Albania is a middle-income country. In recent years Albania has maintained positive growth rates, despite the ongoing economic crisis. The country is facing a challenge of maintaining growth in a difficult external environment while rebuilding fiscal buffers.
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* The World Bank Group comprises five institutions, including the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA), which together make up t... Show More +he World Bank; International Finance Corporation (IFC); and the Multilateral Investment Guarantee Agency (MIGA). Show Less -
Signs of recoverySome signs of hope show through in the region. Central and East European (CEE) countries are expected to see growth accelerate to 2.5 percent in 2014 and to 2.8 percent in 2015 – a si... Show More +gnificant improvement from the previous two years when growth was very modest (0.8 percent in 2012 and 1.3 percent in 2013). But recovery in the new EU member states remains mixed and growth in Western Europe is disappointing.Unemployment rates in several countries have peaked and are now showing signs of improvement. While they remain above 10 percent in several CEE countries, they are declining the most in countries such as Estonia, Latvia, and Lithuania, where structural reforms and prudent policies were implemented swiftly. Given past trends, these positive developments are expected to be reflected in higher income growth for the bottom 40 percent of the population.In the Western Balkans, economic growth is expected to drop from 2.4 percent in 2013 to only 0.6 percent in 2014, due to its debt overhang that is reducing financing for business and lack of reform momentum, and then recover modestly to a projected 1.9 percent in 2015. Ukraine crisisMeanwhile, in Ukraine, geo-political tensions have developed into a deep crisis for the country. Recent trends point to a sharper decline in Ukraine’s real GDP in 2014 and continued retrenchment in 2015 compared to earlier projections. Ukraine’s GDP is expected to contract 8 percent in 2014 and 1 percent in 2015.The conflict in the east has disrupted economic activity, made collection of taxes difficult, adversely affected exports, and hurt investor confidence. Meanwhile, weak revenue performance, rising spending pressures, and a growing Naftogaz deficit make fiscal adjustment more challenging. The current account deficit has adjusted because of the sharp depreciation, but balance of payments pressures remain high due to large external debt refinancing needs, low FDI, and limited access to external financing. A prolonged confrontation in the east, constrained credit supply due to risks in the banking sector, constrained domestic consumption, and investment demand all pose risks and affect prospects for recovery.Russian stagnationIn Russia, the World Bank warned earlier this year of an unfinished transition, including ongoing problems in the business environment and heavy reliance on oil revenues. Currently, the Russian economy is slowing as its past growth drivers have weakened. GDP growth in Russia was just 0.8 percent in the first half of 2014, compared to 0.9 percent in the first half of 2013.Economic activity was already hamstrung in 2013 by lingering structural problems and a wait-and-see attitude on the part of both businesses and consumers. An additional negative impact on the economy – besides slow structural reforms – came from increased geopolitical tensions and an uncertain policy environment. It is policy uncertainty about the economic course the country will take that is casting the longest shadow on Russia’s medium-term prospects. There is a greater need for reforms to enhance the business climate to build avenues for growth and less reliance on the energy sector.The Commonwealth of Independent States (CIS) economies have faced headwinds due to the crisis in Ukraine and ongoing stagnation in Russia, however broad spill-overs to other countries have been limited so far. Immense reliance of the CIS economies on energy exports persists, and progress on structural reforms has slowed. Growth for these countries is expected to be a meager 1 percent in 2014 and to rise only slightly to 1.3 percent in 2015.In Turkey, growth has also slowed from over 4 percent in 2013, but is projected to stabilize at about 3.5 percent in 2014 and 2015.Going forward“The forecast for the Emerging Europe and Central Asia region remains tepid because of deferred structural reforms, as well as ongoing weak growth in Western Europe and stagnation in Russia,” noted Hans Timmer, Chief Economist in the World Bank’s Emerging Europe and Central Asia region. “Economic growth in the region remains lower than in most other regions of the world. Going forward, the emphasis should be on improving governance and the investment climate, strengthening competitiveness, ensuring the stability of the financial sector, and maintaining a sound macroeconomic framework.”“To be sustainable in the longer term, economic growth and shared prosperity need to be fiscally affordable, environmentally responsible, and conducive to social inclusion,” said Timmer.The World Bank, working jointly with other World Bank Group institutions, is helping its client countries in Emerging Europe and Central Asia address these and other challenges to reduce poverty and boost shared prosperity through policy dialogue, analytical work, project funding, and reimbursable advisory services.-----------------------------------------------------------------------------------Watch the video: Press Briefing - Regional Economic Update Show Less -
IBRD Loan: US $150.0 million equivalentTerms: Maturity = 22.5 years, Grace = 7 yearsProject ID: P144029Project Description: The objective is to improve reliability of power supply and financial viabil... Show More +ity of the power sector.For more information, please visit: http://www.worldbank.org/projects/P144029?lang=en Show Less -
WASHINGTON, September 29, 2014—The World Bank’s Board of Executive Directors today approved US$150 million in IBRD financing for the Power Recovery Project in Albania. The project will support Albania... Show More +’s power sector reforms, particularly to improve the reliability of the electricity supply and the financial viability of the sectorThe power sector is facing serious financial and operational challenges in Albania, manifested by a large unfunded deficit of about US$550 million and a large level of technical and commercial losses of about 42 percent – the highest in the region – due to non-payment of electricity bills by consumers, as well as poor collection rates. Energy generation relies almost entirely on hydropower, which means that emergency power imports are often required during dry seasons.The Government's reform efforts for power sector recovery include diversifying generation sources, reducing distribution losses and improving collection, and improving the power market model in line with EU directives. A comprehensive Sector Recovery Plan will be implemented to address the pressing sector issues, especially its fiscal viability."The Power Recovery Project supports the implementation of government reforms, and will help to increase investment; improve management and performance, especially in distribution; and reduce inter-company arrears," said Tahseen Sayed, World Bank Country Manager for Albania. "The project will support the sector recovery plan to address longstanding technical and financial issues."The project consists of four components : i) providing short-term complementary power import support; ii) upgrading distribution infrastructure; iii) upgrading the transmission meter/data center; and iv) supporting power sector reforms and project implementation."The key project entities are the Distribution Company, OShEE, which will benefit from the reduction of losses and improved billing and collection rates; KESh, Albania’s main generation company, which will benefit from improved financial sustainability; and the Transmission System Operator, OST, which will benefit from the installation of an enhanced metering data center to facilitate the market restructuring,” said Salvador Rivera, World Bank Senior Specialist for Energy and Project Team Leader. “The project is a first, necessary step to support sector reforms, leading to improved quality of service and reliability.”Since Albania joined the World Bank in 1991, the Bank has financed a total of 83 projects with over US$1.95 billion of IDA credits and grants and IBRD loans to the country Show Less -