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Media brief of Kseniya Lvovsky, Country Manager, January 12, 2012

January 12, 2012

World Bank Media Briefing
Kseniya Lvovsky, Country Manager
January 12, 2012

Welcome to the World Bank office and Happy New Year. Using an opportunity of several World Bank experts from our HQ in Washington visiting Tirana this week, we would like to share with you the highlights in our collaboration with Albania during the last months of 2011 and share our plans for the New Year.

2011 in Retrospective

As you may remember, on November 15 2011 the World Bank launched its first Regular Economic Report for South-Eastern Europe, including Albania, which compared economic performance of 6 countries and highlighted priority areas for reducing vulnerabilities to the eurozone debt crisis. The report was very well covered in the Albania media, thanks to your efforts. I am pleased that the team leader and principal author of the report, Mr. Ron Hood, is here with us today and will be able to answer directly your questions.

On December 20 2011, the World Bank approved additional financing for Dam Safety in the amount of $22 million supplementing the earlier credit of $35 million. The additional financing will enable KESH to proceed with tendering and undertaking major rehabilitation works at the Komani dam, as well as improve the spillway capacities and operation of the entire Drini cascade.

Taking stock of our entire program in 2011, the World Bank approved $47 million in new lending; mobilized grant resources of $ 6.4 million in trust funds to support flood management, natural resource development, public administration, and corporate reporting; provided small grants totaling $ 200 000 to 25 civil society organizations and published 6 new reports on Albania development issues, including the RER. This is not counting several other regional studies and global reports, like Doing Business, that cover Albania.

The results of our partnership with Albania over the last year ranged from the clean-up of the hazardous site in Porto Romano, to construction of new schools and rural roads, to providing modern medical equipment to public hospitals, to piloting an innovative scheme to pay rural communes for afforestation from the global BioCarbon fund, to adopting the new law on inspections that improves business environment, just to name a few. The Vlore thermal power plant co-financed by the World Beak entered a commercial operation phase in December 2011. Much of the work to rebuild and strengthen flood protection infrastructure in the Shkodra region, to which the World Bank reallocated $12 million from other activities following 2010 floods, has been completed.

Looking forward to 2012

Our main focus in 2012 will be to help Albania mitigate the impacts of the continued eurozone crisis. I believe you read our recent press release about an increase in the financing envelope that the World Bank made available for Albania. These countries are strongly connected with the eurozone economies and thus very sensitive to the change of economic rhythm there.  The main objective of this financing is to help affected countries maintain sustainable growth despite increased external risks.

In Albania, most of this new financing will be used to strengthen and expand the reform program that we have already planned to support through the Government and Competitiveness development policy loans (DPL). Our assistance will also focus on reducing fiscal vulnerabilities and the level of public debt. Support can be also provided to protecting the financial sector from external shocks.  Several experts are visiting Albania this week to discuss with the government the measures to be supported, the timeframe for their adoption, the financing needs, and the instruments through which the funds will be channeled. Some of these experts are present here - Ron Hood, Borko Hadjiski and Michael Edwards - to answer your questions. It is good to keep in mind that the discussions and assessments are at an early stage and the decisions are not yet taken. We will be communicating more specific information as it becomes available.

When economic growth slows and remittances contract, it is critical to strengthen social safety nets and make sure the poorest are protected. We have been working with the Government of Albania over the past years on reforming the social assistance programs. Amending the law on social assistance adopted early last year was an important and timely act. Another team that is visiting Albania this week and is represented here by Team leader Ms. Melis Guven, is working with the Ministry of Labor on a project to support the implementation of these changes and improve efficiency, administration and equity of social assistance. Additional financing will allow us to increase the size of this project from $25 mln to $40 mln as well. We expect to approve financing for this project in April 2012.

Another major project under preparation with the Ministry of Public Works is the Water Sector Investment Project. The project aims to improve water supply to the Durres area, including municipalities and rural communes north of Durres, and the operation of the Durres water utility. We expect to approve $40 million for financing this project in the second half of 2012.

On the analytical side, we have finalized the Public Economic and Financial Accountability Assessment for Albania which is scheduled to be released by the end of this month. It will highlight significant progress compared the 2006 assessment as well as several areas that need improvement.

During this year, we will assist the Government in designing pension reform. This Technical Assistance (TA) will undertake pension modeling to understand the fiscal sustainability and the benefits of the current system, and the impact of various reform options.  A workshop will be organized in Tirana to share international experience and contribute to public debate on pension reform in Albania.

In May 2012, a regional public procurement forum will be held in Tirana to share experiences and lessons from World Bank projects in various countries. We are grateful to the Public Procurement Agency of Albania for supporting this important event and offering to host it in Tirana.

In the next months, we will initiate the preparation of the mid-term Progress Report for current Country Partnership Strategy, which will be an opportunity to draw lessons, revisit priorities and make adjustments to the program as necessary. Given a very different economic environment compared to that expected by this time in the current CPS, there likely to be significant adjustments, including the above mentioned increase in the financing envelope. The preparation of the Progress report will involve consultations with all relevant stakeholders, and we will keep you informed.

Thank you for your attention. I look forward to working with you in this challenging year.