Washington, December 11, 2020 – A new World Bank loan will help Albania strengthening the transparency and sustainability of its public finances, enhance its finance for recovery and growth, and support key sectoral opportunities for sustainable growth into the future. The $80 million Fiscal Sustainability and Growth Development Policy Financing (DPF) operation for Albania, approved today, will support reforms aimed at restructuring and a resilient recovery in Albania and is part of the broader engagement by the World Bank Group (WBG) and other international partners supporting Albania as it manages the challenges created by the impacts of the recent earthquake and ongoing COVID-19 crises.
With the twin shocks of the earthquake and COVID-19 shifting attention toward short-term, emergency measures, this operation is designed to help Albania maintain focus on longer-term reforms needed to ensure sustainable business growth and job creation through the strengthening of policies, institutions, and investments.
“Strengthening policies and institutions for fiscal sustainability and economic development is key for ensuring that Albania can rebound vigorously and rebuild better, as public health restrictions on economic life are gradually lifted,” said Maryam Salim, the World Bank Country Manager for Albania.
The operation has assisted Albania in adopting key reforms strengthening the transparency and sustainability of its public finances. Regular published tax expenditure reviews and reform of the tax administration support effective revenue mobilization. A stronger selection and monitoring process for Public Private Partnerships (PPPs) helps Albania ensure that projects deliver value-for-money.
The operation has also supported substantial financial sector reforms. Adoption of a non-performing-loans (NPL) out-of-court resolution framework assists firm restructuring and NPL resolution. A modern payment services law facilitates transactions and encourages more Albanians to participate in the formal financial system. A new legal framework for capital markets and investment funds can catalyze a more vibrant and diverse financial system, providing a wider set of investment opportunities for the Albanian economy.
Finally, the operation supports key sectoral opportunities for sustainable growth. By broadening access to high-speed internet in rural areas, it connects more Albanians with the opportunities of the digital economy. By strengthening sustainable management of Albania’s forest resources, the operation supports Albania in protecting its natural assets – which are vital for key economic sectors, including tourism and agriculture.
The Albanian authorities, in coordination with the World Bank, consulted a range of stakeholders on the specific measures supported by this DPF, including with representatives of the financial sector, the private sector, regulators, local governments, business associations, environmental protection agencies, universities, NGOs, forest users’ association, members of Parliament, and development partners.
The Fiscal Sustainability and Growth Development Policy Financing operation is a fixed spread IBRD loan with a 3.5-year grace period and a repayment period of 12 years.