Ladies and gentlemen
I am very pleased to be here today and have the opportunity to share with you a few observations on good governance and its crucial role for the sustainability of reforms and development in Albania.
But first of all, let me thank the ministers for the important role they are playing in improving donor coordination and the staff of the Department of Donor and Strategy Coordination (DSDC) for their excellent work as the central unit of the government that guides and supports all the institutions in aid management and strategy monitoring.
Having recently chaired the DTS, during the first half of 2011, I would also like to thank all the DTS members with whom we have closely worked. On behalf of many World Bank colleagues, I would like to express our sincere appreciation to all Development and Integration Partners for their continuous support, commitment and contribution towards strengthening partnership with Albania. After a year of work in Albania, I am gratified by the importance you attach to the principles of Harmonization and Coordination to increase the effectiveness of aid. This is more than ever important at the time of slow recovery and strained budgets.
In this context, I would like to acknowledge your contributions into the successful completion of 2011 OECD/DAC Survey, which was undertaken by DSDC with technical support from the World Bank.
I am immensely delighted that by the end of World Bank’s rotational chairmanship of the DTS, the decision was made that the government, represented by the DSDC, will become a permanent DTS co-chair. As a DTS member, we are committed to supporting the DSDC in this role.
The World Bank - as well as many other development and integration partners of Albania – would like to see stronger leadership and ownership of the Sectoral Working Groups by the respective line ministries. These WGs should evolve to support the goals and programs of those ministries, not donor driven priorities. It has been encouraging to see this process having started, and look forward to further progress in this direction.
The World Bank has intensified its focus on governance as a key factor accounting for variations in development effectiveness. Through its long-standing engagement in Albania, the World Bank has supported institutional development and governance reforms to help strengthen the capacity of state institutions to deliver public goods and achieve development outcomes more effectively and efficiently. Good governance is a cross-cutting theme under the current Country Partnership Strategy, and we review every World Bank operation through a so-called “governance filter” to make sure that it contributes to improving governance of the supported sector.
The Government has taken steps to improve public finance management, public administration, strengthen the legal framework, institutions and business environment. These actions have been instrumental to the country’s impressive economic performance and improved human development outcomes.
Despite these positive developments, Albania continues to face significant governance challenges that will need to be overcome if the country is to achieve its ambitious development goals and accelerate progress towards European integration. To help tackling these challenges, the World Bank recently published several reports that identified issues and policy options to improve governance across a set of indicators and in several specific sectors, namely property rights, water services, and education.
We are pleased to support Government’s efforts to accelerate progress on several dimensions of governance reform through a series of Governance and Competiveness development policy loans.
We see opportunities for DIPs to coordinate support to addressing the governance challenges in a more harmonized and strategic manner, particularly on cross-cutting issues, such as property rights, information systems, and public sector administration.
On property rights, a critical issue for so many of us, it will be important to increase the effectiveness of the respective sector WG, as a key tool for donor coordination.
The feedback from the survey conducted by the DTS (Donor Technical Secretariat) shows the IPS as being one of the 5 topics of interests for all the donors and as one of the priorities in the near future.
The Integrated Planning System Multi Donor Trust Fund that closed on 30 September 2011, very happy to say, has been one of the best examples of donor coordination. 7 donors (EU, Swiss, DfID, Austrian, Italian, Netherland, SIDA) through the MDTF have contributed in a significant way to the overall development goal of ensuring that the Government of Albania’s core policy and financial processes function in a coherent, efficient and integrated manner.
MDTF implementation experience has demonstrated that the needed IPS capacities are multi-dimensional and system wide in nature, and that building these capacities requires a longer-term and strategic planning perspective, a better understanding of capacity development, and sustained support.
Overall, the MDTF was found to have performed well, and to have produced an impressive array of outputs, leading to significant results in many areas, like macroeconomic analysis and improved forecasting, strengthened debt management, establishment of computer based treasury system, improved aid management procedures, etc.
The IPS process has become well-established, follows a consistent schedule, and ensures a linkage between key policy objectives and budget allocations. Likewise, the transparency and effectiveness of budget execution has improved significantly since the activation of the automated Treasury system in 2010.
However, the quality and inter-linkage of the key elements of the IPS need to be further improved. Sectoral and cross-sectoral strategies remain insufficiently aligned with the MTBP and lack systematic costing. Expenditure planning has been transferred to a program basis, but the definition of programs on the basis of results still remains to be fully developed. Likewise, the monitoring of implementation and results at the levels of the NSDI, sectoral/cross-sectoral strategies, and budget programs needs to be strengthened, especially by developing the relevant capacity in the line ministries.
One of the lessons is that IPS implementation should be seen as a long-term process of major change and reform within the Government of Albania, and will likely require longer-term support from its development partners. Therefore, the Government of Albania requested further support for the second phase, and we are grateful to those donors who agreed to continue their support.
Suggested objective of IPS 2 “strengthen the implementation of the Integrated Planning System, by introducing a performance orientation in the policy planning and budgetary processes, and improve institutional capacity to monitor results at the strategy and program levels”. The draft CN was shared with several of you yesterday, and we look forward to a successful collaboration on this critical agenda in the years to come.
Tirana, November 1, 2011