Improving Public Debt Management
In the OIC Member Countries
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B) Public Debt ManagementGovernance and Strategy Development
Legal frameworkPublic debt management in Albania has seen major reforms and improvements in recent years.
An official public debt management strategy has been formulated in close cooperation with
international institutions like the World Bank and the IMF. The reform includes the application
of new analytical tools, the definition and communication of strategic objectives and improved
planning over the medium term. Progress is evaluated continuously and reforms are
implemented on an ongoing basis. A major achievement of the Public Finance Management
Reform of 20072013 was the introduction of a Medium Term Budget Program (MTBP) as an
instrument to add a longer perspective to public finance planning and to promote longterm
sustainability of public finances. This reform has been accompanied and legalised by new
laws.26
Managerial structure (incl. coordination with other policies)In 2008, government established the General Directorate of Public Debt Management
(GDPDM) within the MoF as a major step in the reform process. It is headed by a Director
General who reports to the Deputy Minister of Finance. It manages central government debt,
prepares a mediumterm debt management strategy and drafts an annual debt management
report.
The Law on the Bank of Albania from 1997 mandates a clear separation between monetary
policy operation and public debt transactions. Nevertheless, the Bank of Albania is allowed to
extend credit to government, albeit the amount is limited to 5% of the average annual ordinary
government revenue. Credit has to be denoted in domestic currency and has a maximum
maturity of six months.
In late 2010, a World Bank team undertook a Debt Management Performance Assessment
(DeMPA) for Albania (World Bank 2011). At that time, having assessed 50 countries, Albania
was among the few that had sound debt management practices in a large number of DeMPA
areas and, in addition, had substantially improved since an earlier assessment in 2007. While
governance, strategy development and coordination with other economic policies were
identified as strong areas, external borrowing and operational risk management showed room
for improvement.
According to the 2011 PEFA assessment (Gustafsson et al. 2011), public finance management
had improved considerably since 2006 although indicators still show moderate levels. In
particular, actual revenues and expenditures deviated substantially from those projected.
Albania’s reform of the country’s public financial management system is assisted by external
partners, namely international organizations such as the World Bank and the IMF and
governments of partner countries. On the one hand, they provide financial support for
investments in IT and training of staff. On the other hand, they help through their experience
and technical expertise.
26 Law no .9965, dated 18.12.2006, “On State Borrowing, State Debt and Guarantees of the Republic of Albania”, for thecentral government, and Law no. 9896, dated 04.02.2008, “On Local Borrowing”, for local government.