## _cr08269

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---

### Preface — NSDI 2007-2013: purpose, process and governance
- Presents the National Strategy for Development and Integration (NSDI) 2007-2013 to harmonise national perspectives for sustainable economic and social development and integration into the European Union and NATO.
- Medium- to long-term framework aligned with Integrated Planning System (IPS) and Medium-Term Budget Programme (MTBP).
- Strategic Planning Committee determined NSDI will:
  - embody SAA and NATO Membership Action Plan objectives;
  - define high-level indicators;
  - synthesise sector and crosscutting strategies and reflect indicative costing.
- Preparation timeline highlights:
  - Sector strategies begun June 2006; drafts submitted mid-October 2006; consultations with Ministry of Finance, Ministry of European Integration and INSTAT; wider stakeholder consultation in first half of 2007.
- Implementation and review:
  - Sector strategies updated on major policy shifts; annual review at start of MTBP cycle; annual progress report published.
- Acknowledgements: Department of Strategy and Donor Coordination, line ministries, donors (notably UK DFID).

### 1. Latest developments — political, security and macro performance
- Political and institutional transformation:
  - More than 80% of the domestic product comes from the private sector.
  - Per capita incomes today are twenty times higher than they were in 1992.
- EU integration milestones:
  - 12 June 2006: SAA and Interim Agreement signed.
  - 1 December 2006: Interim Agreement entered into force; implementation judged successful by European Commission.
- NATO integration:
  - 22 August 2007: Office of the National Coordinator for NATO established.
- Governance and rule of law:
  - Parliamentary elections: 3 July 2005; local elections: 18 February 2007.
  - Electronic civil registry expected completion: July 2008.
  - January 2008: Parliament resolution on cooperation for integration reforms.
  - 51 persons accused of corruption brought to justice in 2007.
  - Comparative enforcement: twice as many criminal groups were hit in 2007 compared to 2005; during the last two years 206 groups have been hit and 851 persons have been brought to justice.
  - Police results against trafficking: about 36 criminal groups struck and 149 individuals prosecuted (period “past year”).
- Economic performance (selected figures and trends):
  - PPP GDP per capita: $1809 in 1992 → $5727 in 2006 (WEO data).
  - Economic growth sustained at about 6%; projected to maintain 6-7% in 2009-2011.
  - GDP nominal: Lek 979 billion end-2007 vs Lek 892 billion end-2006 (increase ~9%).
  - GDP per capita 2007: Lek 309611 (about 9.1% higher than in 2006).
  - Inflation: about 3% (±1 %) consistent with Bank of Albania targets.
  - Money supply (M3) grew by 7% in 2007.
  - General balance of payments: €173 million in 2007.
  - Foreign currency reserves: €1.5 billion.
  - Exports grew by 27% in 2007; imports grew by 26% in 2007.
  - Trade deficit about 25% of GDP.
  - Remittances described as one of the highest in the world as a share of GDP.
  - Unemployment: 13.2% in 2007 vs 13.9% in 2006.
  - Public revenues: 27% of GDP in 2007 (25.5% in 2006; 24.8% in 2005).
  - Single 10% tax rate on income began July 2007; flat 10% profit tax came into effect January 2008.
  - Public expenditure: 31.6% of GDP in 2007 vs 28.8% in 2006.
  - Capital investment: 5.7% of GDP in 2006 → about 7.2% in 2007; projected 9.8% in 2008 and then 6.3% subsequently.
  - Budget deficit: 4.6% of GDP in 2007 vs 3.3% in 2006.
  - FDI increased by 84% in 2007 (three times higher than the 10-year average).
  - Heritage Foundation ranking: 56th out of 157 countries (recent report); 81st in 2004; 121st in 2000.
- Infrastructure and privatisation:
  - Major projects: Durres-Kukes-Morine motorway; port modernisation (Durres, Vlora, Shëngjin); concession agreement for Mother Theresa Airport; Vlora thermal power station construction began 2007.
  - Privatisation: Albtelekom privatisation completed; electricity distribution separation approved and privatisation prepared.
- ICT, public administration and financial supervision:
  - National Centre of Registration reduced business registration time from 42 days to one day via one-stop shop.
  - Agency of Information Society established; Gov-Net being improved.
  - Financial Supervision Authority established.

### 2. Vision, strategic priorities and targets (to 2013)
- Seven-year vision: "A country with high living standards, which is integrated in the European and Euro-Atlantic structures, is democratic and guarantees the fundamental human rights and liberties."
- Integration and accession goals:
  - NATO: meet conditions to receive invitation; candidate invitation expected spring 2008; full membership target by 2010 (see 3.1).
  - EU: candidate status within two years of NSDI approval; approximation to acquis and fulfil EU membership standards.
- Rule of law and governance goals:
  - By 2013: reach same level as Central and Eastern European countries on the year they became EU members, according to World Bank 'Rule of law' indicator.
  - By 2013: reach same level as Central and Eastern European countries on year they became EU members, according to Transparency International ‘Corruption Perceptions Index’.
  - Justice sector targets include implementing judicial reform (2007-2010), harmonising organic laws (2011-2013), establishing specialised/administrative/commercial courts, and improving training via School of Magistrates.
- Property rights targets:
  - Medium-term (2007-2010): complete land value map and registration of state properties; legalise informal zones; digitalise registration in priority offices.
  - Long-term (2011-2013): finalise restitution and compensation; complete registration including forests and pastures.
- Public order and security:
  - By 2013: attain ‘Tier 1’ status in the ‘Trafficking in Persons Report’.
- Economic and infrastructure targets:
  - Maintain average growth >6% per annum and tend to reach 7%.
  - Transport: about 6000 km of rural roads rehabilitated by 2013.
  - Energy: By 2013 more than 8500 GWh of electric energy generated domestically per year.
  - Water and sanitation (by 2013): (a) 95% water supply coverage; (b) 83% sewerage coverage; (c) 45% wastewater treatment coverage.
- Social targets:
  - Unemployment target: below 10% by 2013 (INSTAT LFS).
  - Poverty target: headcount poverty rate below 10% by 2013 (INSTAT LSMS).
  - Health: infant mortality rate reduced to 5 per 1000 live births by 2013.
  - Education: secondary education net enrolment rate to 76% by 2013; transfer rate from compulsory to secondary education expected 86%.

### 3. Policies — sectoral and crosscutting responsibilities (selected)
- Sector strategy institutional leads (selected):
  - Defence — Ministry of Defence
  - Justice — Ministry of Justice
  - Public order / State Police strategic plan — Ministry of Interior
  - Transport — Ministry of Public Works, Transport and Telecommunications
  - Energy; Economy — Ministry of Economy, Trade and Energy
  - Health — Ministry of Health
  - Basic and Higher education — Ministry of Education and Science
  - INSTAT — Statistics
- Crosscutting leads (selected):
  - Anti-corruption and transparent governance — Council of Ministers
  - Property rights — Ministry of Justice
  - Public administration, decentralisation, civil registry, integrated border management — Ministry of Interior
  - Environment — Ministry of Environment, Forests, and Water Administration
  - ICT — Ministry of Public Works, Transport and Telecommunications
  - Rural development and agriculture — Ministry of Agriculture, Food, and Consumer Protection

### 3.1 European Union and NATO integration — objectives and instruments
- SAA role:
  - SAA is instrument for gradual EU integration; Article 70 foresees adoption of acquis communautaire; approximation in two five-year phases per programme (National Plan for Implementation of SAA approved September 2007).
  - Free trade zone commitments: eliminate customs duties and quantitative restrictions; respect non-discrimination among goods.
  - Free movement provisions cover workers, establishment, services, capital and payments; Albania to begin procedures to guarantee EU citizens' right to buy immovable property within five years of SAA entering into force.
- Accession preparation:
  - Screening begins after candidate status; Ministry of European Integration to coordinate SAA and Instrument for Pre-Accession Assistance implementation.
- NATO integration:
  - Public support >90%.
  - Timeline targets: receive invitation spring 2008; full member with rights by 2010.
- Defence commitments:
  - Defence budget to reach 2% of GDP in 2008 and retain this level.
  - Transform Armed Forces to fully professional force by 2010; targeted operational capacities:
    - 8% of land forces units able to participate in international operations at any time.
    - 40% of the land forces component having capacity for such participation.
  - Modernisation and interoperability priorities listed (C4I, helicopters, patrol boats, logistics, training).
- Foreign affairs priorities:
  - NATO invitation and ratification of SAA; support Kosovo status process; improve Foreign Service capacity; expand diplomatic presence.

### 3.2 Democratisation and rule of law — justice, property rights, anti-corruption, borders, migration, organised crime
- Justice reform priorities (selected):
  - Guarantee separation/balance of powers; review constitutional dispositions; reform prosecution; implement electronic case management and national CCMIS; computerise judicial files; objective appointment procedures; train judges/prosecutors; improve execution of court decisions; modernise penitentiary and pre-trial detention infrastructure.
- Property rights priorities:
  - Complete first registration and legalisation; create land value map; computerise Agency of Restitution and Compensation archives; make Immovable Property Registration Office autonomous and self-financing; enact immovable property tax based on market value.
  - Implementation phases: 2007-2010 focus on urban/peri-urban areas and legalisation; 2010-2013 focus on forests and pastures.
- Anti-corruption strategic pillars:
  - Prevention, transparency and education; investigation and punishment; consolidation of domestic and international cooperation.
  - Approximate legislation with Council of Europe and UN conventions; implement e-government and transparency measures.
- Integrated border management strategic pillars:
  - intra-service cooperation; inter-agency cooperation; international cooperation; implement general information management system (TIMS); legal/regulatory and organisational reforms.
- Migration strategy:
  - Fight illegal migration: implement Readmission Agreement and TIMS; mobilise remittances for investment; promote bilateral labour agreements; fight brain drain.
- Organised crime and trafficking:
  - Enhance intelligence-based investigations, specialised recruitment, technology and international cooperation; strengthen witness protection; extend capacities to fight money laundering and smuggling.
- Public administration modernisation:
  - Deepen civil service reform, results-oriented management, remuneration schemes, training and central HR database; implement SAA-related capacity building.

### 3.3 Economic and social development — infrastructure, transport, energy, water, environment, economy, ICT, social policy
- Transport priorities:
  - Complete core corridors (North-South, East-West, Durres-Morine), develop ports per comparative advantage (Durres as main port), encourage concessions, improve maintenance and road asset management, rural roads major programme.
- Energy priorities and projects:
  - Energy resource shares: hydrocarbons 61-63%; electrical energy 25-27%; other renewables 11-13%.
  - Vlora thermal power station completion by 2009 at cost of €92 million with capacity 97 MW.
  - Planned production: more than 4000 GWh by 2013 from planned investments (total production in 2005 was 5451 GWh).
  - Transmission projects: 400 kV Podgorica-Elbasan line by 2009; new Dispatching Centre by 2010.
  - Electricity distribution privatisation expected in 2008.
- Water supply and sanitation targets by 2015 (from Air/Energy section):
  - Water supply coverage: increase from 73% to 98%.
  - Sewerage service coverage: increase from 43% to 80%.
  - Wastewater treatment coverage: increase to 50% of the population.
  - Average hours of water supply: increase from 9.7 to 18 hours per day.
  - Gradually eliminate operational subventions with annual average reduction not less than 10% of the 2008 level.
- Environment targets (selected timelines):
  - Air quality: halve non-compliance cases and eradicate breaches >2x standard by 2009; EC-compliant fuels and compulsory emissions testing by end of 2008; national air quality monitoring EC-compliant by 2014 with intermediate steps in 2008, 2011.
  - Solid waste: prevent dumping at unauthorised locations by 2008; safely dispose 75% hazardous waste by 2009; 50% municipal waste to engineered landfills by 2010; complete five regional landfills by 2009; sanitary landfills throughout country by 2014.
  - Waste water: urban sewerage connection rate 75% in 2010 and 85% in 2014; treatment for at least 25% of collected wastewater in 2010 and 50% in 2014.
  - Forest/biodiversity: increase forest cover by 5% overall by 2010; increase protected areas to 15% by 2014.
- Market economy, SME and FDI policy:
  - National Registration Centre operational in 29 municipality offices for one-stop business registration.
  - Export targets: maintain annual export growth 13-15% initially; increase export share of GDP to 14% in 2013; target export-to-import ratio 1:2 by 2013.
  - FDI promotion: concessions law, 'Albania one euro' initiative, infrastructure and business climate improvements.
- ICT priorities:
  - Adopt law on electronic communications in line with acquis; implement e-government services (e-taxes, e-customs, identity, land registration, court transparency); implement national academic network, Gov-Net extension.
- Social policy highlights:
  - Employment: strengthen employment services and vocational education; focus on youth 18-25, women, persons with disabilities, Roma.
  - Gender equality: integrate gender perspectives; prevent domestic violence; increase women labour force participation.
  - Social protection: ndihma ekonomike re-targeting and expansion (see social assistance).
  - Health: shift to preventive care; Health Insurance Institute financing of primary health care as of 2007; increase pre-paid coverage and single strategic purchaser.
  - Education: double teacher salaries by 2009 (policy in implementation); targets include net secondary enrolment to 75% by 2012 (Table 3.1 shows net enrolment 55% in 2006 → 75% in 2012).

### Social assistance and social care (selected)
- Social assistance strategic goal:
  - Reduce absolute poverty headcount rate to 10% by 2013 (household surveys).
- Ndihma ekonomike targeting findings:
  - Share of poor households receiving benefits increased from 24.6% in 2002 to 32.5% in 2005.
  - Share of non-poor households receiving benefits increased from 57% in 2002 to 64% in 2005.
- Recommended measures:
  - Use poverty map from Census and household surveys to allocate block grant funds.
  - By 2013 ndihma ekonomike benefit to approximate poverty line not exceeding national minimum pension.
  - Expand use of work requirements nationwide; simplify documentation; improve electricity subsidy administration.
- Social care priorities:
  - Decentralise social services to local government; transfer residential centres; license NGOs; transform residential to community-based services; guarantee minimum quality and monitoring via licensing and inspection.
- Social inclusion priorities for children, Roma, disabled:
  - Improve registration, vaccination, school enrolment, early childhood coverage, anti-child-labour measures, targeted Roma strategies, accessibility measures for disabled, vocational inclusion and institutional capacity building.
- Social insurance reform:
  - Transition from single pay-as-you-go to multi-pillar pension system; technical working group to prepare reforms; preserve accrued rights; plan financing and supervised licensing for pension funds.
- Health system reform highlights:
  - Address rising non-communicable diseases; shift to preventive care; pool funds; single strategic purchaser; increase pre-paid coverage; introduce co-payments; improve governance and health information systems.

### Tourism, culture and regional development (selected targets)
- Tourism performance and targets:
  - Total visitors by November 2007: 2.1 million; foreign visitors in 2007: 1.1 million; increase in foreign visitors between 2006 and 2007: 19%.
  - Total revenues from tourism: estimated €805 million in 2006; projected €1000 million in 2007.
  - Targets by 2013:
    - Total number of visitors: 3.5 million.
    - Non-ethnic Albanian visitors: 60% of total.
    - Gross revenue from tourism: €2.5 billion.
    - Average revenue per visitor: 35-40% higher than in 2006.
- Culture priorities: protect, catalogue and present cultural heritage; support creative industries; digitalise collections; promote intellectual property protections.

### 4. Macroeconomic and fiscal perspectives — projections and fiscal envelope
- Economic growth projections (Table 4.1):
  - Real GDP growth (%) by year: 2006: 5.5; 2007: 6.0; 2008: 6.0; 2009: 6.5; 2010: 7.0; 2011: 7.0; 2012: 7.0; 2013: 7.0.
  - Investment (%GDP) by year: 2006: 25.1; 2007: 26.5; 2008: 26.9; 2009: 27.8; 2010: 28.7; 2011: 28.8; 2012: 29.0; 2013: 29.6.
- Balance of payments projections (Table 4.2):
  - Exchange rate (Lek/€): 2006: 123; 2007: 122; 2008–2013: 122 each year.
  - Trade balance (€million): 2006: -1,685; 2007: -1,888; 2008: -1,965; 2009: -2,062; 2010: -2,167; 2011: -2,227; 2012: -2,309; 2013: -2,387.
  - Remittances (€million): 2006: 966; 2007: 1,059; 2008: 1,133; 2009: 1,212; 2010: 1,300; 2011: 1,394; 2012: 1,494; 2013: 1,602.
  - Overall balance (€million): 2006: 207; 2007: 129; 2008: 115; 2009: 96; 2010: 148; 2011: 178; 2012: 229; 2013: 279.
- Monetary sector projections (Table 4.3):
  - Inflation (%) by year: 2006: 2.4; 2007: 2.9; 2008–2013: 3.0 each year.
  - Private sector credit (%GDP): 2006: 21.2; 2007: 27.9; 2008: 34.1; 2009: 40.0; 2010: 44.9; 2011: 48.4; 2012: 51.3; 2013: 52.0.
  - Money supply (%GDP): 2006: 74.1; 2007: 78.9; 2008: 83.3; 2009: 87.3; 2010: 90.6; 2011: 92.4; 2012: 93.9; 2013: 94.1.
- Public finance projections (selected entries from Table 4.4; shares of GDP and Lek billion preserved):
  - Revenue — Total revenue (% of GDP): 2006: 25.5; 2007: 26.9; 2008: 26.4; 2009: 27.1; 2010: 27.6; 2013: 28.0. Lek billion: 2007: 264; 2010: 356; 2013: 482.
  - Taxes (% of GDP): 2006: 17.2; 2007: 18.3; 2008: 18.2; 2009: 18.5; 2010: 18.7; 2013: 19.1. Lek billion: 2007: 180; 2010: 241; 2013: 329.
  - Expenditure — Total expenditure (% of GDP): 2006: 28.8; 2007: 31.5; 2008: 34.3; 2009: 31.0; 2010: 31.2; 2013: 31.0. Lek billion: 2007: 309; 2010: 403; 2013: 534.
  - Balance (% of GDP): 2006: -3.3; 2007: -4.6; 2008: -7.9; 2009: -3.9; 2010: -3.6; 2013: -3.0. Lek billion: 2007: -45; 2010: -46; 2013: -52.
  - Financing (selected): Privatisation (% of GDP) 2006: 0.2; 2007: 1.5; 2008: 0.4; Lek billion privatisation 2007: 15.
- Expenditure structure (selected rows preserved exactly as in source table):
  - Wages: 6.3 6.3 6.4 6.3 6.3 6.2 62 81 107
  - Operations and maintenance: 2.5 2.5 2.6 2.7 2.9 3.1 25 37 53
  - Interest: 2.8 2.9 3.1 3.1 3.0 2.9 28 39 50
  - Subsidies: 0.4 0.8 0.2 0.2 0.2 0.2 8 3 3
  - Social: 8.2 8.7 8.5 8.5 8.5 8.5 85 110 146
  - Other: 2.5 3.1 3.8 3.8 3.9 4.0 31 50 69
  - Capital: 5.7 7.1 9.8 6.4 6.4 6.1 70 83 105
  - Total expenditure: 28.8 31.5 34.3 31.0 31.2 31.0 309 403 534
- Indicative sectoral allocation targets (2007-2010 and 2011-2013 totals and sector shares):
  - Total NSDI implementation costs:
    - 2007-2010: Current Lek 145.6 bn; Capital Lek 84.4 bn; Total Lek 230.0 bn.
    - 2011-2013: Current Lek 207.1 bn; Capital Lek 120.1 bn; Total Lek 327.1 bn.
  - Education (2007-2010): Current Lek 32.2 bn; Capital Lek 7.9 bn; Total Lek 40.2 bn (17.5%).
  - Transport (2007-2010): Current Lek 2.9 bn; Capital Lek 43.2 bn; Total Lek 46.1 bn (20.1%).
  - Defence (2007-2010): Current Lek 16.3 bn; Capital Lek 5.8 bn; Total Lek 22.1 bn (9.6%).
  - Water and sanitation (2007-2010): Current Lek 0.9 bn; Capital Lek 7.5 bn; Total Lek 8.5 bn (3.7%).
  - Social protection (2007-2010): Current Lek 18.1 bn; Capital Lek 0.4 bn; Total Lek 18.4 bn (8.0%).
  - Rural roads assumption: average capital expenditure for rural roads in period 2011-2013 will be Lek 14 billion.
  - IPA support: about €17 million per year by 2013.
- Costing assumptions for main policies (selected):
  - Defence: 2% of GDP commitment maintained.
  - Transport (2011-2013 averages): recurrent for national road network Lek 5 billion; capital for national road network Lek 28 billion; capital for ports Lek 4 billion.
  - Water and sanitation (2011-2013 average capital): Lek 11 billion.
  - Social protection (2011-2013 average for ndihma ekonomike and disability payments): Lek 17.8 billion.
- Fiscal risks and bridging measures:
  - Cost of NSDI policies is Lek 30 billion (10%) higher than likely available resources; potential measures: higher economic growth, more effective tax administration, strategic privatisations, public–private partnerships, additional donor financing.

### Implementation, consultation and monitoring
- Consultation process:
  - Advisory Groups of 10-15 members for each sector/crosscutting strategy.
  - Roundtables: three thematic, two focused, four regional (Lezha, Peshkopi, Fier, Pogradec); ten televised debates Oct–Dec 2007.
- Implementation mechanisms and calendar:
  - IPS/MTBP integration: initial budget ceilings (January-February); programme policy review (March-April); budget hearings (June and September); review of strategies (November-December).
- Monitoring architecture:
  - Ministries produce annual Ministry Integrated Plan with Ministry Monitoring Plan annexed; quarterly reporting on key commitments.
  - IPS Information System (IPSIS) to link reporting to Ministry of Finance (MTBP) and Ministry of European Integration (SAA).
  - NSDI monitoring indicators: 45 indicators listed (Table 5.1) covering Defence; Justice; Property rights; Anti-corruption; Organised crime; Public order; Public administration; Decentralisation; Transport; Energy; Water; Environment; Finance; Economy; ICT; Employment; Gender; Social protection; Health; Education; Rural development; Agriculture; Tourism. Examples:
    - Indicator 2: Justice — ‘Rule of law’ — Relative to SEE countries — World Governance Indicators, World Bank.
    - Indicator 15: Energy — Domestic production of electric energy (GWh) — KESH.
    - Indicator 35: Health — Infant mortality rate — INSTAT; Ministry of Health.
    - Indicator 45: Tourism — Number of tourists — World Tourism Organisation.
  - Annual NSDI progress report to be produced by Department of Strategy and Donor Coordination: one page per indicator; assess trends and benchmark regionally.
- Statistics improvements:
  - Five-year national programme for official statistics to: maximise administrative sources; implement ESA 95 national accounts methods; improve measurement of hidden economy; enable quarterly GDP flash estimates; strengthen business registry, external trade data, social and agricultural statistics; improve regional statistics (NUTS 2).

*Source: _cr08269*

### Preface

### Preface

### Overview
- Presents the National Strategy for Development and Integration (NSDI) 2007-2013.
- NSDI harmonises national perspectives for sustainable economic and social development and integration into the European Union and NATO structures in a single strategic framework.
- The NSDI crystallises the medium- to long-term vision for the country based on an open and transparent process guaranteeing broad inclusion of civil society, local government, the business community, the academic and scientific world, the Albanian political spectrum and other groups of interest.
- The NSDI was consulted at length with international partners who support Albania in reforms towards development and integration and the achievement of the Millennium Development Goals.

### Process and governance
- The Government of Albania adopted the Integrated Planning System (IPS) in November 2005, comprising:
  - A medium- to long-term strategic planning process: the NSDI (2007-2013).
  - A medium-term budgeting process: the Medium-Term Budget Programme (MTBP) requiring each ministry to develop a three-year plan between March and June within a specified expenditure ceiling; first-year ceilings are allocated in further detail during the annual budget process between July and October.
- The Strategic Planning Committee (decision in March 2006) determined that the NSDI will:
  - Embody all objectives and measures included in the SAA and the NATO Membership Action Plan and aim to fulfil their standards and criteria.
  - Offer a medium-term time horizon and a long-term vision for national development.
  - Define high-level indicators to gauge progress in achieving national goals.
  - Synthesise medium- to long-term sector and crosscutting strategies and reflect their indicative costing.
  - Base public investment management and the document for orientation of external assistance on sector priorities.

### Strategic alignment and scope
- The NSDI fully accommodates parallel planning processes:
  - The Government Programme presented to Parliament in September 2005.
  - Integration into the European Union (implementation of the Stabilisation and Association Agreement (SAA)) and NATO (achievement of membership standards in five fields: political, economic, legal, military, financial and information security).
  - Public investment management, integrated into the MTBP under new procedures implemented for the first time in 2007.
  - External assistance, including optimisation of foreign aid use in line with commitments of the Paris Declaration on aid effectiveness signed in March 2005.
- NSDI replaces the National Strategy for Socio-Economic Development (NSSED) and addresses NSSED limitations by:
  - Making sector strategies the reference documents of the MTBP.
  - Providing a medium- to long-term planning horizon covering the period 2007-2013, aligning with the financial framework of the European Union and the Instrument for Pre-accession Assistance.

### Preparation timeline and consultation
- In June 2006, the NSDI preparation instruction defined:
  - The sector strategies to be developed as foundations of the NSDI.
  - The standards for their review.
  - The crosscutting strategies to coordinate key policy priorities not the responsibility of a single ministry.
- Line ministries began preparation of sector and crosscutting strategies in June 2006 via Strategy, Budget and Integration Working Groups.
- Draft strategies were submitted in mid-October 2006 to the Council of Ministers.
- Drafts were reviewed with the Ministry of Finance, the Ministry of European Integration and INSTAT.
- Subsequent drafts were consulted with non-government policy stakeholders during the first half of 2007.
- Not all underlying sector and crosscutting strategies were approved when this document was prepared, although agreement had been reached on key strategic directions.

### Implementation, review and accountability
- The NSDI is not expected to be updated regularly; sector strategies will be updated when significant policy shifts occur.
- An annual review of NSDI implementation will take place at the beginning of the MTBP planning cycle to inform initial sector ceilings.
- An annual progress report will be published primarily as a monitoring document to build accountability.
- The NSDI document consists of five chapters covering: current challenges; national vision, strategic priorities and goals; key points of underlying strategies by strategic priority; macroeconomic framework and resource distribution for 2007-2013; and transparency, consultation and indicators for assessment.

### Acknowledgements and appeal
- Appreciation expressed for the Department of Strategy and Donor Coordination at the Council of Ministers, line ministries and public institutions involved, and for donors, in particular the United Kingdom Department for International Development for technical and financial assistance.
- A call to all stakeholders to take part in the realisation of joint goals for Albania’s progress and the increase of citizens’ welfare.

*Preface, National Strategy for Development and Integration (NSDI) 2007-2013*

### 1. Latest developments

### 1. Latest developments

### Political and institutional transformation
- Albania transformed from a deeply isolated country with constitutionally denied freedoms to a country of political pluralism over 15 years of democracy.
- More than 80% of the domestic product comes from the private sector.
- Per capita incomes today are twenty times higher than they were in 1992.
- Foreign policy objectives include integration into NATO and the EU, strengthening economic institutions, regional security, and Euro-Atlantic cooperation in economic and security fields.

### EU integration
- 12 June 2006: Albania signed the Stabilisation and Association Agreement and the Interim Agreement with the EU.
- 1 December 2006: Interim Agreement for trade and related issues came into force; its implementation has been judged successful by the European Commission.
- The Government prepared and is implementing the National Plan for the Implementation of the Stabilisation and Association Agreement as part of the National Strategy for Development and Integration.
- European Commission assessment highlights:
  - Political criteria: progress in democracy, rule of law, fight against corruption, and constructive regional policy.
  - Economic criteria: achievement of macroeconomic stability progressing towards a functioning market economy.
  - Administrative/institutional criteria: appreciation for creating structures to coordinate EU reforms and manage resources for implementation.

### NATO integration
- Broad political consensus supports NATO and EU integration; an ad hoc bipartisan parliamentary commission on NATO integration was established.
- 22 August 2007: Office of the National Coordinator for NATO established in the Council of Ministers to coordinate executive, Parliament, President, and independent institutions to deliver reforms under the Membership Action Plan (MAP).

### Political criteria and governance
- Democracy:
  - Parliamentary elections: 3 July 2005 achieved democratic rotation of power.
  - Local elections: 18 February 2007 accepted by all political forces and considered free and fair.
  - Presidential selection: July 2007 through parliamentary procedure in accordance with laws and the Constitution.
- Electoral reform:
  - May 2007: Parliament established an ad hoc bipartisan commission on electoral reform to act on OSCE/ODIHR recommendations.
  - Electronic civil registry expected completion: July 2008.
  - February 2008: international tender planned to select company for identity cards and digital passports.
  - January 2008: Parliament approved a resolution expressing preparedness of all political forces to cooperate on necessary reforms for integration.
- Rule of law:
  - Reported consolidation of judicial independence; high rate of execution of judicial decisions comparable to many NATO members.
  - 2007 European Commission Progress Report praised political consensus and completion of law on judicial reform.
  - 18 February 2008: Parliament approved draft law on organisation of judicial power after work by the Council of Ministers initiative and parliamentary Commission on Legal Affairs; approved by the Commission with political consensus.
  - A proposed reform pact in justice (early draft) has been circulated for comments and juridical assessment.
- Human rights and minorities:
  - Freedoms and rights of individuals and minorities are respected and guaranteed; free media and full religious freedom and pluralism are emphasized.
- Police:
  - New law on the State Police established new professional standards, decentralised budget, and introduced community policing.
  - Results in fight against trafficking: about 36 criminal groups struck and 149 individuals involved in drug trafficking prosecuted (period referenced as “past year”).
  - Security increased noticeably, corroborated by national and neighbouring countries’ police statistics and international reports.
- Fight against crime and corruption:
  - Zero tolerance policy against crime and corruption; free line established to denounce acts of corruption.
  - Implementation begun of reforms reducing public administration exposure to corruption: electronic registry of businesses, electronic procurement, electronic tax and customs procedures.
  - 51 persons accused of corruption brought to justice in 2007, including high officials.
  - A task force for investigation of economic and financial crime established with assistance of the FBI and the European Commission.
  - Comparative enforcement: twice as many criminal groups were hit in 2007 compared to 2005; during the last two years 206 groups have been hit and 851 persons have been brought to justice.
  - Border control and security: installation of an information management system in main border crossing points to be extended to all points.
  - Legislative measures: laws approved to strengthen fight against organised crime (e.g., law banning speedboats; law assigning responsibility to local government officials when drug plantations are found in their communes).

### Economic criteria and performance
- Functioning market economy:
  - Albania outperformed all Central and Eastern Europe countries since 1992 in GDP growth.
  - Purchasing-power-parity gross domestic product per capita rose from $1809 in 1992 to $5727 in 2006 (World Economic Outlook data).
  - Economic growth sustained at about 6%; projected to maintain a high growth rate of 6-7% in the years 2009-2011.
  - Gross domestic product in nominal terms: Lek 979 billion at the end of 2007 compared to Lek 892 billion at the end of 2006 (increase of about 9%).
  - Gross domestic product per capita in 2007: Lek 309611 or about 9.1% higher than in 2006.
  - Albania entered the group of countries with a high level of the Human Development Index in 2008.
- Inflation and monetary conditions:
  - Annual inflation rate maintained at about 3% (±1 %) consistent with Bank of Albania targets.
  - Money supply (M3) grew by 7% in 2007.
- External sector and reserves:
  - General balance of payments: €173 million in 2007.
  - Foreign currency reserves: €1.5 billion.
  - Exports grew by 27% in 2007, particularly in services and active processing (façon).
  - Imports grew by 26% in 2007, especially capital goods, goods used in processing, energy, and food.
  - Trade deficit about 25% of GDP.
  - Remittances are described as one of the highest in the world as a share of GDP and are the main mechanism supporting the balance of payments.
- Labour market:
  - Unemployment fell to 13.2% in 2007 compared to 13.9% in 2006.
  - Sectors with the largest employment increases in 2007: industry, transport, telecommunications, trade, hotels and restaurants.
  - Public sector pay policy in 2006 and 2007 oriented towards doubling salaries in health and education sectors.
- Fiscal policy and public finances:
  - Public revenues: 27% of GDP in 2007 compared to 25.5% in 2006 and 24.8% in 2005, despite drastic tax reductions.
  - Single 10% tax rate on income began in July 2007.
  - January 2008: flat 10% rate on profit tax came into effect (halving from previous rate).
  - Small business tax reduced by 50%.
  - Social insurance contributions reduced by 30%.
  - Price of electricity for businesses reduced by 33%.
  - Public expenditure: 31.6% of GDP in 2007 compared to 28.8% in 2006.
  - Capital investment: 5.7% of GDP in 2006 to about 7.2% in 2007.
  - Capital expenditure projected high in 2008 (9.8%) and subsequently maintained at 6.3%.
  - Operational expenditure: 2.6% of GDP in 2006 to 2.5% in 2007; projected to increase after 2008 to about 2.9%.
  - Budget deficit: 4.6% of GDP in 2007 compared to 3.3% in 2006 (primarily due to growth in public investment).
- Foreign direct investment:
  - FDI increased by 84% in 2007 (at a level three times higher than the average of the past 10 years).
  - Foreign investor interest concentrated in energy, mining, banking, tourism and infrastructure.
- Index of economic freedom:
  - Heritage Foundation ranking: 56th out of 157 countries (recent report) compared to 81st in 2004 and 121st in 2000, classifying Albania among the “generally free” economies.
  - Fiscal freedom and financial freedom at higher-than-average levels; property rights and freedom from corruption at lower levels.
- Property rights and land management:
  - Agency of Restitution and Compensation of Property advancing restitution/compensation and finalising land value map for compensation.
  - Agency for Legalisation, Urbanisation and Integration of Illegal Construction Zones completing digital map for entire country.
  - Agencies signed cooperation agreement to coordinate and accelerate reforms.

### Infrastructure and privatisation
- Major infrastructure commitments:
  - Durres-Kukes-Morine motorway construction project.
  - Modernisation and expansion of ports: Durres, Vlora and Shëngjin.
  - Concession agreement for Mother Theresa Airport.
  - Construction of Vlora thermal power station began in 2007 to diversify energy away from near-total dependence on water sources.
- Privatisation of strategic sectors:
  - Privatisation of Albtelekom completed.
  - Separation of electrical energy distribution division of KESH approved and privatisation being prepared.
  - Restructuring and privatisation of state companies in the oil sector continues.

### European standards, public administration, and ICT
- Approximation to acquis communautaire:
  - Fast movement to free movement of goods, alignment of customs and taxation policy, and establishment of free competition.
  - New public procurement procedures promote equal treatment, transparency, and value for money.
- Business registration reform:
  - Competency moved from courts to National Centre of Registration; registration time reduced from 42 days to one day using a “one-stop shop” model.
- Rural and agricultural support:
  - Farmer support programmes and fiscal measures (e.g., value-added tax reimbursement up to 6%).
  - Consolidation of farm land encouraged to move from fragmentation to joint initiatives.
- Environment:
  - Albania has very low impact on global pollution due to low greenhouse gas emissions.
  - Work begun to reduce urban vehicle air pollution, manage solid waste, guarantee water supply quality and continuity, and preserve high ranking in the Environmental Performance Index.
- Public procurement and e-procurement:
  - New law on public procurement establishes the Procurement Advocate to protect rights and legal interests of candidates, bidders or winners.
  - Electronic procurement infrastructure expected to reduce procurement costs further.
- ICT and information society:
  - Agency of Information Society established to coordinate ICT policies and projects: informatisation of schools, e-services (e-taxes, e-customs), electronic civil registry and address system, identity cards, electronic signature, modernisation of land registration.
  - Establishment of National Academic Network begun; Gov-Net being improved and extended.
- Financial supervision and stability:
  - Financial Supervision Authority established to manage financial risk; focuses on identification, measurement, prevention and early elimination of main risks.
  - Progress in supervision of insurance market, attention to private pensions and securities.
  - Need identified to improve IT infrastructure to establish reporting and supervision platform for insurance and private pension markets.
  - Advisory Group of Financial Stability established to coordinate activities.
- Public administration reform:
  - Rigorous implementation of competitions for recruitment increased professionalism and reduced political influence.
  - Law on conflict of interest amended to reduce conflicts within the administration.
  - Priority to improve qualifications and training to enable public administration to implement sector reforms.

*Source: _cr08269 - 1. Latest developments*

### 2. Vision, strategic priorities and goals

### 2. Vision, strategic priorities and goals

### Vision
- Albania has entered a new phase of development with a clear perspective towards integration into the Euro-Atlantic structures.
- The signing of the Stabilisation-Association Agreement with the European Union, as well as its member states, constitutes a historic moment towards the realisation of this major goal.
- Achieving the status of a middle-income country is a result of the reforms of the last 15 years, which need to be consolidated in accordance with the new challenges that are present at the current level of development.
- Albania's comparative advantages: geographical position, human resources and physical endowments.
- Positive sectoral factors:
  - Proximity to European markets and favourable climate conditions for the agricultural sector.
  - Becoming part of international transport corridors to raise importance in regional trade.
  - Attractive tourist destination due to natural beauty and rich cultural heritage.
- National seven-year vision:
  - "A country with high living standards, which is integrated in the European and Euro-Atlantic structures, is democratic and guarantees the fundamental human rights and liberties."
- Transition-era challenges noted:
  - Large-scale migration resulting from social and economic difficulties.
  - Corruption and organised crime that placed Albania low on good governance and transparency indices.
  - Informality manifested as arbitrary occupation of land, buildings without permit, unregistered activities, and tax evasion.
- Institutional and governance objectives:
  - Equal implementation of the law, impartial governance, consolidation of national institutions, implementation of the rule of law on market-principles economic model.
  - Resolution of property issues to guarantee restoration of past injustices and protection of property as a fundamental human right.
  - Deepening decentralisation, modernisation of address and civil registry system, provision of identity documents to all citizens according to European standards.
  - Improve public expenditure management efficiency, increase private-public partnerships, and invest in continuous water supply, electric energy, and national road network.
  - Delivery of good quality social services: health financing reforms, improved school enrolment indicators and teaching quality, social policies oriented to human rights, equality and non-discrimination.
  - Improve quality and efficiency of public administration; commitment to strategy implementation as key to European integration and NATO accession.

### Strategic priorities and goals (targets for 2013)
- Integrate the country into the European Union and NATO.
  - Conditions to receive the invitation for becoming a member of NATO will be met and all objectives and duties that stem from membership will be fulfilled.
  - The granting of candidate status for membership of the European Union will be made possible within a two-year period from the approval of the NSDI.
  - The standards of European Union membership will be fulfilled.

- Develop and consolidate the democratic state, based on fundamental liberties and rights; exercise good governance; fight corruption and other negative phenomena; guarantee the functioning of the rule of law.
  - Electoral reform completed so local and national elections take place in a free and fair manner in accordance with European standards.
  - Justice system objectives:
    - Medium-term (2007-2010):
      - Implement law on judicial reform to assess judges and prosecutors professionally and objectively, strengthen their status and divide workload based on number of cases and performance.
      - Implement electronic case management system; improve judicial information technology system; improve cross-border cooperation for integrated information management in fight against organised crime.
    - Long-term (2011-2013):
      - Harmonise all organic laws of the justice system; consolidate cooperation mechanisms between different judiciary institutions.
      - Legal improvements to guarantee financial and human resources of the School of Magistrates to support training for judges and prosecutors.
      - Establish specialised, administrative and commercial courts.
  - By 2013: Albania will reach the same level as the Central and Eastern European countries on the year they became members of the European Union, according to the ‘Rule of law’ indicator of the World Bank.
  - Property rights reform:
    - Medium-term (2007-2010):
      - Complete preparation of land value map and registration of state properties.
      - Legalise informal zones and constructions; initial registration focus on urban zones and priority development areas; digitalise data in a number of registration offices.
    - Long-term (2011-2013):
      - Process of property restitution and compensation to enter final resolution.
      - Integrate legalised informal zones and constructions; continue registration with forests and pastures; complete digitalisation of registration offices.
  - Anti-corruption:
    - Medium-term (2007-2010):
      - Follow up recommendations from the 2005 evaluation report by the Council of Europe Group of States Against Corruption.
      - Approximate legislation with standards in conventions against corruption of the Council of Europe and the United Nations convention against corruption.
      - Gradually reduce administrative barriers; strengthen power to discover and punish corruption cases.
    - Long-term (2011-2013):
      - Reform and strengthen effectiveness of the justice system.
      - Introduce effective and transparent systems in public services such as health provision.
      - Consolidate effective practices and systems in tax and customs administrations and in procurement.
  - By 2013: Albania will reach the same level as the Central and Eastern European countries on the year they became members of the European Union, according to the ‘Corruption Perceptions Index’ by Transparency International.
  - Public order and security:
    - Strengthen public order through community-based policing and continue fight against organised crime.
    - By 2013: attain ‘Tier 1’ country status according to the ‘Trafficking in Persons Report’ of the State Department of the United States.
  - Public administration:
    - Full compliance with the Civil Service Law; meritocracy and professionalism.
    - Decentralisation in full compliance with principles of the European Charter of Local Self-Government.
    - Issue identity card to each citizen from age 16 based on the National Civil Status Registry.

- Achieve rapid, balanced and sustainable economic, social and human development.
  - Transport infrastructure (road transport) objectives:
    - Medium-term (2007-2010):
      - Complete Durres-Morine corridor; increase support to national road maintenance and continue its privatisation.
      - Construct passenger terminal in the port of Durres; complete privatisation of commercial services to increase autonomy.
    - Long-term (2011-2013):
      - Complete investments in North-South and East-West national road axes.
      - Reconstruct east quay and facilities for handling cargoes in the port of Durres.
    - Additional target: About 6000 km of rural roads will be rehabilitated by 2013.
  - Energy system objectives:
    - Develop based on market principles; open and liberalise domestic market; integrate with regional and European energy market.
    - Increase capacity to produce energy to cover aggregate demand at minimal social and environmental cost.
    - Medium-term (2007-2010):
      - Construct Vlora thermal power station; rehabilitate Fier thermal power station; construct Kalivaç hydro power station.
      - Construct 400 kV Podgorica-Elbasan line; build a 400 kV sub-station in Tirana.
      - Begin works for hydro power stations in cascades of rivers Devoll and Drin.
      - Construct a new Dispatching Centre; privatise electricity distribution function; restructure and privatise state companies in the oil sector.
    - Long-term (2011-2013):
      - Hydro power stations in cascades of rivers Devoll and Drin will begin operating.
      - Encourage efficient use of energy through programmes, notably in residential sector.
      - Improve legal and institutional framework to promote renewable energy, notably solar panels.
      - Link Albania to regional network of oil and gas pipelines.
    - By 2013: more than 8500 GWh of electric energy will be generated domestically per year.
  - Water supply and sanitation objectives:
    - Medium-term (2007-2010):
      - Extend use of meters to improve water demand management.
      - Transfer water service to local government; conclude service agreements between local governments and water utilities.
      - Increase capital expenditure by 30%.
    - Long-term (2011-2013):
      - Facilitate advanced forms of private sector participation.
      - Complete a study on regionalisation to merge water utilities for economies of scale.
      - Provide subsidies only to utilities meeting service quality, financial performance and environmental protection targets but do not cover their cost.
      - Prepare a medium-term capital investment programme based on a national master plan.
    - By 2013: share of population covered by services:
      - (a) 95% for water supply;
      - (b) 83% for sewerage;
      - (c) 45% for wastewater treatment.
  - Environment objectives:
    - Medium-term (2007-2010):
      - All road vehicles to start using fuels that meet European standards and introduce effective compulsory emissions testing.
      - Construct five regional landfills; complete project dossiers for all hot spots.
    - Long-term (2011-2013):
      - Implement a national air quality monitoring system in compliance with European standards.
      - Establish sanitary landfill sites for municipal waste disposal throughout the country.
      - Close existing urban solid waste landfills and rehabilitate contaminated land of identified hot spots.
    - By 2013: average air quality in Tirana and major cities will meet the European Union standards.
  - Macroeconomic and fiscal targets:
    - Maintain an average economic growth rate of more than 6% per annum and will tend to reach 7%.
    - Maintain macroeconomic stability through fiscal consolidation, continuous reduction of domestic debt, improvement of the current balance and fiscal policy design in agreement with monetary policy.
    - Main tax rates will be lowered while maintaining public revenue collection rate at 27-28% of GDP, through reduction of informality and good management of the fiscal system.
  - Business climate and private sector development:
    - Medium-term (2007-2010):
      - Enhance capacities of the National Registration Centre to consolidate business registration.
      - Reform licensing system to achieve OECD guiding principles for regulatory quality.
      - Set up an export guarantee agency; initiate investment projects under concession law; establish first industrial park.
    - Long-term (2011-2013):
      - Fight against informality to ensure fair competition.
      - Continue implementation of the European Charter for Small and Medium-Sized Enterprises.
      - Establish public and private institutions to assess and certify quality of products and services; establish export processing centres.
    - By 2013: Albania will reach the same level as the Central and Eastern European countries on the year they became members of the European Union, according to the ‘Doing Business’ indicator by the World Bank.
  - Labour market and social targets:
    - Facilitate labour market through improvements in employment service, active and passive programmes, and vocational education and training.
    - Unemployment rate target: below 10% by 2013 according to the Labour Force Survey conducted by INSTAT.
    - Poverty target: headcount poverty rate will fall below 10% by 2013 according to the Living Standards Measurement Survey conducted by INSTAT.
    - Design a full social policy legal framework to ensure social protection of all citizens; guarantee inclusion of poor individuals and households in ndihma ekonomike and other social programmes.
    - Equal opportunities for men and women in economic, political and social life; prevent domestic violence; by 2013 labour force participation rate of women will grow.
    - Public pension system restructured and reformed to move gradually towards a multi-pillar pension system.
  - Health sector:
    - Medium-term (2007-2010):
      - Create conditions to encourage private sector provision of health services.
      - Define a set of services people are entitled to receive for free.
      - Establish a single strategic purchaser to concentrate on balancing public resource allocation decisions.
    - Long-term (2011-2013):
      - Improve management of health service delivery institutions and clinical pathways.
      - Establish a clearer regulatory framework to ensure responsiveness to citizens.
    - By 2013: infant mortality rate will be reduced to 5 per 1000 live births.
  - Education sector:
    - Medium-term (2007-2010):
      - Complete policy of doubling salaries of education personnel compared to their 2005 levels.
      - Strengthen transfer of responsibilities and decision-making authority from central to local government.
      - Develop a new policy of vocational education and training in accordance with labour market demands.
      - Improve student assessment via reform of matura shteterore and graduation examinations.
    - Long-term (2011-2013):
      - Add a preparatory year before primary school.
      - Improve school financing formula to reflect number of students to eliminate inequalities and promote access.
      - Complete process of granting autonomy to higher education institutions through strengthening external accountability mechanisms and increasing transparency of internal management processes.
    - By 2013:
      - Secondary education net enrolment rate will increase to 76%.
      - Transfer rate from compulsory to secondary education is expected to be 86%.
  - Spatial planning, regional development and agriculture:
    - Implement a new comprehensive and integrated model of spatial planning to guarantee management and control over territory for sustainable development and tourism promotion.
    - Implement an integrated and coherent policy to achieve balanced regional development and reduce inequalities between regions.
    - Consolidate public programmes supporting agricultural and rural development in accordance with EU practices; aim to support sustainable development in this area.
    - Establish the Payments Agency in the long term.
    - Introduce modern systems of food safety gradually and consolidate institutions that guarantee its standards.

*National Strategy for Development and Integration — Chapter 2: Vision, strategic priorities and goals*

### 3. Policies

### 3. Policies

### Sector strategy and institutional responsibility
- Defence (Long-term development plan of Armed Forces) — Ministry of Defence
- Foreign affairs — Ministry of Foreign Affairs
- Justice — Ministry of Justice
- Public order (7-year strategic plan of State Police) — Ministry of Interior
- Civil registry — Ministry of Interior
- Transport — Ministry of Public Works, Transport and Telecommunications
- Energy — Ministry of Economy, Trade and Energy
- Water supply and sanitation — Ministry of Public Works, Transport and Telecommunications
- Public finance — Ministry of Finance
- Economy (Business and investment development strategy) — Ministry of Economy, Trade and Energy
- Employment — Ministry of Labour, Social Affairs and Equal Opportunities
- Sport — Ministry of Tourism, Culture, Youth and Sport
- Social protection — Ministry of Labour, Social Affairs and Equal Opportunities
- Social insurance — Ministry of Finance
- Health                                                                                  Ministry                                                                                  of                                                                                  Health                                                                                  
- Basic education — Ministry of Education and Science
- Higher education — Ministry of Education and Science
- Spatial planning — Ministry of Public Works, Transport and Telecommunications
- Agriculture and food — Ministry of Agriculture, Food, and Consumer Protection
- Tourism (Tourism development strategy) — Ministry of Tourism, Culture, Youth and Sport
- Culture — Ministry of Tourism, Culture, Youth and Sport
- Statistics (5-year national programme of official statistics) — INSTAT

### Crosscutting strategy and institutional responsibility
- Property rights — Ministry of Justice
- Anti-corruption and transparent governance — Council of Ministers
- Integrated border management — Ministry of Interior
- Migration — Ministry of Labour, Social Affairs and Equal Opportunities
- Fight against organised crime, terrorism and trafficking — Ministry of Interior
- Public administration — Ministry of Interior
- Decentralisation                                                                   — Ministry                                                                   of                                                                   Interior                                                                   
- Environment — Ministry of Environment, Forests, and Water Administration
- Consumer protection and market surveillance — Ministry of Economy, Trade and Energy
- Information and communication technology — Ministry of Public Works, Transport and Telecommunications
- Youth — Ministry of Tourism, Culture, Youth and Sport
- Gender equality and prevention of domestic violence — Ministry of Labour, Social Affairs and Equal Opportunities
- Social inclusion — Ministry of Labour, Social Affairs and Equal Opportunities
- Regional development — Ministry of Economy, Trade and Energy
- Rural development — Ministry of Agriculture, Food, and Consumer Protection

_National Strategy for Development and Integration_

*Source: _cr08269 - 3. Policies_*

### 3.1 EUROPEAN UNION AND NATO INTEGRATION

### 3.1 EUROPEAN UNION AND NATO INTEGRATION

### European Union integration — objectives and instruments
- The Stabilisation and Association Agreement (SAA) is the instrument to enable gradual integration of Albania into the European Union.  
- The SAA aims to:
  - strengthen the rule of law, increase its effectiveness, and assist institutional and economic reforms to raise standards of living.
  - enable Albania to attain standards that will guarantee its status as a candidate state and subsequently association with the European Union.
- The SAA familiarises Albania and its citizens with the following duties and rights:
  - Respect of democracy and the rule of law, of human and minority rights, and the free market economy: Respect of democratic principles and human rights, of the rule of law and economic freedoms is a fundamental clause; violation can justify measures leading to suspension or cancellation of the Agreement.
  - Regional cooperation to promote stability and economic development: strengthening political and economic relations through bilateral agreements, implementing European rules of open markets and free competition.
  - Creation of a free trade zone between Albania and the European Union through free movement of goods and approximation of Albanian with European legislation, and cooperation in priority fields for economic and social development.

### Free movement, trade and investment provisions
- Free trade zone commitments:
  - Eliminate custom duties, quantitative restrictions and measures with the same effects.
  - Avoid adoption of new trade barriers and respect principle of non-discrimination among goods of contracting parties in the fiscal area.
- Free movement provisions:
  - Free movement of persons, services and capital: an Albanian citizen may move freely in European territory if exercising worker movement or the right of establishment; vice versa applies.
  - (a) Free movement of workers:
    - Principle of national treatment: an Albanian worker legally employed in an EU member state must be treated equally to citizens of that member state regarding working conditions, remuneration or dismissal.
    - Spouse and children of a legally employed worker, when legally residing, have the right to education and labour market access during the authorised stay of employment.
    - Access to employment for Albanian workers in the European market is limited and depends on the willingness of EU member states, which recognise free movement of workers through bilateral agreements with Albania.
  - (b) Right of establishment:
    - Realised through long-term professional activity as self-employed or through establishing/directing an enterprise.
    - SAA recognises right of establishment for companies through foundation or setting up subsidiaries and branches in the European or Albanian territory.
  - (c) Freedom of supply of services:
    - Recognised temporarily to Albanian citizens in European territory and to EU citizens in Albania; companies and physical persons from the European Community must receive treatment no less favourable than domestic providers.
  - (d) Capital and payments:
    - Ensure free movement of capital linked with direct investment, general investments and credit linked with trade transactions.
    - Albania undertook to begin procedures for guaranteeing the right of citizens of EU member states to buy immovable property in Albania, within five years from the moment the SAA is entering into force.

### Legal approximation and sectoral cooperation
- Adoption of acquis communautaire:
  - Article 70 foresees adoption of the acquis communautaire into the domestic juridical system.
  - Approximation of legislation is expected to take place in two five-year phases according to a detailed programme, updated with changes in Community law.
  - The most recent is the National Plan for the Implementation of the Stabilisation and Association Agreement, approved in September 2007.
- Cooperation in justice and home affairs and other sectoral policies:
  - Aim to implement and guarantee the Copenhagen criteria on freedom, security and justice.
  - Focus areas: visa regime, asylum and migration, fight against organised crime and corruption.
  - Progress in this field is closely linked to free movement of Albanian citizens in Europe.
- Financial cooperation:
  - SAA provides for allocation of financial assistance to Albania to support achievement of Agreement objectives and related economic and institutional reforms.

### Accession preparation and negotiating priorities
- Conditions for accession extend beyond the SAA programme of work.
- Albania will draw on experience from EU enlargement to prepare negotiating positions, prioritise requests for transitional periods, and carry out in-depth impact assessments.
- A recent study identified the following areas as most difficult in past negotiations: agriculture, free movement of capital and workers, justice, freedom and security, food safety, veterinary and phyto-sanitary policy and the environment.
- The screening process begins after obtaining candidate country status.
- The Ministry of European Integration is responsible for orienting, coordinating and monitoring measures for SAA and Instrument for Pre-Accession Assistance implementation.

### NATO integration — objectives, timelines, and commitments
- NATO integration is a main goal of foreign policy, national security strategy, military strategy and the long-term plan for development of the Armed Forces.
- Public support: more than 90% of the public supports NATO integration.
- Timeline targets:
  - Receive invitation for membership in the future summit of the Alliance scheduled for spring 2008.
  - Be a member with full rights by 2010.
- Government priorities include implementation of National Annual Programmes under the Membership Action Plan and post-invitation reforms.
- Key reform focuses: election reform, consolidation of institutions, democracy and the rule of law, fight against organised crime and corruption.
- NATO integration is expected to attract foreign investment and promote sustainable economic development, creating favourable conditions for EU membership.

### Defence — reform, resources and operational targets
- Government commitment:
  - Defence budget to reach 2% of GDP in 2008 and retain this level in the coming years.
- International contributions and missions:
  - Increased contribution to ISAF in Afghanistan with an additional company in mid-2007; continued contribution to joint medical team mission in ISAF via the Adriatic Charter.
  - Continued contribution to ‘Iraqi Freedom’ mission, EU ALTHEA mission in Bosnia with an explosive ordnance disposal (EOD) team, observer role in UNOMIG, participation in operation ‘Active Endeavour’ in the Mediterranean.
  - Participation in NATO missions based on development of the National Support Element and Host Nation Support.
- Defence challenges:
  - Deepen reform, consolidate new structure and implement new ‘joint’ concept.
  - Fully professionalise the Armed Forces, modernise and increase interoperability with NATO.
  - Participate in NATO and other missions while maintaining National Support Element and Host Nation Support capacities.
  - Increase regional cooperation efficiency toward concrete joint projects.
- Sector vision:
  - Armed Forces under civil democratic control, fulfilling constitutional roles: guarantee independence, sovereignty and territorial integrity; defend and support nation in peace, crisis and war; and contribute to regional and beyond peace and security.
- Strategic priorities and policies:
  - Transform Armed Forces into a fully professional force by 2010, increase operational capacities and modernise.
  - Transform into a numerically smaller but more effective force with interoperability and niche capacities:
    - 8% of units of the land forces component of the Joint Force Command would be able to participate in international operations at any time.
    - 40% of the land forces component would have the capacity for such participation.
  - Consolidate structures to fulfil all Partnership Objectives and increase real contribution to NATO.
- Government commitments under the long-term plan:
  - Develop and support staff: consolidate modern personnel management to improve recruitment, training, career structures, and treatment of military and civil personnel.
  - Improve training to increase professionalism and preparedness.
  - Modernise equipment systems: sea and air space surveillance; command, control, communications, computers and intelligence (C4I); helicopters; patrol boats; individual equipment; training infrastructure; simulation centres; vehicles; and other NATO-interoperable equipment.
  - Modernise integrated logistical system.
  - Ensure protection of military forces and civilian population.
  - Increase interoperability with NATO through increased operational levels of priority units.
  - Cooperate with NATO and regional countries in air space and maritime space management.
  - Assess military units per the Operational Capacities Concept.
  - Prepare personnel for Alliance staff posts and ensure quality performance post-membership.
  - Develop capacities to support EU integration via the concept of a unique set of forces.
  - Invest in infrastructure of principal camps and garrisons and logistical management of services and maintenance.
  - Engage in military cooperation with all Alliance countries to support transformation.

### Foreign affairs — objectives, vision and capacity building
- Challenges:
  - Ministry of Foreign Affairs formulates and implements foreign policy, represents and defends national interests and Albanian citizens abroad.
  - Main objectives:
    - Granting of the invitation for NATO membership in spring 2008 and full membership in NATO.
    - Acceleration of European integration through ratification of the SAA by all member states.
    - Complete support to the process of determining the status of Kosovo and achievement of its independence.
    - Continuous improvement of the country’s image to increase economic relations and impact foreign direct investment.
    - Reform of the Foreign Service system and improvement of public service of the Ministry of Foreign Affairs.
- Sector vision:
  - NATO membership as stimulus for Armed Forces reform and positive developments in political, economic and military fields; strengthens Albania’s role in international security.
  - Successful continuation and acceleration of EU integration.
  - Support Kosovo’s independence and strengthen Albania’s regional role.
  - Strengthen capacities of the Foreign Service and public administration in external relations.
- Strategic priorities and policies:
  - NATO membership:
    - Continue implementation of the specially approved plan of measures; maintain continuous intensive contacts with principal actors and present progress.
    - Ministry of Foreign Affairs to coordinate state activity and convey partners’ messages, proposing necessary measures.
  - Integration into the EU:
    - Continue intensive efforts with European governments for completion of SAA ratification by all EU member states during the first semester of 2008.
    - Engage in intensive dialogue with the EU for liberalisation of movement which will open in 2008 and comprise necessary efforts to put it in place as soon as possible.
    - Extend economic and commercial cooperation with EU countries to increase direct foreign investment.
    - Extend diplomatic presence in EU countries where not represented to increase visibility and directly represent national values and interests.
  - Regional policy:
    - Fully support process of determining final status of Kosovo and mobilise international support for its independence.
    - Support initiatives serving regional peace, security and stability.
    - Build and sustain close cooperation with regional countries, especially Kosovo, including direct assistance where necessary.
    - Support Albanian communities abroad to protect legitimate rights and interests.
    - Sign a Treaty of Good-Neighbourly Relations and Cooperation with all countries in the region.
  - Capacity building:
    - Approve new law on the Foreign Service to improve structures, recruitment, training, diplomatic career procedures and definition of rights of Foreign Service staff.
    - Extend presence in countries in the region where not represented to increase visibility and improve image.
    - Open centres of Albanian culture as a mechanism to promote country, culture and heritage.
    - Improve quality of consular services and information for Albanian citizens travelling abroad.
    - Support and strengthen the Albanian diaspora, including organising the diaspora congress and supporting opening of schools for supplementary teaching of the Albanian language.

### SAA implementation and Ministry role
- The Ministry of Foreign Affairs has a primary role to ensure policies are implemented in accordance with peace, stability, cooperation and good neighbourly relations.
- The Ministry is the government focal point for development of political dialogue (Title II).

*Source: _cr08269 - 3.1 EUROPEAN UNION AND NATO INTEGRATION*

### 3.2 DEMOCRATISATION AND RULE OF LAW

### 3.2 DEMOCRATISATION AND RULE OF LAW

### Overview and democratic consolidation
- Progress in establishing democracy attributed to the commitment of Albanian citizens and constructive support of international partners.
- Numerous cases of violation of individual rights have caused citizens to lose confidence in state institutions.
- Government aims to restore transparency and offer a comprehensive programme of institutional reforms oriented towards European standards to consolidate the democratic system and the observance of fundamental human rights and freedoms.
- Priority: free and fair elections as the real source of legitimacy of democratic institutions; restoring public trust in elections is an absolute priority through electoral reform in cooperation with all political forces, international partners and social stakeholders.
- Emphasis on guaranteeing freedom of expression and the media: guarantee freedom of the press; protect the press in informing the public; regulate relations between press, public, state authorities, journalists and directing bodies of written media.
- Encourage active participation of non-government and civil society organisations in decision-making.
- Commitment to implement high standards in respect and realisation of the rights of all minorities; fully implement the ‘European Convention on Human Rights’ and the ‘Framework Convention for the Protection of National Minorities’ ratified by Albania.

### Justice — challenges
- Justice system adopted modern legislation during transition but has not been free from external, particularly political, influences.
- Political interventions have been numerous despite proclamation of judicial independence.
- Justice system considered the sector with the highest level of corruption; no judge or prosecutor has ever been put in prison unlike other sectors.
- European Commission (short-term priorities of the European Partnership) emphasises the need to “finalise, adopt and implement the draft law on judicial reform”.
- European Commission periodic reports suggest improvements should focus on:
  - the relationship with independent judicial institutions, including clarification of competences of the judicial inspectorates of the Ministry of Justice and the High Council of Justice
  - reorganisation of courts to improve efficiency and transparency and provision of adequate space, equipment and computer networks
  - strengthening status, independence and constitutional protection of judges and prosecutors and progress in training, recruitment, case assignment and evaluation
  - transparency of civil and criminal justice processes through publication of court decisions and results of checks on violation of the procedural code
  - execution of court decisions, which remains low, particularly where the state is obliged to compensate citizens
  - penitentiary system, prison facilities, and pre-trial detention centres considered below European standards

### Justice — sector vision
- Functioning of an independent, transparent, responsive and efficient justice system that restores citizens’ trust in fairness and equity of judicial decisions.
- Ultimate goal: justice system performing according to parameters and at a similar level of quality as in European Union countries.

### Justice — strategic priorities and policies
- Reform includes reorganisation of institutions and reform of mentalities to correct weaknesses and increase efficiency; requires continuous financial and human efforts.
- Major strategic priorities:
  - Fully guarantee separation and balance between powers; increase independence through strengthening judiciary accountability:
    - review constitutional dispositions regarding the ‘check and balance’ principle in cooperation with Parliament and international partners
    - review functions of judiciary and Ministry of Justice and legal/constitutional relations between them
    - intensify inter-institutional dialogue and cooperation (Ministry of Justice, judiciary, prosecution, Ministry of Interior, State Police, others) to build trust and consensus among parliamentary political forces and improve judicial performance
    - reform prosecution institution in all dimensions (including possible constitutional changes): increase effectiveness, prevent corruption, raise prosecutors’ accountability; includes a law on prosecution ethics, regulation on assessment system of workload, and regulations for case administration system
    - review and harmonise all organic laws in the justice system
    - improve mechanisms/legal procedures to prevent and fight corruption and protect human rights
    - orient judiciary and administration towards best European practices
    - overhaul judicial budget planning and management system
    - strengthen judiciary institutions of self-control
    - limit immunity of judges and other high state officials to ease penal procedures for acts of corruption
    - implement annual inspection programmes in prosecution and judicial administration; conduct joint inspections of the Inspectorate of the High Council of Justice and the Department of Inspection at the Ministry of Justice and publish control reports
    - train inspectors on new methods of control and EU country systems
  - Orient court system towards best European practices:
    - invest in court renovation or extension
    - complete a national network based on the CCMIS system, computerise processing of judicial files in all courts (civil and penal), assign cases by electronic draw, and provide every court with an internet page
  - Strengthen status of judges and prosecutors:
    - implement objective procedures in appointment of judges through competitive examinations
    - set and implement objective and transparent rules for case division between judges
    - improve conditions, means, and work environments for the judiciary
    - provide continuous and appropriate training (human rights, ethics, commercial issues, SAA-linked topics)
    - develop courses by the School of Magistrates in fields including civil law, civil procedures law, penal law, penal procedures law, constitutional law, European law and human rights, private international law, international judicial cooperation, presentation of the acquis communautaire, public procurement, bankruptcy law, intellectual property, gender equality, personal data protection
  - Increase efficiency and transparency of criminal and civil processes while respecting protection of personal data and improving judicial administration:
    - implement new system of assessing judges’ performance on objective criteria
    - establish annual programme of court controls regarding relations with the public, citizen access and knowledge of court decisions
    - control implementation of case management system at all phases
    - promote pre-trial settlement (arbitrage/mediation) and professionalise arbitrators/mediators
    - review status and qualifications of judicial administration through gradual inclusion in civil service
    - improve processing, analysing and publishing of statistics
    - publish extracts of judicial decisions and consolidated laws
    - promote judicial cooperation
    - create national office for legal aid
  - Achieve sustainable increase in execution of court decisions and improvement of bailiff service:
    - improve bailiff service office infrastructure
    - provide training on changes to Civil Procedures Code and related legislation
    - introduce control system assessing progress and effectiveness in execution by local bailiff offices
    - establish intranet for communications between all bailiff service offices
  - Improve prison and pre-detention systems to guarantee fundamental individual rights and transform penalty into re-education:
    - respect international conventions on penitentiary management and treatment
    - train prison staff on human rights and strengthen Training Centre of the General Department of Prisons
    - implement master plan to improve conditions and solve overpopulation per Council of Europe recommendations: completion of infrastructure interventions in Burrel, Lezha, Lushnja, Peqin, 313, 302 and Vlora prisons and construction of the Durres, Vlora and Elbasan pre-detention centres
    - greater inclusion of prisoners in re-integration activities after release
    - introduce structure for application of alternative sentences
    - distribute convicted persons to institutions near places of residence
    - reform prison system for minors: improve Institute of Re-education for minors, interventions in building/equipment, and training of personnel
    - modernise prison statistical system
- Additional reforms:
  - Promote international judicial cooperation; approve and ensure effective implementation of agreements with neighbouring countries in line with SAA obligations.
  - Improve legislative preparation process: implement manual on legislative process and legal writings; more intensive consultations early in legislative process; policy option analyses prior to new laws; exchange of experience with experts for community standards; improve translations.
  - Harmonise rights and duties of lawyers with international standards and improve the notary function to strengthen legal security and ease court workload.
- SAA implementation: Ministry of Justice responsible for rule of law and overseeing implementation of Title VII on justice, freedom and security; special reference to Articles 78 and 79.

### Property rights — challenges
- Uncertainty over property rights can harm economic growth.
- Major land/property reforms during transition: privatisation of land/housing, recognition of property rights for land confiscated after 1945, creation of Immovable Property Registry System.
- Issues remain:
  - Restitution obstructed by frequent conflicts of claims with current occupants; unresolved issues implementing amended law on restitution and compensation (land valuation methodology, compensation if restitution not possible, overall budgetary implications of compensation).
  - First registration of property not completed; country not wholly included in registration system; parallel operation of old (hipoteka) and new systems; Immovable Property Registration Office not yet able to fully maintain/guarantee registry of legal interests; citizens face complicated procedures and low registration rates.
  - Internal migration pressures create peri-urban illegal settlements often lacking basic infrastructure and services; legalisation, urbanisation and integration of illegal settlements necessary.

### Property rights — vision
- Normalisation of the land market to become an enabling factor for economic growth.

### Property rights — strategic priorities and policies
- Complete first registration and legalisation of property titles; complete restitution and compensation of properties.
- Priority to areas around main cities (most active land market, higher value, higher concentration of claims).
- Regulate ‘de jure’ rather than ‘de facto’ property rights of local and central government.
- Compensation in kind or cash based on market value; primary objective: create land value map and specify physical and financial compensation funds.
  - Land value map: decisive step to resolve property problems; will enable concrete estimates for compensation funds, serve as reference for land value in contracts, and provide overview of land market.
  - Archives of Agency of Restitution and Compensation of Property will be computerised to assist compensation calculations and evaluate complaints from regional offices.
- Enact new legislation to establish an immovable property tax based on market value; property tax critical source of revenues for local government (current absence means population increase not translated into expanded financial basis for infrastructure).
- Legalisation process determined by law on legalisation, urbanisation and integration of illegal constructions and related action plan:
  - First step: self-declaration of illegal properties.
  - Orthophoto maps being produced and information system established.
  - Local government staff to identify and process self-declarations per instructions.
  - Agency for Legalisation, Urbanisation and Integration of Illegal Construction Zones (ALUIZNI) coordinates.
  - Legalisation process directly linked to first registration for cost-effectiveness.
- Improve operation of Immovable Property Registration Office to build trust:
  - Improve service quality and rationalise user fees.
  - Change law to make Office autonomous and self-financing with Chief Registrar reporting to a Board of Directors; specify changes in a business plan.
  - Share data with other land market institutions; monitor service standards.
  - Maximise utilisation of first registration data as source of property rights.
- Desired attributes of effective immovable property registration (kartelas):
  - clear and precise ownership information for all immovable properties
  - records reflect legal situation per indicative maps regularly updated
  - information on records and maps ready and available to public
  - registration of transactions quick
- Main mechanisms to achieve objectives:
  - improving service and reducing rates charged
  - establishing and monitoring service standards
  - ensuring self-financing of system
  - ensuring agency has autonomous juridical status
  - coordinating and cooperating with other property institutions
- Objectives and activities:
  - completion of first registration
  - modernisation of Immovable Property Registration Office: design computer programmes and procedures for updating information; update digital data; establish standards for data exchange
  - development of regulatory framework
  - building administrative capacities
  - Immovable Property Registration Office prepared package of documents including a business plan for Land Administration and Management Project — main activity in coming years
- Implementation phases:
  - 2007-2010: focus on urban and peri-urban areas, simultaneous legalisation process, computerisation of the ten biggest offices
  - 2010-2013: focus on registration of forests and pastures
- SAA implementation: Article 61 demands clarification of immovable properties situation as part of commitment to guarantee free movement of capital.

### Anti-corruption — challenges
- Increase of corruption to a very dangerous degree; surrendering of markets to monopolies; weak/distorted law implementation; delays in reforms; loss of trust among Albanians in state institutions.
- Causes include inability to implement objectives, lack of will, conflicts of interest at all levels.
- International reports and actors highlight:
  - weak implementation of legal framework against corruption
  - weak implementation of administrative instruments to prevent corruption (public administration, weak transparency, malfunctioning control systems)
  - inadequate cooperation between control/audit structures and prosecution
  - malfunctioning of institutions with legal responsibility in fighting corruption
- Disturbing problems in justice: low transparency in penal/civil processes; subjective procedures in appointing judges/prosecutors; deficiencies in status/independence/protection of judges; infrastructure deficiencies in courts, prosecutor offices, prisons; low status/pay of administrative staff; unsatisfactory execution of court decisions.
- Public procurement system often inefficient: weak bid evaluation and inadequate supervision; high proportion of contracts awarded through uncompetitive methods. New procurement law establishes key principles: respect to process, access to information and transparency; open tenders required.

### Anti-corruption — vision
- Gradual and sustainable reduction of corruption, strengthening institutional integrity and promotion of values in government.

### Anti-corruption — strategic priorities and policies
- Prevention, transparency, all-inclusiveness and education:
  - strengthen political system and ethics of public functionaries (financing of political parties/election campaigns, election system reform, regulation of lobbying, review self-regulating mechanisms)
  - modernise/consolidate procedures (licensing reform, public services)
  - sector reforms (control, business climate, civil service, public procurement, education, health, public finance, justice, local government)
  - consolidate transparency and integrity in public administration through free and full access to public institution data and realise e-government at central level
  - approximate legislation with penal and civil conventions against corruption of Council of Europe and implement UN Convention against Corruption obligations
  - information campaigns and sustainable educational measures
- Investigation and punishment:
  - ensure efficient prosecution and higher speed in passing judgements
  - increase integrity and resistance against corruption in justice system
  - strengthen administrative anti-corruption measures
  - invite public participation in denouncing corruption
- Consolidation of domestic and international cooperation and coordination:
  - strengthen cooperation mechanisms through law enforcement agencies
  - consolidate sustainable mechanisms for regular information exchange
  - effective application of regional and international anti-corruption instruments
- SAA implementation: anti-corruption policy requirements covered under Article 74 (public procurement), Article 82 (money laundering), and Article 85 (cooperation).

### Integrated border management — challenges
- Border and Migration Police credited with improved border control and surveillance per European Commission; contributed to fight organised crime, illegal trafficking, prevention of migration flows, and improved citizen service; good cooperation with neighbouring counterparts.
- Innovations: mobile surveillance units; installation of Total Information Management System in main border crossing points; modernisation of border control/surveillance equipment; continuous officer training; agreements/protocols on border cooperation.
- Need further investment to bring border management at some ports up to international standards.
- Outstanding issue: demilitarisation of the Coast Guard for maritime patrol — continued military involvement inconsistent with European standards, NATO partnership goals and Ohrid process commitments.
- Border management together with customs management important for control of corruption.

### Integrated border management — vision
- Ensure coordination and cooperation among relevant authorities/agencies to facilitate trade, free movement of people and regional border cooperation; create effective integrated border management systems for open, controlled and secure borders.

### Integrated border management — strategic priorities and policies
- Strategy aligns with ‘Guidelines for Integrated Border Management in the Western Balkans’ (European Commission working document).
- Focus agencies: Border and Migration Police; Customs Service; Phytosanitary Service; Veterinary Service.
- Concept rests on three pillars:
  - intra-service cooperation: vertical and horizontal coherence
  - inter-agency cooperation: coordinated processing at border crossings, joint operations at green/blue border with division of responsibility, central integrated IT systems, awareness building, joint use of infrastructure
  - international cooperation: local cooperation between officials on both sides, bilateral cooperation, multilateral cooperation preparing for EU systems (e.g. Schengen Visa and Customs Information Systems); based on bilateral cooperation agreements and readmission agreements
- Each pillar addresses legal/regulatory framework; management/organisation; procedures; training/human resources; communication/information exchange/IT; infrastructure and equipment.
- Strategic priorities:
  - change respective legislation to guarantee border agencies function per EU requirements
  - proceed with organisational/restructuring reforms to guarantee direction, control and management of resources
  - define all procedures for personnel, training and financing in internal regulations following joint consultations
  - implement transparent personnel selection and appointment procedures to raise agency quality and professionalism
  - improve communication and information exchange; establish general information management system
  - obtain appropriate infrastructure and equipment to provide professional service to citizens
- SAA implementation: integrated border management requirements covered under Article 80.

### Migration — challenges
- About 20% of the population has been living abroad for more than a decade, making Albania one of countries with highest migration flows.
- Migration is a key aspect of Albania–EU relations; fight against illegal migration is a priority.
- Visa facilitation agreement between European Community and Albania signed in September 2007 as step towards full liberalisation of free movement.

### Migration — vision
- Establish a full policy on migration: move from reactive anti-illegal-flow policy to a national system of migration management.

### Migration — strategic priorities and policies
- Fight illegal migration: implement Readmission Agreement and create a Total Information Management System (TIMS) to record flows of third country citizens who return or reside for employment.
- Create favourable legal/institutional mechanisms to ensure migration assists development:
  - direct migrant remittances toward business investment
  - improve image of Albanian immigrants abroad
  - improve Albanian consular/diplomatic services in host countries
  - protect rights of Albanian immigrants and demand equal treatment per international standards
  - mobilise and organise Albanian communities abroad
- Manage recurrent migration flows by promoting bilateral labour agreements with EU member states.
- Fight brain drain via cooperation with international institutions to develop programmes attracting students and enabling employment of qualified returnees.
- Ensure equal treatment of legally resident foreign citizens through approximation of legislation and attainment of European standards.
- Improve legal framework for migration: law on consular services, law on migration for employment, penal code, electoral code, law on foreigners.
- Create institutional structure for migration policy management linked with integrated services; design/implement joint employment programmes with private businesses; provide services/information on regulated emigration; assess supply/demand for qualified persons in labour market.
- SAA implementation: migration issues addressed in Articles 80 and 81.

### Organised crime, terrorism and trafficking — challenges
- Continued control of speedboat movements and prosecutions for traffickers, but trafficking-related crimes (assisting illegal crossing, people smuggling, exploitation for prostitution, maltreatment of minors) remain problems.
- Services for victim reintegration still lacking, though steps have begun; cooperation agreement for national referral mechanism to identify and assist victims is valuable.
- European Commission noted progress on Specific Action-Oriented Measures against organised crime but calls for increased rate, number and quality of prosecutions and seizures/confiscation of proceeds.
- Need more intensive use of intelligence and improved information flows between public agencies and foreign law enforcement; judiciary cooperation with State Police could improve results.
- Financial Intelligence Unit and its legislative framework need strengthening to prevent money laundering.
- Causes enabling organised crime include socio-economic (pervasive cash economy), institutional (independence of institutions), technological (weak intelligence gathering), and political (insufficient checks and balances in public administration and political system).

### Organised crime, terrorism and trafficking — vision
- A society without threats from organised crime, at peace, improving quality of life, projecting an image of a peaceful country with high security standards.

### Organised crime, terrorism and trafficking — strategic priorities and policies
- Conduct investigations to fully dismantle criminal networks, organisations or structured groups.
- Increase professional capacity of Organised Crime Department through specialised recruitment and continuous training.
- Improve infrastructure for special operations via contemporary technology, legal/sub-legal improvements, staff training, intensive intelligence-based work, and complete systems: TIMS, RMIS, State Police communication network (Datacom), criminal information analysis system (Memex).
- Cooperate with international partners for criminal information exchange and joint operations.
- Strengthen protection of witnesses and collaborators with justice: rigorous application of law on protection of witnesses, improved institutional cooperation, increase citizen trust in law enforcement and judiciary.
- Raise public awareness of organised crime effects on economy and society.
- Extend capacity of money-laundering authorities and customs to fight smuggling through training and information exchange.
- Implement national action plan for drugs: build investigative capacities and improve management of sequestered drugs.
- Use special investigation methods to fight arms trafficking.
- Implement bilateral/multilateral obligations in fight against human trafficking; improve cooperation between state institutions and international organisations.
- Create efficient system for assessing terrorism risks and take preventive measures with clear division of responsibilities among state structures.
- SAA implementation: SAA covers organised crime in Articles 81 (trafficking), 82 (money laundering and terrorism financing), 83 (drugs), 84 (prevention and fight against organised crime and other illegal activities) and 85 (cooperation).

### Public order — challenges
- Transition required establishing police structures suited to a democratic state respecting human rights.
- State Police faces new crime levels/types; community-based policing and demographic changes require close cooperation with local communities.
- Recent organisational structure changes aim to restore institutional stability; human resources and infrastructure management need improvement.
- Perception of improving police effectiveness evidenced by successful large-scale operations; lack of good quality statistics prevents clear trend assessments; improvements in statistics would increase transparency and institutional image.

### Public order — sector vision
- Community-based policing: police as a service accountable to the public and open to the community; requires high professionalism and mentality change to focus on service quality and organisational performance; aim to build community confidence.

### Public order — strategic priorities and policies
- Fight organised crime, trafficking and terrorism, and ensure integrated border management.
- Build partnerships and confidence: staff training, research on citizen perceptions, infrastructure improvement, communication lines between partner agencies.
- Increase quality of service: capacity building in communication, manuals of standard procedures, self-evaluation models, performance indicators.
- Use intelligence-based policing: develop national intelligence model, create intelligence units, train staff in intelligence use.
- Improve police organisation: establish process map, decentralise competencies, disseminate best practices, provide management training.
- Reduce rate of crime and anti-social behaviour.
- Improve road safety.
- Develop human resources: appropriate recruitment/assessment procedures; employee development plans; specify competencies; transparency and communication; unify training; capacity building in Police College.
- Improve logistical management: policy planning, service quality, legal basis, special logistics training, adapt firearms to police mission, improve auto-mechanic structures, devolve State Police budget.
- Develop infrastructure based on master plan and building standardisation.

### Modernisation of administration — public administration challenges
- Preparing for EU accession requires institutions, management capacity and administrative systems able to implement acquis communautaire; need efficient and impartial civil service.
- Department of Public Administration observed evidence of urgency for reform: inability to realise objectives, lack of respect for deadlines, lack of realism in planning.
- European Partnership priorities: introduce results-oriented management and implement salary structure to motivate career development; train employees responsible for SAA commitments and EU financial assistance operations.
- Strengthening public administration will assist legislative process improvements; large law drafting agenda expected for acquis approximation and integration of ratified conventions.

### Modernisation of administration — public administration vision
- Establish professional, merit-based, impartial administration able to address integration and public service challenges.

### Modernisation of administration — strategic priorities and policies
- Establish and strengthen effective structures for all public institutions to ensure function realisation, prevent overlap and improve public services; reassess functions that could be privatised or do not fit public administration objectives.
- Deepen civil service reform and extend relevant legislation coverage: increase objectivity in recruitment and selection; offer same rights/duties to all public sector workers.
- Improve performance management system: objective institutional objectives linked to individual objectives; evaluate realisation annually; link individual performance with remuneration and career development.
- Establish and implement remuneration schemes for civil servants: differentiate public sector workers by qualifications; envisaged additional compensation for postgraduate studies (master, doctorate).
- Provide training as strategic means via Training Institute of the Public Administration to build capacities for SAA and EU financial support programme requirements.
- Establish modern human resource management system: introduce central database for public sector workers for staffing projections and pay reform scenarios; link to treasury for electronic payments.
- SAA implementation: public administration covered by Article 111; European Partnership recommends guaranteeing implementation of civil service status legislation.

### Decentralisation — challenges
- Decentralisation seen as instrument to build democratic system, ensure good governance, deliver services close to citizens, attract citizen participation and contribute to Euro-Atlantic integration via cross-border/inter-communal/regional cooperation.
- Process based on European Charter of Local Self-Government, Council of Europe documents, Constitution, and legal framework for local government.
- Decentralisation components:
  - political decentralisation: give citizens/elected representatives more power in public decision making
  - administrative decentralisation: redistribute authority/responsibility to ensure public services
  - fiscal decentralisation: ensure local government units have adequate revenues and authority over spending

### Decentralisation — vision
- Local government vision conforms to Constitution, European Charter of Local Self-Government principles and SAA objectives.

### Decentralisation — strategic priorities and policies
- Strengthen first level of local government:
  - Institutional strengthening of municipalities and communes: improve administrative structures; clarify relations between councils, chairmen and administrations; simplify and increase transparency; extend civil service law coverage to improve quality of local employees; prepare/approve strategy to train employees and elected officers linked to public participation, good governance and fight against corruption.
  - Financial strengthening: merge two components of small business tax (local tax and simplified profit tax) into single tax; transfer full rights for collection/administration of small business taxes to local government; possibly approve/implement law for local government borrowing and integral law for local financing; aim to improve effectiveness, predictability, fairness in resource allocation; build capacities for internal/external auditing; formalise statistical system and reporting between central and local government.
  - Rapid transfer of properties to local government: complete full transfer of local government property per law and registration procedures; complete transfer, court registration and consolidation of water utilities per Council of Ministers decisions; transfer of forests and pastures owned by local government during first six months of 2008 considered a priority.
  - Improve relations for shared competences: special regulation to define responsibilities and coordination for education and health duties.
  - Improve administrative-territorial division through broad consultations to reach more rational/effective division, using tools like inter-commune cooperation and regional councils.
- Strengthen second level of local government:
  - Address weaknesses in composition/selection of regional council bodies, assigned competences, and independent financial sources; develop new legal framework to redefine composition/selection, extend competences, determine independent financing sources, and review region size per European standards.
- SAA implementation: Article 111 on public administration also covers local government.

### Civil registry and identity cards — challenges
- Need accurate civil registration system for government planning across sectors (taxation, health, social security, education, postal service, military service, free movement).
- Major shortcoming: lack of administrative address system; former system collapsed due to inconsistent policies, insufficient municipal management, urban planning failures, unregulated migration and illegal constructions.
- Legal framework obliges local government to assign names and provide addresses but lacks steps to fully implement/manage the process.
- Harmonised and unified mapping certification process being prepared.
- Responsible units:
  - central: General Directorate of Civil Status, Department of Documentation and Procedures — responsible for address system and national registry of addresses
  - local: local government units responsible for administering address system
- Civil status acts (birth, marriage, death) registered locally at Civil Status Offices and summarized in the Fundamental Register; certificates issued from Fundamental Register serve as identification documents (identity documents do not exist separately).
- Data protection law not fully consistent with Council of Europe Convention 108 and Additional Protocol (ratified 2005); requirements include establishment of independent data protection supervisory authority; current legislation covers public authorities only, not private legal persons.

### Civil registry and identity cards — sector vision
- Establish and develop modern civil registration and address system as basis for secure and unique personal identity document in full accordance with international standards.

### Civil registry and identity cards — strategic priorities and policies
- Establish and administer modern address system:
  - improve existing legal framework
  - establish coordination mechanisms for local implementation
  - draft manuals for address system implementation
  - establish central authority as coordinator for mapping
  - conduct public information campaign
  - install name signs for avenues/roads/streets/squares/parks and number signs for all buildings nationwide
- Establish modern civil registration system:
  - computerise Fundamental Registers and link to new address system
  - review legal framework to fit new service
  - increase capacity of General Directorate of Civil Status and adapt its status for anticipated changes
  - improve cooperation and coordination with local authorities
  - raise public awareness of developments
  - decide on optimal number/location/functions of Civil Status Offices
- Establish synergy between civil registry and identity card systems:
  - link civil registry and identity cards in overall system design: use civil registry to generate personal identity number; establish network infrastructure for data transfer; prevent two separate databases for personal identity data
  - enable use of civil registry by other government/non-government users under principle “one registration of the citizen – multiple use of data”
- Introduce identity cards and electronic passports:
  - system built at two levels:
    1. central level: Centre for Data Processing and Control; Centre for Producing Identity Documents and Electronic Passports
    2. local level: offices for submission of identity document/electronic passport applications; offices for verification of identity documents (Police, Civil Status Offices etc) and electronic passports (at border crossing points)
  - include biometric data control module to guarantee uniqueness of identity and prevent multiple identities
  - system able to adopt changes (microchip cards, biometric data, additional identification data); ensure biometric verification at all times; guarantee confidentiality of biometric/demographic data in database; protect confidentiality and integrity of data in transit between systems
- Protect personal data and implement 2007 European Partnership recommendations:
  - amend primary and secondary legislation
  - establish necessary structure and procedures for effective independent data protection authority
  - raise awareness on data protection issues and standards
- SAA implementation: Article 79 covers personal data protection and Article 81 covers provision of appropriate identity documents.

*Italic: Source — _cr08269 - 3.2 DEMOCRATISATION AND RULE OF LAW*

### 3.3 ECONOMIC AND SOCIAL DEVELOPMENT

### 3.3 ECONOMIC AND SOCIAL DEVELOPMENT

### Infrastructure
- A weak infrastructure has slowed down the rate of economic growth and poverty reduction7:
- Development objectives and expected impacts:
  - The development of the national transport network infrastructure will:
    - facilitate the movement of people and goods,
    - bring markets closer and promote business,
    - increase access to important basic services, such as health and education with a direct impact on the citizens’ living standards.
  - Development of the national road network, cross-border roads, port facilities and airports will help achieve greater integration with the region and the European single market.
  - Investments with an environmental dimension will help sustain economic growth, reduce significant costs to the economy (for example, on public health) and meet EU standards.
  - Electrical energy generation will increase, and the quality of transmission and distribution will improve to ensure security of supply within the framework of commitments to open the domestic energy market and participate in the regional energy market.

### Transport — Challenges
- Despite considerable investments (rehabilitation and new construction in many segments), the road network is constrained in both coverage and quality in comparison with other countries in the region and its condition is currently unsatisfactory due to the lack of an efficient system of maintenance.
- The unequal development of the road network is one of the main reasons for the unequal development of the different regions of the country.
- There is a proportional relation between the level of poverty and the level of the quality of the road infrastructure.
- National Transport Plan view: “countries of the size of Albania can only afford one main general cargo sea port”.
  - Recommendation: develop Albanian ports according to their comparative advantage with Durres further developing its container, general cargo and main ferry terminal facilities; specialisation intended to eliminate duplication of large investments.
  - Concessioning port operations raises issues regarding the timing and sharing of rehabilitation and capacity-increasing investments.
  - Maintenance of equipment, facilities, structures, and dredging in Durres has been inadequate; port and cargo handling equipment should be replaced.
- Railways:
  - Physical infrastructure is poor due to insufficient allocation of resources and lack of maintenance mechanisms.
  - Technical standards are low and do not guarantee safe movement; average speed of trains is at the level of 30-40 km/h.
  - Signalling and interconnection at some train crossing stations are not functional; many level crossings cause accidents with road vehicles.
  - Quantity of freight transported is small, average haul is extremely short, while number of employees is relatively high leading to a financial deficit that obstructs interventions to improve railway infrastructure and superstructure.
  - In these conditions, railway transport is not attractive compared to road transport.

### Sector vision
- Transport systems, structures and infrastructure serving the establishment of a single economic space within the national territory and beyond, with the region and Europe.

### Strategic priorities and policies
- Overall:
  - Transport policy is derived from the National Transport Plan, which must be regularly updated.
  - Main institutional measures include reform of the transport system and particularly of regulatory agencies.
  - Plan envisages establishment of:
    - a National Transport Resource Centre;
    - a transport infrastructure research institute;
    - an Environmental Coordination Unit at the Ministry of Public Works, Transport and Telecommunications.

- Road transport — strategic priorities and policies:
  - Establish a unified legal framework, consistent with the acquis communautaire, adopt directives and become member of conventions that will help Albanian operators to participate in markets.
  - Cooperate with international partners to remove barriers that obstruct the international provision of Albanian transport services.
  - Complete major investments on the national road network (which is almost entirely included in the regional Core Network), including:
    - North-South corridor, notably the road segments Lushnja-Fier-Tepelena-Gjirokastra and Shkodra-Han i Hotit
    - East-West corridor (Corridor VIII), in particular the road segments Fier-Vlora and Durres-Rrogozhine
    - Durres-Morine corridor, which will be completed in three stages
    - Tourism roads, notably the Dhermi-Saranda road but also access roads to Velipoja, Dardha, Butrint, Divjaka, Patok, Lalezi and Spille
    - Border crossing points roads, in particular the Saranda-Konispol road, the Leskovik–Tre Urat segment, the Liqenas road, the Has-Qaf Prush road, and the Arber road
  - Plan and undertake a major investment programme on the local and rural road network in cooperation with the local government.
  - Encourage the building of roads with concession.
  - Reorganise the General Roads Directorate and strengthen the design and implementation capacities of infrastructure projects with approval of standards of roads design.
  - Improve maintenance of the national road network through a road asset management system (including bridges), total privatisation of the service, and doubling of maintenance expenditure.
  - Construct intercity and international bus terminals in Tirana in cooperation with local government and, subsequently, establish bus terminals in other important cities such as in Durres, Shkodra and Vlora.
  - Promote road safety measures, focusing on preventing accidents and reducing environmental pollution from vehicles (standards for gas emissions and noise levels from heavy vehicles), improvement of road safety conditions in the infrastructure (e.g. improvement of road signs), vehicle technical control, road auditing procedures, improvements in the quality of teaching and test procedures of candidates for driving licences.

- Maritime transport — strategic priorities and policies:
  - Develop the Maritime Administration, with all necessary policy-making, implementation and control institutions and structures, according to international standards, including restructuring of the Albanian maritime register and of the port authorities.
  - Develop ports on the basis of master plans, which will consist of specialisation and harmonised development, by rehabilitating and extending the port infrastructure and superstructure, completing privatisation of services, providing contemporary technologies with concession, increasing commercial autonomy and orienting them towards the market economy:
    - Durres, as the main port, will be developed on the basis of the new master plan, currently being prepared, as a landlord port with commercial autonomy.
    - The Vlora, Shëngjin and Saranda ports will be developed on the basis of master plans to be funded by external assistance and the state budget.
    - Prepare a study on increasing commercial port capacities to promote economic development.
  - Develop maritime transport by increasing the technical standards of ships, the level of their management, and accordance with the export and import goods structure.
  - Improve life safety at sea, safety in ships and port facilities in accordance with the provisions of the Safety of Life at Sea (SOLAS 1974) conventions and the amendments of the International Ship and Port Facilities Security Code (ISPS) code.
  - Protect the maritime environment in accordance with the provisions of the International Convention for the Prevention of Pollution from Ships (MARPOL 73/78) through implementation of the project with the Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea (REMPEC) in Malta.
  - Educate and train seafarers in accordance with the provisions of the Standards of Training, Certification and Watch-keeping (STCW 1995) Code (STCW 1995) convention for the standards of training, certification and services of seafarers.

- Railway transport — strategic priorities and policies:
  - Restructure Albanian Railways to improve the management, marketing and financial situation of the company on the basis of the five-year Business Plan.
  - Approximate the legal framework with European legislation.
  - Integrate into the regional railway network, notably through the construction of the rail connection to Macedonia.
  - Modernise the railway infrastructure particularly along the core trunk network.
  - Modernise the rolling stock with passenger trains as a priority.

*Source: _cr08269 - 3.3 ECONOMIC AND SOCIAL DEVELOPMENT*

### 5. Air transport

### 5. Air transport

### Air transport
- Prepare the Air Code and approve it in the Parliament in accordance with international obligations and the acquis communautaire.
- Ensure membership with full rights in international structures and fulfilment of obligations stemming from commitments for the establishment of European Common Aviation Area (ECAA), the Single Europe Sky (SES) and the functional blocks of airspace.
- Improve regulatory system, make institutional changes and create new authorities in accordance with the acquis communautaire in the field of air transport.
- Complete a study on domestic air transport, which will present the perspective for introducing and developing domestic air transport.
- SAA implementation: Issues related to the transport sector are covered in Articles 52, 59 and 106. In addition, Protocol 5 addresses land transport.

### Energy — challenges and vision
- Main sub-sectors shares in the energy resource balance:
  - hydrocarbons (oil and gas): 61-63%
  - electrical energy: 25-27%
  - other sources (renewable): 11-13%
- Urgent problems:
  - Current electrical energy production capacity insufficient; supply accompanied by continuing cuts and rationing.
  - Interconnection lines with neighbouring countries have inadequate capacity for imports.
  - Non-technical losses high due to illegal connections and interventions on meters.
  - Technical losses in transmission and distribution are high.
  - Increasing trend in electricity consumption for heating.
  - Price of electricity is not liberalised.
  - Fuel structure not diversified.
- Vision: develop a liberalised, market-based energy system covering demand at minimum social cost while guaranteeing security of supply and protecting the environment.

### Energy — strategic priorities and investments
- Institutional and regulatory reforms: restructure public energy companies by function (production, transmission, distribution, supply); privatise distribution; reorganisation of KESH; new concession law; encourage renewables.
- Energy efficiency measures: establish energy efficiency fund (according to the 2005 energy efficiency law); reduce residential consumption via tariff changes, efficient bulbs, thermal insulation; obligatory energy controls in industrial enterprises.
- Planned investments and projects:
  - Electricity production: candidate rivers for new hydro plants include Drin, Vjosa and Devoll. Vlora thermal power station completion by 2009 at a cost of €92 million with capacity of 97 MW. Fier thermal station concession negotiations (BOT/ROT). These investments expected to generate more than 4000 GWh by 2013 (total production in 2005 was 5451 GWh).
  - Electricity transmission: projects for 400, 220 and 110 kV lines and substations; 400 kV Podgorica-Elbasan line by 2009; new Dispatching Centre by 2010; substation in Kashar by 2009; envisaged 400 kV Pristina-Kashar line and inter-system 400 kV line between Macedonia, Albania and Italy.
  - Electricity distribution: expected privatisation in 2008 to complete process begun in 2007; three-year annual-updated plan to improve billing, place meters, eliminate illegal connections, construct 110/20 kV lines, subterranean cables, rehabilitate rural network including construction of 6800 standardised transformation points.
  - Hydrocarbons: develop storage facilities in Porto Romano and Vlora; LNG in coastal zone between Seman and Vjosa; modernise maritime transport infrastructure; increase crude oil production; emergency rehabilitation of Ballsh and Fier refineries; decide natural gas supply source (Turkey/Greece/ITG/TAP branches); assess three LNG terminal proposals; pursue AMBO oil pipeline plans.
- Renewables:
  - Small hydropower: prepare specific law based on concession law.
  - Solar: improve legal framework; obligatory installation of panels in hotels; awareness campaigns.
- Market opening: open domestic electricity market; participate in regional market per Directive 54/2003 and South Eastern Europe Energy Community treaty; break-up KESH and privatise distribution.
- SAA implementation: Energy sector issues covered in Article 107.

### Water supply and sanitation — challenges and targets
- Current challenges:
  - Access to water supply low, particularly rural areas.
  - Interrupted supply and lack of disinfection pose health risks.
  - Poor management, lack of meters leading to large non-billed water share and difficult financial situation.
  - Low tariffs and non-consumption-based billing; central government subsidies cover about 34% of operational cost.
  - Investments not oriented to growing and tourism-potential areas; maintenance neglected.
- Coverage and service targets by 2015:
  - Water supply coverage: increase from 73% to 98%.
  - Sewerage service coverage: increase from 43% to 80%.
  - Wastewater treatment coverage: increase to 50% of the population.
  - Chloride residual target norms compliance: from 48% to 100% of all samples.
  - Average hours of water supply: increase from 9.7 to 18 hours per day across the country.
  - Gradually eliminate operational subventions with annual average reduction not less than 10% of the 2008 level.
- Management, institutional, financial, social and technical reforms (selected):
  - Introduce metering and computer-based billing and collection; make universal metering mandatory in long term.
  - Transform water utilities into commercial companies; transfer ownership of assets to local governments; regionalisation study and process.
  - Set tariffs to gradually recover operations and maintenance costs within a four-year period and eliminate subventions; introduce cost centre accounting.
  - Implement free minimum water supply for vital needs and subsidise poorest families receiving ndihma ekonomike.
  - Prepare national master plan based on Geographical Information System and prioritised medium- and long-term capital investment programmes.

### Environment — challenges, vision and targets
- Key environmental facts and challenges:
  - Air quality in main urban centres fails some national and European standards; dust and vehicle emissions exceed limits.
  - Bathing water: in 60 out of 70 monitoring stations WHO targets are met; in 10 stations microbiological parameters exceed norms during summer.
  - Total urban waste production exceeds 722 000 tons per year; average waste per capita: 550 kg urban, 170 kg rural.
  - About 10.4% of national territory (about 303 000 ha) designated protected areas; inadequate to protect biodiversity.
  - Forests and pastures cover about 1.5 million ha or 52% of total area; forests constitute 1 million ha or 37% (cadastral data from 2005).
  - Fish consumption about 3.3 kg per capita per year compared to 15.1 kg in other Mediterranean countries.
- Vision: sustainable development protecting natural resources and promoting environmental values.
- Strategic priorities and policies:
  - Adopt European Community legal standards with staged interim targets based on compliance cost assessment.
  - Enforce environmental legislation via strengthened Regional Environment Agencies and inspectorates.
  - Invest to meet EC standards within next 20 years in: wastewater treatment; solid waste management and engineered landfills; rehabilitation of contaminated land; technological improvement of state-owned industries. Government will establish an Environment Fund to ensure initial financing.
  - Manage environmental resources with clear command-and-control legal framework and permit system (mineral resources, protected zones, water rights, river basin authorities).
  - Protect forests: encourage conservation management, rehabilitate degraded forests, continue transfer to local governments, counter illegal logging.
  - Fisheries: increase vessels, improve port infrastructure, develop aquaculture, increase processing, strengthen administration.
  - Improve communication and awareness and monitoring systems; set emission and environmental monitoring goals.
- Specific environmental targets and timelines:
  - Air quality: halve non-compliance cases and eradicate breaches more than twice the standard by 2009; use EC standard fuels and compulsory EC emissions testing by end of 2008; IPPC permitting system by 2009; construction industry code of practice in 2008; national air quality monitoring EC-compliant by 2014 with intermediate steps (EC-compliant monitoring in 6 cities in 2008; national air emissions inventory in 2008; monitoring in all urban centres by 2011; EC-compliant emissions monitoring at all permitted fixed point sources in 2011).
  - Solid waste: prevent dumping at unauthorised locations by 2008; safely dispose 75% of hazardous waste by 2009; dispose 50% of non-hazardous municipal waste to engineered landfills by 2010; complete five regional landfills by 2009 and engineered sanitary landfill sites throughout the country by 2014; establish hazardous waste landfill by 2009.
  - Waste water: urban sewerage connection rate of 75% in 2010 and 85% in 2014; appropriate treatment for at least 25% of collected wastewater in 2010 and 50% in 2014.
  - Ground water protection zones: implement by 2009.
  - Soil and biodiversity: increase forest cover in worst affected areas and by 5% overall by 2010; increase protected areas to 15% of territory by 2014; prepare draft management plans for protected zones by 2011.
  - Environmental damage: complete feasibility studies and dossiers for hot spots and rehabilitate worst 35% of contaminated land by 2010.
- SAA implementation: Environment issues are addressed in Article 108.

### Market economy and public finance — vision and priorities
- Market economy: establish institutions and regulatory frameworks to ensure functioning market economy, reduce business costs, support SMEs, and increase access to ICT.
- Public finance vision: mobilisation and efficient, effective, transparent and trustworthy use of financial sources per Government Programme and National Strategy.
- Public finance strategic priorities:
  - Improve public financial management and macroeconomic/fiscal forecasts.
  - Strengthen annual and medium-term budget programming aligned with national priorities and real costing of policies.
  - Improve planning and management of public investment: increase average project size and decrease number, adopt new investment management procedures.
  - Increase transparency and timeliness of resource allocation to local government and implement right for local borrowing.
  - Improve reporting quality, transparency in budget execution, and implement computerised treasury system.
  - Formulate and apply international accounting standards and develop effective independent audit and internal control.
  - Fight illegal transactions, money laundering and terrorism financing; prepare national prevention policies; build IT infrastructure and human capacities.
- Tax and customs reforms:
  - Implement flat tax; review tax system and shorten list of taxes; gradually align indirect taxes with European standards; simplify legal acts and move toward e-filing.
  - Modernise tax and customs administrations: risk analysis, strengthen controls, simplify declarations, full computerisation, improve human resource management, strengthen internal audit.
- Public debt management:
  - Manage risk and cost of domestic borrowing while extending maturity and increasing long maturity debt share.
  - Improve balance between domestic and foreign debt; increase foreign debt share via Eurobond market participation.
  - Establish integrated debt management system and strengthen General Department of Debt capacity.
- SAA implementation: Ministry of Finance responsible for multiple Articles in Titles IV, V, IX and specific Articles 82, 85, 87, 89, 90, and 97-98.

### Economy — business climate, SME and FDI policy
- Challenges: improve business climate, reduce informality, simplify registration and licensing, improve human capital and coordination across institutions.
- Reforms and institutions:
  - Regulatory reform via Task Force (established October 2005); action plan covers regulatory management, removal of barriers in licensing/customs/tax/land/construction/inspection, and regulatory impact assessment.
  - National Registration Centre (established September 2007) to ensure one-stop-shop business registration and unified electronic Commercial Register; operational in 29 municipality offices.
  - Licensing reform principles: switch from ex ante to ex post control, silent approval when institutions do not respond, drop excess licensing requirements.
  - Strengthen Competition Authority, state aid control structures, and respect internal market commitments from SAA.
- SME support measures:
  - Harmonise sector strategies, introduce enterprise education in curricula, develop one-stop shops, unify certification, regulatory impact assessment, quality systems, and technology transfer.
  - Improve financial support via micro-credit institutions, credit guarantee fund, factoring and leasing.
- Export and FDI goals:
  - Maintain annual export growth of goods above 13-15% in first years; increase export share in GDP to 14% in 2013; target export-to-import ratio 1:2 by 2013.
  - Export promotion measures: legislative harmonisation, competitiveness fund, export guarantee fund, public innovation/technology transfer services, quality assessment institutions, collection centres and export processing centres.
  - FDI promotion: implement concessions law and ‘Albania one euro’ initiative, improve infrastructure and business climate, stimulate industrial parks, accelerate privatisation especially in electrical energy, oil and gas, and transport.
- Industrial and mining policy: focus on technology investment, competitiveness, modernisation, diversification, and assessment and promotion of mineral potential.
- SAA implementation: Ministry of Economy, Trade and Energy responsible for numerous Articles under Title IV and related provisions.

### Consumer protection and market surveillance
- Challenges: need for improved product safety rules, stronger consumer information and education, growth of consumer representation, effective compensation mechanisms, and a market surveillance system.
- Strategic priorities:
  - Empower consumers through information/advisory system and consumer education in schools.
  - Provide cheap and fast complaint resolution mechanisms before court.
  - Establish national consumer advisory network and involve not-for-profit organisations.
  - Consolidate legal framework: approve and implement laws on market surveillance, consumer protection, food safety, pharmaceuticals and sub-legal acts in line with acquis communautaire.
  - Establish institutional system: Consumer Protection Commission, Advisory Council for consumers, and strengthen existing structures.
  - Early risk-tracking mechanisms and link with European Rapid Alert systems (RAPEX, RASFF); strengthen state inspectorates and establish Food Authority and pharmacovigilance structure.
- SAA implementation: Article 76 deals with consumer protection.

### Information and communication technology (ICT)
- Challenges: rapid mobile expansion; need reforms in fixed telephony after Albtelecom privatisation; regulatory framework not yet in line with acquis communautaire; Albania ranked 106th out of 115 in Networked Readiness Index (2006).
- Vision: a society where all citizens benefit from ICT to increase knowledge, effectiveness and public administration transparency.
- Strategic priorities in telecommunications:
  - Approve and implement law on electronic communications in accordance with acquis communautaire.
  - Prepare regulatory framework and strengthen Regulatory Authority of Telecommunications.
  - Strengthen Department of Post and Telecommunication Policies and Regulatory Authority capacities.
  - Promote competition and new services (e.g., Internet Protocol Television (IP-TV), Digital Video Broadcasting Handheld (DVBH)).
- Public service provision priorities (National Agency of Information Society):
  - Adjust legal framework for electronic signatures, electronic commerce, electronic documents, cyber crime and personal data protection, with oversight bodies.
  - Coordinate initiatives for integrated online services (identity cards, passports, vehicle registration, health insurance applications, social insurance payments, property registration, construction permits, customs declarations, court decision transparency) using electronic signatures.
  - Utilise inter-ministerial network to offer government and citizen services.
  - Integrate ICT in education: computers and internet in each school, teacher training, education management information system.
  - Digitise cultural heritage and implement eSEE and bSEE recommendations.
  - Adapt EUROSTAT methodology for ICT statistics and prepare annual ICT indicator reports.
- SAA implementation: Article 103 (information society and interoperability) and Article 104 (electronic communications networks and services).

### Social policy — employment, youth, sport, gender equality, social protection
- Employment:
  - Challenges: loss of labour force and reduction in female employment; need vocational education and training; large informal sector.
  - Employment service priorities: consolidate employment service, improve contacts with enterprises, use IT, strengthen active and passive programmes, support vulnerable groups (youth 18-25, women, persons with disabilities, Roma), develop health and safety legislation, measures to reduce informal labour including cooperation among inspectorates, tax, customs, police and employment service.
  - Vocational education priorities: national framework for professional qualifications, curriculum modernisation, institutional development (National Council of Vocational Education and Training, National Agency of Vocational Education and Training), instructor competency development, legal framework completion, facilities and teaching material improvements.
  - SAA implementation: Ministry of Labour, Social Affairs and Equal Opportunities responsible for Articles 46-47, 55, 77, 99 and 100.
- Youth:
  - Challenges: representation and participation gaps, internal migration, limited health and prevention knowledge.
  - Strategic priorities: establish National Youth Agency; promote youth participation and representation; economic strengthening via employment and entrepreneurship support; health and social protection education; promotion of European principles and exchanges.
- Sport:
  - Challenges: lack of coordination, infrastructure, qualifications, transparency, and reduced sport lottery revenues.
  - Strategic priorities: reorganise institutional sport structures; improve local and national organisations; establish National Centre for Preparation and Support of National and Olympic Teams; reconstruct and build sport facilities; establish 5 sport centres by 2013 (Shkodra, Korca, Vlora, Durres and Elbasan); improve law on gambling to increase National Fund for the Development of Sport; raise financial autonomy and stimulate business sponsorship.
- Gender equality and prevention of domestic violence:
  - Challenges: gender inequities persist despite constitutional equality; domestic violence widely acceptable in society; low female labour market participation.
  - Vision: gender equality by integrating gender perspectives across policy design and implementation; ensure victim treatment, legal protection, health counselling and accountability for perpetrators.
  - Strategic priorities: strengthen legal/institutional framework; create database on domestic violence; establish commissioner for gender discrimination appeals; increase women's representation via electoral law changes; strengthen economic position of women (access to property, capital, credit); eliminate gender gaps in education; support vulnerable women via strengthened public structures and reintegration programmes; improve health system response and awareness; prevent domestic violence via education and training of professionals; protect victims through shelters, 24-hour reporting lines and coordinated support systems.
  - SAA implementation: gender equality treated in Articles 77 and 99.
- Social protection:
  - Challenges: ndihma ekonomike allocations fell from 0.8% to 0.4% of GDP between 2000 and 2005; coverage and benefit levels low (average benefit < 15% of poverty line); complex two-stage distribution (central block grants to municipalities, then local distribution) with targeting inefficiencies; financing strategy for decentralisation and transfer of institutions to local governments still missing.
  - Vision: by 2013, a system providing adequate social protection converging with EU concepts.
  - Strategic priorities and policies: (section continues beyond supplied content).

*Source: _cr08269 - 5. Air transport*

### 1. Social assistance

### 1. Social assistance

### Strategic goal
- Reduce the absolute poverty headcount rate to 10% by 2013 according to the results of household surveys.

### Main findings on ndihma ekonomike targeting (coverage and leakage)
- The share of poor households reached increased from 24.6% in 2002 to 32.5% in 2005 but remains low.
- The share of non-poor households who received benefits increased from 57% in 2002 to 64% in 2005, especially in mountain and coastal areas.

### Recommended measures to improve targeting and effectiveness
- Use of improved information
  - The number of poor families and the appropriate ndihma ekonomike block grant funds for every local government unit will be determined through a poverty map based on the Census and household surveys.
- Expansion of resources available to the ndihma ekonomike programme
  - By 2013, the ndihma ekonomike benefit will approximate the poverty line as long as it does not exceed the level of the minimum pension at national level.
  - The value of the monthly benefit will still be calculated based on the household structure, differentiated for each family member, depending also on the poverty characteristics.
- Improved assessment of applicant households
  - The proposed simplifications and improvements will ease the documentation requirements and the volume of labour for applicants.

### Work requirements and program integrity
- Expand the use of work conditions for ndihma ekonomike to the entire territory.
  - Objectives: increase transparency in the use of funds, reduce the number of households and individuals that abuse the programme, and increase the income for households engaged in community works.

### Administration of other subsidies
- Improve the administration of the electricity subsidy.

*Source: _cr08269 - 1. Social assistance*

### 2. Social care

### _cr08269 - 2. Social care

### Social care policy and reform priorities
- Policy objective: encourage provision of services to persons in need within their families and communities instead of admitting them into residential centres.
- Strategic priorities:
  - Decentralise social services: decisions on planning, provision and delivery taken at local level (municipalities and communes); Ministry of Labour, Social Affairs and Equal Opportunities to set rules and monitor via a new inspectorate.
    - Two directions to complete decentralisation:
      - Residential service centres will be transferred to the competence of local government units. Interim: State Social Services will continue to coordinate distribution of persons in need across regions according to availability.
      - New social services will be established in the community according to needs identified by local government units.
  - Institutionalise relationship with non-government organisations as providers and defenders of rights; all organisations that offer social services will be licensed; create legal environment to enable local government units to procure social services.
  - Gradually transform residential services into mobile and community based services (deinstitutionalisation); prevent unnecessary admissions; provide alternatives for accommodation, treatment, education and rehabilitation; improve treatment available in residential institutions.
  - Ensure local government units with limited revenues are supported through the central budget while they develop new social services.
  - Guarantee minimum quality for all services according to standards developed by the Ministry of Labour, Social Affairs and Equal Opportunities; monitoring based on licensing and inspection with inspection initially advisory then compulsory.

### Social inclusion — challenges
- Crosscutting aim: enable vulnerable groups to participate equally in development.
- Children:
  - Obligatory vaccination scheme maintains high child immunisation rates, but children from some minority groups are not vaccinated to the level of the majority.
  - Less than 50 percent of children are enrolled in early childhood institutions, public and private.
  - No measures taken against parents who abandon their children or do not send them to school.
  - Child labour common in informal market: selling cigarettes, washing cars, begging.
  - Legislation lacks a unified legal instrument for treatment of children who are victims of exploitation, abuse, or violence.
- Roma:
  - Roma children spend, on average, less than half the time of children from majority households in the educational system.
  - As a result, one in four of Roma surveyed is illiterate.
  - Around 20% of Roma children (up to age 14) are reportedly not vaccinated compared to around 3% of the majority.
  - Inadequate information or medical identification often responsible for incomplete vaccination coverage.
  - Frequent change of dwellings, early marriage, ignorance of the law lead to lack of registration and inability to apply for entitled benefits.
- Disabled:
  - Rapid expansion of number of recipients of the disability allowance; real expenditure almost doubling between 2000 and 2005.
  - No integrated or sustained approach aimed at rehabilitation.

### Social inclusion — vision and strategic priorities
- Vision: greater prosperity via sustainable development to lift people out of poverty; social development enabling participation by all; every child best possible start; opportunities to work for all able to do so; sufficient provision for those unable to work; no one excluded.
- Crosscutting strategy focus: poverty risks persisting after economic growth; assist vulnerable individuals, families and groups to be self-sustaining and have equal rights.
- Strategic priorities:
  - to raise the income generation opportunities of individuals
  - to facilitate access to services
  - to assist vulnerable groups
- Monitoring: modelled on European Union system; Living Standards Measurement Survey every three years; modelled on National Action Plans for Social Inclusion.

### Policies for vulnerable groups
- Children:
  - Justice: separate children from adults in penal case examination; improved procedures for minors; improved conditions in prisons for children; extended use of social workers; targeted court services; establishment of a Delinquency Correction Institute.
  - Health: integrated outpatient management including examination, treatment and combined counselling for main childhood diseases.
  - Education: establish multi-professional units at local government level to ensure integration, development and equality of children at schools.
  - Enforcement of compulsory education and creation of vocational training opportunities to prevent child labour.
  - Establishment of structures for protection and respect of children rights at local level.
- Roma national strategy areas:
  - registration to ensure protection of rights and access to services
  - incentives to attend primary schools; support for children to learn Albanian; provision of teachers who can speak Roma; adult literacy programmes
  - preservation of cultural heritage and family values; empowerment of women and girls
  - improved access to benefits including ndihma ekonomike
  - health services in Roma communities and promotion of family planning, immunisation coverage, ante- and post-natal care
  - building modest houses and road access to Roma sites
  - improving access to public order through recruiting Roma as police officers
- People with disabilities:
  - ensure accessibility through removal of barriers in public infrastructure and buildings
  - introduce programmes of early identification or prevention of disability, coordinate health and social services in line with decentralisation, and integrate education curricula and teaching processes
  - improve conditions for employability through job protection and inclusion in vocational training programmes
  - build capacity of state structures dealing with disability policy
  - improve legislation and awareness of legislation, including simplified procedures

### Social insurance — challenges, vision and reform measures
- Challenges:
  - number of people employed in the formal labour market is small
  - contribution rates are high compared to the received benefits
  - administration needs to improve collection of contributions to reduce evasion
  - pension and ndihma ekonomike schemes are mixed up in some special cases
  - Review argued for restructuring to ensure long-term sustainability due to uncovered population proportion and declining replacement rate.
- Sector vision: restructure public pension system to secure good pensions linked more closely with paid contributions; offer incentives to join contribution scheme; create favourable environment for development of financial markets without threatening entitlements.
- Strategic priorities and policies:
  - restructure and reform existing single tier pay-as-you-go system; transition to a multi-pillar social insurance system with measured steps and political consensus; create favourable environment for third pillar.
  - Important measures:
    - create favourable environment for private companies in financial market to be licensed for insurance activity
    - increase public trust in private pension schemes and encourage larger population share to capitalised pension schemes
    - strengthen control and regulation of licensed investment companies to ensure investments are secure and protected from risk
    - apply stringent controls to use of funds invested by licensed investment companies; ensure capital adequacy aligned with Basel II framework
    - regularly monitor financial position of licensed investment companies to ensure funds are secure, returns fair and investors’ rights protected
  - Preparation toward multi-pillar system:
    - Measures to enforce payment of social insurance contributions:
      - improve methods to detect, inspect and correct non-compliance
      - apply penalties in cases of evasion
    - Reform of current system:
      - improve links between contributions and pensions
      - establish a clear pension scheme based on and balanced with contributions
      - improve administration by strengthening controls on social insurance payments and raise awareness in law implementation
    - Design legal framework for controlled multi-pillar system:
      - a technical working group comprising experts from government, opposition and non-government organisations will prepare reform strategy and precise multi-pillar design (contribution rate, cut-off age, year of introduction of the second pillar)
      - prepare law and normative acts for licensing and standards
      - license competent and secure institutions to invest pension funds
      - establish and strengthen modern supervisory system to monitor pension fund investment institutions
    - Strengthening the existing private and optional third pillar:
      - create a multi-pillar diversified system while strengthening voluntary insurance environment; harmonise development of pillars by implementing two principles
    - Preservation of rights of workers who contributed to current system:
      - maintain existing pensions
      - protect and improve public pillar for middle- and old-aged workers who have contributed
      - recognise rights earned by young workers who have contributed
    - Planning and management of transition:
      - prepare legal framework for second pillar establishment, operation and supervision
      - prepare financing plan for cost of transferring part of contributions to second pillar
      - inform public on new pension system and its operation
      - make necessary institutional changes and develop capacities
      - prepare and implement action plan for transition in a climate of political consensus
  - Financial Supervision Authority support directions:
    - strengthen institutional capacities of the Financial Supervision Authority
    - strengthen credibility of the Motor Third Party Liability claims administration and restructure the Albanian Insurance Bureau
    - assess risk retention policies and introduce institutional arrangements for reinsurance
- SAA implementation: Social insurance issues captured in Article 48 on movement of labour and Article 99 on cooperation.

### Health — challenges, vision and strategic priorities
- Challenges:
  - epidemiological profile changing: non-communicable diseases (mainly cardiovascular diseases and cancer) becoming leading causes of death
  - health risk factors: high tobacco consumption and changing diets
  - need to adjust to lengthy and costly treatments; shift to preventive health care and public health campaigns
  - fragmented health financing system; transfer of financing of primary health care to the Health Insurance Institute (HII) as of 2007
  - payroll tax-based health insurance results in inequity; only a small part of population contributes due to absence of formal labour market, limited administrative capacity and oversight
- Sector vision: a basic health service for all, of acceptable quality and efficiency; change organisation, management, financing and modalities to encourage private initiative and preserve and improve population health continuously.
- Strategic priorities and policies:
  - Increase capacity to manage services and facilities effectively:
    - introduce new public-private mix and innovative organisational schemes; privatise primary health care services and public specialties without beds
    - improve facility and clinical management at all levels
    - continuously improve health system quality and safety via continuous education and accreditation based on standards published in advance
    - improve health services management through training and continuous education for decision makers and key staff
  - Increase possibility to receive effective health services:
    - reduce financial, geographic, cultural and professional barriers; define services perceived as free and affordable
    - deploy geographically and population-wise balanced distribution of services
    - promote right of employees for health protection, information and care at public and private work environment
    - articulate network of services to ensure continuity of care with primary health care as gatekeeper
    - provide widespread free essential public health services
    - provide solid pharmaceutical coverage
  - Improve health financing:
    - increase pre-paid coverage; funds-pooling to protect weakest sectors regardless of ability to pay
    - reduce informal money flows including through introduction of co-payment mechanism
    - improve resource allocation by a single strategic purchaser
  - Improve governance:
    - strengthen Ministry of Health capacity for policy, strategy and planning; Ministry to provide policy leadership while others provide services
    - better regulation with clearer, enforceable framework covering responsiveness, entitlements, privatisation, role of professional organisations, labour legislation for health professionals
    - improve transparency and accountability via capacity to monitor and evaluate performance
    - establish a health information system and special centre to provide cost-effective evidence-based responses
- SAA implementation reference: Albania Health Sector Note, World Bank, February 2006 (cited in source).

### Pre-university education — challenges, vision and strategic priorities
- Challenges:
  - lowest secondary school enrolment rate in the region
  - public spending on education fell during transition to 3.1% of GDP in 2004; rose to 3.4% of GDP in 2006
  - schools inherited insufficient teaching-learning materials and laboratory equipment; poor maintenance
  - government established IT laboratories in all secondary schools; expected internet by end of 2008
  - urban schools operate above capacity; rural areas have low student-teacher ratios but poor transport prevents consolidation
  - need to increase secondary enrolment especially in rural areas and among girls
  - vocational education coverage and quality weak and poorly linked to labour market
- Sector vision: modern national education system to stimulate sustainable economic growth, raise competitiveness and consolidate citizen consciousness.
- Strategic priorities and policies:
  - Reform and strengthen policy making, management and decision capacity:
    - central level: restructure Ministry of Education and Science and dependent institutions with clear management based on performance
    - regional level: restructure Regional Education Departments and Educational Offices to increase capacity to help schools
    - decentralisation: transfer responsibilities and decision-making authority to local government
    - school level: implement school autonomy in curriculum, financing, personnel and management after legal basis and implementing bodies completed
    - base policy and decision making on research and data via education management information system
  - Improve quality of teaching and learning:
    - curriculum modernisation in classes 1-12; restructure secondary education and prepare new curriculum framework
    - teacher professional development: reform professional development for teachers and school directors based on credits
    - school textbook improvement: complete liberalisation reform of textbook publishing
    - improvement of student assessment: consolidate matura shteterore, reform graduation examinations, increase transparency and public trust
    - expand private education service market with supervision of quality
  - Improve efficiency of education financing:
    - increase financial support to basic education from central and local government
    - improve financing formula based on number of students; gradually reduce inherited education-related regional discrimination; rationalise school distribution
    - ensure increasing funding through tax exemptions for private spending on educational infrastructure investments
  - Build capacity and human resources:
    - professionalisation of teaching: develop standards for teachers and student achievement standards based on performance
    - inspection and assistance: change inspector role from control to support; include inspectors in intensive professional development
    - teacher motivation: double teacher salaries by 2009 (currently in implementation) and ensure teaching competences
  - Develop vocational education:
    - new policy of vocational education and training prepared in cooperation with Ministry of Labour, Social Affairs and Equal Opportunities; establish Albanian Framework of Qualifications
    - strengthen and expand vocational education infrastructure
  - Expand pre-school education:
    - add a preparatory year before primary school to increase school capabilities and deliver services for little children from vulnerable groups, especially in north-eastern Albania and the Roma community
    - modernise pre-school education: prepare teachers-educators, build kindergartens in public and private institutions
- Performance targets (selective) from Table 3.1 (Performance indicator / 2006 / 2012 / EU 2004):
  - School expectancy for five-year olds (years): 11.1 / 14 / 17.4
  - Average annual total compulsory instruction time for 7-8 year olds (hours): 570 / 660 / 750
  - Net enrolment rate in secondary education (%): 55 / 75 / 85
  - Percentage of females aged 15-24 years in education and training (%): 33 / 50 / 66
  - Total public expenditure on education as share of total public expenditure (%): 10.7 / 12.0 / 10.8
  - Share of total education expenditure allocated to recurrent non-salary purposes (%): 10.0 / 13.0 / 19.9
  - Average number of 15-year old students per computer in public sector schools: 900 / 100 / 10
  - Mean performance of students aged 15 years on PISA mathematics literacy scale: 381 / 425 / 495
- SAA implementation: Article 100 requires education opportunities to be provided to all at all levels without discrimination.

### Higher education — challenges, vision and strategic priorities
- Challenges and recent achievements:
  - New law on higher education grants academic and organisational freedom and financial autonomy; ongoing completion of legal framework with sub-legal acts; follow-up group for Bologna process implementation.
  - Achievements: restructuring studies in three cycles and lifelong learning; curriculum reform in first cycle with 70% alignment in related programmes; internal quality assessment systems; accreditation of some full-time programmes; near completion of National Framework of Qualifications; implementation of ECTS and Diploma Supplement; easing recognition of diplomas obtained abroad; review of academic staff workload; increased mobility of students and staff.
  - Remaining issues: universities lack internal governance framework and external accountability mechanisms; no regulations for managing university performance; quality control needs extension to part-time courses; teaching methods unchanged; courses often narrow and traditional; little pedagogical training for teaching staff; teaching and research have been separate; research institutes attached to universities primarily in Tirana; infrastructure quality still needs improvement; little transparency in use of university revenues; bursary mechanism not well targeted.
- Sector vision: higher education and research system to create, develop and transmit knowledge through teaching, relevant research and service provision; assist economic development and contribute to democracy and citizenship.
- Strategic priorities and policies:
  - Increase participation: increase percentage of age group in higher education; in 2007 97.3% of those who applied succeeded in getting a place for academic year 2007-2008; increase admissions, reduce dropout, increase completion in normal time; increase staff numbers and improve premises and labs; improve admission and assignment scheme; introduce two-year non-university programmes; regional universities to increase enrolments and support local economies.
  - Restructure missions across cycles: first cycle—increase admissions, improve quality and instruments for work competences; second cycle—increase training level and specialisation; third cycle—re-conceptualise doctorate and long-term specialisations; reform part-time study towards lifelong learning with equal quality.
  - Ensure effective quality assurance and accreditation: Public Agency of Higher Education Accreditation to introduce external quality control and publish reports; priority to internal quality assurance; include part-time and two-year diploma programmes.
  - Increase institutional autonomy balanced with external accountability: establish Administrative Councils with academic staff, students and community interest groups; publish annual reports with specified performance indicators and external quality assurance results; universities to design governance processes and include in statutes.
  - Better integrate teaching and research: Research Strategy Group to develop priorities (e.g. Albanian studies, agriculture and food, natural resources); academic research funded competitively on project basis; regional universities to bid for research and focus on professional education and local links; continue investment in scientific laboratories.
  - Improve teaching: equip graduates with transferable skills; promote interactive and student-centred methods; provide special investment funds; develop performance and career development for academic staff emphasizing teaching quality; update teaching content in line with Bologna process; encourage broader cross-disciplinary programmes.
  - Improve financing:
    - state remains main source; public funding to reflect performance based on funding formula weighting student numbers by subject and level
    - investment funds allocated on project basis with costed proposals
    - improve building utilisation efficiency
    - consider selling services and student fees as additional revenue: student fees currently cover about 22% of full cost; will gradually increase (25-30%)
    - each university allowed to retain earned funds
    - replace current support scheme with new bursary system to improve targeting and promote achievement
- SAA implementation: higher education and research issues are addressed in Article 54 (mutual recognition of qualifications), Article 100 (Bologna Declaration requirements), and Article 109 (cooperation in research).

### Urban, rural and regional development — spatial planning and housing
- Objective: prevent uneven development becoming obstacle to growth; new legal framework for participative regulatory plans; prepare administration for efficient use of financial instruments; ensure minimum access to services in rural areas; promote integrated approach for tourism and cultural heritage preservation.
- Spatial planning challenges:
  - Informality; demographic movement and rapid urbanisation; lack of urban planning and unsystematic construction rule application; unclear division of responsibilities between central and local levels; low professional planning capacity; high corruption.
- Spatial planning vision: promote sustainable territorial development for rational land use, resource protection, cultural heritage protection, and proper conditions for housing, economic and social activity.
- Strategic priorities and policies:
  - Restructure legal framework of territorial planning introducing uniform development controls (building codes, land use regulations, land subdivision regulations, development freezes, public easements, public land reservations) supported by compliance procedures and sanctions.
  - Streamline development and building permit processes into a simple administrative act subject to the Code of Administrative Procedures.
  - Adjust levels of planning and control per functional competences assigned by law; strengthen controls to ensure compliance.
  - Promote active public participation in spatial planning decisions.
  - Strengthen coordinating mechanisms and institutions for horizontal and vertical cooperation.
  - Regulatory plans approved by commune and municipality councils, respecting subsidiarity; provide financial and technical support for regulatory plans for selective cities.
  - New framework to be used alongside restitution, registration and legalisation processes; training for local governments and new law for building inspection to reduce corruption.
- Housing targets and measures:
  - social housing available for rent will be at least 1% of the total housing stock
  - about 5% of the total housing stock will consist of low cost buildings through partnership schemes
  - access to mortgages will grow by 20-30%
  - about 1% of the stock of privatised buildings will be rehabilitated
  - about 50% of the residences of the Roma community will be rehabilitated

### Regional development — vision and strategic priorities
- Challenges: significant regional disparity; need integrated coherent regional policy to address widening socio-economic gaps; apply Partnership Principle for EU funds programming.
- Vision: balanced and sustainable socio-economic growth among regions, especially mountainous and remote areas, to support rapid national development.
- Strategic objectives and policies:
  - Enable all qarks/counties to contribute to sustainable development and competitiveness:
    - Strengthen capacities of all counties to use and manage development potential via National Programme for the Development of Counties to establish single planning and management system and new regional policy elements:
      - single policy framework for counties
      - new partnership between national, regional and local stakeholders
      - single socio-economic programming document per county (County Development Strategy) and a County Development Agency to coordinate implementation
      - County Development Agreement: agreed financial and operational plan setting central government support
      - effective monitoring, evaluation and reporting system
    - Support disadvantaged areas via Disadvantaged Areas Development Programme and special budget line.
  - Create efficient regional development management framework, unified legal framework and coordinated institutional structures:
    - introduce law on regional development and sub-legal acts
    - institutional framework:
      - Advisory structures: National Partnership Council and County Partnership Councils to monitor implementation and consensus
      - Implementing structures: national level structures to manage regional policy and adopt Chapter 22 of acquis; County Development Agency at county level to assist Partnership Council
- SAA implementation: Article 110 addresses cooperation in regional development policy; Article 71 foresees alignment of state aid rules and definition of zonal divisions.

### Rural development — challenges, vision and strategic priorities
- Challenges:
  - rural living standards significantly lower than urban
  - rural poverty dimensions: low per capita income, higher health risks and undeveloped medical services, limited schooling opportunities, insufficient public services
  - poverty higher among those relying on agriculture; poverty reduction linked to agricultural production growth and non-farm employment
- Vision: contribute to equal development of all rural zones, improve quality of life, and reduce rural poverty sustainably.
- Strategic priorities:
  - increase competitiveness of agricultural and agro-processing sector via farm modernisation, restructuring and value-adding activities
  - protect and enhance environment through sustainable management of natural resources
  - improve quality of life and promote diversification to create new jobs
  - develop capacities of local institutions to manage rural development programmes
- Purpose: provide nationally agreed basis consistent with government policy for operational rural development programmes prepared by region; strategy based on EU Rural Development Regulation and Strategic Guidelines 2007-2013; rural development operational programme to be prepared in 2008-2009.
- Strategy organisation: nine policies organised into four axes corresponding to selected EU Rural Development Regulation measures:
  - Axis 1 — Competitiveness of agriculture, agribusiness and forestry:
    - modernise and restructure agriculture; increase value-added and quality; manage forests sustainably; increase skill levels and employment
  - Axis 2 — Preservation of landscape and environmental protection:
    - preserve landscape in less favoured areas; preserve traditional practices and genetic potential; introduce controlled and organic production; prevent nutrient leaching
  - Axis 3 — Quality of life and diversification:
    - create rural employment via diversification into non-agricultural activities and support family and small enterprises; improve quality of life via village renewal (local roads, water and sanitation) and conservation of rural heritage
  - Axis 4 — Participatory rural development:
    - introduce LEADER approach for decentralised governance and community-based local action groups

### Agriculture — challenges, vision and strategic priorities
- Challenges:
  - small farm size and land fragmentation hinder production and marketing
  - low product competitiveness due to high costs and low output quality from inadequate technology, low farmer organisation, lack of market information and underdeveloped commercial infrastructure
  - constrained export opportunities from low agricultural and agro-processing industrial production, lack of trade facilitation, low food safety standards, weak competitiveness
  - meeting veterinary, phytosanitary and food security conditions of SAA and Interim Agreement will be difficult
- Sector vision: ensure high productivity and competitiveness of agricultural and agro-processing sectors domestically and abroad to raise farmers’ incomes and introduce safer products.
- Strategic priorities and policies:
  - Increase financial support to farms and agro-industrial businesses with emphasis on fruit trees, vineyards, vegetables and animal farming and industrial processing of fruit, grapes, vegetables, milk and meat:
    - main instruments: direct state or European funds linked to candidate status, credit schemes with light term to modernise farms through rural banks and credit guarantees, expansion of banking to rural areas via fiscal incentives and savings mobilisation
  - Improve management, irrigation and drainage in two phases:
    - 2007-2009 targets:
      - rehabilitate over 120,000 ha of drainage infrastructure
      - widen river beds and regulate mountain streams (afforestation of banks) to minimise land erosion
      - rehabilitate over 120,000 ha of irrigation infrastructure and transfer management to water user associations
      - rehabilitate 35 damaged dams
      - increase role of local government units in managing irrigation and drainage schemes
      - enhance private sector role in constructing and managing small schemes
    - 2010-2013 targets:
      - ensure 360,000 ha irrigated with 3500-5000 m3/ha (with support of water user associations)
      - ensure 280,000 ha drained (with support of drainage boards partly self-financed)
  - Improve marketing of agricultural and agro-processing products:
    - increase efficiency of existing wholesale markets; establish new markets; strengthen public market monitoring and analysis; support collection points, standardisation and packaging; improve market information for farmers and operators
  - Improve technologies, information and knowledge via Agricultural Information Centres and Agricultural Technology Transfer Centres:
    - institutional strengthening and technical/financial support; training and experience collection; dissemination and technology packages; encourage contract agreements with farmers; strengthen Farmer Schools and Technology Development with Participation; restructure research to meet farmer needs
  - Increase quality and safety of products:
    - improve legal framework for official control of domestic and imported food products per EU standards; support infrastructure for food product control and information exchange; implement HACCP and ISO systems; enforce safety and quality systems by producers; promote good agricultural practices and organic production policies
- SAA implementation: agriculture section ends with SAA implementation reference in source.

*Source: _cr08269 - 2. Social care*

### Chapter II of Title III (and the relevant annexes) on the free movement of goods covers agricultural

### Chapter II of Title III (and the relevant annexes) on the free movement of goods covers agricultural goods. In addition, Article 95 deals with cooperation in agricultural issues.

### Tourism — Challenges and recent performance
- Total number of visitors by November 2007: 2.1 million (including emigrants who are not resident in Albania, according to the definitions of the World Tourism Organisation).
- Number of foreign visitors in 2007: 1.1 million.
- Increase in foreign visitors between 2006 and 2007: 19 percent.
- Largest month-on-month increases observed: January (31%), March (30%), June (27%), October (31%).
- Over the last seven years, tourism corresponded to 77% of the country’s exports on average.
- Total visitors more than doubled between 2000 and 2005; increased further by 23% between 2005 and 2006 (based on quarterly sample surveys at border points).
- Bank of Albania reports rising average daily expenditure per visitor.
- Total revenues from tourism: estimated at €805 million in 2006; projected to reach €1000 million in 2007.
- About 60% of foreign visitors come from Kosovo and Macedonia.
- A new law on tourism was approved in May 2007 aiming to establish a sector with international standards.
- Government investment in 2006-07: funds allocated for tourist signs and tourist information offices in some cities.
- A tourism information campaign spot will appear in 2008 on CNN.

### Tourism — Constraints
- Weak infrastructure in some areas.
- Lack of efficient systems of solid waste treatment.
- Lack of strict controls over informal construction.
- Low funding for protection and maintenance of zones with environmental and cultural interest.
- Insufficiently trained human resources in public and private sectors.
- Ill-defined property rights and lack of enforcement of the legal framework and construction regulations.
- Lack of cooperation between public and private sectors and absence of a single private sector umbrella organisation.

### Sector vision
- Vision: Albania to be recognised as a safe tourism destination of high value, characterised by a unique variety of natural and cultural beauties of world class in a small geographical space, managed in a responsible environmental and social way, easily reached from the European tourism markets.

### Strategic priorities and policies
- Product development: develop specialised tourism products within an integrated framework to reach geographical balance across the country. Types of tourism:
  - Sun and beach tourism, in the long term
  - Special interest tourism (ecotourism, rural tourism, environmental tourism, adventure tourism, cultural tourism and mountain tourism), in the short- to medium term
  - Business and conference tourism, in the short- to medium term
- Recent growth patterns:
  - Special interest tourism increasing by 15-20% and represents 25% of the market.
  - Sun and beach tourism comprises the largest part of international tourism and is growing by 2-4% per year.
- Sector strategic priorities:
  - Awareness and marketing: develop domestic tourism; consolidate a unifying theme to link the country’s tourism product with international markets; create a convincing image through specialised travel companies, local tourism companies, the internet, participation in international tourism trade fairs, and invitations to foreign media.
  - Product development and diversification: organise local areas to convert natural and cultural assets into viable tourism products (sites, activities, information, lodging, food, guide services).
  - Investments in nature areas and culture: establish long-term financial mechanisms and develop/approve tourism plans with incentive policy for investors.
  - Human resource management: establish an elite group of tourist guides; train managers of tourism spots, hospitality professionals and staff; build language skills; enrich teaching programmes with professional subjects on tourism, especially in higher education.
  - Business climate: create a clear regulatory framework aligned with international tourism standards through close public–private partnership and a common platform for tourism development.
  - Data and information management: establish district Tourism Information Offices and a centre for data collection, processing and dissemination to support planning, marketing and monitoring.
  - Territorial planning: support tourism through regulatory plans, urban studies, and infrastructure investments (port facilities, waste management); current implementation examples include the integrated coastal zone management project in the south of Albania and the approval of the law on territorial planning.

### Tourism targets by 2013
- Total number of visitors will reach 3.5 million.
- Non-ethnic Albanian visitors will comprise 60% of the total number of visitors.
- Gross revenue from tourism will reach €2.5 billion.
- Average revenue per visitor will be 35-40% higher than in 2006.

### SAA implementation (tourism)
- Article 94 addresses issues of cooperation in tourism.

### Culture — Challenges
- Culture impacts democratic development and the reaffirmation of Albanian cultural identity regionally and within European cultural identity.
- Cultural heritage (material and spiritual) is central to Albanian art, culture, and traditions and is presented as part of European heritage.

### Culture — Vision
- Improve standards of management and treatment of cultural heritage and approximate standards of European countries based in the community policy of “united in diversity”.

### Culture — Strategic priorities and policies
- Support creativity of Albanian artists, including:
  - Establish a supportive climate; expand creative industries; introduce fiscal incentives for cultural products; improve aesthetic and professional quality; improve social status and conditions of creators.
  - Facilitate promotion of Albanian cultural values abroad through publication of written works in different languages and cultures.
  - Organise international symposiums for cross-cultural dialogue.
  - Participate in international festivals, exhibitions and fairs.
- Protect cultural heritage and promote cultural tourism:
  - Protect, catalogue and present cultural values emphasising cultural diversity; ease public access to cultural assets; establish a modern cultural heritage management system.
  - Incorporate restoration and conservation of monuments in urban and environmental plans.
  - Present fiscal incentives for persons who invest in cultural heritage.
  - Rehabilitate museum-city centres and improve infrastructure to transform them into open centres for local and foreign visitors.
  - Strengthen institutions that preserve cultural memory (libraries, archives, museums); create databases of their possessions; digitalise collections; prepare printed and electronic publications; include institutions in programmes for information exchange with counterpart institutions regionally and beyond through cooperation agreements.
- Increase the role of culture in social life and quality of life: encourage wide public participation, interventions in the education system, and increased public awareness of the benefits of cultural projects.
- Integrate Albanian culture into European and international culture: promote international relations, coordinate with cultural institutions in the region (including Kosovo), and pursue EU objectives in culture (strengthen democratic and human rights values, strengthen mutual trust and respect, promote awareness of the European cultural community and its diversity).
- Protect intellectual property, including strengthening and consolidation of the Office of Author Rights.

### SAA implementation (culture)
- The Ministry of Tourism, Culture, Youth and Sport is responsible for:
  - Article 73 on intellectual property rights
  - Article 101 on cultural cooperation
  - Article 102 on cooperation in the audio-visual field

*Source: Chapter II of Title III (and the relevant annexes) on the free movement of goods covers agricultural goods; tourism and culture sections (excerpts).*

### 4. Macroeconomic and fiscal perspectives

### 4. Macroeconomic and fiscal perspectives

### Overview
- The macroeconomic framework links historical and projected values of main macroeconomic indicators but is conditioned by the lack of full economic data.
- Progress reported on achieving targeted economic growth, consolidating macroeconomic stability, and continuing structural reforms.

### Economic growth
- Annual growth rate is expected to reach 7%.
- Factors supporting growth:
  - Continuous increase in business confidence due to macroeconomic stability and progress toward EU integration.
  - Growth in public investments (road transport infrastructure, education, health services, electricity production) and high levels of private investment (construction, services, housing).
  - Improved quality of management and efficiency of public expenditure strengthening links between public and private investment.
  - Investment in machinery, equipment, training, and supportive fiscal policies to raise labour productivity.
  - Increased producing and competitive capacities through sectoral support (agriculture, energy), utilisation of comparative advantages, and export expansion with reduced import growth.
  - Privatisation of strategic sectors (electric energy distribution, telecommunications, oil extraction and processing) to improve business climate and production efficiency.
  - Expansion and improvement of bank and non-bank financial system: sufficient liquidity, improved access to property rights, broader client range, fast growth of credit to private sector including micro-credit and leasing services.
  - Expanded supervision of lending quality and continued financial intermediation through: (i) improvements in payment systems; (ii) maintenance of positive real interest rates; (iii) improvement in credit portfolio quality; (iv) increased proportion of money in circulation through the banking system.

- Table 4.1 Economic growth projections
  - Real GDP growth (%) by year:
    - 2006: 5.5
    - 2007: 6.0
    - 2008: 6.0
    - 2009: 6.5
    - 2010: 7.0
    - 2011: 7.0
    - 2012: 7.0
    - 2013: 7.0
  - Investment (%GDP) by year:
    - 2006: 25.1
    - 2007: 26.5
    - 2008: 26.9
    - 2009: 27.8
    - 2010: 28.7
    - 2011: 28.8
    - 2012: 29.0
    - 2013: 29.6

### Balance of payments
- Prospects positive: strong inflows from transfers and capital sufficient to fund the trade deficit.
- Export growth rate expected to exceed import growth rate.
- Remittances have expanded steadily over the last five years and are expected to continue expanding as EU integration eases movement of people and formalises activities abroad.
- Grants have declined recently but could increase as EU membership nears.
- Official loans declining while repayments increase; inflow of foreign direct investment expected to increase with macroeconomic consolidation and promotion policies.
- Beyond 2010, exports expected to increase and trade deficit to narrow.

- Table 4.2 Balance of payments projections
  - Exchange rate (Lek/€):
    - 2006: 123
    - 2007: 122
    - 2008: 122
    - 2009: 122
    - 2010: 122
    - 2011: 122
    - 2012: 122
    - 2013: 122
  - Trade balance (€million):
    - 2006: -1,685
    - 2007: -1,888
    - 2008: -1,965
    - 2009: -2,062
    - 2010: -2,167
    - 2011: -2,227
    - 2012: -2,309
    - 2013: -2,387
  - Remittances (€million):
    - 2006: 966
    - 2007: 1,059
    - 2008: 1,133
    - 2009: 1,212
    - 2010: 1,300
    - 2011: 1,394
    - 2012: 1,494
    - 2013: 1,602
  - Overall balance (€ million):
    - 2006: 207
    - 2007: 129
    - 2008: 115
    - 2009: 96
    - 2010: 148
    - 2011: 178
    - 2012: 229
    - 2013: 279

### Monetary sector
- Bank of Albania inflation targeting objective: keep inflation at the level of 3% with a variation of ±1 percentage point around this central value.
- Currency outside banks expected to decline; private deposits to increase, raising money supply (%GDP) from 74.1% in 2006 to 94.1% in 2013.
- Expansion of private sector credit anticipated as money supply increases; private sector credit to reach 44.9% in 2010 and continue growing beyond 2010 at a lower rate as money supply stabilises and government borrowing limits are observed.

- Table 4.3 Monetary sector projections
  - Inflation (%) by year:
    - 2006: 2.4
    - 2007: 2.9
    - 2008: 3.0
    - 2009: 3.0
    - 2010: 3.0
    - 2011: 3.0
    - 2012: 3.0
    - 2013: 3.0
  - Private sector credit (%GDP) by year:
    - 2006: 21.2
    - 2007: 27.9
    - 2008: 34.1
    - 2009: 40.0
    - 2010: 44.9
    - 2011: 48.4
    - 2012: 51.3
    - 2013: 52.0
  - Money supply (%GDP) by year:
    - 2006: 74.1
    - 2007: 78.9
    - 2008: 83.3
    - 2009: 87.3
    - 2010: 90.6
    - 2011: 92.4
    - 2012: 93.9
    - 2013: 94.1

### Public finance

- Summary statement: Table 4.4 presents public finance projections as shares of GDP (%) and in Lek billion. (Source: Actual data for 2006; estimates and projections of the Ministry of Finance for years 2007-2013.)

- Table 4.4 Public finance projections (selected entries reproduced exactly as presented)
  - As a share of GDP (%) and In Lek billion (columns: 2006, 2007, 2008, 2009, 2010, 2013 ; and Lek billion for 2007, 2010, 2013)
  - Revenue
    - Taxes:
      - 2006: 17.2
      - 2007: 18.3
      - 2008: 18.2
      - 2009: 18.5
      - 2010: 18.7
      - 2013: 19.1
      - Lek billion: 2007: 180; 2010: 241; 2013: 329
    - Local government:
      - 2006: 1.2
      - 2007: 1.4
      - 2008: 1.5
      - 2009: 1.6
      - 2010: 1.6
      - 2013: 1.7
      - Lek billion: 2007: 13; 2010: 21; 2013: 29
    - Social insurance:
      - 2006: 4.4
      - 2007: 4.4
      - 2008: 4.8
      - 2009: 5.1
      - 2010: 5.3
      - 2013: 5.3
      - Lek billion: 2007: 43; 2010: 68; 2013: 91
    - Non-tax:
      - 2006: 1.8
      - 2007: 2.5
      - 2008: 1.5
      - 2009: 1.5
      - 2010: 1.5
      - 2013: 1.4
      - Lek billion: 2007: 24; 2010: 19; 2013: 24
    - Grants:
      - 2006: 0.9
      - 2007: 0.4
      - 2008: 0.4
      - 2009: 0.4
      - 2010: 0.5
      - 2013: 0.5
      - Lek billion: 2007: 4; 2010: 6; 2013: 9
    - Total revenue:
      - 2006: 25.5
      - 2007: 26.9
      - 2008: 26.4
      - 2009: 27.1
      - 2010: 27.6
      - 2013: 28.0
      - Lek billion: 2007: 264; 2010: 356; 2013: 482
  - Expenditure
    - Wages (presented in table as a sequence of numbers; preserved exactly as in source):
      - 6.3 6.3 6.4 6.3 6.3 6.2 62 81 107
    - Operations and maintenance:
      - 2.5 2.5 2.6 2.7 2.9 3.1 25 37 53
    - Interest:
      - 2.8 2.9 3.1 3.1 3.0 2.9 28 39 50
    - Subsidies:
      - 0.4 0.8 0.2 0.2 0.2 0.2 8 3 3
    - Social:
      - 8.2 8.7 8.5 8.5 8.5 8.5 85 110 146
    - Other:
      - 2.5 3.1 3.8 3.8 3.9 4.0 31 50 69
    - Capital:
      - 5.7 7.1 9.8 6.4 6.4 6.1 70 83 105
    - Total expenditure:
      - 28.8 31.5 34.3 31.0 31.2 31.0 309 403 534
  - Balance:
    - -3.3 -4.6 -7.9 -3.9 -3.6 -3.0 -45 -46 -52
  - Financing
    - Privatisation:
      - 0.2 1.5 0.4 0.1 0.1 0.1 15 1 2
    - Domestic borrowing:
      - 2.3 1.8 2.4 2.3 2.3 2.0 17 30 34
    - Net foreign borrowing:
      - 0.6 1.3 5.2 1.5 1.2 0.9 13 15 16

- Revenue projections (methodology and policy changes)
  - VAT:
    - VAT rate to remain at 20%.
    - VAT revenue projections based on economic growth, inflation, improvements in administration, changing GDP structure favoring VAT-paying sectors, and increased public investment in 2008.
  - Profit tax:
    - From January 2008 profit tax rate halved from 20% to 10%.
    - Expected effects: negative direct impact on state budget but positive impact on tax base expansion, declaration of real business accounts, and attractiveness for investment including foreign direct and indirect investment.
    - Revenue projections based on tax base growth due to economic growth and structural/administrative improvements.
  - Excise tax:
    - Revenues based on new rates approved in 2007 aligning with regional levels, growth in imports and domestic production, and improved customs administration.
  - Personal income tax:
    - From second semester 2007, a 10% flat tax applied.
    - Expected to motivate declaration of real income, simplify procedures, and increase revenues with growth in registered employees and wages.
  - National and other taxes:
    - Projections based on historical trends and changes introduced in 2007 (e.g., growth in tax rate on imported second hand cars; reduction of port tax and foreign-registered vehicle tax).
  - Customs:
    - Projections account for improved customs administration and negative effects from reduction of customs tariff rates due to WTO membership, free trade agreement with Turkey, and the SAA. Trend expected to be negative.
  - Local government:
    - Projections based on tax base growth and fiscal decentralisation measures, immovable property tax, mineral rent tax, conversion to service tariffs, and review of infrastructure impact tax.
  - Social and health insurance contributions:
    - Growth projections based on economic growth, labour market formalisation (increased registration from identity cards), and gradual reduction in employer/employee contribution ratio; projections subject to pension scheme reforms.
  - Non-tax:
    - Assumes constant transfer of Bank of Albania profits over next three years; revenues from budget institutions to grow with inflation and public services; dividends reviewed with privatisation.
  - Aid and grants:
    - Based on 2008-2010 MTBP and expected EU grants.
  - Privatisation:
    - Revenues projected at modest levels; strategic sector privatisations not taken into account in projections.
  - Domestic borrowing:
    - Expected around 2% of GDP, consistent with a general budget deficit goal of about 3% of GDP in 2013.
  - Foreign borrowing:
    - Projected based on existing and expected agreements with international financial institutions and foreign governments.

- Expenditure projections by economic classification
  - Total budget expenditure projected in range 30-32% of GDP over next three years except 2008 affected by increased foreign financing of Durres-Kukes-Morine road.
  - Personnel:
    - Expenditure for public administration staff to remain constant relative to GDP with full indexing to inflation and differentiated real growth for priority sectors.
  - Operations and maintenance:
    - Projected to grow in real terms, oriented toward maintenance due to investment growth; operational expenditure for administration to fall in relation to GDP to free space for maintenance in priority sectors.
  - Interest:
    - Projections based on finance strategy; public debt to fall as share of GDP.
    - Additional rule: caps growth in public debt by 4% per year for long-term projections.
    - Over half of deficit financed by domestic borrowing, often at poor terms.
  - Subsidies:
    - Projections based on plans for reduction.
  - Transfers:
    - Ndihma ekonomike, unemployment and disability benefits projected to grow by 12% per year with differing growth policies for each payment.
  - Capital:
    - Projected above 6% of GDP in next three years depending on foreign financing; investment stabilises after 2007-2008; continued support to education, health, and infrastructure.

- Expenditure projections by functional classification and costing
  - Average expenditure 2011-2013 for all sectors: Lek 327 billion nominal.
  - Ministry of Finance projection for average public expenditure 2011-2013 (excluding interest, local government expenditure and reserve fund): Lek 298 billion nominal.
  - Cost of NSDI policies is Lek 30 billion (10%) higher than likely available resources; additional expenditure primarily capital items.
  - Potential measures to reduce/eliminate shortfall:
    - Economic growth above anticipated levels.
    - More effective tax administration.
    - Strategic privatisations (not included in 2007-2013 projections).
    - Public private partnership methods (especially transport).
    - Projects financed by international organisations and foreign governments not anticipated in projections.
  - The government will refine costing during the Medium-Term Budget Programme process.

### Costing assumptions of main NSDI policies (Table 4.5)
- Defence:
  - Commitment to allocate 2% of GDP to defence for NATO obligations is maintained; existing ratio between recurrent and capital maintained.
- Justice:
  - Figures include independent institutions: General Prosecutor’s Office, Office for the Administration of the Judicial Budget, Constitutional Court, School of Magistrates, and High Council of Justice.
- Interior:
  - After 2010: additional Lek 0.7 billion per year recurrent and Lek 1 billion per year capital for police; civil registry 2008 capital level maintained for next three years.
- Transport:
  - 2011-2013 averages: recurrent expenditure for national road network Lek 5 billion; capital expenditure for national road network Lek 28 billion; capital expenditure for ports Lek 4 billion. Cost of rural roads not included.
- Water and sanitation:
  - 2011-2013 average capital expenditure Lek 11 billion. Subsidies for water utilities to fall by 10% each year in real terms after 2010.
- Environment:
  - 2011-2013 capital expenditure to increase by Lek 1.5 billion for rehabilitation of ‘hot spots’ and hazardous waste disposal sites.
- Economy:
  - Capital expenditure based on sector strategy (15-year extension) including SME promotion, export promotion, industrial parks, FDI promotion.
- Social protection:
  - 2011-2013 average expenditure for ndihma ekonomike and payments for people with disabilities: Lek 17.8 billion.
- Social insurance:
  - Subsidy level to remain constant at 1.5% of GDP until 2013.
- Health:
  - Salaries increase at same rate as rest of public sector after 2010; annual growth rate of other recurrent and capital expenditure 25% in real terms after 2011.
- Health insurance:
  - Subsidy level to remain constant in real terms until 2013.
- Education:
  - Salaries increase at same rate as rest of public sector after 2010; operation and maintenance expenditure to reach 14% of total recurrent expenditure by (text ends).

*Source: _cr08269 - 4. Macroeconomic and fiscal perspectives*

### 2013. Capital expenditure will be 15% of total expenditure on pre-university education by

### 2013. Capital expenditure will be 15% of total expenditure on pre-university education by

### Indicative sectoral allocation targets and fiscal envelope (2007-2013)
- Total indicative NSDI implementation costs:
  - 2007-2010: Current Lek 145.6 bn; Capital Lek 84.4 bn; Total Lek 230.0 bn; Total 100.0%
  - 2011-2013: Current Lek 207.1 bn; Capital Lek 120.1 bn; Total Lek 327.1 bn; Total 100.0%
- Education:
  - 2007-2010: Current Lek 32.2 bn; Capital Lek 7.9 bn; Total Lek 40.2 bn; Total 17.5%
  - 2011-2013: Current Lek 48.0 bn; Capital Lek 10.8 bn; Total Lek 58.8 bn; Total 18.0%
- Health:
  - 2007-2010: Current Lek 15.3 bn; Capital Lek 5.0 bn; Total Lek 20.3 bn; Total 8.8%
  - 2011-2013: Current Lek 26.0 bn; Capital Lek 8.8 bn; Total Lek 34.8 bn; Total 10.6%
- Defence:
  - 2007-2010: Current Lek 16.3 bn; Capital Lek 5.8 bn; Total Lek 22.1 bn; Total 9.6%
  - 2011-2013: Current Lek 23.4 bn; Capital Lek 8.1 bn; Total Lek 31.5 bn; Total 9.6%
- Transport:
  - 2007-2010: Current Lek 2.9 bn; Capital Lek 43.2 bn; Total Lek 46.1 bn; Total 20.1%
  - 2011-2013: Current Lek 5.8 bn; Capital Lek 37.6 bn; Total Lek 43.4 bn; Total 13.3%
- Water and sanitation:
  - 2007-2010: Current Lek 0.9 bn; Capital Lek 7.5 bn; Total Lek 8.5 bn; Total 3.7%
  - 2011-2013: Current Lek 0.9 bn; Capital Lek 15.1 bn; Total Lek 16.0 bn; Total 4.9%
- Agriculture and rural development:
  - 2007-2010: Current Lek 2.7 bn; Capital Lek 2.5 bn; Total Lek 5.2 bn; Total 2.2%
  - 2011-2013: Current Lek 3.1 bn; Capital Lek 5.6 bn; Total Lek 8.7 bn; Total 2.7%
- Spatial planning, regional development, and tourism:
  - 2007-2010: Current Lek 2.2 bn; Capital Lek 4.2 bn; Total Lek 6.4 bn; Total 2.8%
  - 2011-2013: Current Lek 2.5 bn; Capital Lek 17.9 bn; Total Lek 20.4 bn; Total 6.2%
- Labour and social protection:
  - 2007-2010: Current Lek 18.1 bn; Capital Lek 0.4 bn; Total Lek 18.4 bn; Total 8.0%
  - 2011-2013: Current Lek 28.1 bn; Capital Lek 0.8 bn; Total Lek 28.9 bn; Total 8.8%
- Social insurance:
  - 2007-2010: Current Lek 15.2 bn; (capital not shown) Total Lek 15.2 bn; Total 6.6%
  - 2011-2013: Current Lek 23.6 bn; Capital Lek 0.0 bn; Total Lek 23.6 bn; Total 7.2%
- Health insurance:
  - 2007-2010: Current Lek 6.0 bn; (capital not shown) Total Lek 6.0 bn; Total 2.6%
  - 2011-2013: Current Lek 6.6 bn; Capital Lek 0.0 bn; Total Lek 6.6 bn; Total 2.0%
- Finance:
  - 2007-2010: Current Lek 3.8 bn; Capital Lek 0.4 bn; Total Lek 4.2 bn; Total 1.8%
  - 2011-2013: Current Lek 4.2 bn; Capital Lek 1.2 bn; Total Lek 5.5 bn; Total 1.7%
- Economy:
  - 2007-2010: Current Lek 0.8 bn; Capital Lek 1.6 bn; Total Lek 2.4 bn; Total 1.1%
  - 2011-2013: Current Lek 0.7 bn; Capital Lek 3.1 bn; Total Lek 3.8 bn; Total 1.2%
- Other:
  - 2007-2010: Current Lek 9.2 bn; Capital Lek 1.8 bn; Total Lek 11.0 bn; Total 4.8%
  - 2011-2013: Current Lek 11.7 bn; Capital Lek 3.0 bn; Total Lek 14.6 bn; Total 4.5%

### Specific capital expenditure targets and program assumptions
- Education sector targets stated in the header lines:
  - "2013. Capital expenditure will be 15% of total expenditure on pre-university education by"
  - "2013. Capital expenditure will be 30% of total expenditure on higher education by 2013."
- Rural development and IPA support:
  - Support under the Instrument for Pre-Accession Assistance (IPA) will begin in 2010.
  - Expected IPA support level: "about €17 million per year by 2013."
- Rural roads capital expenditure assumption:
  - "It is assumed that the average level of capital expenditure for rural roads in the period 2011-2013 will be Lek 14 billion."

### Indicative shifts in functional allocation (recurrent and capital expenditure)
- Figures 4.1 and 4.2 present changes in average shares between periods 2007-2010 and 2011-2013:
  - Figure 4.1: "Indicative shifts in the functional allocation of recurrent expenditure"
  - Figure 4.2: "Indicative shifts in the functional allocation of capital expenditure"
  - (Charts list sector labels: Defence; Justice; Interior; Transport; Water; Environment; Finance; Economy; Social protection; Health; Education; Agriculture; Regional development. Exact percentage values appear in the figures.)

### Consultation process and participation
- Advisory Groups:
  - Each sector and crosscutting strategy had an Advisory Group of 10-15 members representing local government; trade unions; professional associations and chambers; academics and other experts; non-government organisations; citizen associations; businesses and employers associations.
  - Group membership and terms of reference were determined by minister decision.
  - Existing bodies used where pre-existing (examples cited: Legal Reform Commission; Higher Education and Science Council; Decentralisation Group of Experts).
- Parliamentary committees:
  - Advanced drafts were submitted to heads of respective parliamentary committees for study and debate with ministries.
- Donor community:
  - Advanced drafts were shared with donor representatives active in the policy areas.
- Review of drafts:
  - Successive drafts reviewed by DSDC teams including Ministry of Finance, Ministry of European Integration and INSTAT; inputs combined by DSDC into a single official response signed by the General Secretary of the Council of Ministers.
  - Final drafts of some strategies were submitted to the Strategic Planning Committee; ministers invited to make presentations for strategies with substantial resource and policy implications; strategies then sent to the Council of Ministers for approval.
- National strategy consultation instruments:
  - The consultation aimed to: receive feedback on strategic priorities and resource allocation; build consensus; assist dissemination.
  - Roundtables organised:
    - Three thematic roundtables (one for each strategic priority: integration; democratisation and the rule of law; economic and social development)
    - Two focused roundtables (civil society; donor community)
    - Four regional roundtables: Lezha, Peshkopi, Fier and Pogradec
  - Participants provided structured questionnaires; public consultation draft distributed to all parliamentary commissions.
  - Ten debates broadcast on public television in October-December 2007, many recorded in a mobile studio outside Tirana.

### Implementation and budgetary integration
- Principal implementation mechanism: the budget process within the Integrated Planning System.
- Key calendar points:
  - Preparation of initial budget ceilings (January-February):
    - Strategic Planning Committee sets initial ceilings in February.
    - Three-stage decision: macro parameters by Ministry of Finance; policy priorities note by Department of Strategy and Donor Coordination; initial ceilings prepared by Ministry of Finance and approved by Strategic Planning Committee.
  - Review of programme policy statements (March-April):
    - Programmes outline goals and objectives linked to sector strategies; review ensures consistency with sector strategies at start of the Medium-Term Budget Programme.
  - Budget hearings (June and September):
    - Line ministries submit budget proposals in May (three-year period) and in September (to refine next year’s breakdown).
    - Ministry of Finance, Department of Strategy and Donor Coordination and Ministry of European Integration review submissions for consistency with NSDI and the National Plan for the Implementation of the Stabilisation and Association Agreement.
  - Review of sector and crosscutting strategies (November-December):
    - After parliamentary approval of the budget, ministries review strategies for on-track status and updates; emphasis on improving links to allow funding of crosscutting strategies.
- Additional support:
  - Coordinated and gradual introduction across government of impact assessments prior to major policy decisions.

*National Strategy for Development and Integration (excerpts as provided).*

### 5.3 MONITORING

### 5.3 MONITORING

### Sector and crosscutting strategies
- Monitoring is based on a short list of indicators defined for each strategy, focused on the achievement of strategic goals and developed at the level of impacts and outcomes.
- Ministries are not required to report regularly on these indicators through a separate report.
- Sector strategies are reference documents for the preparation of the MTBP; the MTBP links budget allocations over the three-year period to budget programme policy objectives.
- Monitoring implementation of each sector and crosscutting strategy at the level of inputs and outputs is part of the overall budget reporting system.
- Under the IPS, each ministry is required to produce every year a Ministry Integrated Plan (with a Ministry Monitoring Plan included as an annex), envisaged to be:
  - a planning tool, containing the major commitments of each ministry for the current year outlined in key documents (notably the MTBP) to assist the Prime Minister in assessing performance;
  - a monitoring tool, where ministries will report against them quarterly on progress achieved towards their key commitments;
  - a communication tool, repackaging the main commitments of each ministry in a compact (not expected to exceed 15 pages) and integrated manner to facilitate scrutiny from the public.
- Ministry Integrated Plans were prepared for the first time in 2007.
- A short Ministry Annual Report on the achievements relative to the commitments made in the Ministry Integrated Plan and the Ministry Monitoring Plan will be published in 2008. Ministries may also include updates on key monitoring indicators of their strategies in the Ministry Annual Report.
- The monitoring system will be supported by a newly-designed IPS Information System (IPSIS) that links information reported by ministries to:
  - the Ministry of Finance (regarding MTBP implementation); and
  - the Ministry of European Integration (regarding SAA implementation).
- IPSIS will:
  - provide the Government with the monitoring information it needs to track major government commitments; and
  - provide ministry management with a means to track comprehensive information on the delivery of Ministry Integrated Plans.

### National strategy (NSDI) monitoring indicators
- Progress in the implementation of the NSDI will be assessed through a set of monitoring indicators measuring exclusively outcomes and impacts; these indicators will be available annually except where mentioned otherwise.
- Macroeconomic indicators reported in Chapter 1 will also be monitored.
- Allocation of public expenditure will be followed up.
- Table 5.1 List of NSDI monitoring indicators (indicator — breakdown — source):
  1. Defence — Fulfilment of the Partnership Objectives — Ministry of Defence
  2. Justice — ‘Rule of law’ — Relative to SEE countries — World Governance Indicators, World Bank
  3. Justice — Number of prisoners relative to available capacity — Ministry of Justice
  4. Property rights — Number of properties that have received a certificate of legalisation — ALUIZNI
  5. Property rights — Number of properties that have been registered at the Immovable Property Registration office (IPRO) — IPRO
  6. Anti-corruption — Corruption Perceptions Index — Relative to SEE countries — Transparency International
  7. Organised crime — Number of trafficking victims trafficked to or originating from Albania — Relative to SEE countries — State Police; IOM Annual Report on Victims of Trafficking in South-Eastern Europe
  8. Public order — Criminal offences per 100,000 population (excluding traffic offences) — Relative to selective European countries — State Police; European Sourcebook of Crime and Criminal Justice Statistics
  9. Public administration — Number of appeals regarding the implementation of the Civil Service Law — By type — Civil Service Commission
  10. Decentralisation — Fulfilment of principles of European Charter of Local Self-Government — Ministry of Interior
  11. Transport — Number of kilometres of national roads constructed — Ministry of Public Works, Transport and Telecommunications
  12. Transport — Traffic deaths by 10,000 vehicles — INSTAT (deaths); State Police (vehicles)
  13. Transport — Average time spent by vessels in ports — By port — Port authorities
  14. Transport — Number of passengers — Tirana International Airport
  15. Energy — Domestic production of electric energy (GWh) — By source — KESH
  16. Energy — Energy consumption relative to GDP — Ministry of Economy, Trade and Energy
  17. Water supply and sanitation — Access: Proportion of households reporting that they have running water and sanitation inside the dwelling — By income level — Living Standards Measurement Survey (every three years)
  18. Water supply and sanitation — Quality: Proportion of samples obtained within a year for all 54 water utilities that tested negative for coliform and chlorine residual — Monitoring and Benchmarking Unit, General Department of Water and Sanitation
  19. Environment — Average yearly concentration in four cities of three air pollutants: PM10 (fine particles); SO2 (sulphur dioxide); and NO2 (nitrogen dioxide) — Tirana, Shkoder, Durres, Elbasan — Institute of Public Health; Ministry of Environment, Forests and Water Administration
  20. Finance — Domestic debt ratio (% GDP) — Relative to SEE countries — Ministry of Finance; IMF reports for other countries
  21. Economy — Foreign direct investment per capita (€) — Relative to SEE countries — Bank of Albania; EBRD
  22. Economy — Export diversification (%): Share of four sectors (textiles, footwear, metals and minerals) in total exports — INSTAT
  23. Economy — Rank in ‘Doing Business’ survey — By indicator — Relative to SEE countries — World Bank
  24. Consumer protection — Proportion of respondents who agree that they are adequately protected by existing measures to protect consumers — [To be included in a future survey of public opinion] — Currently unavailable
  25. Information and communication technology — E-government readiness index — Relative to SEE countries — United Nations Online Network in Public Administration and Finance
  26. Employment — Unemployment rate calculated for the population aged 15-64 years, according to the standard and relaxed definitions — By gender — Labour Force Survey
  27. Gender equality — Female labour force participation rate according to the standard and relaxed definitions — Labour Force Survey
  28. Social protection — Coverage of the ndihma ekonomike programme (%): Proportion of (extreme) poor people who receive the benefit — Living Standards Measurement Survey (every three years)
  29. Social inclusion — Absolute poverty headcount rate — Living Standards Measurement Survey (every three years)
  30. Social inclusion — Share of poorest 20% of population in total consumption — Living Standards Measurement Survey (every three years)
  31. Social insurance — Pension replacement rate — Institute of Social Insurance
  32. Social insurance — System dependency rate: Ratio between beneficiaries and contributors — Institute of Social Insurance
  33. Health — Causes of death by group diseases per 100,000 inhabitants — By gender — INSTAT; Ministry of Health
  34. Health — Maternal mortality rate — INSTAT; Ministry of Health (two sources)
  35. Health — Infant mortality rate — INSTAT; Ministry of Health (two sources)
  36. Basic education — Gross secondary education enrolment rate: Number of students attending Classes 9-12 relative to the population in respective school-age group (14-17 years) — By gender — Ministry of Education and Science; INSTAT
  37. Higher education — Number of students in higher education — By full-time / part-time status — Ministry of Education and Science
  38. Planning — Proportion of municipalities with an urban regulatory plan according to planning law — Ministry of Public Works, Transport and Telecommunications; Association of Municipalities
  39. Regional development — Degree of socio-economic development [To be developed as part of implementing the regional development strategy] — By region — Ministry of Economy, Energy and Trade
  40. Rural development — Average size of agricultural holdings (ha) — Relative to SEE countries — Ministry of Agriculture, Food and Consumer Protection; INSTAT
  41. Rural development — Number of kilometres of rural roads constructed
  42. Agriculture — Productivity in agriculture and agro-processing (Lek/employee) — Ministry of Agriculture, Food and Consumer Protection
  43. Agriculture — Proportion of agricultural production sold (%) — Ministry of Agriculture, Food and Consumer Protection
  44. Agriculture — Volume of agro-industry exports (€) — By main products — INSTAT
  45. Tourism — Number of tourists — By areas of origin defined in the strategy — World Tourism Organisation

### NSDI annual progress report
- Under the IPS, the Department of Strategy and Donor Coordination at the Council of Ministers will be responsible for an annual progress report which will:
  - assess the progress made in the implementation of the strategy, mainly in terms of trends in the above monitoring indicators;
  - utilise other available statistical information in order to analyse long-run trends and benchmark Albania against other countries in the region;
  - selectively identify issues that are of critical importance in the process of achieving the country’s long-term goals and be a basis for wider discussion.
- The annual progress report:
  - will not present a full-fledged strategy, as this is the role of the NSDI document;
  - will not outline a forward-looking framework, as this is spelled out in the MTBP document, under the responsibility of the Ministry of Finance;
  - will not substitute the Ministry Annual Reports to be produced by individual line ministries that will focus on outputs and are a key feature of the IPS.
- The main audience of the annual progress report will be primarily the general public. Its structure will be simple and will dedicate one page to each of the indicators and related policy issues identified above.

### Five-year programme of statistics
- Tracking the monitoring indicators will be supported by implementation of the national five-year programme for official statistics.
- Main statistical duties identified:
  - Maximise the use of administrative sources. INSTAT, after creation of a registry with unique characteristics for every central institution and ministry, will organise a model of collecting data with well defined hierarchic responsibilities.
  - Improve the method of calculating aggregate macroeconomic indicators and national accounts following the ESA 95 methodology; improved data will assist calculation of provisional GDP according to production and expenditure in current and constant prices.
  - Improve the measurement of the hidden economy. Albania will adopt recommendations of OECD, Eurostat, and the Economic Commission for Europe, improving methods particularly using data of the State Inspectorate of Labour.
  - GDP flash estimation: quarterly GDP calculations will be possible through evaluations based on econometric methods using annual GDP data, combined with data from the sales index and improved through various deflators.
  - Structural business data and the business registry.
  - External trade data and Intrastat.
  - Social statistics based on individual and household data: INSTAT implemented in 2006 the first household budget survey and will carry out in 2007 the first labour force survey.
  - Use of Census and LSMS data to extend analytical capacity and enable transfer of know-how through external assistance directed to INSTAT.
  - Agricultural statistics approximating European standards, especially through the agricultural census; fishery and forestry sectors will be incorporated in official statistics in full form.
  - Environmental statistics.
  - Regional statistics improved with establishment of classification at the NUTS 2 level.

*Source: _cr08269 - 5.3 MONITORING*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2008/_cr08269.pdf_