Albania Country Assistance Evaluation Assistance Country Albania 33532 No. Report Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of the World Bank World Document of the Operations Evaluation Department Country Evaluation and Regional Relations September 13, 2005 Country Assistance Evaluation Albania Report No. 33532 Contents Preface ............................................................................................................................................. i ... Summary ....................................................................................................................................... 111 Summary of CAE Ratings............................................................................................................. v 1. Background ....................................................................................................................... 1 2 . Bank Assistance Strategy OED Country Assistance Evaluation oflate 1990s...................................................... 5 Country assistance strategies and progress report: late 1990s. 2000 (PR). 2002 ........ 5 Objectives .................................................................................................................. 5 Lending ..................................................................................................................... 6 OED Assessment of Closed Projects ......................................................................... 7 ESW ........................................................................................................................... 8 Partnership ............................................................................................................... 9 3 . Impact of Assistance Governance and Institution Building ......................................................................... 10 Public Administration and Civil Service ................................................................. 10 Judiciary and Anti-Corruption ................................................................................ 11 Local Institutions and Social Consensus ................................................................ 12 Sustainable Private Sector Growth............................................................................. 14 Macroeconomic Stability ........................................................................................ 14 Private Sector Development .................................................................................... 15 Financial Sector Development ................................................................................ 16 Infrastructure and Urban Development .................................................................. 18 Agriculture .............................................................................................................. 22 Environment and Natural Resources ...................................................................... 22 Human Development ................................................................................................. 22 Social Protection and Poverty Alleviation .............................................................. 24 Education ................................................................................................................ 25 Health ...................................................................................................................... 28 Overall Ratings ........................................................................................................... 30 4 . Contributions Borrower Performance ............................................................................................. 32 Bank Performance .................................................................................................... 33 Other Partners ........................................................................................................... 34 5 . Lessons and Recommendations ..................................................................................... 36 Contents (con timed) Figures 1.1 Real GDP Growth ............................................................................................................... 1 1.2 Inflation. Debt and Fiscal Deficit ....................................................................................... 1 1.3 Current Account Balance and Remittances ........................................................................ 2 3.1 Governance Indicators: Albania 2002 .............................................................................. 12 Tables 2.1 Albania-Lending by Sector: FY97-FY04........................................................................ 6 2.2 Comparative Bank Budget by Cost Category: 2000-2004 ................................................. 7 2.3 Key OED Indicators for Outcomes. Institutional Development and Sustainability for Albania. ECA and World Bank. FY97-04 .................................................................... 8 2.4 ESW and Lending Program ................................................................................................ 8 3.1 Albania-Indicators ofGovernance and Public Sector Management ................................. 12 3.2 Summary of Outcome Ratings for Governance and Institution Building......................... 13 3.3 Albania-Indictors ofEconomic Performance ................................................................... 15 3.4 Albania-Indicators ofFinancia1 Sector Performance ........................................................ 17 3.5 Financial Sector Indicators ofAlbania and Comparator Countries: 1997, 2003 .............. 18 3.6 Albania-Indicators of Performance in Electricity ............................................................. 19 3.7 Albania-Indicators ofPerformance in Water Sector ......................................................... 20 3.8 Albania-Indictors ofPerformance in Other Infi-astructure................................................ 21 3.9 Summary ofOutcomes Ratings for Sustainable Private Sector Growth .......................... 23 3.10 Albania-Indicators ofPerformance in Reducing and Alleviating Poverty ....................... 25 3.1 1 Albania-Indicators ofPerformance in Education ............................................................. 27 3.12 Albania-Indicators ofPerformance in Health................................................................... 29 3.13 Summary ofOutcome Ratings for Human Development ................................................. 30 3.14 Overall Outcome Ratings ................................................................................................. 30 Annexes Annex A : Statistical Annex .................................................................................................. 37 Annex B : People Interviewed .............................................................................................. 53 Annex C : Guide to OED’s Country Assistance Evaluation Methodology .......................... 59 Annex D : Management Action Record ................................................................................ 63 Attachments 1. Comments fi-om the Government ..................................................................................... 65 2 . Chairperson’s Summary ................................................................................................... 75 Bibliography..................................................................................................................... 79 i Preface This Country Assistance Evaluation (CAE) report reviews the Bank’s assistance strategy for Albania from FY98 to FY04. It looks at whether the assistance dealt with the major issues affecting the economy and how it contributed to the accomplishments ofthe country. The report also assesses the relevance, efficacy, and efficiency ofthat assistance and recommends actions for the future. The evaluation is based on a review of World Bank documents and on interviews with govemment officials, Bank staff, officials from other donor agencies, members ofnon-governmental organizations, academicians and people in the private sector. A Bank mission visited Albania from September 4,2004 to September 19, 2004. The contribution and the cooperation ofgovernment officials and agencies, civil society, private sector, and donors are gratefully acknowledged. The Regional response to the Management Action Record is attached as Annex D. A draft ofthe CAE was shared with the Government ofAlbania and their comments are presented as Attachment 1. The comments have been incorporated in footnotes attributed to the Government. The Country Assistance Evaluation was written by Jorge Garcia-Garcia (Task Manager) with contributions by Anthony Pellegrini, Elaine W. Ooi, Ilka Funke, Luis Alvaro Shchez and Patrice Harou (Consultants). The evaluation benefited from work done by OED on the PRSP and on pensions. This evaluation also benefited from comments ofLaurie Effron and two peer reviewers: Messrs. Robert J. Anderson (OEDCR) and Roger Robinson (ECCAR). Maria Claudia Pach6n provided research assistance. Janice Joshi provided administrative support. ... 111 Summary 1. After a pyramid scheme collapsed in late 1996 and early 1997, leading to riots and looting, Albania forged a stable economy through sound economic management and stronger economic and political institutions. The government