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Remarks of the Regional Vice President of the World Bank Philippe Le Houerou in the Strategic Planning Committee

January 14, 2010

Your Excellency Mr. Prime Minister,
Mr. Deputy Prime Minister,
Honorable Ministers,
Distinguished Colleagues,

Thank you for the opportunity to address the Cabinet, and also for the generous hospitality shown to me during my first visit to Albania.  I am here to take stock of the work that we have done together over the years and to listen to you as we are preparing our next Country Partnership Strategy.

Albania should take pride in its development trajectory over the last 19 years.  Coming after over four decades of dictatorship and isolation, the country has rebounded with strong and sustained growth and dramatic improvements in social welfare.  Real income has tripled since 1991, and just in the last six years, poverty has been divided by two.  These remarkable achievements are the product of continuous structural reforms in building up Albania’s market institutions.  It is also the result of sound macroeconomic management, an entrepreneurial private sector, a vibrant media, a burgeoning civil society and a pluralistic political system.  The country has withstood and recovered from several crises – financial, civil unrest, adverse weather – while lending a hand to its neighbors and playing a stabilizing role in the region.

As we can see from the recent global and financial crisis and the increasing concerns about climate change and frequency of natural disasters, there will always be new challenges to face and many things to improve, but I take this opportunity to congratulate every Albanian on the impressive development path that they are on.

We in the World Bank are proud to have accompanied Albania on its remarkable achievements.  The World Bank has financed close to 70 operations in Albania, since 1991 with financial resources of $1.4 billion.  These operations range from early reconstruction and rehabilitation, to institutional development in almost every area of economic and social work – financial sector and private sector development, education and health care, irrigation, administrative reform, energy, transport, forestry and environmental protection.  Indeed, for the World Bank, Albania is our European success story for IDA support.   I must confess that I personally used this extraordinary success story in my previous job when I was leading the negotiations with donors to replenish IDA over the past six years.

Now that Albania has achieved middle income status, the World Bank has been pleased to graduate Albania into the fold of countries which are eligible for IBRD financing, thus helping to support Albania’s already-expanding access to international capital markets. 

We think this indicates that the relationship between the World Bank, the Albanian people, and the successive Albanian governments has been a very successful partnership overall. 

However, as with all relationships, there are times when things go wrong.  In this regard, I want touch briefly on the events last year pertaining to the Integrated Coastal Zone Management Project.  The Bank regrets that, following an inspection of whether or not the Bank had complied with its own policies, there were allegations raised about the Government’s actions under this project.  I want to be very clear, the Inspection Panel process does not investigate our clients’ actions and should not be construed as doing so. Furthermore, no evidence of corruption was presented to the Bank’s Department of Institutional Integrity to warrant further investigation.  The bottom line is that we have to recognize that the Bank made mistakes in this project.  We are working to make sure that this does not happen again, here or anywhere else.

Today, however, I would like to focus on the future.  We are launching the preparation of a new Country Partnership Strategy with Albania for 2010 to 2013, and look forward to a strong and fruitful partnership in the years ahead as Albania advances on the path to EU accession.  We have supported many other countries in the region as they walked a similar path and believe we can offer Albania the benefit of those experiences, especially in safeguarding the progress made to date while taking on new challenges.

The historical experience of your neighbors has shown us how fragile development can be if it is not socially, ethnically and politically inclusive.  In this regard, Albania stands out as a country that has managed exceptionally well in this respect, while contributing to regional stability.   In fact, I saw yesterday the amazing icon from Onufri showing various religions living in harmony.

The recent global financial and economic crisis is showing us how fragile that progress can be without the strong underpinnings of good banking supervision and sound fiscal policy.   Indeed Albania’s ability to weather the crisis, so far, is a testimony to the lessons learned from its own past.  However, as the impact of the crisis continues to emerge, we would encourage you to hold on strongly to your tradition of sound, patient and prudent fiscal policy that has helped this economy remain resilient and grow so strongly in the past 19 years. 

And finally, the emerging lessons of the climate change debate shows us how fragile our development can be if we do not take care of our planet.     The events of recent days show us how vulnerable we are to the changing climate.

I would like to take a moment to express our solidarity with those families affected by the severe flooding in the Shkodra region, and offer our support to those who are struggling with displacement from their homes and livelihoods. The Bank is already supporting the Government through an international panel of experts who are helping KESH and others to monitor the operations of the dams.  We stand ready to assist in the rehabilitation and reconstruction of Shkodra and the surrounding area, where so many people’s lives have been affected.

With our new Country Partnership Strategy, our ambition is to continue to be a trusted and effective partner to the Albanian people on their remarkable journey towards prosperity.   We stand ready to support your efforts to build a socially-inclusive, financially-sound, and environmentally-sustainable Albania and to become a full-fledged member of the European Union.    

In closing, let me again thank you Mr. Prime Minister and your colleagues in the Government for the excellent hospitality and valuable insights provided for me on this short visit, and I look forward to continuing the conversations with your Cabinet, members of civil society and business sector.

Thank You!