EU: Economy is a criteria for Albania

The low domestic production and low exports, as consequence, compared with the high level of import in general, have deteriorated the commercial balance and the deficit of the current account, which the confidential document of the 27 member countries considers a structural problem.

“EU considers that the Albanian economy has continued the economic growth, although with a lower pace, despite the difficult global circumstances. The GDP growth has been kept and the inflation remained within the objectives set by the Albanian Bank. The deficit of the current account deteriorated after the commercial balance expanded. In order to guarantee the macroeconomic stability in a still unstable regional and international economic environment, the EU encourages Albania to take measures for reinforcing the fiscal consolidation by securing a constant fall in the GDP relation with the debt. EU notes that the lack of stability in Albania’s commercial balance with the foreign economies remains high, due to a significant gap in commerce. Albania’s production and export base remains low, suggesting that the deficit of the current account is structural. A series of structural obstacles, including the weak investing climate, damages the competition and hampers the high attraction of added value in foreign investments”, the document says.

Market economy functionality

The fulfillment of the 12 criteria would affect positively in the economic criterion, since the rule of law or the unsolved property issue affects the market functionality. EU notes that there is a high level of informal economy and encourage Albania to reduce unemployment.

“The EU takes in consideration Albania’s efforts for creating a functional market economy by preserving the macroeconomic stability and a stable inflation. EU welcomes the steps taken for improving the regulatory structural framework for businesses, but encourages further efforts in addressing deficiencies, as regards the property rights, the implementation of agreements, the rule of law, the still widely informal economy and the poor procedures for getting out of the market. EU encourages Albania to take measures for improving the infrastructure, including energy and transportation; fighting unemployment; reinforcing the human capital; for improving the education system and for increasing the working force”, EU suggests.

Taxes and Customs

The document refers to the tax system for fighting informal economy, while they ask evidence for war against corruption in customs.

“The EU encourages Albania to continue approximating its direct and indirect tax legislation and practices to the EU legislation, and make more efforts with the fiscal investigation and war against informal economy. The EU notes Albania’s determination in increasing direct investments and pushes for more efforts in treating the existing difficulties for the investors, including the serious delays with the VAT reimbursement. The EU welcomes the commitment of the Albanian authorities in decreasing the reference price usage, and for increasing the usage of transaction value. The EU expects its effective implementation. The EU notes that Albania is taking measures to fight corruption and underlines the necessity of creating solid data in this direction, as regards the concerns raised about the corruption perceived in the customs and tax administrations”.

Predictions

The EU puts in question the predictions for the economic growth, the public debt and the deficit set on the budget of 2012, by advising a review.

“The EU encourages Albania to have a more elaborated budget for 2012, which passed on December 2011, especially as regards the GDP growth predictions, the public debt and the budget deficit, by assessing the possible challenges for the macro economic stability of our country and by examining the possibility of a rearrangement in the budget during the next months. On this end, the EU underlines the need to secure high quality statistical economic data”, the document says.

Statistics

For guaranteeing reliable data, a professional independence is required for the Albanian Institution of Statistics by law (INSTAT).

“EU appeals that the measures that will guarantee INSTAT’s independence should be clearly included in the legislation and guarantee the financial and human resources. An improvement is needed in forming the key economic statistics”.
 
Financial cooperation

As regards financial cooperation, EU requires the political commitments for guaranteeing stability of projects that have been financed by the EU to be respected.

“Increasing ownership by the Albanian authorities in these policies is essential for achieving the expectancies.  The full guarantee for fulfilling the commitments, the guarantee for an effective development, the implementation of projects and the appropriate follow-up even after they are realized, are essential for guaranteeing the stability of the EU projects”.

IPA

“The EU underlines that the establishment and preservation of the necessary administrative capacities, including a reliable staff at the respective institutions, is a precondition for an efficient implementation of this financial aid. EU welcomes the steps that have been taken so far in the preparation with the Decentralization Management process of the pre-accession assistance funds, IPA, especially as regards the first Component. The EU encourages Albania to continue the process even for other components. The IPA Decentralization Management process remains a challenging exercise for Albania in establishing the administrative capabilities”.

The banking system in Albania is seen as capitalized and liquid, but the EU encourages the country to take all the necessary steps for resolving the high level of bad loans.

Prepared by: Arta Tozaj

Top Channel