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Monitoring Comprehensive Reform Programs: The example of Albania

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The World Bank Public Administration Reform Project in Albania is a technical assistance loan for $8.5 million, agreed by the World Bank Board on March 21, 2000. (Click here for further details of Bank lending activities).

The Government of Albania has adopted a comprehensive policy reform program to strengthen Albania's weak institutional and governance capacity. This policy reform program is being supported by a Structural Adjustment Credit, approved by the Bank in June of 1999. The overall objective of the Public Administration Reform Project (PARP) is to provide required resources for technical assistance, training, goods and incremental operating costs that are needed to implement the Government's Institutional and Public Administration Reform agenda effectively.

The project reform design recognized at the outset that the task of strengthening Albania's public administration capacity is monumental. Approaching Western European standards of institutional and governance capacity will require decades, not simply the four-year time horizon available under this project. Moreover, the Bank's experience working in the Albanian environment demonstrates unequivocally that progress in building civic institutions is peripatetic; i.e., small steps forward are inevitably followed by non-trivial setbacks. Nevertheless, progress is possible. For instance, during preparation of this project the Government became convinced of the need to prepare and get an entirely new Civil Service Law enacted. More than a year of effort, with active and close support of the donor community, was required to achieve that goal. Admittedly it is only one small but essential step toward a more professional, merit-based, depoliticized civil service.

By design, this project's time horizon is being kept relatively short. This is intended both to keep pressure on the Government to ensure minimal slippage during project implementation, as well as to permit preparation of a follow-on operation if progress under this project demonstrates promising impacts. This also allows tailoring of any such follow-on operation to evolving needs, which could not be realistically predicted at this time.


The project will include a number of performance indicators, some of which are intended to serve more to focus the Government's attention on the longer-term objectives of its reform effort, and others of which are intended to capture the more immediate and concrete progress that can reasonably be expected to be achieved during project implementation.

Institutional impacts can be expected to materialize slowly and fitfully, both because of the complexity of the causal factors affecting institutional performance and because many of those factors are not fully within the control of government authorities. Accordingly, intermediate institutional impact indicators are specified without pre-judging the extent to which improvements should be expected. The Government commits to monitoring these indicators, while the joint challenge facing the Government and the IDA supervision team will be to assess what progress can be adduced from those indicators. Those assessments will be based on the indicators, on the extent and quality of project execution, as well as on consideration of exogenous factors that may have augmented or attenuated project impacts during a given supervision period.

The Government has committed to monitoring a core set of impact measures of institutional performance with varying degrees of periodicity during the implementation of these reforms. These measures have been selected to meet the twin needs of ease of monitoring plus comprehensiveness with respect to capturing the major objectives of the Government's institutional and public administration reform agenda. These measures draw significantly on the second-generation indicators project.

IndicatorUnderpinning assumptionProposed method of calculation
Policy and public expenditure management
Level one: Aggregate fiscal discipline
Inflation rateThe ultimate measure in terms of macro fiscal impact is inflation. The budget should be a mechanism for maintaining a sustainable level of aggregate expenditures.The percentage change of annual consumer price index (CPI), published in the government's fiscal bulletin and monitored under the IMF program. (Periodicity: annual)
Revenue predictabilityUnplanned revenue shortfalls reflect low administrative capacity and/or deliberate overestimates to avoid difficult spending reductions.The difference between actual central government revenues and those projected in the budget adopted by Parliament at the beginning of the fiscal year. (Periodicity: annual)
Fiscal aggregatesFiscal aggregates are in line with Government's economic program, as agreed with the IMF.End-period gross official reserves (in months of imports of goods and services (Periodicity: annual) External current account deficit (in percent of GDP). (Periodicity: annual)
Level two: Strategic Prioritization
Policy volatilityThe budget should be a credible signal of government's policy intentions. Radical variations indicate that there is no coherent set of policy priorities and that officials charged with implementation will not take policy statements seriously because it is likely to change.The median of year-on-year policy changes (absolute values) in each functional classification over the preceding 4 years, where policy changes are defined as the difference between the percentage share in the budget from year n to year n+1, calculated as a proportion of the year n figure (Periodicity: annual)
Delays in auditingThe government should be held accountable by the legislature for its policy actions. Lengthy delays are an indication that the government is not held accountable by the legislature for its actions.The elapsed time between the end of the financial year and the tabling of externally audited financial statements in the legislature. (Periodicity: annual)
Deviation from functional appropriationsThe government should be held accountable by the legislature for its policy actions.The sum of all (absolute values of) deviations between approved and implemented budgets by functional classification. High deviation indicates poor quality of planning and/or implementation, and lessened credibility in the budget. (Periodicity: annual)
Level three: Operational Efficiency

Representative deviation by spending units at sector level


Spending units should know in advance what their budget funding will be as a prerequisite for operational efficiency and managerial accountability.The average proportional deviation between (i) budgeted allocations for non-personnel costs (operations and maintenance) and other recurrent costs; and (ii) actual expenditures under these appropriations for each major sectoral spending unit in 5 key sectors: health, education, defense, roads and agriculture. A major sectoral spending unit is defined as one that is appropriated at least half of the total personnel costs, operations and maintenance, and other recurrent costs and actual expenditures for the sector. Where no spending unit satisfies that criteria, then the sum of the differences (not deviations) for a range of spending units which between them are appropriated at least half of the total personnel costs, operations and maintenance, and other recurrent costs should be used. (Periodicity: annual)
Transparent, competitive procurementProcurement rules and procedures should enhance transparency and competition.Once the Public Procurement Agency develops capacity to monitor public procurement, they will report on the incidence of permitted forms of procurement (international competitive bidding, national competitive bidding, direct procurement, etc.). Increasing reliance on international competitive bidding (for contracts above a given threshold) would indicate increasing competition. (Periodicity: annual, once monitoring capacity is established) This measure will be complemented by survey-based information. The corruption surveys of firms to be conducted in 2003 will include questions probing firms about their perceptions of the transparency and competitiveness of public procurement practices. Results will be compared to baseline results found in the 1998 corruption surveys; in particular, (a) more than half of the firms surveyed in 1998 claimed that they did not participate in specific government procurements because competition is unfair, (b) almost 50% of firms requiring clearance for participation in government procurements admit to paying bribes for such clearance, and (c) these latter firms claimed to pay bribes 70% of the time. The project will look for improvements (i.e., reductions) in all three of these indicators. (Periodicity: At least once during project execution, in addition to the baseline surveys undertaken in 1998)
Public Sector Human Resource Management
Item one: Fiscally sound pay and employment practices
Numbers of civil and public servants in comparison with international practiceGovernment should be a responsible employer, restraining employment costs while ensuring that remuneration arrangements do not establish perverse incentives.Government will provide data as nearly as possible congruent with the employment categories suggested in the World Bank website. (Periodicity: annual)
Fiscal weight of public employment in comparison with international practiceGovernment should be a responsible employer, restraining employment costs while ensuring that remuneration arrangements do not establish perverse incentives.Three separate measures will be provided: Wage bill as % of GDP, Wage bill as % of government expenditures, and Goods and services expenditures as % of government expenditures. Comparator data will be obtained from the updated database on public sector pay and employment on the World Bank website. (Periodicity: annual)
Item two: Competitive and non-arbitrary remuneration
Civil service pay (vertical compression)Vertical decompression outside the range 1:7 to 1:20 undermines incentives for public officials to pursue a career and take disciplinary threats seriously.The key measure is the median of the ninth decile salaries divided by the median of the first decile salaries; but for comparison with the OECD, ninth decile salaries divided by median salaries and median salaries divided by first decile salaries could be provided. Comparator data from other countries is available through the World Bank website. (Periodicity: annual)
Civil service pay (comparisons with the private sector)Average central government wages as a proportion of average private sector manufacturing wages below 0.5 provides inadequate attraction for skilled staff, or above 1.5 indicates capture by existing personnel.A survey of salaries in the Albanian public and private sectors will be undertaken in 2000. Results of that survey will provide several baseline measures of public/private pay relationships. Thereafter, the Government will report on civil service and other public employee salaries, whose changes will be tracked relative to changes in measures such as GDP and CPI, to assess whether public salaries are adjusting as desired, given their starting point. (Periodicity: Once for baseline. Annual for tracking changes within the public sector relative to changes in GDP and CPI.)
Civil service pay (horizontal compression)Horizontal decompression (discretionary allowances over and above base pay) in excess of 1:1.2 provides opportunities for excessive managerial discretion, facilitating organized corruption and rent-seeking.Central pay and employment registry currently being developed by the government will, once up and running, produce reports on the composition of the budget-financed wage bill by component of salary, as defined in the Civil Service Law, including variance in that composition across public agencies. (Periodicity: Semi-annual, once the pay and employment registry is functioning). A survey of public officials is being completed in early 2000. Data from that survey, as well as from the public/private salary survey to be undertaken later in 2000, will allow identification of a baseline assessment of horizontal compression. The survey of public officials will be repeated in 2002, permitting assessment near the time of the project's midterm review of progress on reducing any excessive horizontal decompression. (Periodicity: Once for baseline. At least one follow-up survey)
Item three:
Human resource management based on rules, performance and fairness
Rule credibilityThe credibility of rules governing the public administration contributes significantly to effective human resource management. Key factors contributing to such rule credibility include: (i) existence of rules in recruitment; (ii) existence of rules in evaluation; (iii) existence of rules in training; (iv) existence of rules in recording; (v) fairness in treatment; and (vi) predictability of one's career path.Spot surveys of officials will be repeated periodically over the course of project implementation, asking questions that permit calculation of an index of rule credibility based on these six determinants of rule credibility. Improvement in rule credibility as measured by that index is an objective of the project.
(Periodicity: At least twice over the course of project implementation)
Limited incidence of political appointees in the civil serviceGovernment employees should be held in some respect by business and the general public, partly on the basis that they have been transparently appointed on merit.The incidence of "non-political appointees" will be measured as civil service appointees as a % of total central administration employment. This ratio is zero as of 15 February 2000. Implementation of the Civil Service Law should increase this incidence. (Periodicity: Annual)
Policy Formulation and Coordination
Policy credibilityPolicies are more reliably implemented when they are credible; i.e., when policies (i) have reasonable consistency over time, (ii) are communicated clearly to employees, and (iii) are supported by public officials responsible for their implementation who (iv) are not subject to political interference/micro-management as they undertake to implement those policies.Spot surveys of officials will be repeated periodically over the course of project implementation, asking questions that permit calculation of an index of policy credibility based on these four determinants of policy credibility. Improvement in policy credibility as measured by that index is an objective of the project.
(Periodicity: At least twice over the course of project implementation)


The Government of Albania is now publishing a regular newsletter to comply with the requirements to publicly report on progress. Click here for the most recent edition.

This page was authored by Gary Reid of the World Bank. It was submitted on 8 January 2002.  

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