Figure 2. Fiscal Balance and Public Debt (percent of GDP)

Source: MoF; INSTAT; World Bank staff calculations. In December 2015, the Parliament adopted the 2016 budget, which targets a headline deficit of 2.5 percent of GDP and a primary surplus of 0.3 percent, an adequate pace of consolidation, considering the Government has no further arrears to clear in 2016. The budget proposes tighter control of expenditures and increases revenues through better administration. Tax adjustments, which aim at broadening the tax base, will only play a minor role. In February 2016, Standard & Poor’s raised its long-term foreign and local currency sovereign credit

ratings on the Republic of Albania to B+ from B and confirmed short-term foreign and local currency sovereign credit ratings of B. Standard & Poor’s assessed the outlook as stable, reflecting the expectation that fiscal performance will remain strong over 2016–19, as authorities continue to make progress under an International Monetary Fund (IMF) program that targets fiscal and structural reforms. The World Bank supported the design of the Public Financial Management Strategy, which is also serving as the platform for European Union (EU) budget support. The reforms underpinning the Policy-Based Guarantee, approved in 2015, aimed especially at improving macro and fiscal stability. These included reform in the pension sector, approval of a new energy law, and improvements in public financial management.

Financial Sector The financial sector continues to face risks, especially external ones, but has remained stable. Overall lending grew by 2.2 percent in 2014, supported by ample liquidity and monetary easing. In 2015, despite the positive new lending, total credit stock decreased by 1.5 percent due to the elevated NPL write-offs by banks. In total, ALL 26.65 billion of NPLs were written off by banks in 2015, or about 20 percent of the total NPL stock. The BoA further cut the key interest rate in 2015 to a record low of 1.5 percent. The exchange rate to the euro has remained stable; however, as monetary and financial conditions have improved, lending and demand for monetary assets have remained low. Widespread euroization, weak demand, and banks’ risk aversion (due to still high NPL levels) hamper the transmission of monetary policy. The Greek economic and debt crisis continues to pose significant risks to Albania as well. As of December 2015, the outstanding NPL portfolio was 18.2 percent of total loans, a significant improvement from the 22.8 percent at end-2014 and the 24.9 percent peak in September 2014. Several legal and administrative measures supported by the World Bank and the IMF have been taken up by the authorities to address the expedition of NPL resolution. The repayment of arrears so far has not significantly influenced NPL reduction, but a decline is expected in the future as the repayment of arrears advances. Meanwhile, in 2015, banks wrote

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off considerable chunks of old, dated NPLs to comply with BoA rules that require mandatory write-offs of loans classified in the “lost” category for more than three years. An economic recovery, clearance of arrears, and reform of the bankruptcy law and collateral execution framework would help facilitate NPL recovery and private balance sheet restructuring and revive loan demand. A new Financial Sector Modernization Lending operation under preparation aims to support the authorities in their efforts to reduce NPLs and enhance financial sector resilience. Despite the large number of NPLs, banks remain sound and well capitalized. The capital adequacy ratio stayed at 15.8 percent in the third quarter of 2015, well in excess of the regulatory minimum of 12 percent. The banking sector remained profitable, as the return on assets at the end of the same period recorded a positive result of 1.20 percent, while the return on equity reached 13.2 percent.

Unemployment and Poverty Poverty is expected to continue on a slow decline, as economic growth translates into job creation. Poverty (US$5 per day, purchasing power parity [PPP]) increased to 47.5 percent in 2012 from 45.2 percent in 2008 and is estimated to have moderately declined to 46.7 percent in 2014, with progress hindered by the weakening of the labor markets in the past several years, accompanied by increases in the unemployment rate. Nevertheless, labor markets are slowly picking up, particularly in sectors in which poorer individuals are often employed, including agriculture and construction. The unemployment rate for the working-age population slightly decreased from 17.6 percent in the fourth quarter of 2014 to 17.3 percent in the fourth quarter of 2015, despite an increase in the labor force participation rate. Among younger workers, unemployment fell from 33.9 percent to 32.1 percent in the same period. Given gradual labor market improvements this year, moderate poverty (US$5 per day, 2005 PPP) is expected to stand at 46.1 percent in 2015. The Bank is supporting social protection in Albania through the ongoing Social Assistance Modernization Project, which is aiding social assistance and disability reform. The project is providing support to the Government’s implementation of reforms to improve the equity and

efficiency of cash-based social assistance as well as disability programs. Under the equity objective, improving targeting and coverage is a key component of the reforms in both programs.

Health Sector The access to and quality of health services have been improving, but more needs to be done to ensure universal access by poor households. Albania spends about 2.6 percent of GDP on health care, substantially lower than other countries with comparable income levels. As a result of low public sector spending, out-of-pocket expenditures at the point of service account for about 60 percent of sectoral funding. The high level of direct household spending indicates that the existing health financing system offers limited protection to the population against catastrophic illness or injury and allows for little redistribution of resources to protect the most vulnerable groups from health shocks. The economic barrier to accessing quality services by the poor is exacerbated by the lack of total health insurance coverage. The Government is working to develop a health financing policy that will address these problems, which will be supported by the ongoing Bank-financed project. The Bank is currently supporting the health sector in Albania through a project on Health System Improvement, which is focused on improving the efficiency and quality of health care. The project seeks to strengthen the management and governance of public hospital services, improve health financing arrangements, and establish health information systems.

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Education and Skills Development Albania has significantly increased access to all levels of education. Primary and lower secondary enrollment are nearly universal. However, a large gap between the gross and net enrollment rates suggests that there is poor internal efficiency. Although students in Albania have consistently improved their scores in international assessments, learning outcomes are low even relative to neighboring countries with similar levels of income. More than 60 percent of 15-year-olds are functionally illiterate in mathematics, while about 50 percent are deficient in reading. These are among the highest shares of functional illiteracy among youth in countries participating in the Organisation for Economic Co-operation and Development (OECD) Program for International Student Assessment (PISA). The poor, including the Roma population and those in the bottom 40 percent of the population, have lower enrollment rates in preprimary, upper-secondary, and tertiary education. The strong correlation between educational attainment and poverty highlights the importance of incorporating more reforms that specifically target the poorest and most vulnerable children.

The importance of education and skilled labor for human and economic development is well recognized. Major higher education reforms have also been initiated. In higher education, the focus has been on the adoption of the Bologna process for a modular education that is compatible across Europe. The new higher education law envisions an enhanced quality assurance framework and a more efficient distribution of public funds for teaching and research. The Bank provided technical assistance to revise the legal framework.

The challenge in Albania is to enhance the quality and relevance of the education and training system to improve labor market outcomes for current workers, while ensuring that learning outcomes are translated into the relevant skills needed in the labor market. Evidence from firm and labor surveys show that roughly three out of 10 firms in Albania report skills as a major or very severe constraint, just behind infrastructure and corruption. Although women have educational parity with men, female labor force participation lags far behind male participation rates for those with less than a college education. Women’s participation in the labor force dropped dramatically between 2008 and 2012, increasing the gap. Returns on education also differ by gender. It is estimated that women who are wage employed earn around 20 percent less than men with similar characteristics. The gap widens in younger cohorts (aged 40 or less), reaching around 24 percent. Going forward, it will be important for Albania’s education reform efforts to focus on developing “21st-century skills” among its students and to do so in a way that is evidence based and linked to labor market needs. Gaps exist in understanding the constraints that hinder a well-functioning labor market in Albania. A comprehensive multi-sectoral approach will be required to identify both supply- and demand-side constraints. The Bank is engaged in an analytical program to identify the constraints to skills development and employment in Albania.

Agriculture Agriculture is a main source of employment and income in the rural areas, contributing 21 percent to GDP in the country and representing 43.3 percent of the workforce (data for 2014). Albania’s farming sector has been dominated by small private holdings since the collapse of the communist state in 1991, when peasant farmers disbanded the quasi-state collective farms. There are currently a total of some 324,000 agriculture holdings, each with an average of (roughly) only 1.1 hectares of field crops in four plots. In addition to field crops, about 70 percent of farms also have livestock. Over the past 10 years, there has been a slight downward trend in the total area devoted to field crops, with a major decrease in cereals, partly compensated for by an increase in areas

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under forage and, to a more limited extent, vegetables.

The challenge is to transform agriculture from subsistence-oriented production into a modern, commercial, and competitive sector, while fostering alternative income opportunities for rural residents exiting the sector. Competitiveness can be improved through increased productivity and higher-quality products. At the same time, agriculture policy reform should be conducted within the context of current and future EU requirements, including harmonization with EU legislation and standards. The Competitiveness Development Policy Financing operation will address the adoption of a risk management policy and the establishment of a risk management unit according to international best practices within the National Food Authority. This support will make it easier for Albania to trade food products across borders. The Bank has supported agriculture in Albania through investments in irrigation, exposure to new technologies and practices, and improved access to quality market facilities, and also through piloting a small grant program that was subsequently scaled up by the Government. Currently, the Bank is financing the Water Resources and Irrigation Project (WRIP), which aims to establish a strategic framework to manage water resources at the national level and in the Drini-Buna and Semani river basins and to improve sustainably the performance of irrigation systems in the project area. Rehabilitation works are completed in 11 irrigation dams, and 13 other investments are being prepared.

Water Albania is water rich, although the potential is not fully used. Years of underfinancing have left a

backlog of critical investment needs in water and sanitation systems, solid waste management, and water resource management that challenge prospects for the sustainable development of the local economy and lower the quality of life. Despite abundant water resources, Albania performs poorly in providing sustainable and quality water service for all, due to scarce access to services in rural areas, low wastewater treatment rates, poor service quality, and inefficient utility companies. Projects financed in the sector have so far yielded mixed results. The Government has moved toward a holistic approach, making integrated water management one of its six priorities with the aim of managing the water sector’s policies, institutions, investments, and budgets in an integrated manner. The World Bank portfolio is helping to address some of the sector’s challenges with other development partners. The Bank has funded several water operations that have provided investments in the rehabilitation of the water supply network, strengthened capacities, and implemented institutional reforms. The Water Sector Investment Project (WSIP) seeks to help improve water utility performance and enhance water supply services. As noted above, the Bank is also financing the Water Resources and Irrigation Project (WRIP) to support the management of water resources and improve the sustainability of irrigation systems.

Environment The Government of Albania is implementing a wide range of policies in the field of environmental protection and natural resource management, revising laws toward a gradual approximation of EU environmental legislation. Challenges include limited enforcement, due to the weak capacity of the environmental authorities at both the central and regional levels, and a lack of resources for monitoring and ensuring full compliance with environmental standards. The Bank has helped to preserve the important natural and environmental assets of Albania and to foster local economic growth through a number of projects, in partnership with the Global Environment Facility (GEF) and other development partners. The Environmental Services Project aims to improve and promote the value of ecosystem services, in partnership with the Swedish Government and GEF. Expected project

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restructuring will aim to address the institutional changes as a consequence of the territorial reform. Through biomass regeneration, forest-dependent communities have successfully participated in the pilot BioCarbon Fund program, reducing greenhouse gas emissions and obtaining additional resources for local needs.

Transport The expansion, improvement, safety, and management of the road network are critical to Albania’s development. With support from several development partners, the condition of the road network has been improving. Within the transport sector, the primary emphasis has been on developing the national road network, which is one of the greatest assets of the country—estimated at US$6 billion—to promote sustainable economic growth and regional and international connectivity/mobility and to provide equal opportunities to the population (especially the bottom 40 percent) to access markets, health and education services, and jobs. However, its management, financing, and development face several key challenges, one of which is to prioritize network investments and maintenance in a sustainable manner, based on sound economic, social, and environmental criteria. The prioritization of new investments and maintenance needs to be aligned with the preparation of sound multi-annual plans. Another challenge is the improvement of road safety—still a major social and public health issue for the country—which can be tackled by implementing physical improvements, public awareness, and enforcement and also by advancing institutional reform and the Government’s Action Plan. The World Bank is supporting road maintenance under the Results-Based Road Maintenance and Safety Project (RRMSP), which aims at maintaining

the condition and improving the safety of road networks, as well as strengthening sustainable and efficient road asset management and safety practices. In addition to financing performance-based maintenance activities in the national road network, this new project is supporting the development of strategies and plans that can be used to inform future road maintenance management and sector investments, increasing transparency in public investment management in the sector. This project is also offering regional opportunities for sustainable sources of employment and income for the poor, especially in rural communities.

Energy The electricity sector faced a number of difficult systemic challenges that left the country vulnerable to supply disruptions and mounting contingent liabilities. The combination of total dependence on hydropower generation and its vulnerability to weather patterns, the lack of self-generation capacity, and the high level of distribution losses that required significant power imports added financial stress to the sector and the economy. The retail tariffs did not fully reflect the sector cost structure, which, combined with very poor collection rates/high arrears, meant that the power sector was not able to be financially self-sustaining. During 2011–14, the reliability of supply deteriorated and the level of losses and bad debt in distribution increased significantly. In 2011 and 2012, a combination of non-favorable hydrology and reduced national hydropower production led to large energy imports, adding a significant financial burden to the sector. The hydrological situation improved in 2013 and 2014, but the security of supply remains an issue as demand increases and weather patterns vary from one season and/or one year to the next. During 2015, the situation improved thanks to

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favorable hydrology and a remarkable improvement in sector performance.

During the past two years, the Government initiated a vigorous outreach and enforcement program to reduce the theft of electricity and improve revenue collections. The situation improved drastically during that time. The distribution losses in 2015 declined to a level of 32 percent compared to 45 percent in 2013. The collection rate was around 98 percent in 2015 (including arrears). New tariffs for regulated power activities and end users became effective as of 2015. The two-tier tariff structure for households was abolished and a cost-reflective tariff for all consumer categories was introduced. In addition, the Government provided subsidies for vulnerable households to offset any change in price.

Efficiency improvements in the distribution sector remain a key challenge. The Government of Albania embarked on a major reform of the power sector over the past two years, including unbundling the state-owned distribution electricity company, establishing market principles, and initiating the Albanian power exchange market.

Further efforts are needed to restore the sector’s financial viability and to ensure that losses, arrears, and bad debt are diminished to sustainable levels, not only to reduce pressures on the budget but also to enable a higher security of supply. The World Bank is financing a US$150 million Power Reform and Recovery Project to support Albania’s power sector reforms, particularly efforts to improve the reliability of the electricity supply and the financial viability of the sector. A Power Sector Financial Recovery Plan was approved in February 2015. A consistent implementation of this plan is expected to turn the system around and help it become self-sustaining by

2018, progressively reducing the fiscal risk posed by the sector. Another challenge is diversifying the sources of the energy supply and reducing the sector’s vulnerability to climate change and variations in weather patterns. Steps have been taken to reduce the country’s vulnerability through support for short-term complementary power imports to maintain adequate reservoir levels in the Drin Cascade, the construction of an interconnection line to Kosovo, and the recommissioning of a thermal power plant (the Vlore power station) and other market operation facilities. The World Bank is also leading a program to strengthen the safety of the dams on the Drin Cascade, together with other development partners. The World Bank’s engagement in the energy sector, done in close collaboration with the International Finance Corporation (IFC), has included support to put the energy sector on a financially sustainable path, with a view to gradually shifting to market liberalization. Ensuring energy supply is a crucial input factor for businesses.

Private Sector Development Improving the business climate has been an important priority for Albania. After a strong Doing Business reform program between 2008 and 2011, Albania’s reform efforts slowed down only to pick up again in 2014. Between 2008 and 2011, Albania engaged in a series of substantive reforms in the areas of promoting business start-ups, paying taxes, obtaining credit, protecting minority investors, resolving insolvency, trading across borders, and registering property. This resulted in a significant rise in the country’s Doing Business ranking from 136th in 2008 to 82nd in 2010. After a lull between 2011 and 2014, Albania once again received a boost due to positive improvements in business start-ups, construction permits, and property registration in Doing Business 2015, with a ranking of 68 and a distance-to-frontier score of 66.06. Despite a strong reform program, Albania’s Doing Business rank fell to 97th in 2016. Due to the moratorium on issuing construction permits as part of its territorial reform program, the distance to the frontier indicator fell to 60.5. Nevertheless, Doing Business 2016 recognized reform successes in other areas: (i) Albania strengthened its corporate

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governance regime and improved minority investor protections by introducing legal requirements for immediate disclosure of related-party transactions to the public; (ii) the implementation of an electronic risk-based inspection system for exports reduced the time for border compliance; and (iii) positive changes were recognized in the quality of regulatory practices in registering property and enforcing contracts. Albania’s export market and product composition remain highly concentrated. Since the turn of the century, Albania has become more integrated into the global marketplace through trade and investment However, its main trading partner, Italy, a slow grower in the region, accounted for 50 percent of Albanian exports in 2013, and the five most important destinations accounted for 70 percent. Due to this concentration of exports in few destinations, the country still shows a high degree of vulnerability to country-specific shocks compared to regional and global peers. In terms of investment attraction, Albania has increased its degree of integration but lags behind peers. Albania’s overall FDI performance is a bit higher than pre-crisis levels. However, in this respect, Albania still lags behind some top performers in the region that have benefited from integration with the EU, such as Bulgaria or Hungary.

The World Bank Group has been supporting private sector development in Albania through its Trade and Competitiveness Global Practice activities, including both advisory work and more recently a Competitiveness Development Policy Finance operation that is under preparation. Investment climate advisory work has focused on tax simplification, trade logistics, investment policy, agribusiness competitiveness, and indicator-based reforms. The new competitiveness operation aims at

supporting government reforms in attracting and retaining investment, making it easier to do business, and facilitating trade. Other upcoming interventions will support private sector development, such as the Financial Sector Development Policy Finance and the Project for Integrated Urban and Economic Development, both under preparation.

Governance and Public Sector Management Since September 2013, the Government has embarked on a set of very ambitious reforms in such fields as energy, pensions, and territorial administration. Good governance is one of the six government priorities, continuously followed and monitored by the Prime Minister. Strengthening public sector management and service delivery is one of the three focus areas of the World Bank Country Partnership Framework (CPF 2015–19). The Citizen-Centric Service Delivery Project became effective in March 2016 and is focused on improving service delivery, increasing transparency, reducing the scope for corruption, and enhancing the accountability of government. This project supports the Government’s efforts on large-scale regulatory reform. Increasing the number of services provided online, reengineering the procedures, and moving toward the full automation of administrative services offered to citizens are key elements of this project. The Bank is supporting a number of other programs in the governance area in close cooperation with several development partners. A number of trust funds are supporting the strengthening of an integrated planning system, public sector accounting and reporting, and capacity building of the financial supervisory authorities. Other trust funds under preparation that will be focused on sector reform are expected to help improve sectoral governance and management.

THE WORLD BANK PROGRAM IN ALBANIA Since Albania joined the World Bank in 1991, the Bank’s overall financing to the country is estimated at US$2.4 billion, including trust fund resources managed by the World Bank. A new five-year CPF for Albania covering 2015–19 was endorsed by the World Bank Group Board of Executive Directors on May 21, 2015. The CPF

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proposes an indicative lending program of up to US$1.2 billion over a five-year period aimed at supporting Albania’s aspirations to achieve equitable growth and integration into the EU. The three main focus areas of the CPF are i) restoring macro-economic balances, ii) creating conditions for accelerated private sector growth, and iii) strengthening public sector management and service delivery. The CPF was preceded by a Systematic Country Diagnostics (SCD) that identified the key constraints and opportunities for Albania’s growth, particularly with regard to reducing poverty and boosting shared prosperity. The CPF deepens World Bank Group engagement in the priority areas identified in the SCD and the Government’s draft National Strategy for Development Integration. The level of commitment already made under the CPF amounts to US$520 million, including the US$220 million Policy-Based Guarantee. Four projects totaling US$300 million have been authorized since the approval of the CPF to support Government reforms in the area of energy, roads maintenance, service delivery, and health modernization. Going forward, following government intentions to provide long-term solutions to property issues and boost growth through tourism, two investment lending projects are being prepared, one involving integrated land management and the other dealing with integrated economic and urban development. Advisory Services and Analytics (ASA). ASA complements the portfolio and the lending program through filling important technical and knowledge gaps. A Country Fiduciary and Project Implementation exercise is being conducted and is expected to conclude in June–July 2016. Work on a Subnational Review is proceeding, with the intention of also being finalized in 2016, and a skills and education assessment is expected to start soon. The latter two works are expected to take a snapshot of the current situation and inform potential future interventions already anticipated in the CPF. Analytical work and technical assistance are being provided, often through regional programs, on the

financial sector, public financial management, corporate accounting, poverty monitoring, pension reform, the energy sector, and water utilities. The current portfolio consists of nine projects totaling US$544 million in International Bank for Reconstruction and Development (IBRD) loans, including US$35 million in International Development Association (IDA) credits. The portfolio has been consolidating significantly in the past few years, from 18 projects at the end of FY09 to nine projects by FY16, with the average size of the project increasing from US$17 million to US$60 million. In order to further improve performance and results, a number of steps are being taken in collaboration with the Government to accelerate implementation, including through regular portfolio reviews that are chaired from the highest government level.

Collaboration and coordination with development partners are strong aspects of the World Bank’s engagement, leveraging other partners’ assistance. The Bank and the EU are the key strategic partners in Albania and their programs cover multiple sectors. Foreign assistance continues to be crucial in supporting Albania’s capacity building and capital investments. With around US$350–$400 million in external annual support, Albania still relies quite heavily on foreign financing, which covers 40–50 percent of the capital expenditures in the budget. EU-supported trust funds have been particularly helpful for public sector work, including in the areas of public financial management, financial reporting, property rights, and transport. Donor coordination is very much led by the Government. Coordination between development partners is organized through the EU and includes a recent effort to move toward a sector-wide approach in key sectors, led by joint government-donor sector working groups.

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ALBANIA: SOCIAL ASSISTANCE MODERNIZATION PROJECT

Key Dates: Approved: April 3, 2012 Effectiveness: October 31, 2012 Closing: June 30, 2017 Financing in million US Dollars: Financier Financing

IBRD Loan

Government of Albania

50.00

147.82

Total Project Cost 197.82

World Bank Disbursements, million US Dollars *:

Total Disbursed Undisbursed

IBRD Loan 50.00 18.86 31.14

* as of April 2016 Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement.

The Project Development Objective of the Social Assistance Modernization Project for Albania is to support the country’s implementation of reforms to improve the equity and efficiency of its social assistance programs. The project, which has a results-based design, consists of two components: (1) Strengthening the implementation and performance of social assistance programs. The objective of this component is to support the results from improvements in the main social assistance programs. The component will support improved implementation of both the Ndihma Ekonomike (NE) program and disability assistance benefits in the main areas identified in the broad roadmap for reforms: (a) program parameters (eligibility criteria and intake processes); (b) benefits administration (business processes, management of information, payment mechanisms, and reporting and monitoring); and (c) oversight and controls. (2) Providing technical assistance to strengthen the implementation capacity of social assistance programs. The objective of this component is to strengthen the capacity for implementing improvements in the delivery of social assistance benefits. This component will finance select technical assistance and investment activities.

Results achieved:

The training of social administrators on improved NE eligibility criteria (i.e., Unified Scoring Formula [USF]) was completed successfully and marks the achievement of the first Disbursement-Linked Indicator (DLI) for the project.

To date, six more DLIs have been achieved, including: (i) screening of more than 80 percent of NE beneficiaries in three pilot areas (Tirana, Elbasan, and Durres), based on the new Scoring Formula; (ii) developing and testing the NE management information system (MIS) in the three pilot areas; (iii) using an automated system by local government units in the three pilot regions to process NE applications, benefits, program enrollment, and payment orders; (iv) ensuring information cross-checking of the NE MIS with at least seven government information systems (i.e., tax registry, employment, civil registry, etc.), which will provide lessons for further refinement; (v) at least 80 percent of NE applicant case files in three pilot regions are complete, using the USF; and (vi) revised assessment criteria, business procedures, and institutional arrangements for the disability assistance program, based on the social model, have been developed and pretested.

With the completion of these DLIs, a total of seven DLIs have been met, with a corresponding disbursement in January 2016 of almost 40 percent of total project financing.

The design of the disability assistance reforms has progressed well. A policy paper on reforming key pillars of the disability system has been developed and approved, along with an Action Plan that clearly spells out the implementation process of the reform.

Key Partners: Ministry of Social Welfare and Youth. Key Development Partners: European Union (EU).

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ALBANIA: HEALTH SYSTEM IMPROVEMENT PROJECT

Key Dates: Approved: February 27, 2015 Effectiveness: August 28, 2015 Closing: February 28, 2021 Financing in million US Dollars:

Financier Financing

IBRD Loan Government of Albania

40.00

5 Total Project Cost 45.00



IBRD Loan 40.00 1.67 38.33


The Project Development Objective is to contribute to improving the efficiency of care in selected hospitals in Albania,

improving the management of information in the health system, and increasing financial access to health services. In order

to improve the access and efficiency of health care services in Albania, the project will support:

a) reforming the hospital sector by creating a sound legal framework and management structure for efficient service

provision, strengthening performance management and planning, overcoming operational constraints in service

delivery, supporting the rationalization of the hospital network, and strengthening the referral system;

b) improving monitoring and management of service quality and efficiency through the establishment of a health

management information system and a medical equipment management and maintenance system; and

c) reforming the health financing and provider payment systems, improving the capacity of the Health Insurance

Fund (HIF) for strategic purchasing, strengthening systems for the efficient purchasing/distribution of

pharmaceuticals and medical supplies, and assessing options to expand insurance coverage within the available

fiscal space.

Results achieved:

The project is in an early stage of implementation. Overall, implementation is under way with the initiation of various activities. A number of technical assistance items are under the procurement process, and contracts will soon be signed. These consultancies are preparing the ground for proceeding with several substantial project activities, including: (i) the physical rehabilitation of the National Health Information Center (NHIC), (ii) the contracting of the international management team to support the current management of the University Hospital Center (QSUT), (iii) the physical rehabilitation of the Pediatric hospital under the QSUT, and (iv) the revision of the Hospital Rationalization Plan, to be followed by its implementation in three regional hospitals. Working groups for each component have been established and assigned responsibility to oversee implementation of activities according to each of the components.

Key Partners: Ministry of Health. Key Development Partners: The Swiss Agency for Development and Cooperation (SDC) and the Austrian Development Cooperation (ADC).

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ALBANIA: POWER RECOVERY PROJECT

Key Dates: Approved: September 29, 2014 Effective: January 30, 2015 Closing: November 30, 2019 Financing from all cofinanciers, million US Dollars*:*: Financier Financing

IBRD Loan OShEE (Distribution Company) OST (Transmission Company)

150.00 45.00 6.00


World Bank Disbursements, million US Dollars *: Total Disbursed Undisbursed

IBRD Loan 150.00 6.33 143.67


The Project Development Objective is to improve the reliability of the power supply and the financial viability of the power

sector. This project consists of four components:

a) import of short-term complementary power to support the Albanian Power Corporation (KESh) to meet its power supply obligations;

b) upgrade of distribution infrastructure to support the plan of the Government and the distribution company to reduce distribution losses and improve cash collection and the reliability of the power supply;

c) transmission meter/data center upgrade to support the Transmission Company in providing a new metering

system and establishing a market place platform with rules and procedures for Independent Power Producers (IPPs) and eligible (deregulated) Medium Voltage customers, among others; and

d) support for priority power sector reforms to facilitate the recovery of the power sector and improve the

performance of the distribution company through the provision of management and technical advisory services.

Results achieved: The project has achieved several intermediate outputs:

The Power Sector Financial Recovery Plan was prepared and approved by the Government.

The bilateral power service contracts have been signed by the power utilities and approved by the Energy Regulatory Authority. The financial obligations based on guarantees and payment schedules are established, including the available escrow account opened by the Electricity Distribution Operator (OShEE). The current payment system from OShEE to KESh for energy and to the Transmission System Operator (OST) for services is working well.

A new Power Law was approved by the Parliament and went into force in May 2015. Respective bylaws are under preparation. The Ministry of Energy and Industry is working to outline and approve the new market model and to establish the Albanian Power Exchange.

In 2015, distribution losses declined to a level of 31.3 percent and the collection rate was around 98 percent (including arrears).

The technical assistance for project implementation has been contracted and the company is providing assistance to the project management unit (PMU) and the project implementation units (PIUs).

A contract was signed for one package and two others are in the evaluation process; four packages are in the prior review process and will be tendered soon.

Key Partners: Ministry of Energy and Industry, Albanian Power Corporation (KESh), Electricity Distribution Operator (OShEE), and Transmission System Operator (OST) as the implementing agencies of the project.

14

ALBANIA: ENERGY COMMUNITY OF SOUTHEAST EUROPE APL5- ALBANIA – DAM SAFETY PROJECT

Key Dates: Approved: June 30, 2008 Effective: December 16, 2008 Closing: December 31, 2016 Financing from all co-financiers, million US Dollars*:

Financier Financing

IDA Credit IBRD Loan KESH Other Donors (SECO) Other Donor (EBRD) Other Donor (KfW)

30.30 17.30 8.40 7.00

15.00 22.00



IDA Credit IBRD Loan

30.30 17.30

24.30 0.35

6.00 16.95


The Project Development Objective is the development of a functioning regional electricity market in Southeast Europe and its integration into the internal electricity market of the EU through the implementation of priority investments supporting electricity market and power system operations in electricity generation. The project is contributing to safeguarding the major hydroelectric dams of Albania and to improving their operational efficiency, and also enhancing the stability of the power supply for the regional electricity market. The project is helping Albania maximize its benefits from existing hydropower by improving the operational practices of existing facilities and enabling more effective participation in the regional electricity market. The project will also promote private sector investment in hydropower by collecting, organizing, and making available better data and studies on the country’s hydropower potential.

Results achieved:

The project has achieved several intermediate outputs:

The Dam Safety Expert Panel was selected and has been active since 2009.

The assessment of rehabilitation works at Drin River Hydropower Cascade, in light of the flooding in early and late 2010, highlighted the urgent need to expand the scope and provide additional investment to scale up the project’s impact and achieve development objectives. Additional Financing was provided and major rehabilitation works have been started.

The Geological, Seismic, and Geodetic Monitoring are completed in three dams along the Drin River; the rockfall danger protection in Fierza and Komani Dams is completed, and the stochastic rockfall modeling is also completed.

Rehabilitation works on the Komani hydropower plant started in July 2013; the refurbishment and rehabilitation of the first unit was completed and the second unit is under the rehabilitation process and will be completed by the end of July 2016.

The works for the Komani scour area consolidation (dam toe and scour area) are progressing and will be completed by the end of June 2016.

Technical assistance for strengthening the institutional set-up of a Dam Safety and Emergency Preparation Plan is completed and the responsible Albanian institutions are working to adopt the recommendations.

The Drin River Cascade–Designed Flood Study’s results were used to design the new feasibility study’s terms of reference. Technical assistance for the Prefeasibility and Feasibility Studies, the Preparation of Tender Design, and Technical Specifications for Providing Safe Flood Management of Drin Cascade is progressing.

The package for the rehabilitation of the Spillway Gates and Stop Logs in three Drin River dams is under a restructuring and retendering process. The new tendering process will start in April 2016.

The development objectives contributing to safeguarding the major hydroelectric dams in Albania are progressing well, and the number of facilities modified by the safeguard measures has increased by 40 percent.

Key Partners: Ministry of Energy and Industry and the Albanian Power Corporation (KESh). Key Development Partners: Swiss Secretariat for Economic Affairs (SECO), the European Bank for Reconstruction and Development (EBRD), and the German Development Bank (KfW).

15

ALBANIA: WATER RESOURCES AND IRRIGATION PROJECT

Key Dates: Approved: November 29, 2012 Effective: May 13, 2013 Closing: May 31, 2018 Financing in million US Dollars: Financier Financing

IBRD Loan Swedish Government

40.00 5.00



IBRD Loan Swedish TF

40.0 5.00

9.10 1.30

30.09 3.70


The Project Development Objective is to establish a strategic framework to manage water resources at the national level and in the Drini-Buna and Semani river basins, and improve, in a sustainable manner, the performance of irrigation systems in the project area. The project has four components:

a) The Dam and Irrigation and Drainage (I&D) Systems Rehabilitation Component, which will rehabilitate and modernize I&D systems and dam infrastructure;

b) Institutional support for the I&D Component, which will improve the performance of organizations that provide irrigation services;

c) The Integrated Water Management Component, which will establish a strategic framework to manage water resources at the national level and at the level of the Drini-Buna and Semani river basins; and

d) The Implementation Support Component, which will manage project resources in accordance with the project’s objectives and procedures.

Results achieved:

The main achievements of project implementation include:

Rehabilitation works are 100 percent completed in 11 irrigation dams;

Draft feasibility studies and preliminary designs for 13 I&D investments have been prepared;

A draft strategy of Integrated Water Resources Management has been prepared and is awaiting final stakeholder consultations;

The IT and logical model for the establishment of the water resource database/cadastre has been prepared;

Inception reports for the two river basin management plans have been completed.

Key Partners: Ministry of Environment and Ministry of Agriculture, Rural Development and Water Administration.

16

ALBANIA: WATER SECTOR INVESTMENT PROJECT

Key Dates: Approved: December 20, 2013 Effective: May 14, 2014 Closing: June 30, 2019 Financing in million US Dollars:

Financier Financing

IBRD Loan 85.3




IBRD Loan 85.3 6.70 78.6


The Project Development Objective is to improve the quality of water and wastewater services in the Durrës Water Utility Service Area and improve the financial performance of the Durrës Water Utility. The project components are:

a) Priority Water Supply Investments that will finance six water supply production wells and a bulk water supply transmission pipeline that will provide up to 6.30 liters per second (l/s) additional supply capacity in the Durrës Utility Service Area; ancillary investments, including elevated reservoirs, linking municipalities/communities within the Durrës area and along the transmission pipeline route to the water supply system; and priority investments in the water distribution network in Durrës, including the provision of leak detection equipment and pressure-reducing valves to reduce losses.

b) Wastewater Network Investments that will finance priority wastewater investments, including rehabilitation of critical parts of the existing sewerage system in Durrës City; construction of the secondary and tertiary sewerage network in the Durrës Beach area; provision of high-powered sewer cleaning equipment for Durrës Water Utility; and the strengthening of Durrës Water Utility’s initial ability to operate and maintain the new Durrës wastewater treatment plant.

c) Institutional Development Program, Utility Strengthening, and Water Demand Management that will support the Government’s broad-based policy and reform agenda at the national level with specific interventions at the local level. Investments include design and implementation of a Water Demand Management Program; support to the Performance Monitoring and Benchmarking Unit; preparation and implementation of a Performance Improvement Plan and other support for institutional strengthening of the Durrës Water Utility; Technical Analysis and Capacity Building, in particular with regard to energy efficiency; and a dedicated annual financial audit of the Durrës Water Utility.

d) Project Implementation Support will help implementation of the project, including salaries for Project Implementation Unit (PIU) staff, PIU operating costs, provision of needed equipment, and consultant services supporting project investment technical reviews, as well as overall project supervision, monitoring, evaluation, and reporting.

Results achieved: The project is in its initial phase of implementation.

The bulk water pipeline procurement was recently completed and the contract was signed.

Works are ongoing for the associated investments, as well as complementary activities to increase sewerage connections and support the operation of the wastewater treatment plant.

The Durrës Water Utility is implementing a new business plan that outlines how services and the utility’s financial situation will be improved over the next five years; a recent but modest tariff increase has been approved as well.

Key Partners: The Ministry of Transport and Infrastructure and the Durrës Water Utility.

17

ALBANIA: ENVIRONMENTAL SERVICES PROJECT

Key Dates: Approved: July 8, 2014 Effective: January 29, 2015 Closing: June 30, 2019 Financing in million US Dollars:

Financier Financing

IBRD Loan Swedish Government Global Environment Facility

10.0 10.0 2.88




IBRD Loan 10.0 0.46 9.54

* as of April 2016. Note: Disbursements may differ from financing due to exchange rate fluctuations at the time of disbursement.

The Project Development Objective (PDO) is to support sustainable land management practices and increase communities’ monetary and non-monetary benefits in the targeted project areas that are mainly in erosion-prone rural upland areas.

This PDO is to be achieved through the support of alternative livelihoods, the provision of environmental services, and the sustainable utilization of wood and pasture products in the long term. The project will particularly focus on enhancing the financial, economic, and institutional sustainability of land use and natural resource management and on helping build the capacities of Albania farmers, community organizations, and government institutions to efficiently use EU funding. The project has the following components:

a) Strengthening institutional capacity to improve environmental services for integrated landscape management;

b) Preparing for the planning and provision of Instrument for Pre-Accession Assistance for Rural Development (IPARD)–like grants to improve land management;

c) Introducing payment for environmental services;

d) Supporting project implementation.

Results achieved: The main achievements include:

Several contracts have been signed and are under various phases of implementation, such as the planning, design, and quality assurance for the Albanian Forestry Information System (AlFIS), the costs of environmental degradation study, erosion measurement and monitoring in Ulza watershed, implementation of the Gender Action Plan (GAP), a project baseline survey, the updating of ARDA grants software, and the purchase of vehicles and establishment of the monitoring and information System (MIS) for the Ministry of Environment (MOE). Procurement for implementation of the registration of forests and pastures and related quality assurance and the National Forestry Inventory (NFI) is at the final stages of evaluation. The joint working group of MOE and ARDA made good progress on finalizing the Grant Operational Manual (GOM) and preparing the awareness campaign program. Institutional reform for the further decentralization of forest management to municipalities is under way, and the project will be supporting this process through various activities. There may be a need for project restructuring to align it with the institutional changes as a consequence of the territorial reform.

Key Partners: Ministry of Environment, Ministry of Agriculture, Rural Development and Water Administration. Key Development Partner: The Swedish Government.

18

ALBANIA: RESULTS-BASED ROAD MAINTENANCE AND SAFETY PROJECT

Key Dates: Approved: March 27, 2015 Effective: September 2015 Closing: December 31, 2021 Financing in million US Dollars: 80.00 million

Financier Financing

IBRD loan Other Donors if any

80.00 million N/A

Total Project Cost 128.47 million



IBRD loan 80.00 9.18 70.82


The Project Development Objectives are to maintain the condition and improve the safety of the Borrower’s primary road and primary secondary road networks and strengthen sustainable and efficient road asset management and safety practices, for the benefit of road users. The project has four main components:

a) Maintenance Works and Monitoring that will provide periodic and routine maintenance of project roads;

b) Institutional Reforms at both the Albania Road Authority (ARA) and the Ministry of Transport and Infrastructure (MOTI), aimed at enhancing capacity in road safety and road asset management on a country level;

c) Sector Reforms in the transport sector; and

d) Project Management and Audit.

Results achieved:

The project became effective in September 2015 and is in the early stage of implementation.

The prequalification of Output and Performance-Based Road Maintenance contracts has started and will be completed in April 2016.

The signing of the Output and Performance-Based Road Maintenance contracts is expected by mid-2016 (for a five-year period) and will cover about 1,400 kilometers of the national network.

Key Partners: Ministry of Transport and Infrastructure/Albania Road Authority

19

CITIZEN-CENTERED SERVICE DELIVERY PROJECT (CCSD)

Key Dates: Approved: August 25, 2015 Effective: Not yet effective Closing: December 31, 2020 Financing in million US Dollars:

Financier Financing

IBRD Loan Albanian Government Total Project Cost

32.00 42.10 74.10



IBRD Loan 32.00 0.00 32.00


The Project Development Objective is to improve the efficiency of delivery and access to selected administrative services in Albania.

The Results-Based CCSD supports government reforms to improve the quality of and access to selected administrative services. This includes the four services that will undergo process reengineering with the division of the front office and back office services. The CCSD is an innovative public services project and the first of its kind in the region. A major part of the US$32 million loan (US$25 million) will disburse upon achievement of the agreed Disbursement-Linked Indicators and progress in specific service delivery areas.

The project has three components:

a) Support enhancements of the back-end systems: business process reengineering of services, building of new IT systems, and automation of services;

b) Support enhancements to the citizen interface with service delivery: reforming front offices in existing agencies, improving citizen convenience with one-stop shops, improving the online delivery of services, implementing beneficiary feedback, and providing information on services;

c) Build capacity to deliver improvements in services by (i) improving strategic planning, performance management, and capacity building of the Prime Minister’s Delivery Unit and the Ministry of Innovation and other implementing agencies, and (ii) carrying out a communications strategy and campaign.

Results achieved:

The project is expected to be effective in March 2016. A recent development is the approval of a new Law on Public Services that provides the required legal framework for the separation of front and back office services and enforces service standards in every agency.

Key Partners: The Ministry of State for Innovation and Public Administration, the EU, Italian Cooperation, and the United Nations Development Programme have supported the Government’s efforts in this priority area.

20

ALBANIA: INTEGRATED PLANNING SYSTEM MULTI DONOR TRUST FUND (IPS 2)

Key Dates: Approved: December 2012 Effective: March 2013 Closing: June 2018 Financing in million US Dollars:

Financier Financing

IDA Credit Other Donors

3.7




Grant 3.7 1.9 1.8


The Project Development Objective of the IPS 2 is to “Strengthen the implementation of the Integrated Planning System by creating the conditions for introducing a performance orientation in the policy planning and budgetary processes and by improving institutional capacity to monitor results at the strategy and program levels.” The performance orientation is an essential link between strategies and policies (supporting the National Strategy for Development and Integration [NSDI] and sectoral/cross-sectoral strategies) on the one hand, and the budget process on the other. In this context, performance is understood in a broad sense, encompassing measures of technical efficiency (cost effectiveness) as well as program outputs and outcomes. The project aims to address the weakness on the monitoring side by establishing a coherent results chain between budget program results (outputs) and higher-level indicators (e.g., impact indicators at the level of the NSDI), through the development of policy/strategy-level intermediate outcomes, which have so far been a missing essential link. Component 3 is also expected to support the integration of the public financial management and policy processes. This will be facilitated through the integrated Albanian Financial Management Information System (AFMIS) that will link the Medium-Term Budgeting Plan to the treasury, thereby enabling the regular tracking of results at the program level (outputs) and their linkage to budgetary inputs, while the Integrated Planning System Information System (IPSIS) will facilitate the monitoring of program-level outputs as well as policy implementation and strategy-level intermediate outcomes. The project will contribute to strengthening macroeconomic and public financial management, which is one of the main priorities of the World Bank’s current Country Partnership Strategy.

Results achieved:

The tendering process for the AFMIS was launched in December 2015 and the first stage will be completed by end-March 2016.

The establishment of the Human Resource Management Information System is almost completed and will be rolled out to four ministries in April 2016.

The NSDI was approved in March 2016.

The EAMIS contract was signed and the installment is under way.

The trust fund provided important initial support to the Delivery Unit at the Prime Minister’s Office, which is now fully functional and is providing substantial support in monitoring the Government’s six priorities.

Key Partners: Ministry of Finance of Albania; Delivery Unit (Council of Ministers), Department for Development Programming, Financing and Foreign Aid (Council of Ministers), Department of Public Administration, and Ministry of Economy, Tourism, Trade and Entrepreneurship. Key Development Partners: SIDA, Austrian Development Agency (ADA), Swiss Agency for Development and Cooperation (SDC), EU.

21

ALBANIA: EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (EITI) POST-COMPLIANCE GRANT III

Key Dates: Approved: October 2013 Effective: February 2014 Closing: December 2015 Financing in million US Dollars:

Financier Financing


0.4




Grant 0.4 0.2 0.2


The Extractive Industries Transparency Initiative (EITI) is a global standard that promotes revenue transparency and accountability in the oil, gas, and mining sectors. It has a robust yet flexible methodology for disclosing and reconciling company payments and government revenues in implementing countries. The Government of Albania officially endorsed EITI at the Global EITI Conference in Doha in February 2009. EITI in Albania is being implemented through the Ministry of Energy and Industry, and the implementation is overseen by a multi-stakeholder group (MSG) headed by the Deputy Minister of Energy and Industry and comprised of representatives of the private sector, civil society organizations (CSOs), and other government ministries and agencies. Albania was declared EITI compliant in May 2013. The World Bank has been supporting the EITI process in Albania through the Multi-Donor Trust Fund for EITI since 2010. The third grant from MDTF-EITI closed in December 2015. Its main objectives were:

a) strengthening EITI’s role of producing and disseminating critical information to citizens, specifically to those living in producer regions, including extending the scope of the current EITI process by enhancing the coverage of EITI reports to the subnational level; and

b) supporting the country’s goals of building on EITI to improve the overall management and governance in extractive industries.

Results achieved:

The project has provided support to the Ministry of Energy and Industry for the finalization of two annual EITI reports and crucial support for outreach and communication activities.

It also supported the Albanian EITI Secretariat with capacity building and operational support.

The grant more broadly provided a platform for dialogue between the Government, private sector, and CSOs, with the objective of enhancing the governance of natural resources in Albania.

All activities have been successfully completed. The 2013/2014 EITI report in particular was lauded for moving beyond the reconciliation of revenues in the extractives sector to also include the hydro-energy sector, given its dominance in power generation.

A fourth EITI grant totaling US$400,000 was approved in December 2015 with the objective of supporting the implementation of EITI toward enhanced transparency in the extractive sectors in Albania. It will finance the following activities: (i) the recruitment of an Independent Administrator for the preparation of two annual EITI reports covering all extractive industries for 2015 and 2016; (ii) core-tailored training on EITI and natural resource management for all relevant stakeholders, including Albania’s EITI National Secretariat and MSG, government officials, parliamentarians, companies operating in the extractives industries, civil society (including CSOs, the media, and youth) as well as advisory services for state agencies and companies operating in the sector to address their particular needs in complying with EITI reporting requirements; and (iii) the implementation of the Albania EITI Communications Strategy for the first year of project implementation, including print and visual media outreach campaigns, organization of awareness raising campaigns, and Internet and social media activities.

Key Partners: Ministry of Energy and Industry, Ministry of Finance, private sector, CSOs and other line ministries. Key Development Partners: SIDA, Department for International Development (DFID), U.S. Agency for International Development (USAID), EU, the Organization for Security and Cooperation in Europe (OSCE), and other development partners.

22

ALBANIA: STRENGTHENING SUPERVISION CAPACITIES OF THE ALBANIAN FINANCIAL SUPERVISORY AUTHORITY (AFSA)

Key Dates: Approved: November 2014 Effective: April 2015 Closing: December 2017 Financing in million US Dollars:

Financier Financing


2

Total Project Cost 2



Grant 2 0 2


The Project Development Objective is to support AFSA in strengthening its capacities to supervise the investment funds sector and the issuance of corporate and municipal bonds. The project is expected to cover two specific areas: Area 1: Develop the capacities of AFSA to supervise and regulate the investment funds sector Area 2: Develop the capacities of AFSA to prepare for the issuance of corporate and municipal bonds AFSA is the direct beneficiary of this project, while the Government and the Bank of Albania have a clear stake in the sound development of the non-bank financial markets. The project is expected to achieve the following results:

Result 1: AFSA is equipped with a comprehensive supervision methodology and practices for investment funds as well as related operational manuals and tools. Result 2: AFSA is better able to support the development of the corporate and municipal bonds market through an improved regulatory framework. Result 3: AFSA’s professional and human resources to supervise capital market activities are strengthened through on-site and off-site capacity-building activities.

Results achieved: NA.

Key Partners: Albanian Financial Supervisory Authority. Key Development Partners: Swiss SECO.

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