USIA - Text: World Bank Discusses Assistance to Albania, 97-04-24

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TEXT: WORLD BANK DISCUSSES ASSISTANCE TO ALBANIA

(Plans to send assessment mission to Albania) (1320)

A Bank announcement April 23 said Linn briefed the Bank's board of executive directors subsequent to a donor consultation meeting on Albania that had been held on April 18.

Participants at that meeting "exchanged their views on the ways the interntional donor community could support the government of Albania to recover economic stability and assist those worst affected by the current crisis," the announcement said.

The mission, which would begin as soon as security conditions permit, "would assess the situation on the ground. The team would investigate the conditions for project implementation as well as review with the government the need to adopt the Bank-supported projects to the post-crisis environment and speed up the transfer of resources for emergency reconstruction efforts and critical imports," Linn said.

Following is the text of the World Bank announcement:

(Begin text)

The consultation meeting was attended by representatives of the European Bank for Reconstruction and Development, European Commission, International Monetary Fund, Organization for Security and Cooperation in Europe, and the governments of Greece, Italy, and the United States. Participants exchanged their views on the ways the international donor community could support the government of Albania to recover economic stability and assist those worst affected by the current crisis.

After briefing the board yesterday, Johannes Linn said, "We would like to send a small mission as soon as possible, hopefully next week if security conditions permit," and added, "The mission would assess the situation on the ground. The team would investigate the conditions for project implementation as well as review with the government the need to adopt the Bank-supported projects to the post-crisis environment and speed up the transfer of resources for emergency reconstruction efforts and critical imports."

Carlos Elbirt, World Bank resident representative, returned to Tirana on Friday, April 18, and a field-based project officer is also expected to return this week. The almost twenty-person local staff has kept the office fully operational throughout the crisis.

Last Friday's consultation of international donors focused on how priorities have changed since the situation in Albania deteriorated last February, and how the various donors engaged in Albania intend to respond in the short and medium-term. Participants of the consultation reviewed reports on the meetings of World Bank representatives with officials of the government of Albania, which took place in London last week during the annual meeting of the European Bank for Reconstruction and Development.

Representatives of the international donor community, who attended this and the previous three donor consultation meetings convened by the World Bank, agreed that this forum has become very useful to them in monitoring developments in Albania and coordinating their response. They expressed their willingness to include representatives of all interested donors in future consultations.

The crisis in Albania has led to a major slowdown in economic activity and supply shortages. The country's Gross Domestic Product (GDP) may fall significantly this year unless the government takes vigorous action to restore economic stability. In February alone, inflation was over five percent. Since the beginning of the year, the exchange rate has depreciated nearly 40 percent. A sharp decline in tax revenues has increased the already substantial fiscal deficit.

Participants of the meeting agreed that the top priority for the government of Albania and the international community is to restore order and security in the country. The first crucial step in this direction has been the recent arrival in the country of the Multinational Protection Force for Albania to secure the distribution of humanitarian aid and help the government prepare for new elections. International assistance cannot be resumed unless the safety of missions can be guaranteed. The support of the international donor community also depends on how soon the government can successfully implement the initial measures to stabilize the economy. Remaining pyramid schemes may undermine the restoring of financial stability. Decisive intervention by the government is necessary in order to make it possible for externally financed technical assistance to assess the nature and extent of the schemes, evaluate their assets and liabilities, and recover assets.

The World Bank and the European Commission will closely coordinate their support for a recovery program in Albania. Last week, representatives of the two organizations met in Brussels to review plans for providing assistance in the following key areas:

• essential institution building, including judiciary and governance reforms;
• emergency reconstruction of infrastructure; and
• employment generation and expansion of the social safety net for those most affected by the crisis.

For the World Bank, the first task is to assess the status of its large portfolio of ongoing projects, and determine how projects should be restructured to adapt their design to the post-crisis environment in Albania. It is currently believed that the country's most urgent needs are repairing infrastructure, schools, and clinics. Another priority is maintaining essential services, such as electricity and water supplies, in order to secure conditions in which the Albanian economy can be reactivated. The World Bank will assist the government in developing an overall economic recovery program which will serve as a coherent framework for addressing such key issues as economic stabilization, governance, and public expenditure, including the expansion of the social safety net. This program will also aim at reviving private sector activity and attracting the support of the international donor community.

In order to design a coordinated response by the donor community to Albania's recovery needs, a donor information meeting is planned to take place after the first assessment missions have completed their tasks. The World Bank, along with other key donors, is ready to play a leading role in preparing this event.

The World Bank and Albania

Albania joined the Bank and the International Development Association (IDA), the Bank's concessions lending arm, in October 1991. The Bank's central lending objective has been to help alleviate poverty and eliminate the major obstacles to economic growth and private sector development in Albania. IDA has concentrated its resources in sectors with the largest economic return, such as transport infrastructure and energy supply, as well as the priority areas of agriculture and human resources, which are critical to growth and poverty reduction. The Bank has consistently supported projects that have helped protect the vulnerable segments of the population during the economic transition in Albania, helping the government to implement projects in the areas of health, education and housing.

Support from IDA includes: a $8 million credit for a Forestry Project in April 1996; a $29.5 million credit for a Power Transmission and Distribution Project in March 1996; a $6 million credit for an Agro-Processing Development Project in December 1995; and a $4 million credit for an Urban Works and Microenterprise Pilot Project in August 1995.

The most recent IDA credit for Albania was approved on June 20, 1996, for a $25 million National Roads Project that is designed to improve the country's road network, support replacement of maintenance and road safety equipment, promote the development of local contracting and consulting industries, and train local staff.

To date, Albania has received 22 IDA credits totaling $273 million.

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