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Interim Poverty Reduction Strategy Paper
Prepared by the Government of Albania
May 3, 2000

Interim Poverty Reduction Strategy Papers (I-PRSPs), prepared by member countries, summarize the current knowledge and assessment of a country's poverty situation, describe the existing poverty reduction strategy, identifies gaps in poverty data, diagnotics, and monitoring capacity, and lay out the process for addressing these gaps and producing a fully developed Poverty Reduction Strategy Paper in a participatory fashion. This country document is being made available on the IMF website by agreement with the member country as a service to users of the IMF website.

Use the free Adobe Acrobat Reader to view Appendices

Table of Contents

  1. Introduction

  2. Poverty Profile

  3. Key Elements for a Poverty Reduction Strategy
    1. Sustainable and Inclusive Economic Growth
    2. Human Development
      1. Health
      2. Education
      3. Child Poverty
      4. Labor Market and Social Protection
    3. Rural and Urban Development and Access To Basic Services

  4. Institutional Mechanisms for the PRSP
    1. Institutional Arrangements
    2. Measures to Strengthen Public Expenditure Management

  5. Participatory Process and Timetable for the PRSP

  6. Monitoring Indicators

      (Use the free Adobe Acrobat Reader to view Appendices)

    Appendix A: Three-year Macroeconomic Framework
    Appendix B: Matrix of Economic and Financial Policies
    Appendix C: Monitoring Indicators

      Table 1: Life expectancy and fertility indicators, 1990–1998
      Table 2: Health indicators, 1990–1998
      Table 3: Education indicators, 1990–1998
    Appendix D: Participation Plan for the PRSP
    Appendix E: Work Program for the Preparation of the PRSP


1.  Introduction

1.  Over the last three years, Albania has made substantial progress in achieving macroeconomic and financial stability and has implemented many structural and institutional reforms required to establish a functioning market economy. In these endeavors the government has been supported by the arrangements under the Enhanced Structural Adjustment Facility (ESAF) and the IDA Structural Adjustment Credit (SAC). The results of these efforts have helped the government to put the economy on a rapid path of growth and to improve the well-being of the population.

2.  Despite this progress, Albania continues to have one of the lowest levels of per capita income in Europe. The government is aware of this reality and is of the view that rapid growth is the main instrument for reducing the development gap of the country relative to the rest of the Europe, improve the standard of living of the population, and reduce the poverty of those most in need. To address these objectives in a comprehensive fashion, the government is planning to prepare a Poverty Reduction Strategy Paper (PRSP) by mid-2001 and launch a new national poverty reduction plan. This policy is consistent with the initiative under the Stability Pact and Albania's aspirations to become more integrated in Europe. To strengthen its effectiveness, the strategy will be formulated through a broad participatory and consultative process that will include, among others, representatives of civil society, local communities, the poor, and the donor community.

3.  To ensure that the economy stays on a rapid growth path and to promote private investment, the Albanian government has agreed with the Fund and the Bank staff on a three-year macroeconomic framework and a set of policy measures, which are described in the attachments to this document. The Government also intends to request a new three-year arrangement under the Poverty Reduction and Growth Facility (PRGF) in 2001 following the termination of the current three-year arrangement, and it will continue to cooperate with the World Bank to deepen its reform program in the context of structural adjustment and other operations.

II.  Poverty Profile

4.  Poverty in Albania is a multidimensional phenomenon. As indicated by various studies, poverty defined in terms of low income and/or consumption in Albania is relatively high, mainly due to limited job opportunities and low incomes, particularly in agriculture. But poverty in Albania not only manifests itself in low income for part of the population, but also importantly in limited access to and poor quality of basic services like education, health, water, and sewerage. Large differences exist between rural and urban areas. Furthermore, repeated shocks and crisis, as well as large external and internal migration have contributed to the weakening of social cohesion and traditional family and community based safety nets, leading to increased vulnerability and social exclusion of different groups of the population.

5.  Albania ranks low in comparison with other Southeastern and Central European transition countries in terms of commonly used living standard and human development indicators. Per capita GDP in Albania is lower than the average for Southeastern European transition countries, and significantly below the average for Central European transition countries. UNDP's human development index places Albania 100th (based on 1997 data) out of 174 countries ranked, significantly below the rankings for other transition countries in Southeastern (55–73) and Central Europe (33–47). UNICEF's Report on the State of the World's Children for the year 2000 ranks Albania 90th out of 175 countries with respect to under-five mortality rate (based on 1998 data).

6.  A study based on the 1996 Living Standard Measurement Survey (LSMS) data, conducted in the areas outside Tirana, suggests that poverty in Albania is a rural phenomenon with almost 90 percent of the poor residing in rural areas and 60 percent of the heads of poor households being self-employed in agriculture. The incidence of rural poverty was found to be five times higher than urban poverty and is highest in the North of Albania, where a large portion of families own less than 0.5 hectare of land each. Many households in these regions require subsidized wheat and cash transfers to survive the winter. Limited access to public services, often aggravated by poor rural infrastructure, especially roads, is a contributing factor to rural poverty. According to 1998 data, 27 percent of farms do not sell products to market and only 50 percent of farms use machinery.

7.  Children are especially at risk of poverty according to the results of the 1996 LSMS data. The poverty rate for children under 6 was found to be almost double that for adults 64 and over. Moreover, the number of children is a strong poverty correlate—approximately one third of the poor have 5 or more children and the poverty incidence among families with five or more children is 60 percent.

8.  Other results of the LSMS study indicate that poor families tend to be young, that poverty is strongly linked to education, while gender does not appear to be a poverty correlate, and that remittances constitute a major informal safety net. The poverty rate drops as the age of a household head rises; poverty is almost 10 percent higher for households with heads 16 to 35 years of age than for households with heads aged 64 and above. Households headed by people who are illiterate or have basic education are 20–30 times more likely to be poor than households headed by university graduates. Especially in rural areas, the poverty rate is minimal where household heads have migrated and returned home; the poverty rate is slightly higher where household heads abroad are currently sending remittances.

9.  The social stratification since the 1996 LSMS may have changed as a result of the economic downfall caused by the pyramid scheme crisis, and large-scale internal and external migration. There are indications that significant pockets of urban poverty have appeared. Slum-like communities have formed around Tirana and other major cities, lacking urban infrastructure and services. Children from these communities often have to walk for about an hour to reach school. It is estimated that in Tirana there are about 800 street children. Parents working abroad often leave their children with grandparents or relatives who in some cases are not able to take adequate care of them. The number of elderly living alone and without help has risen. Problems such as drug abuse, prostitution, trafficking in women, child abuse, and other social problems have also increased.

10.  Access to health services in Albania is limited and services tend to be of poor quality. Budgetary spending on health in Albania (2.1 percent of GDP in 1999) is one of the lowest in the region and since 1990 has fallen significantly in real terms. Currently, 30 percent of existing health centers are not functioning due to a variety of reasons. Albania has fewer physicians and nurses than other countries in the region. Large rehabilitation needs still exist for the physical infrastructure. Informal payments for health services which are supposed to be free are a common phenomenon. Albania compares unfavorably with other countries in the region with respect to infant and maternal mortality rates. In contrast, both male and female life expectancy in Albania are high, notwithstanding the fact that they seem to have fallen since 1991 (Tables 1 and 2, Appendix C). Available evidence indicates that in north-eastern areas of the country malnutrition is present in around one quarter of children.

11.  Enrollment rates in education, particularly at the secondary level and especially for children from rural areas have fallen since 1990 (Table 3, Appendix C). As a result, the expected duration of schooling of children has dropped to below 10 years. This drop occurred against the background of a decline in public expenditures on education from 3.8 percent of GDP in 1995 to 2.8 percent of GDP in 1999, much below the level in neighboring countries. The declining enrollment rates reflect a deterioration in the quality of education, the diminishing relevance of traditional forms of vocational and technical training, as well as the increased opportunity costs of attending school. During the last ten years about 3 percent of children have dropped out of school each year,1 which means that illiteracy which had been virtually eradicated in Albania, could be rising again. There are also serious concerns about the quality of education. In some urban areas the number of pupils per classroom now exceeds 40, while especially in rural areas the percentage of unqualified teachers is quite high. In addition, many schools still are in poor condition (leaking roofs, missing windows, no heat).

12.  Access to basic services is far from universal and services are often not reliable. In urban areas about 80 percent of the population have access to piped water, access levels in rural areas are considerable lower. Furthermore, an urban household on average has running water for only 2–3 hours a day. About 40 percent of the urban population has a sewerage connection. No sewerage treatment facility exists in the whole country, and sewerage is discarded directly into rivers, lakes and the sea. Because of the poor condition of existing pipes, sewerage often contaminates drinking water. Because of the obvious health risks, a high chlorine concentration is used to kill bacteria in piped water. Access levels for electricity are high, but there are frequent disruptions in the service, especially during the winter months.

III.  Key Elements for a Poverty Reduction Strategy

A.  Sustainable and Inclusive Economic Growth

13.  The promotion of sustainable growth and inclusive development is the overarching priority in Albania's development and poverty reduction strategy. A poverty reduction strategy for Albania should therefore focus on a fair distribution of the benefits of growth for the entire population and should take into account existing social capital at the community level. In the past sustainable growth has been a main pillar of Albania's economic program and structural reforms have been aimed at achieving better governance and improving social cohesion. The PRSP approach provides Albania with the opportunity to deepen these efforts by focusing more clearly on poverty reduction as a policy goal and by formulating the strategy in a participatory fashion thereby increasing ownership.

14.  Poverty reduction requires stronger public and private sector institutions that can operate in a transparent and accountable fashion and that are accessible to the entire population, including the poor. Economic activities in Albania have been severely constrained by the weak institutional capacity for enforcement and the lack of transparency in administration which have fostered the development of corrupt practices. Since the 1997 crisis, progress has been made in building a framework for improved and transparent public organizations in cooperation with the World Bank. However, the government realizes that more needs to be done to improve the targeting, transparency, and effectiveness of expenditures and to increase Albania's capacity to absorb foreign aid. As a step in this direction, a medium-term expenditure framework (MTEF) is being introduced to improve the budget planning process and to facilitate more effective expenditure prioritization (see section IV.B).

15.  In recognition of the important role that the public sector must play in ensuring sustainable growth through improved human capital, the government is taking a number of actions aimed at enhancing the inclusiveness and citizen-responsiveness of Albania's public institutions. These include establishing a fully functional People's Advocate (ombudsman), establishing a Civil Service Commission, and appointing a Central Elections Commission. Also, complementary measures are being taken to improve the delivery of health, education and social services.

16.  The government has also initiated major steps to reform the judicial system by: upgrading the quality of legal education; improving the functioning of the judicial system; creating a system for out-of-court resolution of commercial cases; and, making essential legal information more accessible. The government intends to complement these steps, particularly by anti-corruption measures, in cooperation with the World Bank and other donors within the framework of the Stability Pact. The anti-corruption program is a major component of public sector and judicial reform which is essential for building a more transparent and accountable state in Albania. It is also vital for poverty alleviation, because studies show that corruption affects the poor more.

17.  Reducing poverty also requires community-based activities that develop institutions and social cohesion from the bottom up, and build on the traditions and social conventions that govern the behavior and actions of individuals. The absence of these institutions impedes economic development and increases poverty. In addition to supporting public sector reform, the government's strategy focuses on building institutions rooted in local culture, enjoying the full trust and ownership of the community and community-driven programs. These programs would stimulate growth and alleviate poverty in rural areas.

18.  In line with this view that strong growth remains the main instrument for sustained improvement in the living conditions of the population , and given the strong links between economic stability and growth, the government has, in consultation with the IMF, elaborated a macroeconomic framework for the next three years which projects that Albania's economy will expand at a growth rate of 8 percent over the next three years (Appendix A). This framework is underpinned by a comprehensive set of structural reforms—including financial sector reforms, privatization of the remaining state-owned enterprises, and measures to create an institutional and legislative environment conducive to foreign and domestic investment. These reforms as well as those measures geared more specifically towards poverty reduction are summarized in the attached policy matrix (Appendix B).

B.  Human Development

19.  The Government recognizes that economic growth that does not translate into improvements in the standard of living for everyone is socially, politically, economically and environmentally unsustainable. To ensure that sustainable economic growth is inclusive in Albania, the government will therefore promote human development through the design and implementation of comprehensive and integrated strategies in health, education, child poverty, and social protection sectors.


20.  Against the background of unsatisfactory health outcomes—in particular for children—and poor access of the population to health services, the government's objectives are to improve the health status of the Albanian population, to ensure full access to primary health care regardless of income level, and to ensure comparability in access to health services between rural and urban areas. Priority will therefore be given to reforms in the health sector, particularly in public health measures and preventive and primary care services. The Ministry of Health's program calls for undertaking measures to improve institutional capacity in the provision of public health services, particularly in ensuring full coverage of vaccination programs and in improving the monitoring and treatment of infectious diseases. The government will also develop a program that will provide better family planning and reproductive health services in order to improve the health status of women and children.

21.   The government will give high priority to increasing the level and effectiveness of public health expenditures which have fallen significantly in recent years. It will also finalize, in cooperation with WHO and the World Bank, the National Health Policy and Strategy document which deals with all aspects of the Albanian health sector, e.g. financing, management, institutional arrangements, etc. over the short- and medium-term.


22.  The government aims to increase enrollment in basic and secondary education. In basic education, the government will undertake an analysis of the recent decline in gross enrollment rates. It will also review the structure of the secondary education system in order to make it more appropriate to current demands in the labor market and identify measures for improving the quality of secondary schooling. For the entire education system, the government will adopt more appropriate curriculum standards, improve arrangements for the supply of textbooks, and address issues of the quality of teaching staff. It will also explore how to improve the integration of internal migrants into the education system. Furthermore, the government will use its school mapping database to rationalize the allocation of resources for school rehabilitation and construction.

Child Poverty

23.  The government will pay particular attention to alleviating poverty and vulnerability among children. The 1996 LSMS indicates that incidence of poverty among children, particularly in rural areas, is high. Moreover, other evidence indicates that in north-eastern areas, malnutrition is observed in around one quarter of children. In urban areas, the growing number of street children needs to be addressed. The government intends to address child poverty and vulnerability through its programs in education, health and social protection. In the area of social protection, the government will take steps to ensure adequate income support to poor families with children. Introduction of other programs, such as school feeding, food supplements for infants and pregnant women, and assistance in kind to children from poor families will also be considered.

24.  The government will pay particular attention to protection of children without parental care. As an alternative to their institutionalization, foster care arrangements will be developed, including necessary legislation, financial support to foster care providers and appropriate monitoring and supervision institutions and mechanisms. The government will prepare a plan for the introduction of community based social care services (daily care centers, family counseling centers, respite care centers, etc.) in order to provide assistance and support to handicapped children and their families, dysfunctional families, children and youth with disturbed behavior and other vulnerable groups.

Labor Market and Social Protection

25.  Currently, 18 percent (or about 239,000 people) of the workforce is officially registered as unemployed. In order to create a flexible labor market that promotes employment opportunities, the government will review and, where necessary, revise its labor market legislation and regulations, labor market policies and social insurance programs. The Ministry of Labor and Social Affairs (MoLSA) will examine the possibility of implementing public works programs focusing on poor communities, particularly in rural areas, and strengthening job counseling and job search assistance for the unemployed. Well targeted, demand driven training programs will continue to be implemented, with special focus on training and retraining of workers who have been made redundant by privatization, structural changes, etc. In addition, efforts will be undertaken to improve labor statistics.

26.  The government will develop a plan for restructuring its unemployment insurance program to improve its targeting consistent with Albania's level of social and economic development. The government will also review its social insurance programs, with particular emphasis on pensions. It will complete the actuarial evaluation of the pension system by end-2000 and prepare reform proposals in order to achieve its fiscal sustainability in the medium term.

27.  The government will review, by November 2000, its cash-benefit social assistance program, with particular emphasis on the assessment of its poverty impact in order to improve its targeting effectiveness. The MoLSA has already initiated a pilot study for Tirana to review its social assistance program. According to the 1996 LSMS data, the program was modestly effective in targeting and contributing to the alleviation of poverty in the poorest strata of the society and reducing consumption inequalities. The MoLSA will complete and make operational its database on social assistance beneficiaries. In addition to cash social assistance programs, the government will prepare a plan for the development of a system of community-based social care services in order to improve the well-being of vulnerable groups, such as children deprived of parental care, the disabled, single mothers, frail elderly people living alone and dysfunctional families.

C.  Rural and Urban Development and Access To Basic Services

28.  The Poverty Reduction Strategy will aim to identify incentives for inclusive and sustainable economic development in order to ensure that all sections of Albanian society benefit from growth, and broaden income and employment opportunities for both the rural and urban poor. Specifically, the government aims to increase access to basic services (e.g. water, sewerage) for the entire population and to improve the quality of these services.

29.  While a fully-fledged policy to address rural poverty will be developed in the PRSP, the government has already begun to address some of these issues. Moreover, the government will remain committed to improving efficiency in the agricultural sector, focusing on land consolidation and the development of a rural land market. It will also continue with the project for small-scale local infrastructure improvements. The government will improve the enabling environment for village savings and credit associations and will expand the micro-credit rural savings scheme, which has proved to be a very effective instrument. Based on the findings of the PRSP, the Steering Committee will recommend to the Albanian Development Fund (ADF) how to use ADF more efficiently for poverty reduction and local development.

30.  The rural poor are particularly vulnerable to natural resource degradation. Therefore, the government will promote sustainable use and management of natural resources, especially water, forests, pastures, and fisheries. It will explore possibilities for expanding community-based activities that have proven effective, such as community forest and pasture management, water users associations, and community-based institutional frameworks for their operation and maintenance. It will also facilitate fishermen's associations in order to introduce community-based marine resource management. The National Environmental Action Plan will be completed providing the framework for sustainable natural resource use. In addition, it will develop a plan to address the linkage between energy and poverty, with the intention of improving the targeting of subsidized energy and increasing access of the poor to competitive sources of energy.

31.  The government will take steps to tackle problems associated with rapid urbanization that has occurred since 1991. Massive internal migration to urban areas has caused large informal settlements on suburban public land. An estimated 20 to 30 percent of Tirana's current residents are reported to live in such settlements mostly without title registration and with little or no access to essential urban infrastructure. Additional problems have resulted such as degradation of the urban environment due to free discharge of sewage and disposal of solid waste. Pockets of urban poverty have appeared as migrant families tend to be excluded from the formal urban fabric. Through initiatives such as the ongoing Urban Land Management Project as well as community-based social services, the government will provide essential infrastructure networks in informal settlements with community participation and ownership; develop and implement clear rules to regularize and legalize informal settlements to achieve social cohesion in urban areas; and nurture partnership among central and local governments, and communities to set up effective institutional frameworks for the urban sector.

32.  The Ministry of Public Works will examine the issue of homelessness that has resulted from the privatization of state-owned homes, the pyramid schemes, and migration to urban areas. It will also evaluate deficiencies in water supply and quality of water, and garbage collection and disposal in both urban and rural areas.

33.  The government will evaluate its strategy for strengthening local governments with a view to fully ensure the realization of its poverty reduction objectives. The Strategic Plan on Decentralization was approved in December 1999 and a task-force is currently preparing the legal framework and an action plan. Care will be taken to ensure that the delegation of tasks to subordinate levels of government and funding allocations will not conflict with poverty reduction goals.

IV.  Institutional Mechanisms for the PRSP

A.  Institutional Arrangements

34.  The government has established a PRSP Steering Committee to oversee the development of the poverty reduction strategy. The Committee will report to the Council of Ministers and will comprise members of the Economic Policy Committee and representatives from Parliament, civil society and the donor community. The Minister of Finance will act as the coordinator for the preparation of the PRSP. An inter-ministerial PRSP Working Group, reporting to the Minister of Finance and the Steering Committee, has been set up and will be responsible for the day-to-day management of the PRSP exercise and for the preparation of the draft PRSP. In those sectors in which government policies and programs can have a significant impact on poverty reduction, Sector Working Groups (SWGs) have been established and will be responsible both for the development of policies and strategies for inclusive development and for defining priority programs and measures within the sector public expenditure program.

B.  Measures to Strengthen Public Expenditure Management

35.  Implementation of the government's poverty reduction strategy will require that weaknesses in the planning and management of public expenditure be addressed. Measures being taken by the government to achieve this include: (i) the introduction of a strategic approach to the prioritisation of public expenditure under which expenditure decisions will be explicitly linked to government policies; (ii) the adoption of a three year time horizon for the programming of public expenditure acknowledging that the reform and restructuring of sector budgets needs to be undertaken over the medium-term; (iii) the preparation of investment and recurrent budgets within an integrated budget framework that explicitly considers the downstream recurrent cost implications of investment projects; (iv) the refocusing of budget management towards the realisation of outputs and outcomes rather than the utilisation of inputs. Measures will also be required to improve the monitoring and tracking of public expenditures to ensure that resources reach intended programme beneficiaries.

36..  With the assistance of the World Bank and other donors, the government has begun to address these requirements through the introduction of a medium-term expenditure framework (MTEF) and other initiatives to strengthen budget implementation procedures. The MTEF process will ensure that sector policies and public expenditures have a clear poverty reduction focus and are designed within a realistic macroeconomic resource framework. Preparation of the initial MTEF, covering the 2001–03 period, has started and will be completed by June 2000. The initial MTEF will include sector expenditure strategies for health, education, transport, public works as well as labor and social protection. These will explicitly address poverty reduction goals and will identify the measures necessary to improve the targeting of budget expenditures. Following a decision by the Council of Ministers, the MTEF will provide the basis for the preparation of the budget call circular for the 2001 Budget and for the evaluation by the Ministry of Finance of the subsequent budget requests from the line ministries.

37.  Linked to the MTEF process, the government is also implementing initiatives aimed at improving budget implementation. These include: (i) revising the budget classification system in order to allow more meaningful targeting and monitoring of public expenditure; (ii) strengthening Treasury operations to ensure more timely release o funds and better reporting of expenditure; (iii) ensuring full recording of externally financed project expenditures in the government's accounts; and (iv) increasing budgetary responsibility of local governments for services which can be more effectively planned and managed at the local level.

38.  The preparation of the PRSP will be closely linked with the MTEF process in 2001. As part of the PRSP process, poverty reduction guidelines will be prepared by January 2001 for agriculture, health, education, public works, and labor and social protection. These guidelines will be incorporated into the MTEF budget framework memorandum to be prepared in early 2001. Subsequent preparation of the MTEF and PRSP documents will be undertaken concurrently, thereby ensuring consistency between the government's poverty reduction strategy and its expenditure plans.

V.  Participatory Process and Timetable for the PRSP

39.  The interim PRSP was prepared by the Ministry of Finance following extensive consultations with line ministries and other government entities (e.g. statistical institute INSTAT). Comments were also sought from a few local research institutes and from a number of international organizations such as EBRD and UNDP. The preparation of the interim PRSP was launched in January 2000 with the setting up of working groups in line ministries which focused on the poverty reduction strategy. With assistance from the World Bank and the IMF, meetings were also conducted in March to brief government officials, civil society, and donors about the new initiative and in particular the participatory aspect of the exercise. Furthermore, the government has placed a series of articles dealing with the PRSP in one Albanian newspaper which focuses on economic issues.

40.  The government will follow a participatory approach for the formulation, implementation and monitoring of the PRSP (Appendix D). Based on an analysis of the current level of participation in Albania, a complete stakeholder analysis will be carried out. In preparation for this analysis the government has already compiled a list of organizations that line ministries have identified as important in their areas. In the comprehensive stakeholder analysis the government will involve a European research institute in addition to domestic partners. Following this analysis, the government will commit to clear selection criteria for the participation in the consultations process, to ensure broad representation of stakeholders and to make the selection process as transparent as possible. All national organizations and associations are urged to examine how they can contribute to the achievement of PRSP goals. They are requested to include PRSP action plans in their agenda, with a view to developing agreements for mutual collaboration for implementation and ongoing monitoring.

41.  Institutional mechanisms for the consultations with stakeholders, which will take place during the second half of 2000, will include focus groups, interviews, workshops, conferences, etc. To ensure that stakeholders will be able to fully participate in the process, the government will continue with the public information campaign to increase knowledge about the PRSP beginning in May. The government will also disseminate widely background information for the PRSP process to relevant stakeholders. The participatory process for the PRSP will culminate in a national stakeholder workshop to validate and finalize the Poverty Reduction Strategy in June 2001. The complete work plan for the preparation of the PRSP, which also includes extensive data gathering and analysis efforts as well as the PRSP/MTEF work outlined above, is contained in Appendix E.

42.  The government intends to place particular emphasis on providing information to and consulting with foreign donors. In this context, sectoral donor roundtables which have been discontinued since the end of the Kosovo crisis will be revived for health and education and a new roundtable will be established in the area of social protection. In addition, the MTEF exercise envisages the presentation of the government's overall expenditure strategies and priorities to the donor community during the second part of the year. The government intends to use this mechanism to also consult more comprehensively with donors on the PRSP process.

VI.  Monitoring Indicators

43.  The government will undertake a series of measures in order to improve and/or establish appropriate mechanisms for the regular and timely collection, analysis and publication of data required for the monitoring of relevant social indicators related to the well-being of the population. INSTAT, in cooperation with the World Bank, will, by September 2000, compile a poverty update based on the 1998 Household Living Conditions Survey. A qualitative participatory poverty assessment will also be conducted by September 2000.

44.  However, data gap problem for preparation of a PRSP still remain which need to be resolved. A poverty profile based on the 2000 household budget survey will be prepared by mid-2001.The population census to be carried out in April 2001 will provide the sampling frame for undertaking a fully representative living standard measurement survey scheduled for the second half of 2001. Thereafter, a regular program of household income and expenditure surveys will be instituted. The results of all surveys will be widely publicized and the government is committed to consult with relevant stakeholders on these results through appropriate channels (e.g. workshops, conferences). Setting up mechanisms to collect data for several more sector-specific indicators (e.g. dropout and completion rates in education and a monitoring system for infectious diseases) is already part of the work plan set out in the interim PRSP (see Appendix B).

45.  In order to gather more information on the health and nutrition status of children, the government, together with UNICEF, will undertake a Multiple Indicators Cluster Survey (MICS). It will also begin to compile a set of reliable indicators necessary for the assessment of progress in social development, including indicators of the health, nutrition and education status of the population, and access to basic social services and utilities. These indicators will include life expectancy at birth, immunization rates, infant, under-five and maternal mortality rates, primary and secondary education enrollment rates, completion and drop-out rates, access to safe water and sanitation and other social indicators of development. These indicators will be compiled and published annually.

46.  In addition to more data, extensive research is necessary to understand more fully the nature and causes of poverty and subsequently to gauge the effectiveness of various policy interventions. The capacity to conduct such analysis needs to be strengthened in Albania. In this context the government is considering creating a unit responsible for poverty analysis and monitoring affiliated with INSTAT or MoLSA. The first tasks of such a unit would include the compilation of a poverty map based on available data as well as drawing up an action plan for further data collection and analysis.

47.  At present, the government intends to monitor progress of its poverty reduction strategy based on a set of indicators consisting of (i) male and female life expectancy, (ii) infant mortality rate, (iii) maternal mortality rate, (iv) under-five mortality rate, (v) immunization rates2, (vi) basic education enrollment rate, and (vii) secondary education enrollment rate (Appendix C). In addition, the results of the 1998 Household Budget Survey and of the 2000 Household Budget Survey will be used to assess progress.

1This figure needs to be interpreted with caution. The registration system does not trace individual students, so that students who migrate (either internally or abroad) might be counted as dropouts.
2Three rates based of full immunization of children aged 2 and under will be considered - against (i) diphteria, pertussis, and tetanus, (ii) against polio, and (iii) against measles.