PRIORITIES FOR EQUITABLE GROWTH IN ALBANIA · PRIORITIES FOR EQUITABLE GROWTH IN ALBANIA Ellen...
Transcript of PRIORITIES FOR EQUITABLE GROWTH IN ALBANIA · PRIORITIES FOR EQUITABLE GROWTH IN ALBANIA Ellen...
PRIORITIES FOR EQUITABLE GROWTH IN ALBANIA
Ellen Goldstein Country Director South Eastern Europe
January 20, 2016Tirana
Key Messages
¾ Pre-2009 drivers of growth not sustainable
¾ Need to rekindle and rebalance growth: from consumption-led to investment- and export-led
¾ Macro-structural reform agenda with equity and sustainability goals
¾ Reforms starting to deliver results – stay the course!
Strong pre-2008 growth in Western Balkans good for poverty reduction and income conversion with EU
SEE6 Economic Growth and Poverty, 2000-2013
3
Source: World Bank Staff estimatesNote: SEE6 includes Albania, Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro, and Serbia
Sources: World Bank staff calculations based on national statistical offices.
Real GDP per capita, % EU average income per capita
15
20
25
30
35
40
45
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
ALB BIH KSV MKDMNE SRB SEE
-5
0
5
10
15
20
25
30
35
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Povertyheadcount$5/day
Real GDPper capialgrowth
Real GDP and poverty headcount,2002-2014
Strong growth and poverty reduction over the past 2 decades in Albania, but wide gap with EU income average
Source: World Bank staff
24.5
18.5
12.514.3
4.25.8
7.5
1.30
5
10
15
20
25
2000 2002 2004 2006 2008 2010 2012 2014
Poverty count (percent)
Real GDP growth(percent)
25
36
0
5
10
15
20
25
30
35
40
EUAlb@6% [email protected]%
Years Needed for Convergence to EU Average Incomes at Different Pace of Growth
Source: World Bank staff
Investment contributes little to growth post-crisis, with upturn in 2015
Source: World Bank staff calculations based on data from national statistical offices.
Demand decomposition of real GDP growth, 2011-15s
-10
-5
0
5
10
15
2000-2007 2009-2014 2015f
Exports of goods and services Private GFCF Public GFCF Final Consumption Imports of goods and services
… external imbalances remain and productivity makes limited contribution to growth.
Factor decomposition of growth, percentage point
Source: INSTAT
Trade balance, percent of GDP
-30
-25
-20
-15
-10
-5
0
-1.00
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
00-08 09-14
TFP
Pop., labor & human capital percapitaCapital Stock per unit of labor
Source: World Bank calucations
RORK
GFCF (2000=100)
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
2000 2002 2004 2006 2008 2010 2012
Rate of Return on Capital and Investment Index, 2000=100
FOSTER MACRO-FISCAL & FINANCIAL SECTOR STABILITY
Stay the course of fiscal consolidation to ensure debt sustainability
Sources: World Bank staff estimates
Scenarios of Public Debt, percent GDP
Fiscal Balance, percent of GDP and GDP Growth, percent
-7.0
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
2012 2013 2014 2015f
Real GDP growth (percent)
Fiscal balance (percent of GDP) 9 Transparent arrears clearance of 5% GDP
9 Process in place to prevent future accumulation of arrears
Example: Public Finance Policy-Based Guarantee
Sources: World Bank staff estimates
50.0
55.0
60.0
65.0
70.0
75.0
80.0
85.0
90.0
95.0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
No reform Reform
Well-capitalized and liquid financial sector, but asset quality concerns amidst weak credit growth
0
5
10
15
20
25
ALB
BIH
KOS
MKD
MN
E
SRB
SEE6
Q3 2015 Q4 2007
Non-performing loans, percent total
Source: Ministries of Finance, Central Banks and World Bank calculations
-10-505
10152025303540
ALB - nominal ALB - real
Credit growth, percent
Source: Central Bank and World Bank staff calculations
ENHANCE EQUITY, QUALITY AND EFFICIENCY OF SOCIAL SERVICES AND INFRASTRUCTURE
Regulatory changes enhance social and fiscal stability of the pension system
Pension system projected fiscal balances before/after reform, percent of GDP
Since the enactment of the Pension Law ...
-3%
-3%
-2%
-2%
-1%
-1%
0%
1%
2015
2018
2021
2024
2027
2030
2033
2036
2039
2042
2045
2048
2051
2054
2057
2060
Reformed scheme
No reform
Source: World Bank staff calculations
9 14% increase in SII revenue in 2015
9 167,000 new workers added
9Government funding of pension system drops from >46 to <40%
9 1000 new beneficiaries collecting the social pension
Further cut losses and maintain collection rates to ensure energy sector sustainability
Energy sector losses, GWh and percent of total Energy sector sales, GWh and collection rate, percent
Continue improvements in access to piped water and of the water sector
?0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1994
1997
2000
2003
2006
2009
2012
2015
Popu
latio
n (x
1000
)
Piped Urban Piped RuralNot piped Urban Not piped Rural
Source: WHO/UNICEF Joint Monitoring Program, 2015 Source: WB 2015
Access to piped water Water services sustainability assessment
IMPROVE QUALITY OF THE BUSINESS AND GOVERNANCE ENVIRONMENT
Exports gap, percent of potential exports, period average 2006-12
Source: World Bank Staff estimates
Real wage and TFP indexes
Source: World Bank Staff estimates
Private sector still to unleash its potential
0.0
0.5
1.0
1.5
2.0
2.5
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
TFP index
Real Wage index
-40
-33 -33
-27 -27 -27
-31
ALBMKD BIH MNESRB KOS SEE6
Ensure world-class institutional and business environment
0 5 10 15 20 25 30
Starting a Business
Dealing with Construction Permits
Getting Electricity
Registering Property
Getting Credit
Protecting Minority Investors
Paying Taxes
Trading Across Borders
Enforcing Contracts
Resolving Insolvency
Albania Average other WB Average ECA
Doing Business 2016 Ranking
Note: WB comprises Bosnia and Herzegovina, Kosovo, FYR Macedonia, Montenegro, Serbia; ECA comprises countries in Europe and Central Asia. Source: Doing Business, World Bank
Continue the fight for transparency and good governance
Corruption Perception Index,2008-2014
Source: Transparency International
9 Objective: more transparent, faster and improved citizens’ access to public services
9 Support streamlined service delivery of more than 300 services through re-engineering and digitalization
9 Separation of front- from back offices (done at PRO Tirana); digitalization of property registration (10 % done)
9 SMS campaign help monitor the quality of service delivery; reached 33,500 citizens and 20 percent response rate
Example: The Citizen Centric Service Delivery Project
0
20
40
60
80
100
120
140
2008 2009 2010 2011 2012 2013 2014
EU
Albania
PROMOTE STEWARDSHIP OF THE ENVIRONMENT
Address legacy and new pressures on environmental assets and climate risks
Pollution hotspots along the Adriatic coast line
9 Objective: remediation of contaminated industrial site
9 Safe disposal 45,000 m3
of hazardous waste
9 Improved quality of life of Porto Romano community
Example: The Integrated Coastal Zone Management and Cleanup Project
ELIMINATE DISINCENTIVES AND BARRIERS TO JOBS
Provide better job opportunities particularly for youth, women, minorities
30%
30%
Source: World Bank staff estimates
0
10
20
30
40
50
60
70
80
ALB
BIH
KOS
MKD
MN
E
SRB
SEE6
Labor force participation, % population aged 15+, 2015
21.9
45.8
62.9
61.0
53.1
47.0
35.8
32.5
EU28
SEE6
BIH
KOS
MKD
SRB
MNE
ALB
Youth unemployment, 2014, % labor force (15-24)
Source: National statistical offices
Priority areas for sustainable economic growth and poverty reduction in Albania
9 Foster macro-fiscal & financial sector stability
9 Enhance equity, quality and efficiency of social services &
infrastructure
9 Improve quality of the business and governance environment
9Promote stewardship of the environment
9Eliminate disincentives & barriers to (formal) jobs