This sector report claims that in thethree years between 2002 and 2005 alone, almost 235,000people have moved out of poverty in Albania. Strong economicgrowth and large inflow of remittances are at the center ofthis impressive achievement. However, low productivity ofpredominantly small family farms has put a drag on ruralgrowth prospects. Moreover, Ndihma Ekonomike (NE) program,the means-tested income support program is small in scale,and has a low coverage so that it has had only a modestimpact on poverty reduction. As a result of thesedevelopments, the poor are mostly rural residents, lowskilled (measured as years of schooling completed) and largefamilies. The main conclusion of this report is that asAlbania looks ahead it faces the challenges of consolidatingand sustaining these improvements in living conditions andnarrow the widening rural and urban differences. To tacklethese challenges, Albania needs to maintain the high growthpath, raise rural productivity and improve the targetingperformance of its NE program