Micro Business Financing System and Development of Credit Lines in Albania

Abstract

The capacity of public administration was weak; the system, stemming from a party focused environment, was highly
politicized. Corruption was pervasive in every facet of the public sector. Citizens feared public administration and did not trust it
to provide even the most basic services in a fair or impartial way. The financial collapse in 1997 was a watershed event in
Albania's transition from its communist past. It highlighted the problems of Albania's economic governance capacity and, from an
administrative standpoint, reaffirmed and highlighted the inefficacy of a public administration, unable to enforce its laws and
regulations. As the public's confidence in Albanian1 institutions had been significantly eroded by the recent events, restoring the
public's trust in the government became the main priority of the government. In order to achieve this objective the capacity of the
public administration needed to be dramatically strengthened.2 The donors concurred with this assessment. IDA, starting with
the 1998 CAS, considered governance and institution building as one of the central planks of its intervention and identified the
need to adopt and implement reforms to build an accountable and transparent state as the most important challenge facing the
Government of Albania. Over the next several years, the Albanian Government, in partnership with donors, emphasized
institutional reform and capacity building and developed a comprehensive strategy to strengthen the public institutions for more
effective governance.