The Republic of Albania, a lower middle income country with a Gross National Income (GNI) per capita of US$2,060 in 2004 has experienced relatively high economic growth rates following its transition from communism to a market based economy. The Government of Albania (GoA) has carried out major institutional and economic reforms while maintaining macroeconomic stability. Despite these achievements, Albania remains one of the poorest countries in Europe. According to the Living Standards Measurement Survey (LSMS), a quarter of the Albanian population live in poverty and about 5 percent live in extreme poverty (e.g in the northeastern part of the country). The incidence of poverty is more significant among young families and persons with low levels of education.

Key bilateral donors for Albania include the EC, Germany, Greece, Italy, the Netherlands, USAID and Switzerland. Multilateral development institutions include the EBRD, IFAD, IMF, UNDP and IDA. Based on 2002-2003 gross ODA data, IDA, EC, Greece, and the United States are the country’s major donors and the share of bilateral donors is approximately 63 percent.

GoA in collaboration with development partners, produced a PRSP as the Growth and Poverty Reduction Strategy (GPRS) and launched it in 2001 as the National Strategy for Social and Economic Development (NSSED). The GPRS which rests on two pillars: governance and strong economic growth (with education, health care, and infrastructure as priority areas) was presented to the Boards of the World Bank and the International Monetary Fund (IMF) in June 2002. The objectives of the GPRS are to (i) maintain real GDP growth of 22-25 percent during 2002-2004; (ii) reduce the number of people living in poverty; (iii) improve infrastructure and related services such as supply of portable water, sewage and electric power; (iv) reduce infant and maternal mortality rates; and (v) increase the level of 8-year (elementary) and secondary education and average schooling period.

The GPRS is connected and harmonized with the sector development strategies (e.g. in health, and decentralization). In April 2004, GoA published its second progress report on the implementation of the NSSED which included the priority action plan for 2004-2007. The NSSED (a dynamic document) has evolved into the basic document of mid-term (2004-2007) and long-term (2004-2015) government policies that combine the main agendas of GoA for reducing poverty, guaranteeing sustainable economic growth, achieving the MDGs, integrating the country into NATO, the EU and the region. A department of the NSSED (DoNSSED) has been established within the Ministry of Finance to coordinate all NSSED-related activities.

A group of donors (CIDA, DFID, IMF, Italy, Netherlands, Organization for Security and Cooperation in Europe (OSCE), UNDP, UNICEF, USAID and the World Bank) met on several occasions to discuss the GPRS process and the donors' role. Donors provided inputs to the GPRS process in several forms.

Donor coordination began in 1999 through the Friends of Albania (an informal group of development partners) and evolved in 2003 into a Donor Architecture in which the donor community agreed to allow the EC, UNDP, OSCE and the WB to lead the coordination process (reporting to all donors regularly) based on the work of numerous Sector Working Groups (SWGs). These four lead donors had four distinct but complementary mandates. They formed the Donor Technical Secretariat (DTS) to manage the coordination process. The EC, being the largest donor, became the permanent Head of the DTS.

In the first quarter of 2005, the donors agreed to commence work with GoA to formulate a Harmonization Action Plan (HAP) design by December 2005 and develop it in 2006. A Paris Declaration indicator baseline (2004-2005) is being produced and together with quarterly monitoring, the database will give trends by sector and by donor.

Donor coordination in Albania is undergoing a rapid transition from a donor-led approach to country-owned coordination. It is concentrated in the Prime Minister’s Office supported by Ministries of Finance and European Integration. The Deputy Prime Minister chairs the Quarterly Donor-Government Roundtables now. At this meeting, reports on coordination efforts in the sectors are presented. The DTS convenes Development Counselor Meetings in preparation for the Roundtables.

The Government Technical Secretariat (GTS) consisted of representatives of the core ministries – Finance (budget, public investment), Economy, European Integration (Community Assistance for Reconstruction, Development and Stabilization (CARDS) programming), Interior (public administration) and Council of Ministers (policy coordination, national integrated strategy) under the leadership of the Prime Minister’s office. The GTS was instrumental in drafting the Integrated Planning System (IPS). The GTS and DTS met regularly as the Joint Technical Secretariat (JTS) during the IPS design phase. The JTS coordinated government and donor cooperation on the IPS reform and facilitated roundtables.

In May 2005, GoA launched the IPS which aims to integrate the various policy frameworks (NSSED, Stabilization and Association Process, MDGs, etc.) into a single medium-term development plan in 2007. The IPS also envisages a new architecture for donor coordination and management of external assistance.

As a result of the July 2005 Parliamentary elections, the Democratic party-led coalition formed a new Government in September 2005. It will focus its efforts to wipe out corruption, fight poverty, and move Albania closer to European integration. The new government confirmed its commitment to the implementation of the NSSED and the Integrated Planning System (IPS).

In November 2005, the new government approved a reworked IPS and created two new inter-ministerial committees which supersede the GTS inter-ministerial coordinating role. They are the Prime Minister-led Committee on Strategic Planning and the Deputy Prime Minister-led Committee on Government Modernization. The new functions at the Prime Minister’s Office on IPS, NSSED, and Donor Coordination will take over the concrete work of the GTS. The IPS is a state-of-the-art internal coordination system to translate vision, strategy and policy into multi-annual budgeting, objective-based programming, implementation and monitoring/evaluation of impact.

In January 2003, Albania started negotiations with the EU for a Stabilization and Association Agreement (SAA). Negotiations have advanced since then and focus on political, institutional, and economic issues.

Implementation of the Albania Public Administration Reform Project (PARP) was managed successfully from within an existing GoA institution (i.e. the Council of Ministers (CoM)). The project implementation reports of the Unit for Implementation of the Public Administration Reform Program (UIPARP) are good practice models for tracking all stages of project execution (e.g. TOR preparation, procurement, contracting, and contract execution).

A SWAp is being prepared as a pilot in the transport sector.

The Infrastructure Steering Group held a donor coordination meeting on SWAps in Tirana in September/October 2004.

A Memorandum of Understanding (MoU) on the “Development of the South East Europe Core Regional Transport Network” between all Western Balkan countries was signed on June 11, 2004. This MoU confirms the commitment of Western Balkans countries to work together to (i) enhance regional transport within an agreed regional framework and core network, (ii) have reciprocal consultations on transport policy, and (iii) introduce an institutional framework that facilitates sustainable investments in the sector.

Albania is expected to fully graduate from IDA by 2008.

After independence, the Kyrgyz Republic embarked on a comprehensive reform program to transition to a market economy. Despite these efforts, this landlocked, mountainous country has remained one of the poorest in the CIS, with a per capita GDP of about US$308 in 2001. This is partly due to its geographical isolation. Forty percent of the population still lives below the poverty line. Almost 75 percent of the poor live in the rural and mountainous regions.

Debt sustainability remains an outstanding issue over the medium term with the net present value of public debt remaining over 180 percent of exports and over 370 percent of budget revenues – well above the HIPC threshold. In 2002, the Paris Club agreed on a debt-rescheduling package that will reduce debt service burden in the next three years. The debt rescheduling terms are close to Naples Terms. Paris Club members will revisit the issue. Debt stock reduction may be considered then.

The country’s National Poverty Reduction Strategy (NPRS) was completed in January 2003. The draft was formally discussed with external partners at the in-country Consultative Group (CG) meeting held in October 2002. The NPRS represents the medium-term strategy for the implementation of the Krygyz Comprehensive Development Framework (KCDF) which is the country’s long-term vision. The NPRS presents a matrix with pro-poor policies and actions to meet the objectives of the KCDF, and includes 100 indicators to monitor progress. It also envisages a monitoring and evaluation system to collect data. The Government presented its progress on the three year NPRS and its next steps in poverty reduction at the 2004 CG meeting.

The Kyrgyz Republic faces a problem of endemic corruption despite efforts of the Government in instituting an anti-corruption law. Transparency International Corruption Perceptions Index for 2005 ranks the country 165 out of 194 countries in terms of perceived corruption.

Of the development partners, the AsDB, IMF and the World Bank accounted for 65% of total ODA in the Kyrgyz Republic in 2001. Germany, Japan, Switzerland, UK, and USA are the major bilateral partners.

The Kyrgyz Republic joined the WB in 1992, IsDB in 1993 and AsDB in 1994. It became a partner country of KfW in 1993. AsDB, IsDB, KfW and the WB contribute a substantial part of the country's public investment program. Since 2005, these IFIs have been providing a larger share of their assistance in the form of grants (e.g. about 50%, 42% and 100% for AsDB, KfW and WB respectively).

The harmonization program in the Kyrgyz Republic is being defined based on a joint AsDB - World Bank Portfolio Assessment. Development partners are exploring the applicability of the Vietnam harmonization model. More specifically the program is likely to focus around four elements: procurement, financial management and accountability, social and environmental safeguards, and non financial monitoring and reporting.

The EC is involved in the implementation of the NPRS and the KCDF. DFID, EC and the World Bank are operationalising the framework for donor coordination in support of effective linkages between the EC agenda and the World Bank-led work on poverty reduction and social and economic reform developed in the NPRS. External partners (Germany, UK, the WB, and possibly Sweden and Switzerland) are supporting the Government's Manas Taalimi Health Reform Program with a SWAp in health and social protection.

The Government and four international financial institutions (IFIs) – AsDB, IsDB, KfW and the WB concluded their third Joint Country Portfolio Review (JCPR) on March 27, 2006 with each of the representatives signing a Memorandum of Understanding (MoU). The JCPR began on March 6th.

A Joint IMF - World Bank Financial Sector Assessment was completed in April 2003. UNDP 2003 Program Framework and World Bank CAS FY03-06 are compatible with the NPRS priorities.

A Joint Country Support Strategy (JCSS) is being prepared with AsDB, DfID, SDC, UN and WB. The findings of the JCPR would provide useful input for this task.

OECD/DAC Working Party has developed indicators (in a survey instrument) to monitor progress on harmonization and alignment. These indicators were field-tested in 14 countries (including Kyrgyz Republic). A draft report has been prepared.

The 2004 CG meeting (co-chaired by the Government and the World Bank) was held on November 3 in Bishkek. This CG focused on stock-taking and dialogue on the way forward. Harmonization and alignment of external development assistance was also discussed. However, there was no pledging session on the agenda.

AsDB, DFID and EBRD sponsored, and the Government of Kyrgyz Republic hosted the Eastern Europe and Central Asia Regional Workshop on Harmonization and Alignment for Development Effectiveness and Managing for Results in Bishkek on October 28-29, 2004. The workshop prepared participants for the Second High-Level Forum (HLF-2) on Harmonization and Alignment in Paris, Feb. 28-March 2, 2005. The country was represented at the HLF-2 and was a signatory to the Paris Declaration.

The Former Yugoslav Republic (FYR) of Macedonia is a lower middle income country with a Gross National Income (GNI) per capita of around US$1,700. Following its independence from Yugoslavia in 1991, economic growth in Macedonia has been hampered by periods of conflicts, for example, the Kosovo crises of 1999 and the 2001 armed conflict.

In 1994, the Government of FYR of Macedonia launched its economic stabilization program with assistance from major international donors. This led to five years of substantial economic growth marked by the Government recording its first fiscal surplus in 2000 and the country achieving macroeconomic stability in the same year. However, with the onset of the conflict of 2001, GDP declined by 4.5 percent and balance of payments deteriorated, thus affecting overall economic growth.

The major official development assistance (ODA) donors in FYR Macedonia are the European Commission (EC), the United States and the Netherlands. Also, the share of bilateral donors in gross ODA is over 60 percent. Approximately 40 percent bilateral ODA was allocated for technical assistance. Approximately 10 percent was allocated for education programs and social sector programs and 20 percent for emergency assistance programs.

The European Union and the FYR Macedonia signed the Stabilization and Association Agreement (SSA) which entered into force on April 1 2004, marking a major step forward in Macedonia’s efforts to become a member of the EU. The SSA aims to gradually assist countrys integration into the EU through a process of reforms such as aligning FYR of Macedonia’s institutional, political and economic laws with those of the EU. The agreement also aims to create a new environment for the development of trade and investment in FYR Macedonia, which could lead to higher FDI flows, domestic investment and economic growth.

FYR of Macedonia’s developent challenges are: (i) Economic growth: goal is to achieve pre-conflict levels of economic growth which were between 4 to 5 percent per year; (ii) Reform of the public and financial sectors: these two sectors can serve as catalysts to economic growth; (iii) Poverty reduction: reducing high levels of unemployment is key to poverty reduction.

At present, the FYR of Macedonia does not have a National Development Strategy or a Poverty Reduction Strategy Paper (PRSP). Instead, donors have used FYR Macedonia’s Stabilization and Association Agreement (SSA) with the EU and the Ohrid Agreement of 2001 as the country’s development strategy. The Ohrid Agreement is a set of reforms guaranteeing minority rights, especially those of Ethnic Albanians and have been agreed to by all the major political parties. The agreement specifies major reforms in legislation affecting culture, use of language, education, personal documentation and also provides affirmative action in public employment.

The Government of FYR of Macedonia has just established a National System of Foreign Assistance Coordination, whose function is to define the roles and the responsibilities of the Government in its interactions with the donor community.

The Netherlands has provided the lead with World Bank support on analytic and diagnostic work.

Donors currently providing development assistance in FYR of Macedonia are CIDA, DFID, EBRD, EC, EIB, FAO, Germany (GTZ, KfW), IFAD, IMF, the Netherlands, SIDA, SOROS, UNICEF, USAID, WHO and the World Bank.

The European Union and the World Bank co-chair the High Level Steering Group for South East Europe and the Working Level Steering Group (WLSG) whose function is to coordinate donor efforts and promote peace and stability through the implementation of the Ohrid Agreement.

The Republic of Uzbekistan is a low income country which is rich in natural resources (coal, copper, gold, natural gas, oil, silver and uranium). Cotton is its main agricultural product. The country faces serious environmental problems. The heavy use of agro-chemicals and the diversion for irrigation of huge amounts of water from the two rivers that feed the region (Amu Darya and Syr Darya) and poor drainage systems, have led to the drying up of the Aral Sea and the contamination of surrounding land by salt and residual agricultural chemicals. This is now adversely affecting economic activity and the health of the population.

Over 25 percent of the population are unable to meet their basic consumption needs and of these, about two-thirds live in the rural areas. Regional disparities exist. The western Regions of Karakalpakstan and Khorezm in the lower reaches of the irrigated areas, have significantly lower standards of living and suffer from inadequate and unreliable water supply. The Government is committed to fight poverty and has undertaken to formulate its approach in a Poverty Reduction Strategy Paper (PRSP).

External aid is coordinated by the Cabinet of Ministers’ Department for Coordination of External Economic Activity (DCEEA). There has been no meeting of the Consultative Group for Uzbekistan since 1994, but formal and informal donor meetings for coordination and information sharing are frequent in-country. Theme meetings in Tashkent, where each donor coordinates a subject area or sector reflecting its comparative advantage, provide another forum for coordination. The World Bank coordinates groups for the environment and financial sectors, and chairs the UN/UNAIDS Theme Group for HIV/AIDS.

Beside the World Bank, other development partners involved in Uzbekistan are USAID, UNDP, WHO, UNICEF and UNAIDS in the health sector; FAO and US in agriculture; UNDP, EC, OECD and EU-TACIS in natural resources and environment; IMF and USAID in the financial sector; UNDP, KfW and EBRD in infrastructure; USAID and UNDP working on legal issues; EC, EU-TACIS, GTZ and UNDP in the social sectors; and EBRD in the telecommunications sector. AsDB, UNDCCP, UNFPA, UNHCR, Japan (JBIC and JICA), Korea, Kuwait and Switzerland are also donors.

In one project, the European Bank for Reconstruction and Development (EBRD) has agreed to rely on the World Bank for assurance on the acceptability of financial management arrangements, including those on external audit.

Likely areas of harmonization are financial management, procurement and capacity building.