EU critical of Albania’s overoptimistic growth agenda

EU critical of Albania’s overoptimistic growth agenda

TIRANA, July 23 – The European Commission has described the Albanian government’s 2018-2020 economic growth and public debt targets as overoptimistic at a time when Albania continues to face several obstacles to improving potential growth and competitiveness. In its assessment

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Alleged airport concessionaire’s abusive charges under probe

Alleged airport concessionaire’s abusive charges under probe

TIRANA, July 23 – The Albanian government is looking for a consultant to carry out a review of the concession contract it has with the Tirana International Airport, the country’s sole airport with a de facto monopoly on international flights

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Credit to private sector recovers when corrected for exchange rate, NPL effects

Credit to private sector recovers when corrected for exchange rate, NPL effects

TIRANA, July 19 – Credit to Albania’s private sector was officially below zero in the first five months of this year, but Albania’s central bank says lending grew by an annual of about 5 percent when corrected for exchange rate

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Insurers lobby to make private pension insurance compulsory

Insurers lobby to make private pension insurance compulsory

TIRANA, July 19 – Albanian insurers are lobbying to channel a portion of the mandatory social security contributions to the country’s nascent private pension funds under a new system already applied in leading and developing economies which they say increases

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Albania plans to diversify electricity generation with floating solar power plants

Albania plans to diversify electricity generation with floating solar power plants

TIRANA, July 19 – Albania’s state-run power utility KESH says it is planning to build the country’s first floating solar power plant on the northern Drin River cascade where it generates about two-thirds of the country’s domestic electricity from three

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More Albania restaurants adopt farm-to-table approach as agritourism gains upper hand

More Albania restaurants adopt farm-to-table approach as agritourism gains upper hand

TIRANA, July 17 – When Altin Prenga decided to leave Italy after a decade as a migrant there and start a small family-run restaurant in his native village of Fishte, northern Albania, everybody was calling him crazy. Almost a decade

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Energy, low base effect wane euro free fall effect on Albania’s exports

Energy, low base effect wane euro free fall effect on Albania’s exports

TIRANA, July 17 – Albania’s exports officially grew by double digits in the first half of this year, seemingly defying the negative effects from the sharp strengthening of Albanian’s national currency against Europe’s single currency which has significantly curbed profits

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Albania private-run HPPs suffer drought triggered double-digit decline in income

Albania private-run HPPs suffer drought triggered double-digit decline in income

TIRANA, July 17 – Private and concession hydropower plants operating in the country saw their income drop by double-digits in 2017 when a prolonged drought almost paralyzed the country’s wholly hydro-dependent domestic electricity generation. An annual report by Albania’s energy

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Big Albanian companies dominate €1 billion PPP contracts so far

Big Albanian companies dominate €1 billion PPP contracts so far

TIRANA, July 16 – Another Albanian company has won a major project as part of the Albanian government’s ambitious but controversial €1 billion public private partnership program for the next four years in a bid to upgrade road, health and

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Vienna Institute downgrades Albania’s 2018 outlook on ‘unprecedented’ currency appreciation

Vienna Institute downgrades Albania’s 2018 outlook on ‘unprecedented’ currency appreciation

TIRANA, July 16 – The Vienna Institute for International Economic Studies has slightly revised downward Albania’s 2018 economic outlook, citing an ‘unprecedented appreciation’ of Albania’s national currency against Europe’s single currency. In its latest summer report on economic prospects for

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                    [post_content] => TIRANA, July 23 - The European Commission has described the Albanian government’s 2018-2020 economic growth and public debt targets as overoptimistic at a time when Albania continues to face several obstacles to improving potential growth and competitiveness.

In its assessment of Albania's 2018-2020 economic reform programme, the EU's executive arm says Albania’s mid-term growth prospects will be hampered by two large energy-related projects completing by the end of this year which forced it to revise downward Albania’s 2018 forecast by 0.2 percentage points earlier this year.

TAP and the Devoll Hydropower, the two major energy-related that drove growth in the past four years complete their investment stage by the end of 2018, leaving a huge gap of about €300 million unless other major projects replace them.

“A baseline scenario with output growth of around 4 percent is not implausible in the current context, but the projected trajectory appears slightly optimistic. Steady output acceleration in 2018-2020 is likely to be prevented by decelerating investment activity as the two large energy projects approach completion… and it seems slightly optimistic to expect the remaining impact to be overcompensated by higher consumer spending and public investments,” says the Commission.

The Albanian government’s baseline scenario is that the country’s growth will range between 4.2 percent to 4.4 percent over the next three years on stronger domestic demand leading to higher consumption as well as rising public investment.

However, in its latest ‘Spring’ European economic forecast report, the European Commission downgraded Albania's growth outlook for the next couple of years and now expects the Albanian economy to slow down to 3.6 percent in 2018, down from a 9-year post crisis high of 3.8 percent and recover to 3.9 percent in 2019 to register the highest growth rates among regional EU candidates.

The Commission says there is risk that new investment will be unable to bridge the gap that TAP and Devoll HPP leave in the country's FDI.

"The ERP [economic reform programme] recognizes that FDI inflows associated with the two large projects, which are about to be completed, will diminish, but seems to expect — without any discussion — that this will be compensated by new FDI projects,” says the report.

“Albania’s success in attracting foreign investment in recent years has been heavily concentrated in non-tradable and natural resource-based industries. There is a risk that new investment opportunities in these industries will dry up and that investments in other sectors like tourism will be on a smaller scale," says the Commission, adding that attracting FDI to higher value-added activities would require wide-ranging structural reform to bring about substantial improvements in the investment environment.

Albania's FDI is largely focused on energy, with electricity and natural gas having attracted a record €1.7 billion in the past four years mainly as a result of the two major energy-related projects. Major investment has also been made in the low value-added oil and mining industry, the majority of which ends up being exported as crude oil and chrome ore.

 

Weaknesses to growth

The EU says institutional weaknesses to growth and competitiveness have only been partially addressed so far.

"Albania faces several obstacles to improving potential growth and competitiveness. A weak judiciary, insufficient enforcement of property rights and burdensome administrative procedures are institutional weaknesses that have been only partially addressed so far. This is hampering both local businesses and potential FDI inflows, unfortunately these important weaknesses are not being taken into account despite ongoing reforms," says the report.

EU experts also warn plans to increase the use of public-private partnerships and concession contracts entail significant fiscal risks in the form of contingent liabilities for the state budget and the public debt reduction agenda.

The warning comes at a time when the Albanian government is implementing an ambitious but rather controversial €1 billion PPP program which the IMF says risks creating new hidden arrears which if included in the public debt stock could increase it by another 7 percent of the GDP.

Albania's public debt currently stands at about 70 percent of the GDP, a level considered too high for the current stage of Albania’s economic development, with its high servicing cost curbing much-needed public investment in key education, health and road infrastructure. The government expects it to drop to 60 percent of the GDP by 2020.

The Commission says government’s projection for the downward path of public debt might require additional fiscal measures due to downside risks to growth and budget execution.

The European Commission says Albania's inflation rate running below the central bank's 3 percent target for five consecutive years reflects the absence of upward price pressures from a domestic economy that is still operating below potential, in combination with disinflationary impacts from the external environment.

Local Albanian experts have also rated the currency exchange risk as one of the key threats facing the Albanian economy this year following an unprecedented stronger lek against Europe’s single currency with a series of negative effects on the country’s Eurozone destined exports, local producers facing tougher competition from cheaper imports and major euro-denominated savings.

In late June 2018, EU leaders at the European Council decided to delay Albania's opening of EU accession talks for mid-2019, requiring the Balkan country to show more progress with reforms in the judiciary, tackling high level corruption and organized crime.

 
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                    [post_content] => TIRANA, July 23 – The Albanian government is looking for a consultant to carry out a review of the concession contract it has with the Tirana International Airport, the country’s sole airport with a de facto monopoly on international flights and whose high charges on carriers are often blamed for Albania having one of the region’s highest ticket prices.

In an announcement published on the Public Procurement Agency, state-run Civil Aviation Authority invites bids until August 3 for consultancy services on the "independent economic review of the TIA concession contract" to carry out a review in 40 days for about 29.5 million lek (€234,000).

The economic review comes following frequent concerns the country’s competition watchdog has expressed in the past four years over the concessionaire’s alleged abuse of its monopoly position in charging high fees that make the operation of low-cost carriers difficult and lead to high costs for Albanian passengers who often choose to fly from neighboring countries offering cheaper flights.

The probe also comes after Albania’s sole international airport has already been operating under a build-own-operate-transfer concession contract for the past 13 years and a Chinese consortium has taken over the airport’s operations from the original German-led concessionaire since mid-2016.

The Tirana International Airports is one of the most profitable companies in Albania with profit rates of up to 38 percent. The Chinese-led concessionaire saw its net profit climb to about 2.3 billion lek (€18 million) in 2017, up 25 percent compared to the previous year, according to reports filed with the National Business Center.

While the airport’s exclusive rights on international flights were lifted in mid-2016 paving the way to the operation of the small Kukes airport in northeast Albania in return for extending its concession term for 2 years until 2027, no new airports have been activated in the past couple of years and TIA continues to have a de facto monopoly.

The Albanian government says it is preparing to launch two new airports that would break the current monopoly that the Tirana International Airport has on international flights in an operation that is expected to increase market competition and lead to lower ticket prices and also serve the country’s emerging tourism industry through faster access to southern and northern travel destinations.

While negotiations with a Turkish consortium to build a new airport in southern Albania are in their final stage, the government is also planning to reactivate Kukes airport, a north-eastern Albania airport that has been abandoned for about a decade.

The Kukes airport will apparently be reactivated by Kastrati, one of Albania’s top two companies which has been offered an 8 percentage point bonus for its unsolicited bid, putting it at an advantage and apparently making it a winner when the tender is held later this year.

The operation of the Vlora airport could extend the Tirana International Airport’s concession term by three to four years, depending on the year when it becomes operational.

 

Ignored recommendations

The ‘economic review’ also comes at a time when several previous recommendations by the competition watchdog have been ignored for years by authorities.

Under a recent July 20 decision, the competition authority asks Albanian air transport authorities to revise the concessionaire's charges every three years as envisaged in the original contract at a time when they have not been reviewed since 2005 when the 20 year-concession kicked off and also adopt a cost-oriented methodology on them.

In an early 2014 decision on some recommendations to increase competition in the air transport industry, Albania's Competition Authority unveiled the airport's landing and take-off, base ground handling, parking and lighting fees were much higher compared to regional airports which have more than one airport, including Kosovo which has a single airport.

The watchdog also recommended that authorities must adopt a cost-based approach in deciding on the concessionaire's proposed charges.

In another late 2015 decision, the Competition Authority recommended lifting the concessionaire's exclusive rights on international flights and liberalizing services such as ground handling, landing and take-off, as well as passenger, cargo, parking and lighting services.

Competition authorities are reported to have insisted on its recommendations being enforced during the past couple of years at a time when the sole development was the removal of the TIA concessionaire’s exclusive rights on international flights.

Albania's Air Transport Code allows the Civil Aviation Authority to intervene in preventing discriminatory tariffs and practices, abusive high prices as a result of dominant position as well as abusively low prices.

The Competition Authority has also earlier probed the monopoly aviation fuel services offered at the airport, but concluded there was no request by other operators to offer the service despite concerns over alleged market entry barriers.

The watchdog had earlier warned the monopoly conditions under which the Tirana International Airport concessionaire and the aviation fuel company operate are increasing operating costs for airlines and affecting ticket prices.

The aviation fuel is provided by Air BP Albania, the Albanian subsidiary of the specialized aviation division of British Petroleum oil giant.

“Although the exclusiveness of aviation fuel trade at the Tirana international airport area expired in January 2015, this market remains a monopoly of Air BP company which is the only operator providing this service in the air passenger market,” said the Competition Authority said in late 2016 when it initiated a probe.

 

Drawing lessons

As the Albanian government is concluding negotiations with a Turkish consortium over building a new airport in Vlora, southern Albania, the International Monetary Fund has warned the country’s officials to be careful and draw lessons from the 2005 airport concession as it proceeds with new public private partnerships that could put Albania's public debt agenda at risk.

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.

Some 18 airline companies operate in Tirana, the overwhelming majority of which foreign-owned, linking Tirana to dozens of foreign destinations through direct flights, mainly Italy.

New low-cost carriers have been linking Tirana to Budapest, Amsterdam and more recently to London in the past year in what looks like a policy change under the new Chinese takeover since mid-2016 amid government plans to build new airports.

The Tirana airport handles more than 2 million passengers a year, being one of the country’s main hubs.
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                    [post_date] => 2018-07-19 17:47:46
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                    [post_content] => TIRANA, July 19 - Credit to Albania's private sector was officially below zero in the first five months of this year, but Albania's central bank says lending grew by an annual of about 5 percent when corrected for exchange rate and loan write-offs effects that statistically keep credit below real figures.

The situation is a result of a sharp strengthening of Albania’s national currency, lek, against the euro, the currency of about half of total credit and the write-off of bad credit that has spent three years in the loss category in a bid to reduce the stock of non-performing loans.

The national currency traded at an average of about 127 lek in May 2018, down 5.5 percent compared to the same period last year, artificially reducing the amount of lending in Europe's single currency when reported in Albanian lek.

Meanwhile, the stock of non-performing loans dropped by 30 billion lek (€234 mln) to 80 billion lek (€625 mln) at the end of 2017 when NPLs hit a 7-year low of 13.23 percent, in a process triggered by the compulsory write-off of bad loans that have spent more than three years in the banks’ balance sheets and new deals restructuring loans for big borrowers in trouble.

Credit to the private sector has been sluggish in the past five years amid a high level of non-performing loans and poor demand by both businesses and households.

Governor Gent Sejko says average interest rate on lek loans fell to 6.3 percent in May, supporting the reduction of borrowing costs and triggering a 6.6 percent increase in lek-denominated credit.

Last June, Albania’s central bank decided to initiate emergency interventions to buy excess euros from the local currency exchange market in a bid to stop euro’s free fall and the negative effects it has on the country’s Eurozone-destined exports, local producers facing tougher competition from cheaper imports and half of euro-denominated savings in the banking sector.

In another coordinated move, the central bank also decided to cut the key interest rate by another 0.25 percentage points to a historic low of 1 percent in new monetary policy easing aimed at achieving the 3 percent inflation target.

Meanwhile, total deposits in the first five months of this year contracted by 2.7 percent or 26.6 billion lek (€210 million), reflecting the euro depreciation effect for about half of euro-denominated savings and possible panic withdrawals as the euro hit a 10-year low against Albanian lek in a short period of time and interest rates remained slightly above zero.

Average interest rates on time deposits of up to three years stand at about 1 percent last May.

Albanians' saving were at 968 billion lek (€7.6 billion) while credit to the private sector was at about 540 billion lek (€4.2 billion), making the country's banking system fully liquid and deposit-funded, according to Albania’s central bank.
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                    [post_content] => TIRANA, July 19 – Albanian insurers are lobbying to channel a portion of the mandatory social security contributions to the country’s nascent private pension funds under a new system already applied in leading and developing economies which they say increases benefits for all employees, employers and even the government.

Albanian employers and employees currently pay 21.6 percent in pension contributions to state authorities, but private insurers argue that making 3 to 5 percent of contributions mandatory for private pension funds would increase benefits for employees through supplementary and earlier pensions, employers paying less in taxes and the government that currently allocates hundreds of millions of euros annually from taxpayer money to cover the huge gap in the social security system.

"Transferring a percentage of the pension contributions, even a tiny one, from the administration of the state to that of private companies would allow for the emergence of private pension plans as a strong option, one that exists everywhere in the world, but one that is missing in Albania," says Avni Ponari, the head of one of the country's largest insurers.

"Changing the law to allow for a part of the compulsory contributions that employers pay to the state to go to the management of private pension funds will not entail any additional costs for the employer, the employee – and not even for the state itself. This is because the employer and the employee will pay the same share of the pension contribution, but on the other hand, there will be a new alternative and further financial market development," he adds.

The Albanian Association of Life, Pension and Investment Fund Insurers says Albania, Serbia and Bosnia and Herzegovina are the only three Western Balkan countries that don't apply compulsory private pension systems, something which they say is the main reason behind the low level of pensions in the three countries.

Average retirement compensation in Albania at the end of 2017 was at about 15,500 lek (€122), about a third below the minimum wage.

Albania currently has only 1.1 contributor per beneficiary pensioner in a system that creates a huge burden to public finances, allocating taxpayer funds to cover a deficit which last year amounted to an annual 45 billion lek (€355 million).

"It is time for private voluntary pension plans to become mandatory as part of a three-pillar pension system, like the one applied across the world. This proposal is not asking to increase the current percentage that is legally binding, the 21.6 percent currently paid as pension contribution, but to change the system so that a portion of that mandatory contribution can go to private pension management companies," says Ponari, who runs insurance and pension fund companies.

According to him, a new three-pillar system will best help the country's economy, making sure Albanians’ money is invested in long-term financial instruments such as 5 to 10-year bonds.

“Albania now needs to lay the foundations for a diversified pension system, with both public and private pensions as critical parts, to contribute to the country's financial security. The key part of this system are private enterprises, especially the private insurance industry, which needs to be revitalized and supported by the state and not only seen as a source of tax money,” says Ponari.

Private insurers say legal changes that make pension contributions for people aged below 50 compulsory with private pension funds and leaving them voluntary for elderly employees or self-employed people are already under discussion with authorities.

Meanwhile, the Financial Supervisory Authority says the development of the emerging private pension market is high on its agenda.

"Increasing consumer awareness to benefit a supplementary pension through the voluntary private pension is a key factor that promotes the development of this market and is part of the Financial Supervisory Authority's strategy to develop the markets it supervises, but that can also provide a solution to future social issues for third generations," says Ervin Koçi, the head of Albania’s financial superior watchdog.

 

A modest market 

Albania’s emerging private pension market grew by 31 percent in 2017, but its net assets accounted for only 1.73 billion lek (€13.6 million), a modest amount considering three market operators that have been operating since 2012, according to the Financial Supervisory Authority.

Membership in the three voluntary pension funds grew by 21 percent to about 20,950 at the end of 2017, with women members holding a slight advantage of 53.5 percent.

Private pension operators invested all of their assets in government securities in the internal market in 2017.

The three market operators include Raiffeisen, a subsidiary of Austria’s Raiffeisen Bank, Albanian-Austrian-owned Sigal and Albanian-Turkish-run Sicred Pension, with their assets accounting for a mere 0.1 percent of the country’s GDP.

Surveys have shown two-thirds of employers and half of employees in Albania are not aware of the benefits of the private pension funds in Albania aimed at supplementing pensions offered under the government’s obligatory scheme.

Under the new pension reform, starting January 2015, the retirement age for women, currently at 60, will gradually increase by two months per year to reach 63 years old by 2032. The increase in retirement age for men, currently at 65, will continue only after 2032, to reach 67. The retirement age for both men and women is expected to increase to 67 years old by 2056.
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                    [post_date] => 2018-07-19 10:23:48
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                    [post_content] => TIRANA, July 19 – Albania’s state-run power utility KESH says it is planning to build the country’s first floating solar power plant on the northern Drin River cascade where it generates about two-thirds of the country’s domestic electricity from three hydropower plants built in the 1970s and 80s under communism.

The ambitious project would diversify the country’s current wholly hydro dependent electricity generation through new technology that has been revolutionizing renewable energy in the past decade.

KESH says the floating plant will be an 118,000m2 floating system with a capacity of 12.9 MWp that will be built on the Vau i Dejes reservoir where the country’s third largest hydropower plant is situated and that OST transmission operator has in principle agreed to link the floating power plant to the transmission grid once it is completed.

The state-run electricity producer says the floating power plant will be more efficient in electricity generation compared to land solar systems, but provides no details about the costs, financing and time for the completion of the ambitious project.

More and more global superpowers have been building floating solar plants as they seek to switch to renewable energy, with China already operating a 40MW plant, the world largest such project, producing enough electricity to power a small town.

“Floating solar arrays have been in use for a little over a decade. They have several advantages; they don’t take up any valuable space on land, and the cooling effect of the water on which the panels float makes them more efficient. They can also help to mitigate the evaporation of water for drinking or irrigation by intercepting sunlight before it hits a reservoir’s surface,” says the World Economic Forum.

Because of the country’s favorable geographical position and Mediterranean climate with plenty of sunshine, Albania’s is advantaged in solar energy production, but has no major such plant yet. However, solar panels are being increasingly used by households and businesses to meet part of their own needs and cut expensive electricity consumption.

With domestic electricity generation currently wholly reliant on hydroelectricity, Albania has large untapped wind and solar energy potential that can be cost-competitive, UAE-based International Renewable Energy Agency (IRENA) has unveiled in a South East Europe report

“Due to the very good solar resource and relatively satisfactory wind speeds (3.3-9.6 m/s), there is high, untapped potential for the deployment of solar PV (up to 1.9 GW) and wind (987-2 153 MW),” says the report, adding that low temperatures of geothermal reservoirs make geothermal power generation an unlikely option in Albania.

In a bid to diversify electricity generation, the Albanian government has been offering incentives to small solar energy producers, setting a €100/MWh price on the electricity produced by small solar energy plants of up to 2 MW and €76/MWh tariff on wind energy plants with a capacity of up to 3 MW.

State-run KESH power utility also owns a new thermal power plant in Vlora, southern Albania, but the 97 MW $112 million low-sulphur distillate oil fuelled power plant available for use since 2011 has not been made operational because of high fuel costs and problems in its cooling system. Much cheaper Caspian natural gas from the under construction Trans Adriatic Pipeline could activate it on lower costs after 2020.
                    [post_title] => Albania plans to diversify electricity generation with floating solar power plants 
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                    [post_date] => 2018-07-18 15:57:23
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                    [post_content] => TIRANA, July 17 – When Altin Prenga decided to leave Italy after a decade as a migrant there and start a small family-run restaurant in his native village of Fishte, northern Albania, everybody was calling him crazy.

Almost a decade on, his restaurant has turned into a success story for Albania’s emerging agritourism industry and his business has gained international recognition as a perfect place offering farm-to-table food, employing dozens of local households.

Having honed his craft as a migrant in Italy after leaving Albania at only 15, Prenga decided to come back to Albania in 2009 and become a pioneer in Albania’s agribusiness industry by opening the internationally famed ‘Mrizi i Zanave’ restaurant named after a poetry volume by Gjergj Fishta, one of Albania’s best 20th century writers who was born in Fishte village.

The 35-year-old chef-owner now boasts one of the country’s best slow food restaurants with original dishes created from local home grown food and animals.

His success has inspired many others to try the farm-to-table restaurants and the Albanian government is now offering tax incentives for the emerging industry.

Fundim Gjipali, another award-winning Albanian chef who shares his time between Rome and Tirana where he owns downtown restaurants, is also opening up an agribusiness in his hometown of Shijak, some 30 km off Tirana, under the farm-to-table philosophy incorporating seasonal ingredients and minimizing the distance between the farm and the diner's plate.

Dozens of others are experimenting to bring Italian models to Albania but experienced chefs already in the industry say agribusiness requires tradition and only those who make a difference will manage to survive.

In a new fiscal package that the Albanian government has adopted, the emerging agritourism sector is also set to benefit from several tax incentives, including a 5 percent corporate income tax, a reduced 6 percent VAT and exemption from the infrastructure tax on investment.

Businesses engaged in agritourism will also benefit a reduced 5 percent corporate income tax for a 10-year period in case they get the status of ‘certified agritourism operator’ until late 2021.

The incentives are aimed at giving a boost to agro-tourism, currently in its initial steps in Albania with few restaurants, wineries, bee and fruit farms offering tourists authentic local products.

Albania has also undertaken a campaign to brand its unique agriculture products to boost agro-tourism through the promotion of quality authentic Albanian products such as olive oil, mountain tea, medicinal and aromatic plants considered some of Albania’s rarest riches.

Korça apples and honey, Berat olive oil, Tropoja chestnuts, Saranda mandarins and northern Albanian medicinal plants as well as Fier region vegetables are already renowned products regionally, in addition to the local Raki, a clear liquor usually made from grapes which is the traditional alcoholic drink of Albanians. However, they lack international recognition and certification to penetrate EU markets.

In its 2018-2022 draft strategy on the sustainable tourism development, agro-tourism is high on the agenda as one of the tools not only serving tourism promotion and economic development, but also making tourism more sustainable and preserving and promoting the cultural and local identity.

The tourism ministry says it will also prioritize mixing cultural tourism with agro-tourism through a ‘rural renaissance’ program that will restore historic villages such as the Theth mountain tourism destination in northern Albania and the Dhermi and Vuno coastal villages along the southern Albanian Riviera.

Agriculture is a key sector to the Albanian economy, employing about half of the country’s GDP but producing only a fifth of the GDP, unveiling its low productivity which is hampered by the fragmentation of farm land into small plots and poor financing and technology employed.

Meanwhile, tourism, although highly seasonal, is becoming a booming business in Albania, generating about €1.7 billion a year, some 14 percent of the country’s GDP from an estimated 5 million tourists.

 

‘100 villages’ program

The Albanian government has selected 100 villages nationwide to upgrade their infrastructure and public services and promote agritourism by offering incentives and grants to support local characteristic agriculture products.

Prime Minister Edi Rama says agritourism and the 100 villages program is a new tool to shift attention to rural areas and their untapped potential and bring migrants closer to their home villages.

"I am convinced that this program will be an important turning point in relations between Albanian migrants who have left their home villages and now work in Greece, Italy or elsewhere, not as nostalgia or an obligation to send monthly remittances to help parents and relatives, but as an instrument to make a profit enabling everybody that makes an investment to earn in a year more than they do with their current jobs abroad," says Prime Minister Edi Rama.

The initiative comes as dozens of villages in Albania, especially in the poorer northern regions, are already being abandoned due to massive migration and households moving to nearby urban areas or central Albania.

High migration rates and a sharp decline in the number of birth rates has turned into a key concern in Albania where about 1.2 million people, almost 40 percent of the country’s 2.8 million resident population, already live abroad, making Albania one of the top countries with the highest per capita migration globally.

Europe’s once cannabis capital, the Lazarat village in southern Albania, is also among the 100 selected villages that will have their infrastructure upgraded in a bid to make them agribusiness oriented.

Almost four years after the collapse of its internationally acclaimed pot industry, the Lazarat village has lost most of its youngsters and luxury cars and agriculture and sheep farming is the only thing the elderly people remaining there can do to earn a living. Authorities are now promoting local agriculture products and replace the once booming Lazarat pot industry with medicinal plants.

Lazarat, 200 kilometers south of the capital, Tirana, was cracked down in mid-2014 in a police operation that destroyed 102 metric tons of marijuana and 530,000 marijuana plants with an estimated street value of some €6 billion, worth about half of the country’s annual gross domestic product.

The Theth and Valbona mountain tourism villages in northern Albania, Shengjergj and Pellumbas on Mount Dajti outside Tirana, the Dhermi and Vuno coastal villages along the southern Albanian Riviera and Lin and Tushemisht across the Albanian part of Lake Ohrid, southeast of the country, are among the 100 villages selected as part of the integrated rural development project Albania intends to apply from 2018 to 2020.
                    [post_title] => More Albania restaurants adopt farm-to-table approach as agritourism gains upper hand
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                    [post_date] => 2018-07-18 10:04:28
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                    [post_content] => TIRANA, July 17 - Albania's exports officially grew by double digits in the first half of this year, seemingly defying the negative effects from the sharp strengthening of Albanian's national currency against Europe’s single currency which has significantly curbed profits for producers of two-thirds of Albania’s Eurozone destined exports.

However, data published by state-run statistical institute, INSTAT, shows more than half of exports growth is a result of the resumption of electricity exports and a sharp hike in crude oil exports following the late 2017 bankruptcy of a local refiner as well as recovering commodity prices giving a boost to the country’s oil, mining and steel industry.

The low base effect also plays a key role as Albania’s exports contracted by 5 percent in 2015 following the mid-2014 slump in commodity prices and registered a mere 0.1 percent growth in 2016 before recovering by 12 percent in 2017.

The contribution of the key 'garment and footwear' sector to exports’ growth for the first six months of this year when exports grew by 18.3 percent was at a mere 4 percentage points at a time when Albania's national currency, lek, gained 5.5 percent against the euro, the currency for more than 90 percent of Albania’s exports of this kind.

Employing about 100,000 people, the textile and shoe industry is one of the country’s top employers and strongly relies on cheap labor costs, being one of the hardest-hit from euro’s free fall in Albania during this year. Producers say they are losing about €500 for every €10,000 of value added exports during this year compared to late 2017.

The garment and footwear industry in Albania is mostly involved in cut-make-trim production and overwhelmingly imports raw materials, designs and patterns from Italy, the main destination of the locally processed products. Only few local garment and footwear products have upgraded to full cycle production and are marketed as Made in Albania brands.

Europe's single currency traded at an average of 125.95 lek in June 2018, compared to 133.49 lek in December 2017 and 136.57 lek in January 2017, having lost 7.8 percent against the Albanian lek in the past one and a half years.

Albania's central bank and the government claim the euro's free fall in Albania is a result of recovering economy and higher euro inflows from FDI, tourism and migrant remittances.

However, the main opposition Democratic Party and some economy experts have linked the national currency’s constant strengthening to alleged illegal euro inflows resulting from the peak 2016 cannabis cultivation and ongoing drug trafficking in the country, considered a major cannabis producer and a key transit route for cocaine and heroin for European markets.

Monthly exports during this year have fluctuated between 24 billion lek (€189 mln) to 30 billion lek (€237 mln) a month, meeting about 51 percent of what the country imports compared to 45 percent during the first half of 2017.

While the June exports grew by about 17.8 percent year-on-year, they were down by about 12 percent compared to May 2018, reflecting new strengthening of the national currency despite an emergency intervention by Albania’s central bank to buy excess euros in the local currency exchange market.

Albanian exporters have warned the considerable strengthening of Albania’s national currency, lek, against Europe’s single currency in the first four months of this year will lead to losses of at least €100 million for the country’s economy for 2018 alone.

The euro’s free fall has primarily hit Eurozone-destined exports, local producers facing tougher competition from cheaper imports and half of the country’s savings in the euro.

On the positive side, it has made repayment of euro-denominated debt much cheaper for the Albanian government and half of total credit by Albanian households and businesses.

Albania’s exports are currently poorly diversified with three-quarters of them relying on ‘garment and footwear,’ ‘minerals, fuels and electricity’ and ‘construction materials and metals,’ exposing the country’s economy to industry-specific shocks such as the mid-2014 slump in commodity prices.

 
                    [post_title] => Energy, low base effect wane euro free fall effect on Albania’s exports
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                    [post_content] => TIRANA, July 17 – Private and concession hydropower plants operating in the country saw their income drop by double-digits in 2017 when a prolonged drought almost paralyzed the country’s wholly hydro-dependent domestic electricity generation.

An annual report by Albania’s energy regulator, ERE, shows income generated by more than a hundred small and medium-sized private and concession hydropower plants from electricity sales to state-run OSHEE distribution operator dropped by about a quarter last year as the country faced one of the worst droughts in decades.

The report shows private-run HPPs with a capacity of up to 15 MW generated about 8 billion lek (€62.7 million) in income in 2017, down from 10.6 billion lek (€83.7 million) a year earlier as their production suffered a sharp cut and regulated prices remained unchanged at about 7.5 lek (€0.06)/kWh.

Meanwhile, six larger private-run HPPs with a total capacity of 227 MW produced about 554 MWh in 2017, about half of the total electricity generated by 137 small HPPs with total capacity of 446 MW.

Electricity produced by the six larger HPPs managed by Turkish and Norwegian companies is not sold at regulated prices, but yet often ends up being sold to state-run operators in auctions where the majority of electricity is imported.

With heavy rainfall having significantly improved the country’s hydro situation since late 2017 and new big private HPPs launching, 2018 is set to register record high domestic electricity generation.

In December 2017, Turkey’s Ayen As Energji launched its 74.6 MW “Fang” HPP in what makes it the fourth largest HPP in terms of installed capacity in the country so far after the three state-run HPPs.

Meanwhile, Norway's Statkraft is set to complete its second and final 182 MW Moglice HPP by the end of 2018 to conclude its major Albania Devoll Hydropower project and turn the largest private hydropower producer in Albania.

In addition, regulated prices for small HPPs with a capacity of up to 15W, which are based on average prices at the Hungarian Power Exchange, have increased by 15 percent to 8.56 lek(€0.067)/kwh for 2018, benefiting about a hundred of HPP investors.

Albania had 144 private and concession HPPs operated by 98 companies with total installed capacity of 698 MW and a generation of 1,608 GWh, down 22 percent compared to 2016, accounting for 35 percent of domestic electricity generation.

The overwhelming majority of HPPs have been built and made operational during the past decade under built-own-operate-transfer deals of up to 35 years with the Albanian government.

The remaining two-thirds of electricity is generated by state-run KESH power utility and its three major HPPs on the northern Albania Drin River cascade built in the 1970s and 80s under communism.

State-run OSHEE distribution operator and power utility KESH imported electricity worth about €200 million in the second half of 2017 in a situation that plunged them into financial straits and paralyzed much-needed investment in the distribution grid.

However, the favorable hydro-situation this year allowed state-run KESH power utility to meet the country’s electricity needs and export electricity worth about €60 million for the first half of this year.

Albania’s wholly hydro-dependent domestic electricity sector often places public finances at risk and uncertainty, especially in case of adverse weather conditions triggering costly imports such as last year.

In a bid to diversify the domestic electricity system, the Albanian government has offered tax incentives on solar and wind plants as well as natural gas fired plants at a time when the major Trans Adriatic Pipeline, a section of which also crosses through Albania, is scheduled to bring first Caspian gas to Europe by 2020.
                    [post_title] => Albania private-run HPPs suffer drought triggered double-digit decline in income 
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                    [post_date] => 2018-07-16 16:27:14
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                    [post_content] => TIRANA, July 16 – Another Albanian company has won a major project as part of the Albanian government’s ambitious but controversial €1 billion public private partnership program for the next four years in a bid to upgrade road, health and education infrastructure, adding to the list of Albanian companies getting PPP contracts through controversial unsolicited proposals and bonuses putting them at an advantage.

Gener 2, one of the biggest Albanian companies in the construction industry, has been announced a winner to build and operate a 21-km highway linking Tirana's industrial area to the airport and the so-called Highway of Nation connecting Albania to Kosovo, significantly cutting distance to the current lengthy and narrow roads.

Gener 2, which last July was awarded an 8.5 percentage point for its unsolicited proposal for the Thumane - Fushe-Kruje - Vore - Kashar highway, bid about €226 million to build and maintain the road for 13 years in exchange for annual government instalments, beating Albanian and Italian competitors who bid to complete the project for €274.5 million to €298.4 million, according to an announcement by Albania’s Public Procurement Agency.

One of the country’s biggest companies, Gener 2 also runs two shopping centers in Tirana and is engaged in two hydropower plant constructions along the Valbona River, northeast Albania, in a project that has triggered strong protests by environmentalists and local residents relying on the emerging mountain tourism there. The company has also recently announced a partnership with U.S.-based CNN giant to launch a local news channel by the end of 2018 and "bring CNN standards to the Albanian media market."

The new PPP is the second major road project that the Albanian government is implementing under an  ambitious €1 billion PPP program amid criticism by international financial institutions that the country’s public debt reduction agenda is being put at risk and that the program is being carried out under controversial unsolicited proposals and without a clear cost-benefit analysis.

The first major project that has already been concluded involves the construction of a 40-km segment in the Arbri Road linking Albania to neighboring Macedonia for 33.6 billion lek (€265 million) in a public private partnership that is expected to receive government financial support for 13 years and allow the concessionaire to introduce a tolling system once the highway is completed in about three years.

Gjoka Konstruksion, an Albanian-run company which had been awarded a 10 percent bonus for its unsolicited bid after the failure of the 2015 contract negotiations with a Chinese company, was the apparent winner of the late October 2017 tender, facing no rivalry from two other Albanian companies disqualified for not submitting financial bids.

The €1 billion PPP program that the Albanian government intends to implement for the next four years also includes several other major road projects in central and southern Albania, the construction of a regional hospital in Fier, the country’s second largest district, and several new schools in Tirana.

Last June, the government also awarded a bonus to a local company for submitting an unsolicited proposal to build a new road linking the Yachts Ports in Vlora, southern Albania to the Llogara Pass, which is expected to become a toll road following its completion

In early 2017, a consortium of Albanian companies was announced the winner of a public private partnership project with the municipality of Tirana to build and operate the first five pre-university schools in Tirana for 1.94 billion lek (€15 million) as part of a nationwide €1 billion PPP project.

While the PPP projects are expected to be completed in four years, the government intends to repay concessionaires over 12 years in annual instalments and road concessionaires are also expected to collect tolls to meet investment costs.

 

Controversial unsolicited proposals

 

To date, almost all companies that have been awarded bonuses for their unsolicited proposals have resulted in apparent winners in tenders where competition has been poor, giving rise to allegations of pre-determined winners.

While international financial institutions such as the IMF and the World Bank have called on the Albanian government to put an end to unsolicited proposals in PPPs, the ruling Socialists says the practice will be discontinued only by 2021 when their second consecutive term of office expires and after a controversial €1 billion PPP project to rehabilitate road, health and education infrastructure has come to an end.

Unsolicited proposals are becoming widespread even in projects outside the €1 billion program.

Last June, the Albanian government approved a bonus for an Albanian company for a new PPP to inspect fuel and liquid gas measurement systems, a service currently carried out by the state-run Directorate of Metrology. The concession would be the second in the oil sector after the fuel marking concessionaire and probably further increase costs for Albanian consumers, already suffering one of Europe’s highest oil prices due to the high tax burden levied on them.

Another major Albanian company, Kastrati, has been given a bonus for its unsolicited bid to make operational a small airport in the northeastern Albania region of Kukes, on the border with Kosovo, in a bid to break the de facto monopoly the Tirana International Airport currently has on international flights, reduce ticket prices and serve the country’s emerging tourism industry.

The government says it is also concluding contract negotiations with a Turkish consortium to build a new airport in Vlora, southern Albania.

The International Monetary Fund 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. The Washington-based financial institution has described the PPP projects as economically the same to borrowing.

PPP contracts also involve three controversial waste-to-energy plants which the European Commission has recently warned pose concerns in terms of compliance with EU principles since disposal and incineration are the least preferred waste management options.

According to the IMF, PPPs entail construction, financial, demand, political, force majeure and renegotiation risks and the Albanian government’s legislative threshold of annual payments to concessionaires not exceeding 5 percent of the previous year fiscal revenues is not reliable, reflecting a mix of mandatory and expected payments and worst-case estimates if pre-determined minimum revenue guarantees are triggered such as in the case of toll roads not meeting minimum traffic.

Interest by foreign companies to participate in the €1 billion PPP projects has been vague amid allegations of pre-determined winners in tenders where Albanian companies submitting unsolicited proposals have been advantaged through pre-tender bonuses

Foreign and Albania investors perceive public procurement procedures as one of top barriers for doing business in the country.

The latest Balkan Barometer survey showed companies in Albania cite tailor-made criteria for certain participants and deals before the tender is even published for not participating in public tenders.

Albania has been actively using concessions and PPPs to facilitate public investment in the past decade with more than 200 concession/PPP contracts signed by mid-2017 with an estimated total investment of 505 billion lek (€3.7 billion), about 36 percent of the GDP.  Almost half of them include small and medium-sized hydropower plants.

The Albanian government is in conflict with several foreign investors and faces the threat of being punished with a staggering €2 billion, about a fifth of the country's GDP, from a handful of arbitration cases, according to a leaked late 2017 confidential document by the country’s justice ministry.
                    [post_title] => Big Albanian companies dominate €1 billion PPP contracts so far
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                    [post_content] => [caption id="attachment_137921" align="alignright" width="300"]Vienna Institute for International Economic Studies forecasts on Albania Vienna Institute for International Economic Studies forecasts on Albania[/caption]

TIRANA, July 16 - The Vienna Institute for International Economic Studies has slightly revised downward Albania's 2018 economic outlook, citing an ‘unprecedented appreciation’ of Albania’s national currency against Europe’s single currency.

In its latest summer report on economic prospects for Central, East and Southeast Europe, the Vienna Institute for International Economic Studies, wiiw, has downgraded Albania's 2018 GDP forecast to 3.8 percent, down from a previous 4.1 percent last March and slightly revised upward by 0.1 percentage points its 2019 and 2020 expectations to 4.1 percent and 4 percent respectively.

The 3.8 percent growth scenario would be a slowdown for the Albanian economy which grew by a 9-year high of 3.84 percent in 2017 backed by major-energy-related investment currently in their final stage and the emerging tourism sector.

The main reason that wiiw, one of the top centers for research in Central, East and Southeast Europe, cites for its 2018 downward revision is the ‘unprecedented appreciation” of the Albanian lek against the euro during this year.

"The year so far has witnessed an unprecedented appreciation of the Albanian currency. Further volatile exchange rates are expected in the coming months owing to seasonality," says the Vienna Institute.

Europe’s single currency has been trading at a 10-year low of about 126 lek over the past month with a series of negative effects on Albania’s highly euroised economy, primarily hitting exports to the Eurozone, local producers facing tougher competition from cheaper imports and half of the country’s savings in Europe’s single currency.

Meanwhile, emergency interventions by Albania’s central bank through purchases of excess euros during the past month have only managed to stop euro’s free fall in the local Albanian market, stabilizing it at the 126 lek rate, down 6 percent from the mid-January peak level of about 134 lek and 10 percent below mid-2015 when the euro’s five-year reign of about 140 lek came to an end.

However, the Vienna Institute is optimistic that the emerging tourism sector and new planned infrastructure investment will keep the economy growing at about 4 percent over 2019 and 2020 at a time when TAP and the Devoll Hydropower, the two major energy-related that drove growth in the past four years complete their investment stage by the end of 2018, leaving a huge gap of about €300 million unless other major projects replace them.

“Backed by a booming tourism sector, large infrastructure projects – some close to completion and new ones in the pipeline – and consumption, the economy will grow by above 4 percent in the medium term,” says the Vienna Institute.

At an average of about 4 percent over the next three years, wiiw expects Albania to register the highest growth among the six EU aspirant Western Balkan countries where overall growth is expected to drop from 3.6 percent in 2018 to 3.2 percent in 2020, mainly because of a significant slowdown in Serbia, the region's largest economy.

Prospects in the Western Balkan countries have improved significantly thanks to fiscal easing, progressive integration into international production networks and the latest rating upgrades, says the Vienna Institute report, adding that foreign direct investors are becoming more and more active in the EU aspirant region which is gaining importance as an alternative to the increasingly expensive EU-CEE countries.

The Vienna Institute’s forecasts are almost in line with the Albanian Socialist Party government’s optimistic scenario of growth picking up to 4.2 percent in 2018 and gradually accelerate by 0.1 percentage points each year to reach 4.5 percent by 2021 when its second consecutive term of office expires.

The World Bank and the IMF predict the Albanian economy will slow down to between 3.5 percent and 3.7 percent this year as two major energy-related projects, the Trans Adriatic Pipeline and a large hydropower plant, complete their investment stage by the end of this year.

The Vienna Institute has earlier warned the public private partnership-channeled infrastructure investment that the Albanian government is implementing could boost growth in the medium-term but pose certain risks in the longer run.

The Albanian government’s ambitious €1 billion PPP project has come under fire by international financial institutions and economy experts worried over the effect it will have on the public debt and efforts to bring it down to 60 percent by 2021, because of new potential accumulated unpaid bills to private concessionaires. Albania's public debt currently stands at about 70 percent of the GDP, a level considered too high for the current stage of Albania’s economic development.

An earlier Vienna Institute study has shown no Western Balkan country, including frontrunners Montenegro and Serbia already holding accession talks, will be able to meet EU accession criteria before 2030.

The wiiw baseline scenario sees tiny Montenegro reaching the level of governance required to join the EU in around 12 years, followed by Serbia in 13 years, Albania in 15 years, Kosovo in around 18 years, Macedonia in 21 years and Bosnia and Herzegovina in 23 years.

In late June 2018, EU leaders at the European Council decided to delay Albania's opening of EU accession talks for mid-2019 requiring the Balkan country to show more progress with reforms in the judiciary, tackling high level corruption and organized crime.
                    [post_title] => Vienna Institute downgrades Albania’s 2018 outlook on ‘unprecedented’ currency appreciation 
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            [post_content] => TIRANA, July 23 - The European Commission has described the Albanian government’s 2018-2020 economic growth and public debt targets as overoptimistic at a time when Albania continues to face several obstacles to improving potential growth and competitiveness.

In its assessment of Albania's 2018-2020 economic reform programme, the EU's executive arm says Albania’s mid-term growth prospects will be hampered by two large energy-related projects completing by the end of this year which forced it to revise downward Albania’s 2018 forecast by 0.2 percentage points earlier this year.

TAP and the Devoll Hydropower, the two major energy-related that drove growth in the past four years complete their investment stage by the end of 2018, leaving a huge gap of about €300 million unless other major projects replace them.

“A baseline scenario with output growth of around 4 percent is not implausible in the current context, but the projected trajectory appears slightly optimistic. Steady output acceleration in 2018-2020 is likely to be prevented by decelerating investment activity as the two large energy projects approach completion… and it seems slightly optimistic to expect the remaining impact to be overcompensated by higher consumer spending and public investments,” says the Commission.

The Albanian government’s baseline scenario is that the country’s growth will range between 4.2 percent to 4.4 percent over the next three years on stronger domestic demand leading to higher consumption as well as rising public investment.

However, in its latest ‘Spring’ European economic forecast report, the European Commission downgraded Albania's growth outlook for the next couple of years and now expects the Albanian economy to slow down to 3.6 percent in 2018, down from a 9-year post crisis high of 3.8 percent and recover to 3.9 percent in 2019 to register the highest growth rates among regional EU candidates.

The Commission says there is risk that new investment will be unable to bridge the gap that TAP and Devoll HPP leave in the country's FDI.

"The ERP [economic reform programme] recognizes that FDI inflows associated with the two large projects, which are about to be completed, will diminish, but seems to expect — without any discussion — that this will be compensated by new FDI projects,” says the report.

“Albania’s success in attracting foreign investment in recent years has been heavily concentrated in non-tradable and natural resource-based industries. There is a risk that new investment opportunities in these industries will dry up and that investments in other sectors like tourism will be on a smaller scale," says the Commission, adding that attracting FDI to higher value-added activities would require wide-ranging structural reform to bring about substantial improvements in the investment environment.

Albania's FDI is largely focused on energy, with electricity and natural gas having attracted a record €1.7 billion in the past four years mainly as a result of the two major energy-related projects. Major investment has also been made in the low value-added oil and mining industry, the majority of which ends up being exported as crude oil and chrome ore.

 

Weaknesses to growth

The EU says institutional weaknesses to growth and competitiveness have only been partially addressed so far.

"Albania faces several obstacles to improving potential growth and competitiveness. A weak judiciary, insufficient enforcement of property rights and burdensome administrative procedures are institutional weaknesses that have been only partially addressed so far. This is hampering both local businesses and potential FDI inflows, unfortunately these important weaknesses are not being taken into account despite ongoing reforms," says the report.

EU experts also warn plans to increase the use of public-private partnerships and concession contracts entail significant fiscal risks in the form of contingent liabilities for the state budget and the public debt reduction agenda.

The warning comes at a time when the Albanian government is implementing an ambitious but rather controversial €1 billion PPP program which the IMF says risks creating new hidden arrears which if included in the public debt stock could increase it by another 7 percent of the GDP.

Albania's public debt currently stands at about 70 percent of the GDP, a level considered too high for the current stage of Albania’s economic development, with its high servicing cost curbing much-needed public investment in key education, health and road infrastructure. The government expects it to drop to 60 percent of the GDP by 2020.

The Commission says government’s projection for the downward path of public debt might require additional fiscal measures due to downside risks to growth and budget execution.

The European Commission says Albania's inflation rate running below the central bank's 3 percent target for five consecutive years reflects the absence of upward price pressures from a domestic economy that is still operating below potential, in combination with disinflationary impacts from the external environment.

Local Albanian experts have also rated the currency exchange risk as one of the key threats facing the Albanian economy this year following an unprecedented stronger lek against Europe’s single currency with a series of negative effects on the country’s Eurozone destined exports, local producers facing tougher competition from cheaper imports and major euro-denominated savings.

In late June 2018, EU leaders at the European Council decided to delay Albania's opening of EU accession talks for mid-2019, requiring the Balkan country to show more progress with reforms in the judiciary, tackling high level corruption and organized crime.

 
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