On Wednesday 24th August, Minister of Finance, Ridvan Bode, and Italian Ambassador in Tirana, Saba D’Elia, are going to sign an agreement on debt for development swap for a total amount of 20 million Euro. The Agreement is part of the financial assistance package provided by the Protocol of Development Cooperation 2010-2012 between Italy and Albania.The Agreement is intended to convert the debt owed by Albania to Italy into financial resources available to implement projects for social development. How does this conversion work in practical terms? The instalments, which the Albanian Government was supposed to pay to the Italian Government to settle the previous soft loans, will be transferred into a special account at the Central Bank of Albania (the counterpart fund). The Ministry of Finance shall transfer as many instalments as to reach the total amount of 20 million Euro. Thanks to this mechanism, the Management Committee of the counterpart fund, established by the Agreement, will have the necessary financial resources to fund projects in the fields of employment generation, education, health and, generally, for social inclusion of vulnerable groups.
After the signing of the agreement, an operational manual will be drafted to provide instructions for the formulation of those projects that will be submitted to the Management Committee. This structure, composed by representatives of the Albanian Government and experts from the Italian Development Cooperation, is in charge to select the projects to be funded under the debt for development scheme, to monitor their implementation and to assess activities and achievements.
In the field of international aid, agreements on debt for development swap are regarded as advanced financial tools, already successfully implemented by the Italian Cooperation in many other partner countries. By signing this Agreement, the Italian Cooperation is introducing in Albania this innovative operational tool, which will relieve the burden of external debt repayments for the Albanian Government and, at the same time, pool additional financial resources for social development projects considered as a priority by both sides.