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

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.

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: 2001 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.

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

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.

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.

Albania: PRSC Design (HD angle…)

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.

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