Interview of Kseniya Lvovsky, World Bank Country Manager to Scan TV

July 11, 2011

Interview of Kseniya Lvovsky, World Bank Country Manager Scan TV

1. What is the World Bank mission and is it limited only to developing countries?

The World Bank Group is a multilateral organization of some 190 member countries, from the world’s poorest to the world’s richest. Our mandate is to reduce poverty and support sustainable development.  We provide financial resources, knowledge, and capacity building capacity to low income and middle income countries. Our private sector arm, the International Financial Corporation, focuses on supporting frontier investments   in developing countries by the private sector.
With the world economy becoming globalized and interconnected, the World Bank is also increasingly involved in addressing global issues, such international trade, global economic shocks, infectious diseases and climate change. Global challenges require coordinated action of all countries, rich, middle income and poor, and the World Bank is promoting dialogue and collaboration on these issues across all countries.
The World Bank mission in Albania is to help the country achieve sustained economic and social development while country moves closer to Europe. Albania joined the World Bank in 1991.

2. What are the objectives of the Country Partnership Strategy for Albania and which are the strategic directions on it?

The basis for the World Bank’s activities in Albania is the Country Partnership Strategy . It is developed in consultation with the Government and other stakeholders, including the civil society.
During its almost 20 years in Albania, the World Bank has supported country’s development across a broad range of sectors. It has helped to modernize Albania’s public administration and improve its public expenditure management practices. World Bank projects have focused on health care, education, and improving social protection and social service delivery systems. Local infrastructure has been upgraded, and financing of national and rural roads has improved communications within the country, facilitating people's access to economic and social centers and services. The World Bank has helped Albania to take important steps to upgrade the regulatory framework for businesses and to remove harmful administrative barriers. Albania was one of the top ten reformers worldwide in 2009.

The current World Bank Group Country Partnership Strategy for 2011-2014 supports Albania’s National Strategy for Development and Integration by focusing on three strategic objectives:

(i) accelerating Albania’s return to high growth rates in a post-crisis Europe;
(ii) broadening and sustaining Albania’s social gains; and
(iii) managing water resources factoring the need to reduce  vulnerability to climate change.

The CPS program also continues to support governance improvements in Albania. The financing envelope totals to around US$300 million of IBRD lending, while IFC financing for the private sector is expected to increase to US$120-$150 million.

3. How would you evaluate the performance of the Albanian economy through time, what are some of the successes and deficiencies that you see?

Albania had a very successful record of sustained high growth for the ten years before the 2009 global economic downturn. Annual growth averaged over 6 percent – among the highest in Europe -- with the unemployment rate declining steadily. The poverty headcount halved during 2002-2008 (from 25.4 percent to 12.4 percent) and approximately 200,000 people were lifted out of poverty during this period. The reduction in poverty has been particularly dramatic in rural areas, where the poverty headcount fell from 39.6 percent in 2002 to 14.6 percent in 2008.  Albania was one of the few countries in Europe that maintained positive growth rates in 2009, despite the global crisis. Although the Albanian economy has come through the recent global turmoil in better shape than many other countries, there is little room for complacency given the weak recovery in the EU and problems in some of Albania’s most important trading partners. As in most developing countries, there is a need to complete structural reforms and increase productivity within key sectors while supporting the creation of jobs. For sustaining growth and moving towards the EU living standards, it will be also important to give more attention to managing land, water and environmental quality, strengthen the rule of law, make the regulations clearer and make sure they are applied and enforced.

4. How would you describe the cooperation between Albanian governments during the implementation of joint projects?

I have been working in Albania for less than a year and was working, as a World Bank staff, in several other developing countries before that. On my watch, cooperation has been excellent. I am very impressed by commitment, professionalisms and eagerness to learn from best regional and global practices of our government counterparts.

5. Country Economic Memorandum - A new Growth Agenda was published in 2010. What does it include and what is the progress so far?

The reviews Albania’s economic performance, identify the constraints to growth and provides the analysis to help design the policies that would overcome the constraints. It focuses on the growth challenges Albania faces as newly arrived upper middle income country in a difficult, I would say unprecedented,   post- global crisis external environment, with major shifts in global economic power.  The report examines the potential vulnerabilities of the economy and proposes measures for maintaining macro-financial stability of the economy. The report places education and skills at the center of the new growth agenda for Albania. It also proposes measures needed to complete the creation of the backbone infrastructure, such energy and ICT, and improve the investment climate and factors influencing the return on investment.  Many recommendations the report are being reflected in a new programmatic series of Development Policy operations to improve governance and competitiveness that is under preparation and will spread over three years.

6. Which are some of the biggest and important projects (active or proposed ones) of the WB in Albania?

The current portfolio consists of 11 active projects with financing of around $230 million, with the main focus on energy, transport, social sectors and environment.   Our latest project is the Social sector development policy loan of $25 million signed last months.  It will followed by the social assistance investment operation that we are preparing. Other main projects under preparation  are the Water Sector Investment Project,  the Water Resources and Irrigation Project;  and the programmatic DPL series on governance and competitiveness.

The Bank is involved in analytical work on property rights, governance, water, education, social protection, financial sector, and climate change adaptation in energy and agriculture.

7. Development Policy Loan on Social Sector Reform was signed between the Albanian Government and the WB in June 20, 2011. What is the importance of this project?

The importance of this operation is that it supports improved targeting, efficiency and transparency of social assistance programs to better reach  and serve the poor and as well as improve their access to health services.  The approval of this project was preceded by a number of policy actions taken by the Government of Albania and passed by the Parliament in February and March this year.

The Ndihma Ekonomike Program has been amended to:

- change the resource allocation system to municipalities by adding a poverty criterion, and by defining household eligibility
- update the indexation formula for the disability benefits program, de-linking calculation of increases in benefits from minimum wage indexation and linking increases to inflation instead
- Introduce a bonus for school-age children’s attendance in compulsory education for households receiving NE
- to mandate the creation of an automated national registry for applicants and beneficiaries of social assistance programs

On the health care side,

- Health Insurance Institute (HII) has been authorized to extend coverage of health insurance to NE program beneficiaries and has established a package of benefits
- A systematic rule has been defined to transfer resources to the HII, using cost of services as a criterion, and maintained the payroll contribution at the current level
- The Government has unified the publicly funded purchasing of health services under one agency, by transferring financing of hospitals to HII.
- The HII  has signed performance contracts with thirty nine hospitals
As I mentioned, we are supporting the government in implementing these changes,

8. Which are the challenges of Albania in response to the global economic changes, global developments and increased competition? What do you recommend to accomplish these challenges?

The challenge for Albania in the coming period is to broaden the sources of growth, increase productivity and create an economic climate that will lead to more new jobs. The county needs to invest in human capital and protect the natural capital it is endowed by. Regional cooperation and progress towards EU integration are important for future competiveness and growth. A modern, competitive, prosperous Albania is within reach. But he agenda is large and some reforms are difficult and require national consensus. Many of them require not only changes in legislation but in behavior of all economic actors.   For this to happen, everyone has to work towards this future– government, main political parties, municipalities, local communities and civil society.