IMF urges Albania to press ahead with reforms

IMF urges Albania to press ahead with reforms

TIRANA, Feb. 14 – Improvements in infrastructure, the business environment and rule of law will boost Albania’s growth potential, a senior International Monetary Fund official said during a visit to Albania this week. Speaking after concluding his Albania visit, Tao

Read Full Article
Businesses, experts divided over de-euroization implications

Businesses, experts divided over de-euroization implications

TIRANA, Feb. 13 – The de-euroization package that Albania’s central bank has announced has found exporters and economy experts divided over the effects such a policy could have on the country’s highly euroized economy. Alban Zusi, the head of Albania’s

Read Full Article
IMF warns Albania to draw lessons from airport concession as it proceeds with new PPPs

IMF warns Albania to draw lessons from airport concession as it proceeds with new PPPs

TIRANA, Feb. 12 – As Albania has started implementing an ambitious €1 billion public private partnership project, the International Monetary Fund has warned that Albania must ensure that the country’s potential benefits are realized while managing the PPPs fiscal costs

Read Full Article
Arbitration threat: Albania loses $80 million in one month

Arbitration threat: Albania loses $80 million in one month

TIRANA, Feb. 12 – Albania has been ordered to pay back the country’s largest oil producer dozens of millions of dollars over a tax dispute under a decision that comes as a second consecutive blow the country’s public finances receive

Read Full Article
Season’s first strawberries tap local markets

Season’s first strawberries tap local markets

TIRANA, Feb. 8 – The first local strawberries are already tapping local and international markets for this year as more and more farmers and businesses in the southern region of Fier, known as the breadbasket of Albania’s agriculture, have discovered

Read Full Article
Investment funds return to growth as net assets exceed half a billion euros

Investment funds return to growth as net assets exceed half a billion euros

TIRANA, Feb. 8 – Investment funds returned to double digit growth rates in 2017 after suffering a modest contraction in 2016, the first since their establishment in 2012 and rapid growth in the following three years. A report by the

Read Full Article
De-euroization package: Albania discourages saving, borrowing in Europe’s single currency

De-euroization package: Albania discourages saving, borrowing in Europe’s single currency

TIRANA, Feb. 8 – Albania will start applying next June some de-euroization measures in a bid to discourage the current high levels of Europe’s single currency in the country’s banking system and improve the transmission of its easier monetary policy

Read Full Article
Banks post historic high profits of €165 mln as they write off bad debt

Banks post historic high profits of €165 mln as they write off bad debt

TIRANA, Feb. 7 – A sharp cut in provisioning needs as non-performing loans continue their downward trend supported by the mandatory write-offs of loans that have spent three years in the ‘loss’ category led to historic high profits for commercial

Read Full Article
General elections effect worsened water companies’ performance, report shows

General elections effect worsened water companies’ performance, report shows

TIRANA, Feb. 7 – As the government has launched a nationwide campaign to crack down on illegal water connections and accumulated unpaid bills, a report by the country’s water regulator has unveiled a grim picture in the performance of water

Read Full Article
Greece’s NBG sells Albania unit to local ABI Bank

Greece’s NBG sells Albania unit to local ABI Bank

TIRANA, Feb. 6 – The Albanian subsidiary of Greek-owned National Bank of Greece is on track to be acquired by a local bank, becoming the second Greek bank to leave Albania in the past six years. The acquisition by the

Read Full Article
WP_Query Object
(
    [query_vars] => Array
        (
            [cat] => 5
            [paged] => 2
            [error] => 
            [m] => 
            [p] => 0
            [post_parent] => 
            [subpost] => 
            [subpost_id] => 
            [attachment] => 
            [attachment_id] => 0
            [name] => 
            [static] => 
            [pagename] => 
            [page_id] => 0
            [second] => 
            [minute] => 
            [hour] => 
            [day] => 0
            [monthnum] => 0
            [year] => 0
            [w] => 0
            [category_name] => economy
            [tag] => 
            [tag_id] => 
            [author] => 
            [author_name] => 
            [feed] => 
            [tb] => 
            [comments_popup] => 
            [meta_key] => 
            [meta_value] => 
            [preview] => 
            [s] => 
            [sentence] => 
            [fields] => 
            [menu_order] => 
            [category__in] => Array
                (
                )

            [category__not_in] => Array
                (
                )

            [category__and] => Array
                (
                )

            [post__in] => Array
                (
                )

            [post__not_in] => Array
                (
                )

            [tag__in] => Array
                (
                )

            [tag__not_in] => Array
                (
                )

            [tag__and] => Array
                (
                )

            [tag_slug__in] => Array
                (
                )

            [tag_slug__and] => Array
                (
                )

            [post_parent__in] => Array
                (
                )

            [post_parent__not_in] => Array
                (
                )

            [author__in] => Array
                (
                )

            [author__not_in] => Array
                (
                )

            [ignore_sticky_posts] => 
            [suppress_filters] => 
            [cache_results] => 1
            [update_post_term_cache] => 1
            [update_post_meta_cache] => 1
            [post_type] => 
            [posts_per_page] => 10
            [nopaging] => 
            [comments_per_page] => 50
            [no_found_rows] => 
            [order] => DESC
        )

    [tax_query] => WP_Tax_Query Object
        (
            [queries] => Array
                (
                    [0] => Array
                        (
                            [taxonomy] => category
                            [terms] => Array
                                (
                                    [0] => 5
                                )

                            [include_children] => 1
                            [field] => term_id
                            [operator] => IN
                        )

                )

            [relation] => AND
        )

    [meta_query] => WP_Meta_Query Object
        (
            [queries] => Array
                (
                )

            [relation] => 
        )

    [date_query] => 
    [post_count] => 10
    [current_post] => -1
    [in_the_loop] => 
    [comment_count] => 0
    [current_comment] => -1
    [found_posts] => 7297
    [max_num_pages] => 730
    [max_num_comment_pages] => 0
    [is_single] => 
    [is_preview] => 
    [is_page] => 
    [is_archive] => 1
    [is_date] => 
    [is_year] => 
    [is_month] => 
    [is_day] => 
    [is_time] => 
    [is_author] => 
    [is_category] => 1
    [is_tag] => 
    [is_tax] => 
    [is_search] => 
    [is_feed] => 
    [is_comment_feed] => 
    [is_trackback] => 
    [is_home] => 
    [is_404] => 
    [is_comments_popup] => 
    [is_paged] => 1
    [is_admin] => 
    [is_attachment] => 
    [is_singular] => 
    [is_robots] => 
    [is_posts_page] => 
    [is_post_type_archive] => 
    [query_vars_hash:WP_Query:private] => 7c6d40accdf1b7107fd0620ce08e489d
    [query_vars_changed:WP_Query:private] => 
    [thumbnails_cached] => 1
    [stopwords:WP_Query:private] => 
    [query] => Array
        (
            [cat] => 5
            [paged] => 2
        )

    [request] => SELECT SQL_CALC_FOUND_ROWS  wp_posts.ID FROM wp_posts  INNER JOIN wp_term_relationships ON (wp_posts.ID = wp_term_relationships.object_id) WHERE 1=1  AND ( wp_term_relationships.term_taxonomy_id IN (5) ) AND wp_posts.post_type = 'post' AND (wp_posts.post_status = 'publish') GROUP BY wp_posts.ID ORDER BY wp_posts.post_date DESC LIMIT 10, 10
    [posts] => Array
        (
            [0] => WP_Post Object
                (
                    [ID] => 135793
                    [post_author] => 29
                    [post_date] => 2018-02-14 10:46:04
                    [post_date_gmt] => 2018-02-14 09:46:04
                    [post_content] => [caption id="attachment_135796" align="alignright" width="300"]zhang Tao Zhang, the IMF deputy managing director[/caption]

TIRANA, Feb. 14 - Improvements in infrastructure, the business environment and rule of law will boost Albania's growth potential, a senior International Monetary Fund official said during a visit to Albania this week.

Speaking after concluding his Albania visit, Tao Zhang, the IMF deputy managing director, stressed the need for the Balkan country to press ahead with reforms and take advantage of the favorable external environment in Europe, where Albania's main trading partners Italy and Greece have escaped their recessions.

“In my discussions with the [Albanian] authorities, I emphasized that this is the moment to accelerate reforms. The global economy is in an upswing. This includes Europe, where inflation and interest rates remain low. However, such favorable external conditions are not going to last forever. So now is the time to press ahead with reforms and build up stronger economic and financial defenses," Zhang said, noting the progress Albania has made in reducing poverty, maintaining stability and developing the economy.

“I also discussed with authorities policies to boost Albania’s growth potential. These include improvements in infrastructure, education, and business environment, especially the rule of law. Reducing public debt is an important goal that can be achieved by strengthening public expenditure management and the tax system," added the senior IMF official.

In a meeting with Finance Minister Arben Ahmetaj, the IMF official offered assistance to curb potential risks stemming from the much rumored public private partnerships which IMF has warned could further increase public debt, currently at about 70 percent of the GDP.

The Washington-based lender of last resort expects the Albanian economy to slow down to 3.7 percent in 2018, down from an expected 3.9 percent in 2017 as the TAP and Devoll Hydropower project reduce their FDI contribution by an estimated €180 million in 2018 alone and by €360 million in 2019.

The Albanian government’s growth expectation for 2018 is at 4.2 percent, 0.5 percent higher than the IMF and 0.7 percent more optimistic compared to the World Bank’s forecast.
                    [post_title] => IMF urges Albania to press ahead with reforms
                    [post_excerpt] => 
                    [post_status] => publish
                    [comment_status] => closed
                    [ping_status] => closed
                    [post_password] => 
                    [post_name] => imf-urges-albania-to-press-ahead-with-reforms
                    [to_ping] => 
                    [pinged] => 
                    [post_modified] => 2018-02-14 10:48:44
                    [post_modified_gmt] => 2018-02-14 09:48:44
                    [post_content_filtered] => 
                    [post_parent] => 0
                    [guid] => http://www.tiranatimes.com/?p=135793
                    [menu_order] => 0
                    [post_type] => post
                    [post_mime_type] => 
                    [comment_count] => 0
                    [filter] => raw
                )

            [1] => WP_Post Object
                (
                    [ID] => 135772
                    [post_author] => 29
                    [post_date] => 2018-02-13 15:06:44
                    [post_date_gmt] => 2018-02-13 14:06:44
                    [post_content] => TIRANA, Feb. 13 - The de-euroization package that Albania’s central bank has announced has found exporters and economy experts divided over the effects such a policy could have on the country’s highly euroized economy.

Alban Zusi, the head of Albania’s Exporters' Association, fears the central bank's strategy to discourage saving and lending in Europe’s single currency will lead to a stronger national currency and losses for the country’s exports, two-thirds of which are destined for Eurozone countries, mainly Italy and Greece.

The national currency, lek, is already trading at an 8-year high of about 133 lek against Europe’s single currency in a gradual upward trend that began in mid-2015 as the euro’s five-year reign of about 140 lek came to an end.

“The euro's depreciation by 6 percent in the past couple of years has led to losses of about €60 million for the country's exporters considering total exports of about 1 billion euros," says Alban Zusi, the head of the Exporters Association, worried over the implications such a policy could have on the country's free floating exchange rate regime.

Exporters are also worried a stronger national currency could make them lose their competitive advantage especially in key sectors such as the garment and footwear industry producing the country’s top exports, employing about 100,000 people and relying on cheap labor costs.

Albania’s exports grew by 12 percent in 2017 following sluggish performance since the mid-2014 slump in commodity prices paralyzing the country’s poorly diversified exports, but Albania's trade gap still widened by 5.2 percent last year due to a hike in imports fuelled by some major energy-related investment.

When it comes to imports, a stronger national currency will make them cheaper, but damage local producers who will be forced to reduce prices to survive tough competition from abroad. An increase in imports will also negatively affect the country’s GDP growth as Albania is already a net importer with exports meeting only about 44 percent of what the country imports.

Zef Preçi, an economy expert who heads the Albanian Centre for Economic Research, is also against the central bank’s de-euroization strategy, saying the move could have negative effects for Albania’s long-term EU integration prospects and even further strengthen the national currency in the short-run with a negative impact on the country’s competitiveness and exports.

Preçi favors Albania’s unilateral introduction of the Euro as neighbouring Kosovo and Montenegro have done, saying this policy will help Albania deal with high public debt levels and curb the effect of money laundering and drug proceeds on the national economy.

"A rapid move toward the euro instead of the Albanian lek will undoubtedly serve the reduction of risks and buffering from shocks on the horizon as a result of the government's careless policies, especially regarding the aggressive increase in public debt, the threatening involvement of the private sector in public infrastructure investment and even the evident exposure of the national economy toward money laundering from criminal proceeds such as the cultivation, processing, trade and exportation of marijuana and other stronger drugs," says Preçi.

Albania’s public debt is already at 70 percent of the GDP, a high level for the country’s stage of development, while public private partnership and hike in cannabis cultivation in 2015-2016 have become hot topics in Albanian politics and economy.

"That does not also exclude the adverse effect, such as the case of PIIGS, the Mediterranean countries that adopted the euro and were the gist of Eurozone's 2011-12 crisis, which showed that the decrease in public debt interest rates only pushed the governments to increase their public debt levels," says Preçi.

"In order not to repeat this phenomenon, I think that by unilaterally adopting the euro, a favourable environment is created for more transparency over public debt and a greater role of the European Central Bank in this respect. In addition, I think that the introduction of the euro will help curb dangerous PPPs especially in the future and somehow protect the national economy from the evident and threatening money laundering phenomenon," he adds.

Expert Selami Xhepa has earlier said the de-euroization measures could curb the financial market and drive investors to seek other opportunities abroad.

“The more you increase rigidity toward investment alternatives in euro, the more investors and banks as part of the financial system, will look for alternatives abroad where there is zero risk regarding the exchange rate risk,” says Xhepa, warning that the measures negatively affect investors who receive payments in euro from abroad and use euro as their currency in their day-to-day operations.

 

In favor 

Other economy experts see the central bank's move as not a war against Europe's single currency, but the protection of borrowers and savers that could also help the Bank of Albania on a better transmission of its monetary policy.

"The reason for the initiative to reduce the use of euro in the economy is based on several factors; statistics show there is about 1 billion euros annually in migrant remittance flows, 65 to 70 percent of the trade exchanges are carried out in Europe's single currency and tourism which is the sector contributing most income to the economy and has 90 percent of its inflows in euro,” says Adrian Civici, an economy expert.

“The Albanian economy has a 50 percent euroisation rate. Facing this situation, the Bank of Albania has undertaken a de-euroization process for a better pass-through of its monetary policy to the economy and protect customers from the sharp exchange rate fluctuations as the biggest volume of loans is Euro-denominated at a time when salaries are in the national currency, lek," adds Civici.

Banking expert Elvin Meka says the process the central bank has initiated is the right one but, will not be easy.

“There will not be any effort to drastically stop the use of euro in the economy and the Albanian financial system. What we target is a balance on the use of Albanian and foreign currencies in the economy," says Meka.

"As far as businesses are concerned it must be clear that there will be no administrative measures that banks can impose on businesses. The measures have a regulatory character that target promoting a greater use of the national currency in the economy and the financial system such as lending and saving," Meka has said.

 

De-euroization package

 The new de-euroization rules that Albania’s central bank will apply by next June make it more expensive for commercial banks to provide Euro-denominated loans and accept deposits in Europe’s single currency, by increasing compulsory reserve requirements.

Compulsory reserve requirements for lek-denominated deposits and loans, currently at about half of the total, have been lowered or kept at the same levels in a bid to encourage the use of national currency and protect savers and borrowers from exchange rate fluctuations.

“These regulatory amendments aim at making foreign currency transactions in the banking sector more costly (i.e. less preferred) and promote mechanisms for raising the awareness of borrowers (especially those households who are unhedged against the exchange rate risk) on risks that accompany foreign currency borrowing," central bank governor Gent Sejko has said.

The compulsory reserve requirement for foreign-currency liabilities that mainly involve Euro-denominated deposits has been raised to 12.5 percent, up from a previous 10 percent on both foreign and local currency deposits. For commercial banks where foreign-currency deposits account for more than half of the total, the reserve requirement for any liability above the 50 percent level has been set at 20 percent.

Meanwhile, compulsory reserve requirements for lek-denominated deposits has been lowered by 2.5 percent to 7.5 percent.

Similarly, the minimum requirements on foreign-currency denominated liquid assets has been increased to 20 percent of the short-term liabilities, up from a previous 15 percent and preserved at 15 percent on lek-denominated liquid assets.

In a bid to raise awareness of the risks facing borrowing in foreign currency, commercial banks have also been asked to propose borrowers an alternative lek-denominated loan and provide examples of changes in loan instalments in case of currency exchange fluctuations.

The de-euroization package will also serve the country’s central bank to increase income and reduce losses it incurs from the high level of Euro-denominated deposits and loans.

A recent IMF working paper by international and Albanian experts, estimates that Albania loses a total of about 9 billion lek (€67 million) annually, 0.6 percent of the GDP, from its high euroization levels at about 50 percent.

IMF experts estimate Albania’s current euroization level of about 47 percent needs to drop by only 10 percent in order not to negatively affect the country’s banking system and economy.
                    [post_title] => Businesses, experts divided over de-euroization implications 
                    [post_excerpt] => 
                    [post_status] => publish
                    [comment_status] => closed
                    [ping_status] => closed
                    [post_password] => 
                    [post_name] => businesses-experts-divided-over-de-euroization-implications
                    [to_ping] => 
                    [pinged] => 
                    [post_modified] => 2018-02-13 15:06:44
                    [post_modified_gmt] => 2018-02-13 14:06:44
                    [post_content_filtered] => 
                    [post_parent] => 0
                    [guid] => http://www.tiranatimes.com/?p=135772
                    [menu_order] => 0
                    [post_type] => post
                    [post_mime_type] => 
                    [comment_count] => 0
                    [filter] => raw
                )

            [2] => WP_Post Object
                (
                    [ID] => 135766
                    [post_author] => 29
                    [post_date] => 2018-02-12 18:06:23
                    [post_date_gmt] => 2018-02-12 17:06:23
                    [post_content] => TIRANA, Feb. 12 – As Albania has started implementing an ambitious €1 billion public private partnership project, the International Monetary Fund has warned that Albania must ensure that the country's potential benefits are realized while managing the PPPs fiscal costs and risks.

In a report examining public infrastructure in the six EU aspirant Western Balkans countries, the IMF notes that the region's economies have one of the worst scores for the management of PPPs.

The IMF brings Albania’s experience with the 20-year concession contract it signed back in 2005 with a German-led concessionaire on upgrading and operating the country’s sole international airport as a deal under which important lessons can be learned.

“The PPP achieved some main objectives, but important lessons can be learned. Albania secured construction and operation of a modern airport of high standards, allowing for continued strong growth in travel demand and imposing only minimal fiscal risks on the country. The investment, however, could have been better designed from the onset, facilitating stronger traffic growth, increasing revenue growth associated with higher levels of activity, and positioning Albania more competitively in the regional aviation market,” says the IMF.

“Many Albanians travel by bus to airports in Kosovo, Montenegro, and Macedonia, and the relatively high costs of flights to Albania may also have affected inbound tourism,” says the IMF, attributing the low number of low-cost carriers to the airport's high landing fees.

The Tirana International Airport consortium had its exclusive rights on international flights lifted only in mid-2016, about 12 years after it launched its operations in return for extending its concession term for another couple of years until 2027 for the operation of the Kukes airport, in northeastern Albania, which is unlikely to launch operations as the country's second international airport in the short to mid-term due to its unfavorable geographical position.

The Albanian government's latest initiative of building a new international airport in Vlora, southern Albania, is set to extend the Tirana airport's concession term by another two to three years depending on the year it becomes operational.

Albania recently concluded its first major project as part of its ambitious, but rather controversial €1 billion PPP project for the next four years to upgrade road, health and education infrastructure. The project is a long-awaited major road linking Albania to neighboring Macedonia which will be built by an Albanian company for €240 million in the next four years in return for repayment in annual instalments and traffic guarantees for a 13-year period until 2031.

Insufficient fiscal space and public sector inefficiencies make private financing of infrastructure investment attractive, but the IMF says PPPs involve risks in all stages of the project.

“PPP investments involve fiscal risks in all stages of the project cycle, including budget preparation, procurement, financing, and managing performance-based contracts. PPPs can generate large explicit and implicit contingent liabilities (for example, guarantees), and encourage off-balance operations that reduce transparency,” says the IMF.

The Washington-based lender of last resort has earlier warned Albania’s €1 billion PPP project will not only fail to bring public debt down to 60 percent by 2021, but could create hidden costs which if included in the debt stock could take it to 71 percent of the GDP, a high burden for Albania’s current stage of development.

Albania has already had troubled experience with a more than a dozens of concession contracts in the key health, customs sectors which are expected to cost taxpayers about €70 million in 2018 and much more in the next few years as more PPPs become operational.

The IMF suggests sound planning and project selection as well as strong fiscal institutions with sufficient control at each stage of the PPP process including possible contract renegotiations as some of the key elements for ensuring government success in PPPs.

The Washington-based financial institution says it expects Albania’s growth to slow down to 3.7 percent of the GDP in 2018, down from 3.9 percent this year as investment by large energy related projects such as the Trans Adriatic Pipeline and Devoll Hydropower project taper off and no new major projects appear in sight to replace them.

The IMF’s role in Albania was downgraded to advisory in early 2017 after the conclusion of a 3-year binding deal supported by a €331 million loan also conditioning the government’s tax policies.

 

Infrastructure gap 

All Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro and Serbia have underdeveloped transport, power and telecoms networks compared with the European Union average, says the IMF report.

"Better transportation, energy, and telecommunications networks would help Western Balkan countries raise productivity, integrate deeper into the bloodstream of global trade, and improve the region’s attractiveness for foreign investment," says the IMF.

However, lack of ample budget resources and strong institutional frameworks governing the selection, execution, and monitoring of projects are missing in the Western Balkans where most countries already have high public debt and budget deficit levels.

“A regionally coordinated public infrastructure push, coupled with better management of actual projects, could significantly increase per capita income. The long-term gain of real GDP per person could be as high as a 3-4 percentage points," says the IMF.

The World Bank has earlier warned catching up with the average EU income could take Albania and other EU aspirant Western Balkan economies about six decades unless current sluggish GDP growth doubles to 5 or 6 percent.

Western Balkan countries are preparing to adopt measures for an EU-backed regional economic area, a test before their apparent eventual European Union integration.

Short and mid-term enlargement prospects for the six Western Balkan countries have been hampered by internal developments in the bloc with the Brexit, the migrant and financial crises as well as rising populism high on the agenda.

A recent European Commission enlargement strategy has recently unveiled only Serbia and Montenegro, the only two Western Balkans that already launched accession talks, are likely to join the block by 2025.
                    [post_title] => IMF warns Albania to draw lessons from airport concession as it proceeds with new PPPs
                    [post_excerpt] => 
                    [post_status] => publish
                    [comment_status] => closed
                    [ping_status] => closed
                    [post_password] => 
                    [post_name] => imf-warns-albania-to-draw-lessons-from-airport-concession-as-it-proceeds-with-new-ppps
                    [to_ping] => 
                    [pinged] => 
                    [post_modified] => 2018-02-12 18:06:23
                    [post_modified_gmt] => 2018-02-12 17:06:23
                    [post_content_filtered] => 
                    [post_parent] => 0
                    [guid] => http://www.tiranatimes.com/?p=135766
                    [menu_order] => 0
                    [post_type] => post
                    [post_mime_type] => 
                    [comment_count] => 0
                    [filter] => raw
                )

            [3] => WP_Post Object
                (
                    [ID] => 135764
                    [post_author] => 29
                    [post_date] => 2018-02-12 13:31:20
                    [post_date_gmt] => 2018-02-12 12:31:20
                    [post_content] => TIRANA, Feb. 12 – Albania has been ordered to pay back the country’s largest oil producer dozens of millions of dollars over a tax dispute under a decision that comes as a second consecutive blow the country’s public finances receive over the course of one month from international courts.

Paris-based International Chamber of Commerce has ruled the Albanian government will have to pay back Bankers Petroleum $57 million (€46.5 mln) over a tax dispute dating back to 2011. The conflict escalated in 2015 following an audit by a government agency claiming the country’s largest oil producer had artificially increased operating costs in order to avoid paying the profit tax, a national TV reports citing a copy of the decision by Paris-based international arbitration court.

The ruling is the second international punishment Albania has received during the past month after Strasbourg-based European Court of Human Rights decided last January the Albanian government will have to compensate owners of a seaside apartment block a total of about €17 million ($21 mln) for illegally demolishing it in late 2013 to pave the way for a coastal promenade.

The two rulings take the total bill Albania has to foot to about $80 million, a significant amount for Albania’s struggling public finances burdened by the high cost of the country’s public debt, currently at 70 percent of the GDP, a high level for Albania’s current stage of development.

The rulings also unveil the Albanian government’s arbitrariness when enforcing contracts and respecting property rights, two of the main concerns facing foreign investors in the country in addition to highly perceived corruption and an inefficient judiciary that Albania is trying to reform.

Top Channel TV has learned the costs the Albanian government incurs from the arbitration trial with Bankers Petroleum amount to $60 million including court expenses and interest rates.

In Sept. 2016, Bankers Petroleum was acquired by a Chinese company for C$575 million (€392 mln) from Canadian investors who ran the country's largest oil producer for 12 years under a 25-year concession deal with the Albanian government which expires in 2029.

 

Bankers Petroleum conflict

The conflict with the Albanian government started in 2015 after an audit by the national agency for natural resources claimed the company had artificially increased its expenses by $300 million in order to avoid paying the profit tax which companies operating in the oil industry pay at a 50 percent rate only after meeting their investment costs. To date, no oil company operating under concession contracts in Albania has paid the profit tax, justifying it with high investment costs.

Earlier in 2015, the then Canadian-run came under fire over failing to meet safety requirements following the eruption of water and gas from two of its oil wells, causing property damage and the temporary evacuation of local residents who claim the company's drilling operations trigger constant earthquake-like tremors.

The Albanian government and Bankers Petroleum suspended arbitration proceedings in early 2016 after agreeing to hire a third-party auditor over the $57 million tax dispute as Bankers continued to pay the disputed amount in instalments.

However, later in late 2016, the Albanian government resumed legal action at the Paris-based arbitration court, dissatisfied with the ruling of PwC, one of the Big Four auditors, which ordered the Albanian government to pay back Canada-based Bankers Petroleum $37 million it had already paid in instalments over the disputed amount.

Bankers Petroleum, which since Sept. 2016 has been run by China’s Geo Jade, has considerably curbed oil production and delayed new drilling following the mid-2014 slump in international oil prices.

The company is now exporting its crude oil production after the late 2017 suspension of operations of a local oil refiner that went bankrupt left more than 1,000 oil workers jobless.

Bankers Petroleum operates the Patos-Marinza, one of Europe’s largest onshore heavy oilfields, and accounts for the overwhelming majority of 95 percent of Albania’s total oil production.

Bankers was one the country's largest debtors to the Albanian tax authorities at the end of 2016 with debts estimated at 2.5 billion lek (€18.7 million), according to a report by the Supreme State Audit.

State auditors say oil companies operating in the country are actively engaged in practices of fictitiously reporting high expenditure in order to avoid paying the corporate income tax which in case of oil companies is paid at a 50 percent only after investment costs are met.

Oil companies are charged a 10 percent royalty tax, making crude oil exports, the country’s second largest, a low value added product.

BMI Research, a unit of Fitch credit rating agency , estimates Albania's production of crude and natural gas and other liquids to have slowed down to 17,600 barrels of oil per day (bopd) in 2017, from 18,100 bopd in 2016 and a record high of 27,500 bopd in 2014 when oil prices were at their peak levels.

International oil prices recovered to $57 a barrel, up from a record low of $45 a barrel in 2016, but yet almost half of the peak level of more than $110 in mid-2014, says BMI Research.

Albania is a major oil producer but due to the poor quality and heavy refining needs of domestically produced oil, the country imports the overwhelming majority of its needs.

Currently, Shell oil giant is also engaged in oil explorations in the country, having made some key oil discoveries in southern Albania.

Last December, Albania concluded contract negotiations with the Royal Dutch Shell over a new oil exploration block, extending the British-Dutch multinational’s operations in the country, currently at an exploration stage, to three blocks.

Due its high tax burden levied on oil, Albania faces one of Europe’s highest fuel prices, but paradoxically one of the continent’s lowest GDP and consumption per capita estimated at only a third of the EU 28 average.

At €1.3.4/liter in February 2018, Albania’s diesel prices were the Western Balkan’s highest and even higher compared to Europe’s superpower Germany, says the Global Petrol Prices portal.

The oil industry produces Albania’s second largest exports and employs more than 3,000 people.

 

Arbitration threat 

 The decisions by the two international French courts ordering Albania to pay back about $80 million to private investors, unveils a new threat facing the country’s public finances for 2018 when two-major energy-related investment complete such as the Trans Adriatic Pipeline and big hydropower plant complete, leaving a huge gap in FDI, government revenue and contribution to GDP.

A late 2017 leaked confidential document by the country’s justice ministry showed that Albania faces the threat of being punished with a staggering €2 billion from a handful of arbitration cases with foreign companies, raising concern over the devastating effects it would have on the country’s public finances and one of Europe’s poorest economies.

Former Justice Minister Petrit Vasili says the country faces a severe financial threat.

"It's a fearful financial emergency and the Prime Minister faces the criminal offence responsibility for his destructive financial actions with the unilateral cancellation of contracts, but also his inaction, because he did nothing even though he was informed in writing over the situation," says Vasili, an opposition Socialist Movement for Integration (SMI) MP who in April 2017 was justice minister representing the SMI in the coalition government when he informed Prime Minister Edi Rama of the €2 billion arbitration court threat.

In case such a scenario is materialized, Albania risks losing almost a fifth of its GDP and half of the annual budget, not to mention public debt costs and economic and social effects from sharp cuts in government spending.

In its 2018 fiscal package, the Albanian government ranks potential punishment from international arbitration cases as one of the key threats facing the 2018 budget in addition to the prolonged drought paralyzing the country’s hydro-dependent domestic electricity generation in the second half of 2017 and triggering costly electricity imports of more than €100 million.

Albania recently won its first major legal battle with Italian businessman Francesco Becchetti over cancelled waste management and renewable energy projects dating back to two decades ago. Bechetti whose Albania assets, including a local TV station, were seized in mid-2015 on suspicion of money laundering and fraud-related offences, is still seeking hundreds of millions of euros other arbitration trials in the U.S. and Austria.

Albania is estimated to have lost about 8.5 billion lek (€63 million) in arbitration cases until the end of 2016, the majority of which in one case dating back to 2010 in the so-called electric train project with U.S. giant General Electric over the unilateral cancellation of a 2005 contract.
                    [post_title] => Arbitration threat: Albania loses $80 million in one month
                    [post_excerpt] => 
                    [post_status] => publish
                    [comment_status] => closed
                    [ping_status] => closed
                    [post_password] => 
                    [post_name] => arbitration-threat-albania-loses-80-million-in-one-month
                    [to_ping] => 
                    [pinged] => 
                    [post_modified] => 2018-02-12 13:31:20
                    [post_modified_gmt] => 2018-02-12 12:31:20
                    [post_content_filtered] => 
                    [post_parent] => 0
                    [guid] => http://www.tiranatimes.com/?p=135764
                    [menu_order] => 0
                    [post_type] => post
                    [post_mime_type] => 
                    [comment_count] => 0
                    [filter] => raw
                )

            [4] => WP_Post Object
                (
                    [ID] => 135711
                    [post_author] => 29
                    [post_date] => 2018-02-08 15:05:32
                    [post_date_gmt] => 2018-02-08 14:05:32
                    [post_content] => TIRANA, Feb. 8 - The first local strawberries are already tapping local and international markets for this year as more and more farmers and businesses in the southern region of Fier, known as the breadbasket of Albania’s agriculture, have discovered strawberry cultivation as their new success story.

Currently selling at about 500 lek (€3.7) a kg, strawberry prices are expected to undergo a sharp decline and drop to as low as €1.5/kg  as the peak production stage nears in the next few months, meeting domestic market needs but also exporting a small part of production to neighbouring countries, mainly Kosovo.

Strawberry production was quite limited until five years ago when the first massive cultivation began by farmers who had mainly worked in neighboring Greece and Italy.

The Kafaraj village in Fier has also been nicknamed ‘the strawberry village” due to the massive greenhouse strawberry cultivation in the past few years.

This year's production is set to be one of worst for the Karafaj farmers as they had their greenhouses damaged twice by floods in the past couple of months due to the local Vjosa River overtopped its banks.

However, dozens of other villages in Fier and Lushnja have high expectations about this year’s production.

One of the many many Italian entrepreneurs in Albania, Adriano Mazza found a “strawberry paradise land” in in the village of Grabian, Lushnje. He tried almost 14 varieties of strawberries, of which two had the highest yield and production is mainly destined for export.

“Strawberries are a smart investment in Albania, as they have 3 months production season far better than in some other countries where the production season lasts only 15 days. Albania’s sea position in the West makes the climate very favourable for this fruit,” Mazza has told the Agroweb portal.

Albania’s average yield of strawberry increased to 55 to 60 metric tons per hectare in 2017, up from an initial 40 to 50 metric tons in the early 2010s when large-scale cultivation began, says USAID Albania. The U.S. Agency for International Development has been assisting Fier farmers with alternative strawberry varieties to enable earlier harvest and shift production toward earlier, more profitable market windows as well as nutrition systems to improve the quality and food safety of strawberries.

In addition to dozens of farmer entrepreneurs and local pickers, an agriculture company run by one of the country's richest man is also engaged in strawberry cultivation in Lushnje through tunnel greenhouses among other fruit and vegetables it cultivates.

SuperBerry Albania, a Fier-based Dutch-Albanian joint venture has been exporting berries to the Netherlands since late 2015 after it launched a new packing facility.

Albania’s strawberry production relies on the Camarosa variety to a large extent and other short-day strawberry varieties including Sabrina, Fortuna, Nabila, Oso Grande, Splendor, and Miranda.

Experts say Albania has the ideal climate to grow berries, that can be harvested twice a year rather than once, providing for ‘out of season’ raspberries.

The southwestern Albanian region of Fier, known as the breadbasket of Albania’s agriculture, produces about a third of total vegetables and a quarter of the country’s field crops, making agriculture in this region a key sector in addition to its oil industry which has slowed down in the past three years due to a slump in international oil prices.

Agriculture is one of the main sectors of the Albanian economy, employing about half of the country’s population but producing only about a fifth of the country’s GDP, unveiling its poor productivity and huge untapped potential hampered by the fragmentation of land into small plots, poor credit and lack of subsidies.
                    [post_title] =>  Season’s first strawberries tap local markets 
                    [post_excerpt] => 
                    [post_status] => publish
                    [comment_status] => closed
                    [ping_status] => closed
                    [post_password] => 
                    [post_name] => seasons-first-strawberries-tap-local-markets
                    [to_ping] => 
                    [pinged] => 
                    [post_modified] => 2018-02-08 15:05:32
                    [post_modified_gmt] => 2018-02-08 14:05:32
                    [post_content_filtered] => 
                    [post_parent] => 0
                    [guid] => http://www.tiranatimes.com/?p=135711
                    [menu_order] => 0
                    [post_type] => post
                    [post_mime_type] => 
                    [comment_count] => 0
                    [filter] => raw
                )

            [5] => WP_Post Object
                (
                    [ID] => 135709
                    [post_author] => 29
                    [post_date] => 2018-02-08 11:37:16
                    [post_date_gmt] => 2018-02-08 10:37:16
                    [post_content] => TIRANA, Feb. 8 - Investment funds returned to double digit growth rates in 2017 after suffering a modest contraction in 2016, the first since their establishment in 2012 and rapid growth in the following three years.

A report by the country's Financial Supervisory Authority shows net assets in the three investment funds rose by an annual 11.4 percent to 72.7 billion lek (€547 mln), accounting for about 5 percent of the country's GDP.

The double-digit hike comes as a new Albanian-run investment fund has been operational since mid-2016, breaking the monopoly held by the Albanian subsidiary of Austria’s Raiffeisen Bank with its two investment funds.

The hike also comes at a time when interest rates in traditional deposits stand close to zero and investments funds, overwhelmingly investing in government securities, offer much more profitable investment alternatives.

The number of investors in the three investment funds rose by 7 percent to 31,314 at the end of 2017.

The emerging investment fund market is dominated by investments in government bonds and T-bills, accounting for about 80 percent of total assets.

Yields on 2-year notes, the government's key domestic instrument for long-term internal borrowing, rose by 0.12 percent to 3.35 percent in last January's auction, up from 2.55 percent last June, but were down from 3.8 percent in January 2017.

Meanwhile, yields on 12-month T-bills, the government's key instrument for short-term internal borrowing, slightly rose to 2.67 percent this week, on a constant upward trend since last March when they stood at 2 percent, according to Albania’s central bank.

Operational since early 2012, the two Raiffeisen-run investment funds and Credins Premium, a newly launched Albanian-owned fund, have increased their market share to 5 percent of the GDP, but yet account for only 7 percent of the bank deposits.

In its latest country report on Albania, the International Monetary Fund warns that investment fund supervised by the country’s Financial Supervisory Authority, lack an adequate crisis management framework.
                    [post_title] => Investment funds return to growth as net assets exceed half a billion euros
                    [post_excerpt] => 
                    [post_status] => publish
                    [comment_status] => closed
                    [ping_status] => closed
                    [post_password] => 
                    [post_name] => investment-funds-return-to-growth-as-net-assets-exceed-half-a-billion-euros
                    [to_ping] => 
                    [pinged] => 
                    [post_modified] => 2018-02-08 11:37:16
                    [post_modified_gmt] => 2018-02-08 10:37:16
                    [post_content_filtered] => 
                    [post_parent] => 0
                    [guid] => http://www.tiranatimes.com/?p=135709
                    [menu_order] => 0
                    [post_type] => post
                    [post_mime_type] => 
                    [comment_count] => 0
                    [filter] => raw
                )

            [6] => WP_Post Object
                (
                    [ID] => 135707
                    [post_author] => 29
                    [post_date] => 2018-02-08 10:17:01
                    [post_date_gmt] => 2018-02-08 09:17:01
                    [post_content] => TIRANA, Feb. 8 – Albania will start applying next June some de-euroization measures in a bid to discourage the current high levels of Europe’s single currency in the country’s banking system and improve the transmission of its easier monetary policy in boosting credit in the local currency.

The new rules make it more expensive for commercial banks to provide Euro-denominated loans and accept deposits in Europe's single currency, by increasing compulsory reserve requirements. Compulsory reserve requirements for lek-denominated deposits and loans, currently at about half of the total, have been lowered or kept at the same levels in a bid to encourage the use of national currency and protect savers and borrowers from exchange rate fluctuations.

"These regulatory amendments aim at making foreign currency transactions in the banking sector more costly (i.e. less preferred) and promote mechanisms for raising the awareness of borrowers (especially those households who are unhedged against the exchange rate risk) on risks that accompany foreign currency borrowing. The changes will enter into force within the first half of this year," central bank governor Gent Sejko told a press conference this week.

The compulsory reserve requirement for foreign-currency liabilities that mainly involve Euro-denominated deposits has been raised to 12.5 percent, up from a previous 10 percent on both foreign and local currency deposits. For commercial banks where foreign-currency deposits account for more than half of the total, the reserve requirement for any liability above the 50 percent level has been set at 20 percent.

Meanwhile, compulsory reserve requirements for lek-denominated deposits has been lowered by 2.5 percent to 7.5 percent.

Similarly, the minimum requirements on foreign-currency denominated liquid assets has been increased to 20 percent of the short-term liabilities, up from a previous 15 percent and preserved at 15 percent on lek-denominated liquid assets.

In a bid to raise awareness of the risks facing borrowing in foreign currency, commercial banks have also been asked to propose borrowers an alternative lek-denominated loan and provide examples of changes in loan instalments in case of currency exchange fluctuations.

"In order to avoid any possible misunderstanding, I would like, first of all, to clarify for the public that the Bank of Albania does not intend to reduce to zero the use of foreign currencies in financial activities, but to reduce the level of euroization to levels that are acceptable for economies of similar structure and size to our economy,” said governor Sejko.

“What we would like to see reduced, diminished or minimized is the presence of open foreign currency positions and exchange rate risk taking, whether directly or indirectly, in an unstudied or unhedged manner, by consumers, firms and financial market agents," he added.

Currently, some 53 percent of deposits in Albania's banking system are denominated in foreign currency, the overwhelming majority of which in Euro, while lending in credit is still dominated by Euro loans.

An IMF report shows Euro-denominated deposits increased by 10 percent to about half of total savings in the banking system over a decade until 2016. Meanwhile, the share of foreign currency credit, the overwhelming majority of which is denominated in Euro, dropped by 10 percent to 60 percent over a five-year period until 2016.

"The Bank of Albania deems that de-euroization is a necessary and useful process in the long run, in terms of both enhancing the effectiveness of economic and financial policies and reducing the risks to the financial stability," said central bank governor Gent Sejko.

"Our studies and analyses show that the use of foreign currencies in the domestic economic and financial environment is relatively high. This phenomenon is related to the high use of foreign currencies in commercial transactions and as a medium for savings, in the form of deposits, or for financing, in the form of foreign currency loans," the governor added.

Albania had some €1.9 billion in Euro-denominated loans and about 2 billion euros in deposits at the end of 2016, according to the European Central Bank.

Albania's central bank also decided to keep its key rate at a historic low of 1.25 percent this week, an easy monetary policy it has been following since mid-2016 in a bid to boost current sluggish credit and consumption.

The Albanian economy is projected to have grown by 3.9 percent in 2017 boosted by some major energy-related investment which are set to conclude their investment stage by the end of this year, pushing international financial institutions to lower their GDP forecasts on Albania to 3.5 to 3.7 percent.

 

Euroization costs 

The de-euroization package will also serve the country’s central bank to increase income and reduce losses it incurs from the high level of Euro-denominated deposits and loans.

A recent IMF working paper by international and Albanian experts, estimates that Albania loses a total of about 9 billion lek (€67 million) annually, 0.6 percent of the GDP, from its high euroization levels at about 50 percent.

The losses include 6 billion lek (€45 million) in seigniorage income for the central bank, indicating the difference between the value of money and the cost to produce it, and another 3 billion lek (€22.4 mln) in the high foreign currency reserves the Bank of Albania is obliged to hold to address the possible need for emergency liquidity assistance in Europe’s single currency, something which reduces the banking system’s refinancing needs and the possible size of the portfolio of domestic financial assets.

Experts estimate Albania’s current euroization level of about 47 percent needs to drop by only 10 percent in order not to negatively affect the country’s banking system and economy.

“Albania’s euroization level is just about 10 percent above the level predicted by the model, if Albania had the average euroization level as justified by the structural features of its economy and by strong macroeconomic performances,” says the IMF working paper.

Experts say high euroization entails lower seigniorage revenues, reduces the effectiveness of monetary policy, and heightens the vulnerability of the financial systems to exchange rate swings.

In a report examining the euro’s international role, the European Central Bank says unofficial loan and deposit euroization is salient feature among EU aspirant Western Balkans countries with Kosovo and Montenegro, already using the euro as their de facto currency without the EU’s blessing.

The report says unofficial euroization is determined by factors such as confidence in the domestic currency, trade relations with the euro area and remittances.

Albania conducts two-thirds of its trade exchanges with Eurozone countries, mainly Italy, and receives about €600 million in remittances from more than 1 million migrants, mainly in Italy and Greece, 40 percent less than pre-crisis peak level a decade ago.

 

 
                    [post_title] => De-euroization package: Albania discourages saving, borrowing in Europe’s single currency 
                    [post_excerpt] => 
                    [post_status] => publish
                    [comment_status] => closed
                    [ping_status] => closed
                    [post_password] => 
                    [post_name] => de-euroization-package-albania-discourages-saving-borrowing-in-europes-single-currency
                    [to_ping] => 
                    [pinged] => 
                    [post_modified] => 2018-02-08 10:17:01
                    [post_modified_gmt] => 2018-02-08 09:17:01
                    [post_content_filtered] => 
                    [post_parent] => 0
                    [guid] => http://www.tiranatimes.com/?p=135707
                    [menu_order] => 0
                    [post_type] => post
                    [post_mime_type] => 
                    [comment_count] => 0
                    [filter] => raw
                )

            [7] => WP_Post Object
                (
                    [ID] => 135703
                    [post_author] => 29
                    [post_date] => 2018-02-07 16:15:37
                    [post_date_gmt] => 2018-02-07 15:15:37
                    [post_content] => TIRANA, Feb. 7 - A sharp cut in provisioning needs as non-performing loans continue their downward trend supported by the mandatory write-offs of loans that have spent three years in the 'loss' category led to historic high profits for commercial banks operating in Albania in 2017.

Bank of Albania data shows the 16 overwhelmingly foreign-owned banks operating in Albania posted record profits of about 22 billion lek (€165 mln) in 2017, more than double compared to 2016 and breaking a previous record of about  15.7 billion lek (€116 mln) in 2015.

The record high profits come at a time when credit struggled to remain at positive growth rates, registering a mere 0.5 growth rate but moderate rates of about 3 percent when adjusted for the exchange rate effect and the NPL write-offs.

Non-performing loans, a key barrier that has been keeping lending standards tight, dropped by an annual 5 percent to 13.23 percent at the end of 2017 and were about 12 percent lower compared to the peak 25 percent level in mid-2014.

Data published by the country's central bank shows the record high profits were mainly a result of a sharp cut in provisioning for bad loans which dropped to a record low about 1.2 billion lek (€8.8 mln), down from a four-year high of 17.4 billion lek (€130 mln) in 2016.

However, a report published by the country’s association of banks shows the picture is not the same for all 16 commercial banks, and five small banks incurred losses in the first three quarters of 2017. Three-quarters of profits in the first the first three quarters of 2017 were posted by the country's two largest banks Turkish-owned BKT and Austrian Raiffeisen Bank, says the Albanian Association of Banks.

In its latest country report on Albania, the International Monetary Fund describes the country's banking system as well-capitalized, liquid and profitable.
                    [post_title] => Banks post historic high profits of €165 mln as they write off bad debt
                    [post_excerpt] => 
                    [post_status] => publish
                    [comment_status] => closed
                    [ping_status] => closed
                    [post_password] => 
                    [post_name] => banks-post-historic-high-profits-of-e165-mln-as-they-write-off-bad-debt
                    [to_ping] => 
                    [pinged] => 
                    [post_modified] => 2018-02-07 16:53:25
                    [post_modified_gmt] => 2018-02-07 15:53:25
                    [post_content_filtered] => 
                    [post_parent] => 0
                    [guid] => http://www.tiranatimes.com/?p=135703
                    [menu_order] => 0
                    [post_type] => post
                    [post_mime_type] => 
                    [comment_count] => 0
                    [filter] => raw
                )

            [8] => WP_Post Object
                (
                    [ID] => 135695
                    [post_author] => 29
                    [post_date] => 2018-02-07 11:41:07
                    [post_date_gmt] => 2018-02-07 10:41:07
                    [post_content] => TIRANA, Feb. 7 – As the government has launched a nationwide campaign to crack down on illegal water connections and accumulated unpaid bills, a report by the country’s water regulator has unveiled a grim picture in the performance of water companies which slightly deteriorated in 2017 when the country held general elections.

In an almost common trend during the past quarter of a century of the country’s transition to democracy and a market economy, the performance of state institutions deteriorates on general or local elections years due to weaker law enforcement and fictitious employments by central and local government authorities to apparently gain an electoral advantage.

The report by the Water Regulatory Entity shows the bill collection, the operation and maintenance costs and staff efficiency indicators slightly deteriorated in 2017. Meanwhile, the key non-revenue water indicator only slightly improved by 2 percent to drop to 65 percent, a staggering amount that shows the inefficiency in the management of the country’s local government-run water companies, the high level of thefts and a dilapidated distribution grid that is estimated to need huge unaffordable investment.

Although Europe's second richest country in water resources per capita after Norway, Albanians get an average of only 11.4 hours a day in tap water access and about a quarter of population in remote rural areas still don't have access to water.

“We are Europe’s second richest country in natural [water] resources, but Europe’s sole country with problems in tap water supply,” Prime Minister Edi Rama said last November, adding that water supply hours ranging from as low as 1 hour a day in villages to 4 to 5 hours a day in towns, put Albanians in a ‘survival mode.’

The bill collection rate dropped by 8 percent to 84 percent in 2017 and staff efficiency deteriorated to 9.2 employees per 1,000 water connections, the report shows.

Water metering only slightly improved to 68 percent, while half of the population continued to lack access to sewerage services.

"One of the main reasons of this downward trend in performance was that 2017 was an electoral year which is usually accompanied by an artificial increase in the number of water company employees and a lower law enforcement reflected on decline in bill collection rates," says the report.

“The bill collection rate dropped by 8 percent as a result of the tendency of not enforcing law during the electoral period as well as the increase in areas covered by water companies with the inclusion of rural areas that have poor bill collection rates,” the water regulator says.

Albania has some 61 water companies, the same as the number of local government units which in 2015 were cut to 61 from a previous 384 municipalities and communes.

“Staff efficiency deteriorated by 1 person to increase to 9.2 people per 1,000 water connections with a total of an extra 519 employees, which is mainly a result of the electoral year effect on artificial employments,” it adds.

Commenting on the price hike some major water companies such as that of Tirana and Durres are applying this year, the water regulator says current prices are yet four times lower compared to an average of 300 lek (€2.24)/m3 it estimates based on an affordability formula calculating water expenditure at 5 percent of the average €500 monthly income in an Albanian households of four.

Household consumers in Tirana and Durres, the country’s two largest municipalities covering about half of the country’s population, are facing 44 percent and 10 percent hikes respectively in water prices this year, with many describing them as unaffordable.

The report shows the country’s water network needs huge investment of about €3.7 billion, about a third of the country’s GDP in order to bring the water infrastructure to normality.

A national strategy on the water and sewerage system estimates Albania needs to invest about €170 million annually in the next 22 years to improve the sector's efficiency, but “the government and its donors can handle only about half of that amount.”

 

Nationwide campaign

 

Three months after Prime Minister Rama announced a nationwide campaign to crack down on massive illegal water connections and accumulated unpaid bills, a field inspection has been initially launched with business to continue with household consumers next March.

The campaigns come after consumers were left a 90-day deadline to self-regulate by cutting illegal connections, getting water meters and signing deals to pay off accumulated unpaid bills with the water companies.

The energy ministry says some 9,000 new contracts have already been signed, 26,000 new water meters installed and 7,500 consumers have signed deals to pay off accumulated unpaid debts in monthly instalments.

About a third of consumers were charged fixed rate bills in 2017 due to not being equipped with water meters.

The same as with the late 2014 nationwide electricity campaign, consumers who are found with illegal water connection face the threat of criminal charges and imprisonment.

In the late 2015 nationwide campaign against electricity, hundreds of household and business consumers were arrested over illegal grid connections. Dozens of thousands are still paying their accumulated debts in installments which has made state-run OSHEE electricity operator from a loss-making company into the country’s largest and most profitable.

Although significantly stabilizing the electricity sector, Rama’s rule of law platform with electricity came under criticism for targeting the poorest Albanians. One man committed suicide in prison after he was arrested for reconnecting to the electricity grid when he was cut off because he couldn’t afford to pay the bill.
                    [post_title] => General elections effect worsened water companies’ performance, report shows 
                    [post_excerpt] => 
                    [post_status] => publish
                    [comment_status] => closed
                    [ping_status] => closed
                    [post_password] => 
                    [post_name] => general-elections-effect-worsened-water-companies-performance-report-shows
                    [to_ping] => 
                    [pinged] => 
                    [post_modified] => 2018-02-07 11:41:07
                    [post_modified_gmt] => 2018-02-07 10:41:07
                    [post_content_filtered] => 
                    [post_parent] => 0
                    [guid] => http://www.tiranatimes.com/?p=135695
                    [menu_order] => 0
                    [post_type] => post
                    [post_mime_type] => 
                    [comment_count] => 0
                    [filter] => raw
                )

            [9] => WP_Post Object
                (
                    [ID] => 135686
                    [post_author] => 29
                    [post_date] => 2018-02-06 11:05:20
                    [post_date_gmt] => 2018-02-06 10:05:20
                    [post_content] => TIRANA, Feb. 6 - The Albanian subsidiary of Greek-owned National Bank of Greece is on track to be acquired by a local bank, becoming the second Greek bank to leave Albania in the past six years.

The acquisition by the American Bank of Investments, an American-Albanian bank that has been operating in Albania since 2016, comes after NBG Albania has been losing significant market share in the past decade and amid financial trouble its Greece-based parent bank has been facing in the aftermath of the 2008 crisis and the worst-ever recession in neighboring Greece.

The sale operation which is subject to approval by Albania's central bank and the country's competition authority, comes as part of a restructuring plan agreed with European authorities that has forced Greece’s troubled second largest lender to sell assets in several South-East European countries including Turkey, Bulgaria, Romania and Serbia.

“The National Bank of Greece S.A. has entered into a definitive agreement for the sale of its entire stake (100%) in its subsidiary, Banka NBG Albania Sh.A. (NBG Albania) to the American Bank of Investments SA (ABI). The transaction is being implemented in the context of NBG’s Restructuring Plan and in-line with its commitments towards European Commission’s DG Competition,” NGB Greece says in a statement, without proving any financial details about the sale transaction.

NBG has been operating in Albania since 1996 and is currently one of the three remaining Greek-owned in Albania, whose market share has considerably contracted since the outbreak of the global financial crisis and Greek debt crisis in 2008.

NBG Albania's assets at the end of the third quarter of 2017 dropped to 2.8 percent of total assets in an ongoing downward trend since 2008 when it held a 6.7 percent market share in terms of assets that include loans, investments in securities and placement with banks. NBG Albania is currently the tenth largest bank operating in Albania in a banking system composed of 16 overwhelmingly foreign-owned commercial banks, according to the Albanian Association of Banks.

Meanwhile, the American Bank of Albania, which is only slightly larger in terms of assets compared to NBG Albania is set to double its market share to about 5.7 percent in terms of assets following the merge.

The American Bank of Investments, ABI, launched its Albania operations in December 2016 as a rebranded bank after U.S. based NCH Capital Inc, private equity and venture firm took over France's Credit Agricole’s Albania unit.

In Albania, NCH Capital Inc has been operating with its Tranzit non-banking financial institution offering various debt and equity financing opportunities to companies and individuals since 2010.

Subsidiaries of Greek banks operating in Albania saw their assets in Albania’s banking system drop to about 13.5 percent at the end of 2016, down from 25 percent in 2008 just before the onset of the global financial crisis when four subsidiaries of Greek banks operated in the country. The situation is also a result of the acquisition of Emporiki Bank by France-based Credit Agricole in 2010. In 2015, the same unit was acquired by U.S.-based NCH Capital Inc, private equity and venture firm, and rebranded the American Bank of Investments.

Alpha Bank and Tirana Bank are the two other Greek-owned banks operating in Albania with a market share of 5.3 percent and 5.4 percent respectively at the end of third quarter of 2017, according to the Albanian Association of Banks.

 

Commercial banks to be cut 14

The number of commercial banks operating in Albania is expected to be cut to 14, down from a current 16 following two internal market acquisitions in the past year.

In mid-2017, Italy's Intesa Sanpaolo Albania unit, the country's fourth largest bank acquired the bankrupt Veneto Bank in Italy and its subsidiaries in several European countries including Albania.

The Veneto Bank branches in Albania, currently holding about 1.8 percent of total assets in the banking system, are expected to merge and be rebranded this year.

The same thing is also expected to happen with the ABI acquisition of NGB branches.

The merge process is also expected to cut the number of some inefficient branches and could possibly reduce the number of staff in the banking system, already at a standstill due to the introduction of e-services.

The Albanian banking system has been well-capitalized, liquid and profitable during the past eight years with the Albanian-owned assets increasing their share to 11.5 percent at the end of 2016.

Commercial banks operating in Albania posted record high profits of about 17 billion lek (€125.5 mln) in the first three quarters of 2017 as non-performing loans continued their downward trend and credit returned to positive growth rates, according to the Bank of Albania.

The banks’ record high profits, almost treble compared to the same period in 2016, came at a time when deposit rates are close to zero, spending on provisioning against loss sharply dropped and net income from other activities mainly related to commission fees and foreign exchange operations increased.
                    [post_title] => Greece’s NBG sells Albania unit to local ABI Bank
                    [post_excerpt] => 
                    [post_status] => publish
                    [comment_status] => closed
                    [ping_status] => closed
                    [post_password] => 
                    [post_name] => greeces-nbg-sells-albania-unit-to-local-abi-bank
                    [to_ping] => 
                    [pinged] => 
                    [post_modified] => 2018-02-06 11:05:20
                    [post_modified_gmt] => 2018-02-06 10:05:20
                    [post_content_filtered] => 
                    [post_parent] => 0
                    [guid] => http://www.tiranatimes.com/?p=135686
                    [menu_order] => 0
                    [post_type] => post
                    [post_mime_type] => 
                    [comment_count] => 0
                    [filter] => raw
                )

        )

    [post] => WP_Post Object
        (
            [ID] => 135793
            [post_author] => 29
            [post_date] => 2018-02-14 10:46:04
            [post_date_gmt] => 2018-02-14 09:46:04
            [post_content] => [caption id="attachment_135796" align="alignright" width="300"]zhang Tao Zhang, the IMF deputy managing director[/caption]

TIRANA, Feb. 14 - Improvements in infrastructure, the business environment and rule of law will boost Albania's growth potential, a senior International Monetary Fund official said during a visit to Albania this week.

Speaking after concluding his Albania visit, Tao Zhang, the IMF deputy managing director, stressed the need for the Balkan country to press ahead with reforms and take advantage of the favorable external environment in Europe, where Albania's main trading partners Italy and Greece have escaped their recessions.

“In my discussions with the [Albanian] authorities, I emphasized that this is the moment to accelerate reforms. The global economy is in an upswing. This includes Europe, where inflation and interest rates remain low. However, such favorable external conditions are not going to last forever. So now is the time to press ahead with reforms and build up stronger economic and financial defenses," Zhang said, noting the progress Albania has made in reducing poverty, maintaining stability and developing the economy.

“I also discussed with authorities policies to boost Albania’s growth potential. These include improvements in infrastructure, education, and business environment, especially the rule of law. Reducing public debt is an important goal that can be achieved by strengthening public expenditure management and the tax system," added the senior IMF official.

In a meeting with Finance Minister Arben Ahmetaj, the IMF official offered assistance to curb potential risks stemming from the much rumored public private partnerships which IMF has warned could further increase public debt, currently at about 70 percent of the GDP.

The Washington-based lender of last resort expects the Albanian economy to slow down to 3.7 percent in 2018, down from an expected 3.9 percent in 2017 as the TAP and Devoll Hydropower project reduce their FDI contribution by an estimated €180 million in 2018 alone and by €360 million in 2019.

The Albanian government’s growth expectation for 2018 is at 4.2 percent, 0.5 percent higher than the IMF and 0.7 percent more optimistic compared to the World Bank’s forecast.
            [post_title] => IMF urges Albania to press ahead with reforms
            [post_excerpt] => 
            [post_status] => publish
            [comment_status] => closed
            [ping_status] => closed
            [post_password] => 
            [post_name] => imf-urges-albania-to-press-ahead-with-reforms
            [to_ping] => 
            [pinged] => 
            [post_modified] => 2018-02-14 10:48:44
            [post_modified_gmt] => 2018-02-14 09:48:44
            [post_content_filtered] => 
            [post_parent] => 0
            [guid] => http://www.tiranatimes.com/?p=135793
            [menu_order] => 0
            [post_type] => post
            [post_mime_type] => 
            [comment_count] => 0
            [filter] => raw
        )

    [queried_object] => stdClass Object
        (
            [term_id] => 5
            [name] => Economy
            [slug] => economy
            [term_group] => 0
            [term_taxonomy_id] => 5
            [taxonomy] => category
            [description] => 
            [parent] => 0
            [count] => 7297
            [filter] => raw
            [cat_ID] => 5
            [category_count] => 7297
            [category_description] => 
            [cat_name] => Economy
            [category_nicename] => economy
            [category_parent] => 0
        )

    [queried_object_id] => 5
    [post__not_in] => Array
        (
        )

)

Latest News

Read More