Representatives from 24 donor countries and 15 international organisations met in Brussels on May 26 1999. The main purpose of this meeting was to secure pledges towards meeting Albania’s additional external financing needs resulting from the Kosovo crisis, in order to enable Albania to cope with short term costs and maintain the stabilisation and structural reform process.

Donors gave strong support to Albania in order to handle the emergency situation and costs arising from the Kosovo conflict while the country continues to implement the economic and institutional reforms agenda. Today’s G24/Consultative Group meeting was co-chaired by the European Commission (Directors Fabrizio Barbaso and Joly Dixon) and the World Bank (Director Ms Arntraud Hartmann). The delegation of Albania was led by the Prime Minister, Mr. Pandeli Majko, accompanied by the Finance Minister, Mr. Anastas Angjeli, the Minister of Economic Co-operation and Trade, Ms. Ermelinda Meksi, and Mr. Maqo Lakrori, State Secretary for Euro-Atlantic Integration.

Prime Minister Pandeli Majko referred in particular to the burden placed on the Albanian State, economy and society by the unprecedented influx of refugees. This inflow has so far increased the Albanian population by about 15% and may continue. Maintaining stability in the country while hosting the large number of refugees is a top priority for the Albanian government. He also underlined the strong commitment of his government to resolutely pursue economic and institutional reforms. This includes the consolidation of democracy, strengthening of public administration, creating a suitable environment for private sector development and a sound financial sector, enhancing public security and combating fraud and corruption. He recognised the importance of humanitarian assistance provided to the refugees, but urged donors that this needed to be complemented with further support to the State.

Finance Minister, Anastas Angjeli, recalled the successful macro-economic stabilisation program following the 1997 crisis. This was possible due to a combination of strong control of public expenditures, major efforts to increase tax and customs revenues, as well as the availability of external financial support. Mr Angjeli underlined the measures taken to ensure better management of public resources and measures to reduce corruption. He stressed also the substantial progress made so far in winding up the pyramid schemes, reforming the financial sector, the reforms in public administration and tax and customs administration. He explained the measures taken so far by the government to face the exceptional situation of the influx of refugees and the costs arising from the crisis. He emphasised the special public expenditure control measures introduced during the crisis to assure transparency in the use of funds, such as the Kosovo account and the special reporting requirements. Minister Angjeli also referred to the difficulties in preserving adequate public revenues. He thanked the European Commission for the valuable contribution in the critical area of customs administration. In view of the present situation he stressed the necessity of reconciling the objectives of sound budgetary policy and the provision of basic public services. He urged the donors to fill the external financing gap of US $200 million for 1999 of which an amount of US $160 million was induced by the current crisis. He also reiterated the determination of the government to pursue economic reforms agreed with the World Bank and the IMF. To alleviate any negative impact from the present crisis on future developments, the Albanian Delegation drew also the attention of the participants on medium and long-term projects and programmes.

Participants in the meeting reviewed the impact of the Kosovo conflict on the Albanian economy. They acknowledged steps taken by the government to allocate, at a very early stage, public resources to host refugees while preserving overall control of expenditures. They encouraged the government to maintain fiscal and monetary discipline in line with IMF recommendations. Delegates noted that Albania deserves substantial international assistance in light of the rising budgetary costs resulting from the recent conflict. They welcomed the decision of the Albanian government to adopt as soon as possible a revised budget for 1999 to reflect these rising costs and to introduce the necessary transparency procedures in the use of funds. Participants also acknowledged the government’s effort in co-ordinating with international organisations assisting the refugees. Participants mentioned specifically the sacrifices made by the Albanian population, currently hosting a vast majority of the refugees. In addition, participants recognised the strong pressures exerted on the Albanian public sector services to meet the present emergency situation. Particular attention needs to be given to the water, power, education and health sectors, which were already in a fragile situation prior to the crisis. Participants urged the government to resolutely implement its institutional reform program, in particular its anti-corruption program, reforms in the civil service, and to make every effort to promptly implement the action program agreed with the Customs Assistance Mission supported by the EU.

Delegates also noted the valuable co-ordination mechanisms established after the 1997 crisis among the core donors EC, WB, EBRD and IMF. This group liases with "Friends of Albania", which is co-chaired by the EU/OSCE. Core donors regularly monitor progress in the reform programmes agreed upon. This donor co-ordination process fits well into the broader regional framework now being established for the Balkans.

Donors pledged support of US $ 200 million for 1999. This includes incremental requirements caused by the Kosovo crisis. Pledges from some donors still need to be formally approved.

All donors recognised the uncertainty of the situation and confirm that further external financing could be needed in 1999. Accordingly, it was agreed that the European Commission and the World Bank, in consultation with the IMF, would continue to monitor Albania's evolving financial needs over the remainder of 1999 and the timely availability of the funding committed. They would take the initiative, if necessary, to hold a meeting to mobilise additional resources.