1. Republic of Albania: Linking Public Sector and HD Strategies
Philip Goldman
Human Development Department
Europe and Central Asia Region

2. Major Challenges
Legacy: isolation, low incomes (about 17-18% under $1/day), 40% of population lack 2 or more basic needs
Severe economic and social transformation in a short period of time –external migration, massive peri-urban growth
Little capacity to develop, implement, monitor and evaluate policy, weak governance and high corruption.
External interest: geopolitical issues, human trafficking, European accession, etc.

3. Establishing a Cross Cutting Strategy
Country’s needs much greater than available internal and external resources.
Extremely high civil service turnover, but public administration reform underway.
New initiatives in monitoring: Census and LSMS, and a plan for a permanent household survey.
GPRS backed by sectoral MTEF’s with some underlying health and education technical work
In November 2000, we fielded a SPAC mission to begin Credit identification. What we found was that the country had moved far beyond a simple social protection operation. Instead, there were major cross cutting opportunities.

4. Albania: Correspondence of 2002 MTEF to Approved Budget (Recurrent, % GDP)

5. GPRS/MTEF: Laying Lines of Attack
Identify broad themes, drill down to sectors
Ensure the proposed program is feasible and selective given capacity constraints
Develop strategic priorities and sequencing
Maximize ownership of the program,
and
Pull together strong team of Bank specialists with expertise beyond their sector mapping (MTL initiative)
In identifying a new concept, we laid out some basic starting principles.

6. Resources Available for GPRS Program
Macro
Stabilization
Structural Reforms, including pensions, energy, private sector, etc.
Resources Available for GPRS Program
Domestic Revenues and Borrowing
IMF PRGF Program
IDA’s Country Assistance Strategy
Other Donor Programs
Cross Cutting
Policy Monitoring and Evaluation
Public
Expenditure Management
Civil Service Reform
Decentralization
Anti-Corruption, Transparency and Accountability
Rural Development
Growth and Poverty Reduction Strategy
Medium Term Expenditure Framework and Budget
PRSC (specific policy and institutional priorities, especially cross cutting)
Other Lending and TA (targeted investments to agreed GPRS priorities)
AAA (to continue to inform the policy dialogue and reform strategy)
Sectoral Reforms
Health
Education
Social Protection
Private Sector
Etc.

8. Albania: PRSC Design (HD angle…)

9. Coordinating the Aid Program (CAS/PRSC)
2002
2004+
Albania’s Growth and Poverty Reduction Strategy Growth, Human Development, Governance (includes MTEF)
IDA PORTFOLIO (2002 +)
IMF
PRGF, incl. energy, pension reform, etc.
PRSC’s 1, 2, and 3: PSD/Rural Development, Policy Monitoring and Evaluation, Health, Education and Social Protection, Rural Water, Public Sector Management
IDA investment projects: Health, education, social services, energy, community works, rural water, roads …
AAA: Poverty assessment, labor market study, decentralization strategy, water strategy, rural human capital, fiduciary work, etc.
DONORS
EU and bilaterals: Governance, Anti-corruption, security, LSMS, qualitative monitoring, support for social sectors, other projects.

10. Reducing Complexity for Overwhelmed Clients and Bank Staff
PRSP (PRSC …)
Diagnosis
Identify Options
Extensive Consultations
Prioritization (limited)
Costing x-references MTEF
Detailed Implementation Plan
Monitoring (comprehensive)
MTEF
Diagnosis (some x-referenced)
Identify Options (some x-referenced)
Limited Consultations or x-referenced
Prioritization (more focused)
Transparent costing
Summary Implementation Plan
Monitoring (budgetary angle)
“Real” PRSP
Diagnosis, Identification of Options, Consultations, Prioritization/Strategy, 3-year expenditure framework, implementation plan, monitoring plan