Albania: Country Fiduciary Assessment.
Report No. 38028-AL
August 2006
Operations Policy and Services Unit
Europe and Central Asia Region
Document of the World Bank

Introduction and Executive Summary
Overview of the CFA
Objectives
1.1 The objectives o f the Country Fiduciary Assessment (CFA) is twofold. First, the CFA aims to assess the strengths and weaknesses of the Public Financial Management system on issues related to procurement. Second, the CFA aims to assess fiduciary risk related to Albania’s budget environment with a view toward helping the government to prioritize its actions and measure progress on PFM reforms, with the emphasis on procurement.
Sources and concurrent analytical work
1.2 The present CFA builds directly upon previous analytical work in this area, including the
Country Financial Accountability Assessment (CFAA) in April 2002, the Country Procurement
Assessment Report (CPAR) in January 200 1, and a Public Expenditure and Institutional Review (PER) in 2001, This present CFA report draws upon and is in fact one component o f three simultaneous, integrated Bank-prepared reports. The other two reports are under:
The Public Expenditure and Institutional Review, June 2006 (PEIR). The PEIR addresses three key issues-first, fiscal sustainability and fiscal risks; second, strategic resource allocation; and third, accountability o f public sector financial management. The PEIR emphasizes the PFM reform process and the PFM policy reform directions. It covers issues related to the policy and planning framework; budget formulation, including strategic resource allocation and policy-related budget execution issues. The PER includes a set o f high-level recommendations on public financial management. One PER recommendation is that “in the short to medium term the government should focus to deepen the reform in public expenditure management with particular focus on annual budget preparation and execution (including curtailing use o f nontransparent virement, and implementing multiyear procurement for capital projects), and strengthening capacities in line ministries”. A draft PEIR (June 2006) was sent to the Government of Albania (GOA) on July 6,2006.
0 The Public Expenditure and Financial Accountability (PEFA) Public Financial
Management Assessment, July 2006. The PEFA assessment incorporates a set of 31 high-level indicators used to develop an integrated assessment o f the PFM system against the critical dimensions of PFM performance. It evaluates the likely impact o f PFM weaknesses on the three levels o f budgetary outcomes-aggregate fiscal discipline, strategic allocation of resources, and efficiency o f service delivery. The PEFA assessment does not contain recommendations.