Economy is weak, but stable

According to the report, the economic slowdown, dropped remittances, financial limits, low trust on consumers and the poor producing capacity have withheld the private consumption and spending on investments.

“Public debt increased from 59.4% of Gross Domestic Product in 2011 to 62.9% by the end of 2012, exceeding the statutory ceiling of 60%, which was abolished in December. Some three fifths of the public debt is domestic but it continues to show a short-term bias (around half of it has a maturity of one year or less) which requires frequent re-financing. Overall, the relatively high and increasing government debt and its short-term bias are are a cause of concern, as they represent a source of macro-financial vulnerability, especially following the abolition of the statutory ceiling. The accumulation of public debts shows a serious weakeness in managing the public finances.”

As for the case of CEZ, which is expected to be resolved from international courts, the failures in the privatization process are another problem mentioned in the report.

“The private sector remains dominant and continues to account for about 80% of the Gross Domestic Product. The privatisation process suffered setbacks with the unsuccessful sale of Albpetrol, a state owned oil company, and of the remaining public stake in Albtelecom, a partly privatized telecommunication firm. No progress was made on the privatisation of INSIG”

According to the report, the banking system remains well capitalized and luquid, but bad loans are a concern. The strong slowdown of the increasing loans is considered damaging for the economy.

“Overall, although some progress was made on establishing a functional market economy, Albania needs to strengthen finances and reduce the relatively high level of public debt, further bolster governance, enhance labour market performance, provide protection for property rights and strengthen the rule of law and the fight against corruption”.

Albania has not fulfilled the commitments deriving from the Stabilization Association Agreement in the intellectual property area, while the property right is another area that has seen no progress.

“In the area of property rights, a key priority of the opinion is the implementation of a property reform strategy, although very little has progress has been done for the implementation of key strategic objectives, such as the property registration, property restitution, compensation and legalization. The action plan need to be reviewed to ensure that it is realistic and sustainable in terms of objectives and funding.

As for the competitiveness, the report values the limited progress same as in the agriculture and rural development areas, and little progress in fishing. Environment, employment, education, food safety and veterinary show little progress, and even less in science and research. The transportation remains another problematic sector.

“Little progress has been made with the transportation policies. Further efforts are needed for correlating the local legislation with the European one, and to reinforce the administrative capacities in all types of transportation. Road safety remains a serious cause of concern and should be treated urgently. The air safety supervision capacities have improved, but still depend highly from foreign experts”,

According to the report, little progress has been shown from the energy area. The tax sector has seen limited progress, where fiscal evasion and corruption remain a problem. As for statistics, they value the changing of the structure and the law, but they want its implementation and guaranteeing of independence and credibility of Institution of the Institution of Statistics.

Prepared by: Ernest Bungur

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