World Bank Supports Strengthening of Public Financial Management and Improvement of Road Conditions and Safety in Albania

March 27, 2015

WASHINGTON, March 27, 2015— The World Bank Group’s Board of Executive Directors today approved two projects for Albania totaling Euro265.9 million (US $306.7 million equivalent): Euro200million (US $226.7 million equivalent) for the Public Finance Policy Based Guarantee, and Euro65.9 million (US $80.0 million equivalent) for the Results-Based Road Maintenance and Safety Project.

The Public Finance Policy Based Guarantee (PBG) in support of a commercial loan is a second in a series of two programmatic development policy financing operations. This operation supports strengthening public financial management to address arrears and tax, pensions, and energy sector reforms to improve fiscal sustainability. It supports actions for the continued clearance of arrears and prevention of future arrears, strengthening of budget preparation and execution, raising revenues, reforming the pension system, and reducing fiscal risks emanating from the energy sector. The approval of this second operation as a Policy Based Guarantee follows the completion of prior actions in these key areas, including in public finance management, pension, and energy sector reforms.

“The Albania Public Finance Policy Guarantee in support of a commercial loan supports key reforms, critical for Albania to protect its fiscal space for growth-enabling investment and poverty-alleviating social services,” said Doerte Doemeland, World Bank Lead Economist and Project Leader. “The Guarantee will reduce Albania’s borrowing costs, alleviate government funding pressures and risks, and free up commercial bank resources for credit to the private sector.”

The Results-Based Road Maintenance and Safety Project aims to maintain the condition and improve the safety of the road networks, and strengthen sustainable and efficient road asset management and safety practices for the benefit of road users. The maintenance of the national road network has been systematically underfunded, undermining the sustainability of the transport sector. Road safety remains a major social and public health issue in Albania with annual fatalities high compared with neighboring countries. The project will also assist Government in public investment management reforms in the transport sector so that investments are fiscally sound and in line with the medium-term budget plan.

“The project will improve the safety of about 1,334 km of Albania’s high volume National Roads. Road users all over the country are expected to benefit from improvements in road maintenance through less travel times and vehicle operating costs, as well as reduced social and economic costs associated with road accidents,” said Artan Guxho, World Bank Senior Infrastructure Engineer and Project Leader.

Project results will be measured through pre-defined targets related to periodic and routine performance-based maintenance, improving road safety star rating of national roads network, and preparing multi-year maintenance plans as part of the road asset management system. The total cost of the project is Euro128.47 million, with a co-financing of Euro62.57 million from the Government of Albania.

Since Albania joined the World Bank in 1991, a total of 86 projects comprising over US$2.4billion of IDA credits and grants and IBRD loans have been provided to the country.

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