Albania is a middle income country and a potential candidate country to join the European Union. It has experienced strong growth in recent years and has progressed from borrowing from the World Bank's concessional arm (the International Development Association) to its non-concessional arm (the International Bank for Reconstruction and Development). This has sent a positive signal to investors and the financial markets about the economic prospects of the country.
Albania has made substantial progress in managing its debt. The ratio of total public debt to GDP has fallen slightly, external borrowing is low (20% of GDP) and the average maturity of debt has doubled. However, improving debt management is a priority for the Government and is important as Albania progresses towards EU candidacy.
The Government raised the profile of debt management by making the debt management unit a General Directorate in 2008 and organised the operations into a front-, middle-, and back-office. In 2009, we provided assistance to the Debt General Directorate (DGD) to strengthen various areas of its debt operations under the new structure.
The focus of our work was on enabling the DGD to develop a more rigorous debt strategy. A key component of this was to guide staff in developing a model of different borrowing scenarios to inform borrowing decisions. The analysis of outcomes from the different scenarios in the model was used as part of the updated debt strategy.
In addition, we are helping to formalise the procedures for the debt operations by recording them in a procedures manual. To support and entrench the reforms that have taken place, we are also working with the human resource department to assess training needs and create development plans for staff across the DGD.