Over the past decade, Albania has been seeking to develop the framework for a market economy and more open society. It has faced severe internal and external challenges in the interim – extremely low income levels and a lack of basic infrastructure, the rapid collapse of output and inflation rise after the shift in regime in 1991, the turmoil during the 1997 pyramid crisis, and the social and economic shocks accompanying the 1999 Kosovo crisis. In the face of these challenges, Albania has made notable progress in creating conditions conducive to growth and poverty reduction. In the process leading to its first Poverty Reduction Strategy (that is the National Strategy for Socioeconomic Development, now renamed the National Strategy for Development and Integration), the Government of Albania reinforced its commitment to strengthening its own capacity to collect and analyze on a regular basis the information it needs to inform policy-making. Multi-purpose household surveys are one of the main sources of information to determine living conditions and measure the poverty situation of a country. They provide an indispensable tool to assist policy-makers in monitoring and targeting social programs. In its first phase (2001-2006), this monitoring system included the following data collection instruments: (i) Population and Housing Census; (ii) Living Standards Measurement Surveys every 3 years, and (iii) annual panel surveys. The Population and Housing Census (PHC) conducted in April 2001, provided the country with a much needed updated sampling frame which is one of the building blocks for the household survey structure. The focus during this first phase of the monitoring system is on a periodic LSMS (in 2002 and 2005), followed by panel surveys on a subsample of LSMS households (in 2003, and 2004), drawing heavily on the 2001 census information. A poverty profile based on 2002 data showed that some 25 percent of the population are poor, with many others vulnerable to poverty due to their incomes being close to the poverty threshold. Income related poverty is compounded by poor access to basic infrastructure (regular supply of electricity, clean water), education and health services, housing, etc. The 2005 LSMS was in the field between May and early July, with an additional visit to agricultural households in October, 2005. The survey work was undertaken by the Living Standards unit of INSTAT, with the technical assistance of the World Bank.
