Question: Can you give us a general overview of the contribution that the World Bank and its mission has been giving to Albania since its beginning, since back in 1991?
Answer: The World Bank’s mission worldwide is a world without poverty. Since we joined in partnership with Albania in 1991 we have been working to provide support to the government and to the people through the projects and investments in order to help ultimately reduce poverty and improve social welfare in Albania. But, of course, that goal is very multi-faceted and so the range of our investments which I think includes 68 projects over a decade and a half and 1.4 billion dollars of financing which range from across sector from infrastructure to social sector, to the agricultural sector to energy to governance and policy reform.
Question: In your view has the World Bank mission in Albania been well accomplished?
Answer: I think it has actually been a very successful partnership. One of the things that we evaluated earlier this year is looking back at this decade and a half of participation with the Albanians and the Albanian public. First we consider Albania our success story for the branch of the Bank which is called the International Development Association (IDA) that does concessional lending to borrowers. Albania has had a remarkable development over the last decade and a half, if you look at the average growth rates, if you look at the reduction of poverty. With us a sign of that success is that the country has achieved per capita incomes, and improved social indicators that allowed it to graduate from the concession arm of the bank that provides credits, interest-free credits into the commercial financing part of the bank. This is a very admirable progress and we feel that we have contributed in some way our lending and through our policy advice and our engagement with the public.
Question: Which of the projects was the most accomplished and which one the most problem-ridden?
Answer: For me one of my favorite projects, the project that epitomizes the work of the bank is our natural resources development project which has been supporting 218 communes throughout the country in building communal forestry and management plans for working in a more sustainable way with the forests and brining in an improved income to people of these communities.
As you know in Albania with the recent poverty results we know that a good share of the poor and some of the poorest communities in Albania are in the mountainous areas. So this project has helped them utilize the resources that they do have available locally: so they prepare management plans and look at how to invest better in their forests and gain income. In addition to that project, we have something that we are very proud of to be associated with Albania, it’s one of the first, it’s called the first project in the world to qualify for bio-carbon fund in which communities are being paid for helping the natural re-vegetation of their forests in an effort to deal with climate change. I am very proud of that. It has had its challenges but we feel that the communities have benefited. We have done a recent review and looked at some of the communities and their incomes from the forests have gone up some 50 %. We like that very much and we hope that they will be able to sustain.
But we have another intervention that we have done during our time here in Albania which we also consider very important which is a collaboration that the World Bank did with IFC on the privatization of the energy distribution company. This is a very, very important reform for Albania. I think one of the most important reforms in the last 5 years because it brings in a huge amount of private finance to address one of your long-standing problems, which is in the distribution of energy. We are very pleased; we work very hard to partner with the government and with IFC to bring that to completion. Now of course the work of the private company and the regulator together to see the investments through, but we will be there to accompany that along the way.
The most difficult project; well I am sure that many people would vote for the coastal management project because the long inspection panel process that proved very controversial; but I don’t that’s the most difficult project , I would have to say. One of the projects that is actually still difficult it’s still in the energy sector. We have a very large investment that we are doing together with IBRD on rehabilitating sub-stations. That has been problematic partly not because of many reasons but one has been during the life of the project has been the restructuring of the energy sector which is very good. We have had some difficulties with the procurement along the way. Now I think it’s up and running, it’s very technical and it’s e very modern way of proceeding of the financing for the rehabilitation of the key sub-stations. I think we are almost there.
Question: When talking about the problems that projects in Albania encounter, you refer to what? What are the problems faced by the project: is it the implementation of projects by World Bank in Albania? Are they human related problems, red-tape, and corruption? What is the problem?
Answer: I think probably one of the biggest factors related to the implementation of the projects continues to be of course the capacity in the public administration. We took a decision with the government about 4 years ago. Instead of having free-standing units where basically the projects’ finance external consultants to run the whole projects which of course can lead to faster implementation we took a decision to do what’s called mainstreaming the project implementation into the line ministries, because we think, even though it can slow down project implementation in the short run, over the long run it builds much more sustainable capacities. One of the things we are actually very proud of our long history in Albania is building capacities for the public administration to do projects on its own without donor support either financially or technically.
Another is that Albania continues to be a high risk country in terms of procurements and so we have a very vigilant regulations and supervision of the procurement that goes on the projects. Sometimes that holds things quite a bit because we have very complicated procurement procedures. Sometimes it’s capacities issues and some time it’s government’s issues that you really have to say we have to cancel this procurement and start over in the interest of efficiency and good governance of the resources.
Question: One of the problems often heard about the World Bank projects are the delays as to the starting date of the project. Whose fault is this is it the fault of the government or factors that you outlines above?
Answer: It does. But there is an additional factor which is interesting to note. The way the World Bank works with concessional resources is that those resources are allotted to countries on an annual basis and unfortunately if you don’t use them, you lose them. They go back into the pot for re-allocation of the countries because it’s very important for the World Bank not to have resources sitting around when some countries can use them but other countries are holding on to their allocations. So in the past we have had to very rapidly prepare project in order to get hold of the resources for future use in Albania and in some respects I think one of the lessons that we have learned is that we prepare projects very quickly and you start to roll it out there is too many things to catch up with there is ownership questions of the various stake-holders. So that has been one of the issues. As Albania however graduates into commercial financing that restriction no longer exists. If you don’t use it, it can still remain in the pot and you can have access. So we are hoping as we go forward we will take more time together with the government in the preparation of projects so they can be implemented faster once start on the ground. That’s a problem on our side. On the other side there is sometimes we need to build together with the authorities more awareness of the processing procedures but also more ownership on the part of the beneficiaries.
One thing that we like in Albania is that people are very impatient for development. I know that I said this comment earlier about Albania being a success story, I know many Albanians don’t see where they are coming from, but they really see where they want to go. Project beneficiaries sometimes have a sense that if we decide today that we are financing infrastructure in the municipality, something that will appear in a year or in a short period of time. But one of the things the bank prides itself on is to do the proper technical works so that investment is fully sustainable over the long run because we may be building something like as school that people need for the next calendar year but that school has to be here 30 years from now.
Question: Are the problems you mentioned comparable to the problems faced by your counterparts in other countries in the region mainly for the Bank in such countries?
Camille: I think these are common issues across the World Bank’s portfolio worldwide. This is what we have seen as countries have developed. The more mature borrowers, and remember that Albania only joined the Bank only in 1991, but we have had members from the countries since the beginning, 60 years ago. Those have been building capacities, which takes some of the more mature borrowers. It’s very interesting because when you come to prepare a project rightly so the beneficiaries should be preparing those projects.
Some of the countries we operate come completely prepared with projects to the bank and say: this is what we want to do, we have done all the technical work, the feasibility study and the design and we just need your judgment and your financing. But this is very untypical. This is for extremely sophisticated borrowers like Turkey, Mexico and Brazil. I don’t think that the delays we have had in Albania are untypical. Let’s take the Balkans. We are right in the middle in terms of the Balkan, in terms of the disbursement rates of projects and you would surprised to know that the worst country, and I should try to flag them in the region is Serbia in terms of the disbursements because they have many bureaucratic procedures on their side and that can slow down the project’s implementation. Montenegro is the fastest.
Question: So impatience is not only characteristic of Albanian but of the Balkans as a whole?
Answer: I guess so. I think also because it’s a little bit different because looking at former Yugoslav countries. It’s an impatience to catch up with somewhere where they were before. But with the Albanians it’s very nice because there is always this prize ahead of them. I don’t the Albanians will ever be less patient about future developments and I think their ambition and their energy is a very important driving factor in how well the country has done so far but also how skeptical people feel on a daily basis.
Question: Before talking about the future and the contribution of the World Bank, Mrs. Nuamah I would like to stop briefly on the priorities the World Bank has had in Albania. I would like to talk first about tourism and the coastal management project. What are the problems encountered: reviewing, the truth of including Porto Romano in this project.
Camille: Well I am glad you offered me this opportunity because much of the time, to my regret, I have spent here has been on resolving these issues together with the team both the country’s office team and the team in Washington on resolving some of the issues on the Coastal Zone Management project. That said, I personally think that was an excellent project. I think one of the problems with the project had to do initially, that’s a lesson we learnt inside the Bank, and we are applying to other projects across the world is in matching some of our safeguard policies with the governments’ laws and regulations.
And we will give you some specifics. We have a policy safeguard in the bank which is resettlements. Which basically talks about, the objective is that the projects really shouldn’t harm as opposed to benefit beneficiaries. There is some things like building a land-fill. Community may not want the land-fill in the neighborhood because of course a landfill is a landfill. So we have a lot of procedures about how to balance the benefits and the losses in the projects and I think what we did one of the mistakes we made in that project was clearly explaining those procedures to ourselves and to the government. What we found in the middle of the project was a violation in some respects of policy but a situation of violation on us on the government’s side of the policy that had not been fully agreed with the government. It’s something very hard to shift move the blame around. It was quite a painful process to correct. But I think that we have been through that lesson.
The other big lesson of that project I think is the need for open communication at all points in time. From the beginning through the project when the demolition occurred in Jala and in the future and I think now we have established that. We have a very good communication with the government. As you know we have recently restructured the project and it’s about to start up again with some very key investments. But we are steadily engaged in the resolution of that problem.
Let me take Porto Romano. I know that there were some discussions in the media about the idea that Porto Romano clean-up of the linden factory was added to the project during the restructuring for some reasons. But I have to correct this. Porto Romano hot-spot was identified in 2003 by the UN as one of the number one hot-spots in Albania. The World Bank has been working closely together with the Japanese and the Dutch. Since then in designing and in including and preparing for that clean-up we are very pleased to announce that we broke ground the other day and the works are under way. It took a long time because you have a lot of things to do. But even from the onset of the Costal Zone management project it was a decision that was taken not to spin it off as a separate project, because it is too small but to include it in the coastal zone. So it has been there since the beginning and we hope that now we are in the process, the works are going and we will see the end of that shortly because it’s a very dangerous site. The impact of it on the people in the area is tragic in fact so say the least. There are families living on that site who have health issues because of the pollution and we hope that can be resolved.
Question: You mentioned that the news out to media was false. I make use of the context to ask you how hve the relations with the media been like and have you been felt misunderstood by them?
Answer: No I don’t actually think we are misunderstood. I think you have a very vibrant and pluralistic media and it’s a good thing for a developing country. I think it’s a good thing that people ask questions and I think it’s a good thing that answers are provided. One of the things I think we have done better in the past as one of our opportunities is to explain more, to make the public more aware of how we are operating and to disclose more of what we are doing.
The Bank is launching a new Access to Information policies on July first so lots and lots of documents and discussions pertaining to the board of executive directors but also to the projects are going to be released to the public and I think overall across the bank we are making an effort to improve our interactions with the media. But on the other side I have actually enjoyed my interactions with the media here because I find them as journalists who are very alert and astute to the issues that are there; in addition we have done some training for media to help them understand some of the issue better the governance indicators, poverty monitoring etc.
Question: Let's stop in the energy sector. Even the World Bank projects in this sector have been as you said a little problematic. Are all such projects so?
Answer: Well in fact the World Bank has been the leading donor in the energy sector for a very long time. We have been proud to associate ourselves with a large group of donors to help lead the discussions with the government on the restructuring of that sector, but it’s not over. I think there are many things that continue to be done. Let me point out some reforms that took place in the last 4-5 years which are really critical. The Bank together with the European Union and other partners have launched the Energy Community for South Eastern Europe, and so many of the reforms that Albania has undertaken in the energy sector now are geared towards the development of the full regional market for electricity which is where you need to head also for accession to EU. So the unbundling of the energy sector from generation which would include the hydropower and the new thermal power in Vlora to the transmission system operator to the privatization of the distribution company is an extremely important reform.
But as we know reform, signing a piece of paper and ‘stroke of the pen reform” are not enough, you will have to continue to roll out the implementation. Of course the first is the distribution, the privatization of the distribution company which is aimed to bring in financing into the sector. One of the problems in the sector for this country for a long time has been its financial situation, meaning a lot of people are not paying for electricity and there for you have lost of losses. You are producing energy but you don’t have the financing to go into the sector for maintaining it and for doing expansion. You need a lot of investments to improve the quality of distribution.
We are still working on generation because we have a project in dam safety that is looking at the Drini cascade and as I said these transmission sub-stations and then we will be following along as the private company fulfills its obligations to continue to invest in the sector. So we will be with the energy sector for some time.
Question: How long will this take?
Answer: How long will it take? That’s of course a big dollar question in development. Well you know I mentioned Albanians as being impatient. If you are impatient in development you become frustrated, and frustrated is not the appropriate stance for somebody in development. But you can’t be too patient. Their commitments between the private operator and the regulator there are commitments for making steady gains. Actually we think that the privatization will accelerate the improvements on the distribution side. I really can’t say how long it’s going to take, but I think we have turned a major corner.
Question: Let’s stay with two other sectors which are equally important for the Bank such as transportation and education sectors. First on transport: which are the key projects of World Bank in Albania?
Answer: We have two projects ongoing in the road sector. The first is a transport project which is completing the first 26 km of the Milot-Rreshen part of the Durress-Kukes road. We are proceeding very well and I think by the end of the year will be completed with all the safety regulations and all the pieces on the sides and the access roads etc. We have been steadily working for a long time to help upgrade the capability of the Albanian government to manage the National Road Network. So we were very pleased lat year no earlier this year when they passed a new law to establish the Albanian Road Authority and together with other donors we are helping to develop an asset system management and to actually help manage the expenditures that are in the road sector in a more efficient way and to ensure that an appropriate amount of spending is spent on operations and maintenance, because you are rapidly developing a road sector, where it’s very important to make sure that those roads are maintained.
Another project which could have been a candidate for my favorite project is probably one of our most successful projects in the current portfolio is the secondary roads and the local roads projects. With the absolute last amount of concessional financing from the bank that Albania qualified for, we prepared a small project of 20 million to help develop the feeder roads program of the government of Albania, which as you know aims to rehabilitate or reconstruct 1500 km of feeder roads. This is an extremely important initiative for rural poverty reduction. When the vice-president was here in January, we took him to see a road in the Berat area. And it reminded him of his days when he was a country manager in Mozambique and he said “You can not underestimate the impact of good transport in the rural sector on access to schools, access to health, access to markets, and access to services for the rural poor. I mean it changes the entire community. So with that project, even though it was very small, the program we helped develop with the government, the Albanian Development Fund has gone up to 450 million dollars of concessional and semi-concessional financing from other donors.
We are very pleased and actually as we move into a new program we are going to try and replicate that kind of model of being catalyst for a large program of donor financing. What’s very nice about that project in the transport sector is that it is based on very objective criteria, there is a database developed of all the communities in Albania of how far people will have to go to go to school, to go to the hospital, how poor the communities are, that helps allocate the resources from all these donors to spend on these roads. The second is that there is a technique in which the local community has to commit to the maintenance of the road in the future. The third thing is that knowing that local communities have limited resources the design of the roads that are being implemented are designed to have low maintenance costs in the future. So we are very proud of this innovation. And this has been very successful. Before the second year they have disbursed 80 % of the resources. And they have almost completed the 8 sections of the local and secondary roads that we in fact are supporting. But with the 430 million I think you will change the face of the Albanian countryside.
Question: Is it too much to ask you how long before that project get completed?
Answer: We had to guess the other day because we were starting to think what would be our next intervention in the rural sector, so not to be too optimistic, but I think that 430 million is a lot to implement. I do think you have a vibrant construction industry and you have local contractors in communities, so you have a lot of people to work on these roads, so you have good designers, a lot of good environmental people, who know how to do road assessment. So the ADF is very good at getting into communities and helping them develop. So I guess my sense is in 2-3 years you will begin to see the impacts and in 2-3 years we will start to think about where our next intervention would be. I will give you one of the ideas. When we talk to road sector people, you also have a lot of national investments in the road network with lots of donors, EBRD, KfW and some others. I think that once you make a bog dent in the national road network, the Bank would come back with a program that is about completing the national road network, helping the donors come together and to bring the national road network to a standard and a program of maintenance over time.
Question: Do you think the graduation of Albania to the levels of commercial crediting will make the disbursement of financing easier? What will the effect be like?
Answer: Well I don’t that in itself will impact the rate of disbursements. But it’s going to make the need to make and implement project much more important, because the financing is commercial. In other words you borrow the money today, after a certain period of time you will start paying interest on it, well you expect that interest to be paid by the growth that the project has resulted in. So it’s very crucial as you move into commercial financing in the private sector including through the Bank. That it is imperative that the projects once they start they have to move quickly. As I mentioned before I think we have to take more time to prepare them I think. I think they have to be as we say shovel ready before the money hits the ground.
Question: Not in terms of the importance, but education was left as the last item for discussion. Of course it is very important for a developing country. World Bank has paid special attention to projects in the field or not, such as that of internet in schools?
Answer: We are just finishing a report on new growth agenda for Albania in the future. The reason I mention it is because education comes extremely high for a particular reason. You have had a lot of rapid growth in the past because you are starting from a low base and you have moved very quickly to converge with your neighbors. That’s something we see in transition countries. So you move forward, now you are in an emerging economy, and you need to drive that growth through productivity improvements. One way in which you can improve the productivity of the economy of the region is in the skills of the labor force. Not only do you need to have productivity improvements, but you need job growth. Albania has seen a lot of people shift from the agricultural sector to the services, and it has seen a lot of people go overseas, earn some financing and send it back. But you have a lot of people in Albania that we call passive participants in the market economy. So you have this resource of labor that needs to be made competitive to attract jobs to Albania and increase social welfare over time. So for that reason we have an important project that we have done together with two other donors, Council of Europe Development Bank and European Investment Bank in education sector. Of course one of the objectives is to leapfrog education sector into the modern world and create graduates that the private sector not only can employ but also they can train and retrain and bring their own energies into private companies. You want to hire high-tech kids who know more than you in using a computer and having creative ideas about how to expand productivity and sales in your company. The internet in schools is meant to be one of the pillars of that project. So we have spent with a lot of other donors buying computers for schools and rolling out internet access, but it has to be followed up with training for teachers, bringing in some of the local community who is an internet savvy, creating programs in which children not only learn to use computers, but they use the computers for learning. We want the next generation of digital Albania, right? That’s where we are aiming. Now the computers have been rolled out. So we have to pay a lot of attention. So I always asked when going around “ Are the computers in your school being used yet?” Two of the communities I asked. I asked Vuno because I know the people in Jale and I asked people in Thethi, because it’s remote and in winter time they are cut off. They need at least telecommunication access.
Question: What has been their answer to that?
Answer: Well, in Vuno the computers are in school but the internet is not there yet. But I think because of their connection with tourism it will be very organic as it moves ahead and this is the same with Thethi. I think Thethi has opened up quite a bit because you have these people coming in summer so there is a capacity there and a hunger and the question is whether the teachers are trained . This is something we are working together with the Ministry of Education to make sure we roll out not only teacher training but also new curricula. We are working with them on the reform of the secondary education curricula now and that’s going to be an important part.
Question: Are you happy with the time that he implementation of the project has taken?
Answer: Well, I think that the education project is one of the most challenging ones, because we did something at the start of the project which is fully mainstreaming its implementation at the Ministry of Education. So it’s Ministry of Education staff implementing the project, which is good, because it’s the largest project that the Ministry of Education has. We have some 50 million and the two other donors have 50 million but the government of Albania put in 25-40 million of its own revenues into that project.
So it’s a sizeable project and it should have been mainstreamed and that slowed down things at the beginning. In addition, one of the challenges, I think, in that project is a huge infrastructure project because you need schools. You still have triple shifting and double shifting and the classrooms are crowded and there is a need to renew the school infrastructure.
But the Ministry of Education people are not infrastructure people, neither in the Bank, education sector, nor in the ministry. So a lot of time has been spent building that capacity, not only with the ministry but also with the municipalities that are going to get the schools to understand infrastructure. If the Ministry of Public Works was in charge of schools, schools may have been built faster. But it’s important that they learn those skills. I think we are ready to roll out now 8 schools, we expect the rehabilitations to start in fall, and another 12-20 schools that are being built around the country.
Question: Which are the relationships between the bank, the Central Government and the Local Government?
Answer: I think it’s evolving. This is a very interesting topic. One of the things that we supported in the past was the local government borrowing law, to allow the local governments to source their own direct financing for their own development. It’s different from the Bank and the IFC. Because for the Bank by arrangements the government of Albania is the bank’s client, the money to the local government from the bank goes through the line ministries. The LAMP project went through the Ministry of Interior, the project for education goes through the Ministry of Education or the local roads go through the Ministry of Public Works and FDA and for irrigation goes through the Ministry of Agriculture. We have challenges there. Although we feel that has been capacity building in the ministries we have moved down and continued to build capacities with the local governments. I think that the local governments are as impatient as the Albanian public. You know there are frictions in Albania between the central government and the local governments and sometimes those get in the way. So in the design of future programs we are going to do municipal investments, for instance in the water sector those are things we have to manage very carefully at the beginning. But I talked about IFC which is our financial arm in the private sector and they have a window for sub-national financing around the world. So I don’t think that all of the municipalities in Albanian would be financially capable to take one, but some are. For instance the financing for the water system in Korca is directly to the Municipality, not from the Bank but from other donors. So over time as municipalities will continue to build their capacities, financial management and their revenue and other capacities, you can see more of that kind of lending directly to the municipality.
Question: Politics has a say, in a way even, directly or not, in the World Bank projects?
Answer: Politics has a say in every thing that has to do with the state. So of course our challenge is that ultimately our client is the public of Albania. The intermediary is the Government of Albania, so we find ourselves sometimes in the middle of a controversy between the ultimate client and the intermediary. That’s a challenge of doing business. I think what’s important is that the Bank brings to the table its independent voice and its expertise and its focus on the technical professional approach to development. So you can have a controversy why this and not that. At the end of the day there are good technical reasons that are related to the long term development of the country that can be made to make those choices.
Question: How do you solve such issues?
Answer: Most it’s dialogue and dialogue. Talk, talk, and talk. Well I know a lot of people think it’s a lot of talk, but in fact you look for the information and you understand the information. It important for us to talk to the ultimate beneficiaries and not just to the government. That’s a long standing lesson for the Bank for the last 20 Years. It’s to go out together with the government, but also independently and understand the constraints being faced. So you have to prioritize. It’s like the budget of a family. The teenager would like a new cell phone, and the mother needs a washing machine. The family as a group have to make a decision about how to evaluate. So we have developed over time in the bank .Is it a short term return, is it a long-term return. What’s the likelihood of sustainability? You put this technical opinion on the table with most of the people no matter what politics in Albania; you can build a consensus around that.
Question: I would like to know the assessment of the World bank of the Albanian economy in view of the international crisis.
Answer: This is a very important question and a very timely one. First I have to say that the World Bank assessment is that structurally speaking the Albanian economy has a lot of potential. You still have an abundant amount of natural resources that are yet to be developed. You are blessed with a strategic location. And as I said before you have a work force, you have one of the few growing populations in the region. So structurally speaking the fundamental basis for growth in Albania is very strong. We have three challenges going ahead. One of which is external.
The second one of which is again structural and focused on policy. In the external environment clearly Albania is emerging or is reaching the stage of an emerging economy in the most difficult moments that we have seen for emerging economies in the past two decades. So you have a very big challenge in the sense that the euro-zone and the European area are looking at a very protective recovery to previous growth rates. The second is that the capital markets and the markets for direct investments are more demanding now than they were for the previous graduates in this region such as Lithuania, Estonia, and these countries. One of the lessons of the crisis is that these markets are not necessarily going to take at face value the kind of structural reforms that many of these other countries claim to have achieved when they emerged into these markets. So the markets are going to look much more carefully at the implementation rates of structural reforms. So it’s not simply enough to say that you have an internal territorial planning law and you have some other laws which want to see the pace at which construction permits are issued and the governance of that. It won’t be simple to say that you have developed a new inspection regime or that you have a new tax framework, how that is actually rolling out and influencing the private sector. I think the markets are going to pay attention to that. That’s going to go into your attractiveness for both sovereign financing and financing from outside for the private sector and from FDI.
So that’s very challenging. It’s much more challenging than before. That was external. The second – the structural side, as I mentioned is that in the history of your transition you are beginning to exhaust resources of growth that came from moving resources from one sector to the other, so moving people from the agricultural sector into the growing services sector, construction etc. Those things are not going to have to carry forever. So what we need to look at now is how grow from productivity meaning how to make workers more agile, smarter, faster and able to attract jobs and also the private sector as well. You are going to move into sectors which are not as easy as the other sectors that you made money in the past. It depends on innovation, adoption, new forms of doing things, brining in new techniques, whatever it is whether it is marketing or production of shoes, or textiles you are involved in or even trying to attract those auto-production sector, car-parts etc that you strategic location would dictate that you eligible for. I mean the third is policy. I think that as you move into new environment. If you think of it rather that Albania is a rather small boat on a big sea you are in choppy waters now and something that helps to manage the success of that boat moving through would be a macro-economic policy. Your policy framework in the last decade or so has been very robust, very sound and prudent and has helped you achieve those 6 % growth rates that you have seen in the past.
Making it through the crisis depends a little bit on some fiscal stimulus that came at the time for you had public investments that were going on at the time, whether they were proper ones or not but that fiscal stimulus helped you get through the crisis, and also because you have a every robust banking sector As you go into the future having a clear macro-economic framework allows investors to see that on the fiscal and the government side -the balance in the boat is going to be sound. So it’s like the fisherman in the boat. And if the boat is moving up and down like this, it’s very hard to see where the nets or the hooks are going, Good macro-economic policy which keeps the boat steady and there is a radar in a storm, I think it’s going to be fundamental. That’s a big message I think for going forward.
That said, I also think that you have these enormous resources, people, the location and you have the natural resources. You should not just focus on these natural resource-based sectors like mining, tourism or agriculture. Because as you can see from your neighbors there is a lot of what we call mobile foreign direct investment out there, that can go anywhere. It could be, I don’t want to suggest sectors, because I think that’s for the private sector to decide. But it could be calls centers. Everybody in Albania speaks Italian. They are cheaper than the Italian workers. But let’s see what happens with the fiscal measures in Italy. You really do have the capacity, but you have to, as I said, to make sure that the reforms are really fully implemented and that you do see the impact at the end of the day, and that you are able to go out and attract the kind of private sector into Albania that brings innovation that has backward linkages with the other sectors and you diversify your economy. I actually think this is a country to back, provided those measures are in place.
Question: You said that the Albanian economy was having plenty of potential but there are two completely different opinions here especially when it is talk about the impact of the international economic crisis. There are many who say that Albania is in crisis today, there are many who say Albania is out of one. What is your opinion?
Question: Well I think it’s not black and white. I think that you have been impacted by the crisis. We don’t know if Europe is out of the crisis yet. I mean it’s hard to project these days. One of the things that are going on to days is variability that is unknown. The Greek situations and the ongoing sovereign debt situation in Europe has been questioning whether or nor we are in the path of a slow recovery or are we seeing a second dip. There is variability in the external environment. Of course I think there will be an impact in Albania. You are not an isolated country. You are in an strategic location that at another time would be a very nice advantage which puts you in the middle of a very big storm. And with both Greece and Italy going through austerity measures, these are your major trading partners, your major remittance resources. A lot of investments come from these two countries. It’s time to batten out the hatches and prepare. So that said, how you got through before is structurally you at a time the time when the returns to investments provided the investment environments are clear, you can still attract.
The World Bank Vice President and the President rather, it’s an opinion of the Bank that developed countries where there are still high return projects, because they have not fully invested yet, that are going to be the way out for the world. Now really they are referring to East Asia, Latin America, China, but even smaller developed countries have the potential to attract some of that financing. You just have to make yourself extremely competitive. It’s not out of sights; it’s just a matter of putting all the pieces together.
Now I am going to go into a controversial moment, but I think this is one of those moments for a country where it’s time to work together and not to really focus on what would be the appropriate path for the country going forward. This is of course a very difficult thing to say, because politics is never about working together. But there are countries in which the opposition and the government can sit down around some parts of the policy framework and say this is the path out. This is just one of those moments.
Question: The moment is kind of tensed when they see how badly the situation has aggravated in a neighboring country, Greece both economically and financially. Do you see the Albanian economy threatened in any way by all this?
Answer: I think it would be naive to presume that you are isolated. That was 40 years ago under the dictatorship. Now you are integrated. And this has been one of the hallmarks of impatience of Albanians to move forward. So for sure there is no avoiding some impacts of the crisis. The question is how you get ready and which parts of your structural agenda you focus on to get you through.
Question: Which are the priorities of the new Country Partnership Strategy?
Answer: Thank you very much for that question. I mean we are in the middle right now of putting the finishing touches on the new strategy for partnership with Albania which will be taken to the Board of Executive Directors in July for 2010-2014. Some of these challenges that we have discussed earlier are exactly the ones where we are trying to understand where our assistance is mostly placed in the future. So together with the government, but we also had some consultation with the private sector, we actually met with parliament both with opposition and government members on these issues, donor community, civil society. We have a three prong strategy.
The first is helping Albania to recover its growth rates by improving its competitiveness. That of course it’s a big statement. We will support very much the establishment of a sound macro framework for putting the radar on the boat and in particular in the absence of the IMF we think that it’s a very important role for the bank to play there in discussing both with the government but also with the parliament what is the fiscal and monetary strategy going forward. The second is the lesson that we learned knowing the emerging economies are not going to be treated as friendly as the previously emerging economies is to focus on some strategic regulatory reforms but to follow them through to completion at least to the point where they are having an impact on the private sector. And we are working on the property registration at the moment. We have this project where we are supporting the registration of 400 000 parcels in 8-10 urban cities around Albania.
That’s going to make a big difference at least to some parts of the property markets and we are helping to modernize the Property registration office. That’s one area. And of course we will continue in infrastructure. Well being a larger financier that’s an area of focus. We want to help the government plan its infrastructure agenda in a fiscally sustainable way so you keep the balance in the boat. One of the new things under the new CAS is we have decided to refocus a bit on our core agenda. We are very much focused on growth as the leverage of the poverty reduction in the past. But now we are going to focus back on the social assistance system. Well I was talking to some of my colleagues this morning and I didn’t realize that it was the World Bank that set up the ‘ndihma ekonomike” with the government whenever before you were born. But we are going back to assist with that because not only the uncertain environment going forward. But it’s important now that you are a middle income country and you do take care of the most vulnerable. That program is there but there is a lot of leakages. Families that are very wealthy getting Ndihma Ekonomike and poor families not receiving it, and the levels of benefits are low. We are going to improve the efficiency and the targeting of that. We will stay in education and health because these are very important areas for the country and not in the Aqui Communitare but for the Bank which has a role to play outside the accession agenda. This is important for the country because you need to build up the human capital.
And then the third part which is new for us is that a recent study in the region has shown Albania is the second most vulnerable country for the climate change in Europe and central Asia, because the rainfall in this area is going to be variable. We saw it this year we saw it last year. Albania is a steep country, so the rainwater runs fast an d its takes with it the soil and gets into the sea and you want to have tourism. And there is low-lying land outside the areas. We are focusing a lot of our environmental work around the agenda of helping you manage your water resources better. So that is the third pillar of the CAS. I am pleased to say that we will probably do ratchet up the amount of lending compared with the level when you were a concessional country and a lot of people don’t understand this. Concessional resources are very scarce. So they are concessional but you never get how much you need. Well I think it’s unlimited but they are scarce. Now that you have access to the commercial window of the bank there is access to more financing. But the flip side of that is you have to manage your debt very well. And as we know Albania’s debt has gone up a little bit. We should pay close attention to the implementation rates of the projects and how fast we should be disbursing in order to help people to pace the development a little bit. It’s good to be impatient but you can’t have everything today.
Question: You were optimistic about the new strategy of the World Bank in Albania. Are you equally optimistic about its implementation?
Answer: No I think we have a lot of challenges. I think we should try to prepare some projects which will take longer to prepare. Some patience! The idea is when they hit the ground to have them more implemented more urgently. And then the second is we need to simplify. We started in Albania with 26 projects at the beginning at the same time. Now we have 15. We are trying to aim to do, especially now that you are doing commercial financing, to do fewer, but larger and simpler. So to pick things that are very strategic and finish them. That’s a very hard thing to do. So yes we have to be optimistic. I think I development you have to see the potential. If you don’t see the potential then you don’t put the energy in it. You just shuffle paper. In 20 years Albania has come a remarkable way. There are developing countries around the world which would envy the progress. But there is more to do. I think if people work together, I think you can do it.
Question: I thank you for this opportunity you gave us to unveil the new strategy of the World BankOf course I have attended you in many interviews, press conferences, but have not seen you in others studios. Have you been to one yet? The last question is more kind of personal. Is your life as varied in Albania as the World Bank projects?
Answer: Is my life varied. I haven’t been to a lot of studios but I have to do this more before I leave. Actually I have been very closeted. I have been around. I have tried to see as much of the country as possible. There is still one region which I shall not name that I shall try to get to before I leave. I think you have a spectacular country and interesting people. I have to say that I have driven myself to Valbona, I haven’t driven myself to Thethi because the road up there is kind of challenging. If I can say one thing, I really liked Albania, because to me Albanians and Jamaicans have the same temperament: very open, very charming, very hospitable. It’s funny when you talk to people, they don’t hide anything. It’s a very nice dialogue that you can have with almost everybody in Albania from the security guard in front of my house to the prime minister and the leader of opposition. That has been very helpful to be able to understand the country quickly and to be able to contribute. But I am going to use this opportunity and say that the assets of this country are the women. Seriously! You have some of the strongest women I have met here who are balanced to be in a country that has a lot of challenges with their family life, their work. I say that as a testimony of the people I work with in my office: extremely committed but able to balance having a social life with a family and really putting their heart and soul into the work. That has been a big lesson for me. And I am trying to emulate this going forward in my own life. So it was a privilege to be here.
