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Albania
Please note: All linked documents are in PDF format
| Objective |
SO Number |
FY 2004 |
FY 2005 |
FY 2006 |
| Economic Restructuring and Agriculture Development |
182-0130 |
6,413 |
6,438 |
6,438 |
| Civil Society |
182-0210 | 4,727 |
4,077 |
4,077 |
| Rule of Law |
182-0220 | 2,150 |
2,200 |
2,200 |
| Health Sector Improvement |
182-0320 | 2,450 |
2,700 |
2,700 |
| Special Initiatives |
182-0410 | 3,180 |
3,130 |
3,130 |
| Cross-Cutting Programs |
182-0420 |
2,790 |
2,955 |
2,955 |
| Transfers |
|
6,525 |
6,500 |
6,500 |
| Total (in thousands of dollars) |
28,235 |
28,000 |
28,000 |
|
The Development Challenge: The legacy of nearly five decades of misguided economic policies continues to leave Albania with widespread poverty, a deteriorated infrastructure, and weak public institutions. Thirteen years into its transition, Albania's 3.14 million people have a per capita gross domestic product of $1,950, among the lowest in the region. The economy is dominated by subsistence agriculture, providing more than 25% of output and nearly 51% of employment, and a large informal sector. Foreign Direct Investment in Albania is extremely low and limited by poor infrastructure, corruption, and unevenly enforced commercial law that discourage private investment.
Albania's economy demonstrates several structural imbalances. Unemployment is high at 15%, and underemployment is endemic - only 22% of individuals aged 15 and older are fully employed. Almost 25% of all Albanians fall below the poverty line. Less than half of Albanian households have running water inside the dwelling. Only 14% of all households receive electricity continuously. The poor lack ready access to key public and private services and they face major physical and economic barriers to accessing quality health care. These conditions undermine public support for the government in general, and its reform program in particular.
Albania faces the major but not unique challenge of maximizing economic growth, employment, and income through increased private investment, while simultaneously increasing tax revenues, improving public services, and strengthening democracy, governance, and rule of law.
Democracy in Albania is still becoming estalished. Elections are frequent, but there has not yet been an election declared free and fair by international standards. Polls show that citizens want democracy but express low levels of confidence in their institutions: political parties, the legislature, ministries, and the courts. Only local government has achieved a degree of public regard. The rule of law in Albania is compromised by pervasive corruption, executive intervention, and ineffective judges and prosecutors. The state's ability to provide public order, maintain infrastructure, and deliver services is improving, but it remains hampered by low revenues and rent-seeking behavior among tax and customs officials. Shortcomings in basic governance generate the "support gap" common in other transition countries and other low-performing nascent democracies.
With the end of Albania's isolation, dramatic changes in demographic and health trends emerged. In the past 15 years, health systems and infrastructure received inadequate resources, which impeded service delivery, maintenance, and modernization. Simultaneously, an unparalleled population redistribution with rapid urbanization and extensive in-migration occurred. The dramatic outflow and movement of people has posed a serious challenge to public health in Albania. Compounding the situation is the threat of HIV/AIDS, TB, and a worldwide pandemic of influenza. A general low priority on health care and public health care expenditures, combined with other social sector realities, increases the vulnerability of the country's economic and democratic transition.
Continued U.S. Government assistance will help to accelerate Albania's transition to a market economy, and a participatory democracy based on the rule of law, as well as support integration with the European Union (EU) and neighboring states. It will also enable Albania, as the largest Muslim country in the Balkans, to continue to contribute to regional stability and to support U.S. foreign policy. The latter is illustrated by the Government of Albania's (GOA) support for the U.S. in its war on terrorism and its position on Iraq. The GOA entered into the Article 98 agreement and has deployed troops to Iraq, Afghanistan, and Bosnia-Herzegovina.
The USAID Program:
The USAID program in Albania supports economic growth and micro-, small- and medium-enterprise (SME) development, democratic development and rule of law, and social stability. Program objectives directly support and are consistent with multi-dimensional U.S. interests identified in the President's 2002 National Security Strategy and the Joint State Department-USAID Strategic Plan. These objectives concentrate on the following three general development themes:
- Economic growth and SME development through increased private investment, improving the availability of credit, supporting capital formation, and strengthening the banking system;
- Democratic reform and rule of law to support civil society through increased citizen awareness of public issues, assisting in elections, strengthening legal institutions, supporting the GOA decentralization program, and mitigating corruption and trafficking of persons; and
- Health sector reform designed to improve primary health care by developing and implementing quality primary health care models, strengthening management capacity at the primary health care level, and encouraging community participation to ensure improved health care for Albanians.
Other Program Elements: USAID provides assistance to Albania through numerous programs that do not draw on bilateral funding. For example, regionally-funded activities in Albania support: non-governmental organizations (NGOs) which monitor government accountability; NGOs working on anti-corruption, advocacy and information sharing via the Organization for Economic Cooperation and Development's (OECD) Anti-Corruption Network; women's legal rights; training for journalists, labor leaders, health professionals, bankers, and other professionals; and a program of energy activities that seek greater efficiency in power generation and distribution, as well as management of energy resources.
Other Donors: The U.S., after Italy and Greece, remains Albania's third largest bilateral donor. Multilateral contributors and International Financial Institutions include the World Bank, International Monetary Fund (IMF), European Union (EU), European Bank for Reconstruction & Development (EBRD), European Investment Bank, Open Society Foundation, United Nations Development Program, Food and Agriculture Organization , International Fund for Agricultural Development, and United Nations Children's Fund (UNICEF). Bilateral contributors include: Germany, Swedish International Development Agency (SIDA), British Department for International Development, Danish Agency for International Assistance, and SNV (Dutch Development). Key elements of donor support focus on democratization and institutional development, with an emphasis on the judiciary, political cooperation, media, local government, and civil service reform, and the fight against crime and corruption. USAID is the leading donor agency in anti-trafficking, agriculture, enterprise development, and economic competitiveness.
Cooperation between USAID and other donor organizations active in Albania is robust. USAID coordinates with the Organization for Security and Cooperation in Europe (OSCE) and the British and Dutch governments on election issues. USAID closely coordinates anticorruption programming with the World Bank. With the OSCE, USAID provides technical assistance to the new High Inspectorate for the Declaration and Audit of Assets. In economic development, USAID coordinates assistance to the Bank of Albania with the World Bank, and small and medium enterprise development with the World Bank, EBRD, and Germany. The EU, World Bank, IMF, and EBRD are involved in the promotion of trade and investment, complementing U.S. Government programs. In the health sector, USAID coordinates with the World Bank, the major financer in the health field. As part of a transnational and bilateral approach to anti-trafficking, USAID partners with Terre des Hommes, SIDA, UNICEF, the Oak Foundation, and the National Albanian American Council. In the energy sector, USAID collaborates with the World Bank, EBRD, the European Investment Bank, and the Governments of Germany and Italy.
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