Greece-Albania talks spark fears over transparency

Greece-Albania talks spark fears over transparency

TIRANA, Feb. 1 – There has been concern in Albania over talks behind closed doors with Greece about a new maritime border agreement after the Greek foreign minister indicated in a media interview Albania had agreed to make territorial concessions.

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Financial Supervisory Authority: Challenges ahead with boosting consumer, investor confidence

Financial Supervisory Authority: Challenges ahead with boosting consumer, investor confidence

By Ervin Lisaku In an interview for Tirana Times, Ervin Koçi, the executive general director of the Albanian Financial Supervisory Authority, talks about the challenges facing the insurance, securities, investment fund and voluntary pension markets it supervises. The director of

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Business closures hit record numbers of 50 a day in early 2018

Business closures hit record numbers of 50 a day in early 2018

TIRANA, Feb. 1 – The rate of business closures accelerated last January as more than 50 businesses a day, mainly small family-run ones closed down, hinting tougher competition amid poor consumption and a new upcoming hike in the tax burden.

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Albania-Kosovo customs union project halted indefinitely, Supreme State Audit finds

Albania-Kosovo customs union project halted indefinitely, Supreme State Audit finds

TIRANA, Jan. 30 – Behind political rhetoric of the Albanian government stepping up its customs union project with neighboring Kosovo, the reality on the ground is quite different with a series of barriers preventing economic cooperation and a common market

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Experts worried over neglect to Albania’s gems as two sites make it to Europe’s most endangered

Experts worried over neglect to Albania’s gems as two sites make it to Europe’s most endangered

TIRANA, Jan. 30 – Albanian heritage experts have hailed the shortlisting of Gjirokastra and the post-Byzantine churches among Europe 12 most endangered sites as a good opportunity that could see them escape the threat if they make it to the

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Albania’s euroisation needs to drop by 10% to avoid annual losses of €67 mln, IMF experts say

Albania’s euroisation needs to drop by 10% to avoid annual losses of €67 mln, IMF experts say

TIRANA, Jan. 29 – As Albania’s central bank prepares to apply de-euroisation measures in a bid to reduce the current high level of Euro-denominated loans and deposits in the country’s banking system, experts estimate Albania has to significantly reduce its

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Thousands rally to protest against government

Thousands rally to protest against government

TIRANA, Jan. 29 – The opposition’s protest rally  in Tirana this Saturday gathered thousands calling for the Rama government to resign over its alleged ties with organized crime and fostering of corruption. Most protesters arrived in Tirana from other municipalities.

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Shrinking Albania: New, ‘silent’ migration trend hit record numbers in 2017

Shrinking Albania: New, ‘silent’ migration trend hit record numbers in 2017

TIRANA, Jan. 22 – Albanians are leaving the country at a record-breaking pace, but unlike previous years, they are no longer seeking asylum, choosing instead to fly under the authorities’ radar to migrate illegally, a new study published this week

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Fast-track procedures on new Vlora airport okayed amid environmental concerns

Fast-track procedures on new Vlora airport okayed amid environmental concerns

TIRANA, Jan. 25 – The Albanian government has approved fast track negotiation procedures with a Turkish consortium that has offered to build a new airport in Vlora, southern Albania, making it the country’s second international airport and breaking the monopoly

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Albania revises growth, debt targets in optimistic scenario turned down by IMF, World Bank

Albania revises growth, debt targets in optimistic scenario turned down by IMF, World Bank

TIRANA, Jan. 19 – The Albanian government has reviewed its mid-term macroeconomic scenario slightly revising upward the country’s GDP growth for the 2018-2021 period, but delaying the public debt target of 60 percent of the GDP for 2021 in considerably

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                    [post_content] => TIRANA, Feb. 1 – There has been concern in Albania over talks behind closed doors with Greece about a new maritime border agreement after the Greek foreign minister indicated in a media interview Albania had agreed to make territorial concessions.

Opposition and civil society representatives have expressed concern about lack of transparency in the talks, while the government has said it is acting in the best interest of Albanians and for critics to wait for a final agreement to be made public.

Albanian lawmakers called Minister for Europe and Foreign Affairs Ditmir Bushati to a hearing focused on the content of his meetings with Greek counterpart Nikos Kotzias.

Bushati confirmed a new Maritime Border Agreement and the separation of sea boundaries was discussed.

Concerning the new agreement, Kotzias told Greek media Skai the Greek territorial waters would expand about 12 square miles.

A Maritime Border Agreement with Greece was first negotiated in 2009, when the Democratic Party was in power and Sali Berisha was prime minister, but it was overthrown for being unconstitutional as Albania was to lose maritime territory under the deal.

There was a huge popular uproar at the time, with the Albanian public being very sensitive to any government trying to “sell the sea” as critics put it. A similar uproar has started this week before the details of a new deal have been fully released.

Uninformed of the new agreement terms, opposition MPs and a big part of the population asked for more details to make sure this new deal benefits Albanians and the country.

Bushati responded to these accusations through his personal Facebook account, saying the new Maritime Border Agreement will be made respecting the Constitution, as well as internal and international regulations.

President Ilir Meta also issued a statement, saying he is carefully following its progress and, taking into consideration every concern, will act accordingly to the Constitution.

The talks over the maritime border a part of larger package of discussions to address long-standing issues between Albania and Greece.

Bushati also said Greece is taking steps to remove the law of war hampering relations between the countries since WWII.

He added the Korca meeting last week picked up on topics open for half a decade, such as the remains of Greek soldiers who died on Albanian soil during the Italian-Greek war.

A deal on finding and burying the remains of Greek soldiers in Albania was also made in the past according to Bushati but went through improvements in order to enable excavation, identification and burial supervision from both sides.

The group of Albanian experts has worked with devotion, and has been helped by an american expert. The process will be finalized collectively,” Bushati said.

He added that aside from historic topics, the ministers also discussed current issues, such as the apostille stamps of Albanian documents, which are estimated to cost around $4 million annually, as well as the rights and living conditions of half a million Albanians living in Greece.

In addition it was confirmed the licence of automobiles, trade and investment agreements between the two countries and even each country’s dissatisfaction with the use of different school history texts were also discussed.

Democratic Party (DP) MPs however, asked for more transparency concerning Albania-Greece relations.

DP MP Tritan Shehu expressed concerns about the transparency of Albanian diplomats in the Ministry of Foreign Affairs and asked for more details on the evaluated proposals and agreements to make sure they actually benefit citizens.

Meanwhile, local media reported Kotzias too was asked by Greek conservatives on the topics discussed behind closed doors between him and Bushati.

Kotzias also said the chief diplomats’ main topics of discussion were historic issues left open for years, while adding noteworthy progress has been made in solving them for the common interest of the people and in accordance with shared european values and rules.

It was also reported by local media, however, that Kotzias denied there was any discussions on the Cham topic, which is of particular importance to Albania.

The Ministry of Foreign Affairs in Albania also issued a statement saying the Cham topic is not yet on the table for discussion.

The diplomatic relations between the countries have witnessed a positive turn lately, with concrete steps taken by both sides to substantially solve some of the long-standing, above-mentioned issues.

Last year, Tirana approved the construction of a second cemetery in Bularat for the Greek soldiers that died on Albanian soil during WWII, while President Ilir Meta granted Greek-born Archbishop Anastasios Yannoulatos Albanian citizenship at the end of 2017 — a decision that was enthusiastically welcomed in Athens.

Similarly, Kotzias said last December that Athens is looking to find legal avenues to revoke the war law that has hampered Albania-Greece relations since the end of WWII.

Greece and Albania are tied by geography and people. Based on 2011 census data, there were 480,851 Albanian migrants living in neighboring Greece, the country’s second top trading partner and a main source of remittances. That’s on top of many indigenous Albanian-speakers of Greek nationality, the Arvanites of southern Greece. There is also a small Greek minority in southern Albania, in a couple of municipalities where Greek is the official language alongside Albanian.

 
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                    [post_content] => [caption id="attachment_135621" align="alignright" width="262"]SONY DSC Ervin Koçi, the head of Albania's Financial Supervisory Authority[/caption]

By Ervin Lisaku

In an interview for Tirana Times, Ervin Koçi, the executive general director of the Albanian Financial Supervisory Authority, talks about the challenges facing the insurance, securities, investment fund and voluntary pension markets it supervises. The director of the country's second most important financial supervisory institution also elaborates on the upcoming first privately-owned stock exchange, the initiative on the compulsory insurance against natural disasters, the risks of investing in unlicensed online trading platform and the Bitcoin bubble which international media have compared to the Albanian pyramid investment schemes. 

 

Mr. Koçi, you have been the director of Albania’s second most important financial institution, the Albanian Financial Supervisory Authority, since almost one year now. Your election there comes after an 8-year experience in politics as an MP. Is it a move back to you economic and financial background where you maybe feel more comfortable?

- The appointment as the head of the Albanian Financial Supervisory Authority (AFSA) last April on one hand was a personal challenge for me, but on the other it was a very big responsibility that the Parliament of the Republic of Albania entrusted me. Since the beginning I was aware that I was taking the lead of one of the most important financial institutions in the country which supervises three markets, such as the insurance market, securities market and the investment fund and private voluntary pensions market. Certainly, my experience of several years in the banking sector as well as the experience of holding two mandates as member of the Parliamentary Economy Commission has helped me significantly in the exercise of such function. But believe me it is completely different when you look at things from the inside, you can identify the problems closely, how to find a solution to the problem, you can understand the way the market mechanisms work and many other issues. As you mention being at the head of the Financial Supervisory Authority has made me come back to a sector that I know very well, by keeping me in this way distant from politics and these are two things which are very different from one another.

 

What can you tell us about the activity of Albania’s Financial Supervisory Authority and the challenges facing the country’s insurance, investment fund, securities and private pension markets monitored by the AFSA?

The Financial Supervisory Authority was established in 2006 as an institution independent from the executive power, responsible for the regulation and supervision of the non-banking financial system and operators that exercise their activity in this field. Moreover, the Authority does not receive money from the state budget, which is not connected with public funds, but it is based on its organic law and is financed only by the market.

In regard to the challenges, which are numerous, for me as the head and for the institution as a whole the key priority is the increase of confidence of consumers and investors in the financial markets. We are aware that if the consumers are not protected and if there is a lack of trust from their part, then there will be no sustainable development of these markets. For this reason, during 2017 our focus has been consumer protection and this has been reflected in some very important decisions. I would like to highlight the ones undertaken at the end of the previous year, related to the arrears of the Compensation Fund since 2002, considered a very big problem by the consumers. The Authority is committed to resolve this issue within the current year. I would also like to mention the decision taken related to real-time online registration of border policies, the removal of commissions or similar payments of depository banks to investment fund investors, as well as the taking of other regulatory measures having as a main target the consumers. Even throughout this year our main focus remains the consumer protection.

The financial education of the public is another important aspect of the daily responsibilities of the Authority, because we believe that an informed consumer is more protected from potential abuses in the market.

In regards to market objectives, related to insurance, we aim to make this market comparable to the countries of the region, with regard to volume indicators and customer penetration, by increasing at the same time consumer trust. By taking in consideration the penetration rate, i.e. the ratio of gross written premiums to gross domestic product, Albania ranks last in the region, with about 1.04%, compared with a ratio of over 2% of other Balkan countries.

On the other hand, the investment fund market is the market that in recent years has had the highest rate of development dynamic. The Authority's main objective for the investment market is to consolidate risk based supervision in order to achieve a better management of the risk. The operation of the first private stock exchange in Albania will be a very important development in the capital market. However, the Authority will be very careful and attentive to monitor any action of the stock exchange in order to offer maximum guarantee and transparency to investors.

As regards voluntary private pensions, this market is the most moderate development of the markets under Authority’s supervision. Over the last year, there has been a small but steady growth of members of the three pension funds operating in the country, and these are valued as positive signals for the performance of this market. However, the potential for further development is much larger and for this reason, AFSA is ready to undertake some legal initiatives for the development of the private voluntary pension market, but also for better regulation and supervision of other markets, such as the supervision of capital and insurance.

There has recently been an AFSA legal initiative to make insurance against natural disasters such as floods regularly hitting the country compulsory for every household and business, but some experts have called it a new hidden tax. How is the legal initiative progressing and can it offer full protection against floods or earthquakes at reasonable prices?

Please let me clarify that AFSA as an institution cannot undertake any legal initiatives which require political decision-making, but can only be involved in this process, mainly in the technical aspect, after this initiative is undertaken by the line ministries, with regard to the relevant question is the Ministry of Internal Affairs and Ministry of Finance.

For this reason, compulsory property insurance is a political decision which requires a thorough analysis and involvement of all stakeholders. But, with regard to this issue, there has been no concrete development. In terms of natural disasters occurring year after year, as the case of this winter floods, I think a solution should be found in order not to burden the state budget in general, because these are the taxes of the citizens. But on the other hand, before imposing a legal obligation on the citizens, their confidence should be increased, as well as their protection must be guaranteed in order to have a more functional market. The service provided must correspond to the level of obligation payable by any citizen in the Republic of Albania.

The AFSA licensed in mid-2017 the country’s first privately-owned stock exchange which is yet to launch operations in the country following the closure of the state-run Tirana Stock Exchange in late 2014 after 12 years of inactivity. What are your expectations from the stock exchange as a new investment and financing alternative?

- The Financial Supervisory Authority licensed the first Albanian Stock Exchange with private capital as a necessity for increasing investment alternatives and formalizing the economy and transparency of businesses. The existence of a regulated market, such as the stock exchange helps businesses to access new capital resources in an environment dominated by low-interests for bank deposits with restrictive loan granting policies. The increase of competition growth in the Albanian economy will encourage businesses to be listed on the stock exchange in order to improve their image to better respond to the market needs. I think that the stock exchange will create possibilities for the unification of needs for local business funds and potential investors, representing a financing alternative to business activity, in addition to bank loans. Involvement of a wide range of stakeholders in the securities market creates opportunities to increase liquidity in this market and consequently brings a more realistic assessment of financial instruments. Moreover, the growth of the securities market offers a development opportunity to the industry of the investment funds and pension funds. The stock exchange through the trading system creates opportunities for an efficient, fast, transparent, impartial and low-cost intermediation trading. However, AFSA will be very prudent during the monitoring of the stock exchange activity.

 

The FSA and Albania's central bank have issued several warnings to potential investors about the risks of investing in online trading platforms and even identified concrete operators luring investors on their websites and through phone calls. Call centers have also increased the number of online trading platforms or currency exchange investments following Italian legal changes making the supply of marketing or support services for Italy-based companies from non-EU countries such as Albania much tighter starting April 2017, although the services are destined to international markers. Are Albania's investors aware of such investment risks and how much protected are they in case of investing in operators unlicensed by the FSA?

- The Authority has as its main focus the continuous monitoring of all the licensed subjects.

In cases of ascertainment of unlicensed activities, notifications to the competent bodies have been made and to other public institutions for their activity. Moreover, as you mention continuously, the Authority has warned investors to take great care before undertaking such an investment. Consumers and investors may be informed on the Authority's official website on licensed entities in order to avoid fraud. On the other hand, investors should be aware that investing in the capital market is an activity that requires a high rate of economic information and financial literacy. These types of investments, besides the profit advantages carry with them also the risk of loss, thus investors should be aware and bear their investment responsibility.

 

International media have compared the bitcoin bubble to Albania's 1997 pyramid investment schemes. Local experts have also warned Albania is not immune to that considering a number of individuals and businesses believed to have been involved in the bitcoin transactions lured by the spectacular surge in bitcoin value. What is your opinion on that?

-Concerning this issue, which is one of the most debated issues globally today, the similarities between investments in bitcoin and the pyramid schemes in Albania lie in the big participation of retail investors with bitcoin investments today and with the fraudulent pyramid schemes in Albania back in 1997. These type of investors (retail) usually are not aware of the risks associated with this type of investment, they don’t really understand what these instruments are, and are showing a herd type of behavior when making a decision to invest in these instruments, in the meaning they are just following the crowd without making any judgment or analysis on what they are doing. For this reason, the regulatory authorities all around the world have issued warnings in the framework of investor protection. The central banks have issued a warnings on bitcoin, while the focus of securities markets regulators, has been on the so called ICO’s (initial coin offerings). The AFSA issued a warning to investors in November, to increase awareness on the risks that investors face when they make a decision to make such an investment.  The securities law which is the law governing issuance of securities in Albania recognizes only two forms of raising money from the public which are the Initial Public Offering representing an offering of securities to the public in an organized market, and through the private offer. In both cases the issuer is obliged to publish a prospectus which includes among other information, all of the potential risks associated with the investment. The ICO is not one of these forms to raise money from the public since there is no business prospectus offered, they are not supervised by regulatory authorities and the firms issuing these type of “coins” carry a high risk of failure. There are several risks associated with investing in ICO’s such as a lack of transparency, lack of supervision from regulatory authorities, a very high risk of fraud since this firms that are using this form of financing can disappear causing investors to lose all of their investment and there is also a very high legal risk since the anonymity of the transactions can make it very appealing for money launderers to use it for this purpose. Another risk is the very high volatility of this instruments that make it look more like a gamble than a real investment. The AFSA has informed investors that in Albania there is no licensed company to issue virtual currencies to attract investors. Of course there might be individuals or businesses in Albania investing online using the internet in companies which are issuing these “coins” outside of Albania, but they should be aware that they carry all the risks and are responsible for their own choices when making such an investment.

 

In conclusion, what are your challenges for 2018 and beyond?

The focus of the Financial Supervisory Authority is not only the supervision and regulation of financial markets, but also the diligent development, in order to ensure a sustainable impact on the economic growth of the country.

An Advisory Committee has been set up by the Financial Supervisory Authority, which has already completed the drafting of a five-year strategy for the development of the supervised markets. This strategy was drafted in cooperation with the structures of the Financial Supervisory Authority, the Ministry of Finance, the World Bank, the International Monetary Fund, the Bank of Albania, the markets under supervision, therefore with all the stakeholders of the financial market. An action plan is being drafted in line with this strategy, for the 5 forthcoming years. Furthermore, the work has begun on legal and regulatory initiatives towards the development of the markets in order to fulfill consumer needs.

 

 

 
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                    [post_content] => TIRANA, Feb. 1 – The rate of business closures accelerated last January as more than 50 businesses a day, mainly small family-run ones closed down, hinting tougher competition amid poor consumption and a new upcoming hike in the tax burden.

Data published by the country’s tax administration shows some 1,655 businesses switched to the passive status in January 2018, at an average rate of 53 businesses a day.

As a rule, businesses switch to passive register in case of not operating or not submitting tax statements for 12 months or declaring the suspension of commercial operation with the National Business Center for a period of more than 1 year or indefinitely.

Last year, some 14,400 businesses were switched to passive status, at an average rate of 35 businesses a day.

Meanwhile, the number of new businesses for 2017 was at about 19,000, the Monitor magazine reports referring to data by the National Business Centre, something which increases the number of total businesses by only 5,500, one of the lowest rates in the past few years.

The increase in the number of businesses closing down comes as a new tax regime is expected to affect micro and small businesses in the next few months and a nationwide campaign against informality continues, often forcing businesses to close down their old tax IDs and open up new ones.

Starting April 2018, the 20 percent VAT threshold on businesses will be lowered to annual turnover of 2 million lek (about €15,000), down from a current 5 million lek (€37,000) in a move which is expected to have a negative impact on dozens of thousands of small businesses, already facing tough competition by supermarket chains and shopping centers.

Most closures are taking place in the country’s largest cities such as Tirana and Durres and mainly involve family-run groceries or coffee bars.

Small business owners complain the increase in local and central government taxes, the ongoing repeated tax inspections, an increase in competition especially by shopping centers and poor consumption are leading them to closures.

Coastal areas relying on tourism, such as Durres and Vlora see a drastic cut in turnover after the peak summer tourist season at a time when tourism is not yet a year-round industry.

A new wave of migration in the past few years, especially in northern Albania, has also negatively affected local businesses.

Small businesses with one to four employees account for the overwhelming majority of 91 percent of the total 160,000 enterprises Albania had at the end of 2016. State statistical institute, INSTAT, estimates about 109,000 enterprises are family-run with only one person officially reported as employed with the tax administration.

The Albanian economy grew by about 4 percent in 2017, but growth was mainly driven by two major energy-related investments such as the Trans Adriatic Pipeline and a large hydropower plant as well as a boost in the tourism sector.

Experts estimate the Albanian economy has to grow by an annual 6 percent, a growth rate it enjoyed for about a decade until the global financial crisis, in order to produce welfare for the average Albanian.
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                    [post_content] => TIRANA, Jan. 30 - Behind political rhetoric of the Albanian government stepping up its customs union project with neighboring Kosovo, the reality on the ground is quite different with a series of barriers preventing economic cooperation and a common market of about 5 million consumers.

An audit into the much-rumored project by Albania's Supreme State Audit has shown the consecutive deals the two governments signed during the past four years in the four joint government meetings they  held, were characterized by the expression of goodwill, but did not translated into real government policies that would responsibly and successfully conclude the customs union project with Kosovo.

“The final step involving the unification of the fiscal policies has not been made yet. That is a precondition on ensuring customs union which is a potential on increasing the exchange of goods, economic growth for both countries as well as the preparation and a maturation process for Albanian institutions to handle challenges facing integration into the European market," says the Supreme State Audit in a late December 2017 report.

Both Albania and Kosovo apply completely different tax regime with Albania having a higher tax burden as it applies a fixed 20 percent value added tax and a 15 percent corporate income tax, compared to Kosovo's differentiated 18 and 10 percent VAT and a 10 percent flat tax.

The tax burden levied on fuel, the key product for both the Albanian and Kosovo customs administrations, also significantly differs with Albania applying a total tax rate of €0.48/liter compared to Kosovo's €0.36/liter excise duty.

The customs union is a project dating back to 2014 when the two neighboring ethnic Albanian countries held their first joint government meeting in Prizren, a town just 20 km off the Albania-Kosovo border, signing a joint declaration on strategic cooperation and partnership.

Four year on, progress in trade exchanges between the two countries has almost remained at a standstill while the Albanian government has temporarily withdrawn from the customs union project by delaying the establishment of Kosovo customs unit at Durres Port, Albania's biggest port, where 90 percent of transits and 30 percent of goods handled there are destined for neighboring Kosovo.

The Supreme State Audit has unveiled the Albanian government has withdrawn for an indefinite time from the decision to set up Kosovo customs units at Durres Port and Porto Romano, outside Durres where oil and liquid gas imports are handled. The Kosovo customs units were initially scheduled to become operational last December, few days after the two governments held their fourth meeting in Korça, southeastern Albania.

Albania and Kosovo have signed a series of free trade agreements, indirectly through the Central European Free Trade Agreement, CEFTA, but the customs union is a higher level, involving not only economic interaction, but also economic and fiscal synchronization, says the Supreme State Audit.

"To date, the customs union model has been introduced as a political proposal and not as natural consequence of the reality of economic developments in the region. In the meanwhile, there are no concrete plans in the field of cooperation between the two governments, although part of the same nation, geographically next to, with an upgraded road infrastructure, especially after the launch of the Highway of Nation helping trade between the two countries," auditors say.

The Supreme State Audit says if trade, tax and economic policies were unified, the common market would have 5 million consumers in a territory of 39,000 km2 and Albanians would be the region's second largest community after Serbia. With their labor force at the peak of productivity, Albania and Kosovo as a single market would be an attractive offer for foreign companies for trade aspect as well as production and manufacturing.

However, the unification of the Albanian and Kosovo customs points requires not only a physical infrastructure, but also the establishment of joint interactive data network between institutions and businesses through a single window, the report says.

Almost a decade after landlocked Kosovo declared its independence from Kosovo, Albania has not also made available facilities in the Shengjin port, north of Albania, to the neighboring country to handle goods and passengers despite almost annual promises.

The recognition of mutual phytosanitary certificates on plant products has emerged as a key barrier for businesses in both countries as the two countries seek to diversify trade exchanges mainly relying on “fuel, electricity, construction material and metals.”

Reference prices, certificates of origin and phitotosanitary documents are some of the issues facing Kosovo businesses in Albania.

Albanian companies have also complained high customs duties and non-tariff barriers only favor big companies, mainly construction and steel companies in exports with Kosovo.

The Supreme State Audit recommends immediate action and measures to accelerate the customs union project and remove trade and investment barriers between the two countries.

 

PM Rama’s pledge

“We will continue working on the opening of the Kosovo Customs Operations Office at the Durres Port and that means that this office must become operational as soon as possible,” Prime Minister Rama said in late November 2017, adding that the office will also ease Kosovo exchanges with other countries through Durres Port.

“Goods destined for Kosovo will complete all the customs procedures at Durres Port, making it unnecessary to stop at Albania-Kosovo customs offices. That will be a drastic cut in time needed to carry out procedures and will considerably reduce the products’ cost and increase trade benefits,” added Rama.

 

Trade exchanges overcome five-year standstill

Albania-Kosovo trade exchanges dominated by Albanian exports rose by 31 percent to hit a historic high of 29.4 billion lek (€220 million) in 2017 after fluctuating at about the same level of about €160 million in the past five years.

Albania’s trade exchanges with Kosovo account for only about 3 percent of the total and Kosovo is the country’s second most important destination for exports. Neighboring Kosovo is the only country that Albania has a trade surplus among regional Western Balkans countries involved in CEFTA.

Albania’s exports to CEFTA countries account for only about 14 percent of the total while imports for only less than 7 percent, compared to about three-quarters of exports and two thirds of imports to and from EU member countries.

Albania and Kosovo have overcome a number of trade barriers over certain products in the past few years and made some procedures easier, but lack of an early tradition in economic cooperation seems to be the main issue preventing the creation of a single market of about 5 million resident consumers, experts say.

Data shows that behind political rhetoric of excellent economic cooperation with Kosovo, trade exchanges between the two countries are almost the same compared to Albania’s trade volume with Serbia and only half of what Kosovo imports from Serbia.

When it comes to mutual investment, the level of investment is largely dominated by Albanian companies.

Albanian investors have been among the top five foreign investors in Kosovo in the past few years with the Albanian FDI stock in Kosovo, mainly concentrated in the real estate, financial and trade sector, estimated at €193 million and represented by some 900 Albanian companies.

Kosovo companies in Albania have also been more active in the past few years with their stock of FDI trebling to a total €42 million in late 2017, up from only €14 million in early 2014.

Some 500 Kosovo companies operate in Albania, mainly in the construction and trade sectors.

The Highway of Nation linking Albania to Kosovo has played a key part in the Kosovo Albania trade and human exchanges in the past decade despite its huge cost of about €2 billion euros on both sides of the border not yet justifying trade exchanges of about €200 million annually, more than double before the highway’s 2009 opening.

The Albanian part of the highway, which is set to become the country’s first toll road in 2018, plays a key role in Albania’s patriotic-dominated tourism bringing about 2 million Kosovo tourists each year.
                    [post_title] => Albania-Kosovo customs union project halted indefinitely, Supreme State Audit finds 
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                    [post_date] => 2018-01-30 15:19:00
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                    [post_content] => [caption id="attachment_135591" align="alignright" width="300"]voskopoja Voskopoja church. Photo: Europa Nostra[/caption]

TIRANA, Jan. 30 - Albanian heritage experts have hailed the shortlisting of Gjirokastra and the post-Byzantine churches among Europe 12 most endangered sites as a good opportunity that could see them escape the threat if they make it to the final top seven list, but say the situation reconfirms the decades-long neglect to the country’s landmark cultural gems.

Architect Kliti Kallamata, the managing director of the Korça-based "Past for the Future” foundation that submitted the nomination for the Voskopoja and Vithkuq post-Byzantine churches, southeastern Albania,  blames decades-long neglect that the public administration has shown toward the monuments by carrying out only emergency interventions with no strategic multidisciplinary restoration project.

“These monuments face a lot of problems starting with moisture, the degradation of mural paintings, the static stabilization of complicated structures, the approach toward degraded and ruined architectural elements, lack of lighting and protection against theft and lots of other stuff,” says Kallamata, adding that the last interventions date back to the mid-1960s under communist just before Albania banned religion.

"The first and last serious intervention the government carried out in those monuments was in 1966 on the conservation of the arcade of St. Nicholas church as it risked collapsing following a 1960 earthquake,” Kallamata has said in an interview for a local media.

According to him, none of the post-Byzantine churches can be professionally considered safe.

"Even the intervention that has been made, despite the good intention to preserve values, was unprofessional and not based on scientific analysis because the people who designed the projects and implemented them were not real professionals in the conservation and restorations based on the monuments' requirements,” he says.

The architect says the government's recent project on restoring several post-Byzantine churches in Voskopoja has only carried out emergency intervention while lack of professionals specialized in fresco restoration is a key concern.

"That does not mean those interventions are final and the churches are now out of danger. The fact that all frescoes are in critical condition is a clear indication that the threat of damage or losing values is present and very big,” he says.

Protection against theft is another issue facing the Voskopoja and Vithkuq churches which have regularly fallen prey to robberies in the past decade.

“All 12 post-Byzantine churches we have selected to be involved in this European project are the most representative monuments of 17th and 18th century church art and masterpieces of the Post-Byzantine era (the Byzantine art that continued after the collapse of Byzantium and Ottoman occupation in the Balkans),” says Kallamata.

“The churches are the most authentic testimony to the extraordinary development of those two Christin centers (Voskopoja e Vithkuq) during the five centuries of the Ottoman occupation in the Balkans. The values of these churches go beyond Albania's borders and take special importance as values of Balkan and European history and art, but their condition is critical,” he adds.

The architect and restorer is optimistic making the final endangered list could save the churches.

“If the post-Byzantine Voskopoja and Vithkuq churches are included in Europe's 2018 seven most endangered programme, we will have the right assistance to conserve and restore them under contemporary professionalism and later introduce them to the public.”

Last year, the Albanian government launched a project to restore four remaining post-Byzantine churches in Voskopoja, a present-day village in southeastern Albania that used to be Albania’s most thriving 18th century town.

The Euro 2.8 million government-funded project involves the upgrade of road infrastructure and lighting as well as restoring the four remaining churches in a bid to turn Voskopoja into a year-round tourist destination.

Situated outside Korça, Voskopoja is said to have had a population of 40,000 to 50,000 in the 18th century, greater than Athens, Sofia or Belgrade at the time, with an estimated 10,000 to 12,000 buildings, including 26 churches, a hospital, an orphanage, a library, the only Greek printing press in the Balkans (1720), which published at least 19 religious works and the so-called New Academy.

In addition to interest because of historical and cultural heritage, Voskopoja turns into popular destination during winter when visitors go skiing and enjoy the local traditional dishes, the most famous of which the lakror pie.

The village is located just outside Korça, nicknamed “The small Paris of Albania” and the “City of serenades.”

The southeastern city of Korça has in the past couple of years had its old bazaar and medieval art museum restored making it more attractive to tourists.

Korça, also features a prehistoric museum, a national education museum where the first Albanian language school opened in 1878 and the Vangjush Mio house museum.

Korça is also known for its mountain and culinary tourism in the Dardhe and Boboshtice villages.

 

 Gjirokastra’s threat

[caption id="attachment_135592" align="alignright" width="300"]gjirokastra 2 Gjirokastra fortress[/caption]

The Forum on the Protection of Cultural Heritage, a watchdog bringing together activists, says the situation with Gjirokastra is alarming as identified by Europa Nostra's shortlist of 12 European heritage sites that also involves the southern Albanian town, a UNESCO World Heritage site since 2005.

"We hope that this approach by Europa Nostra and other reaction by local stakeholders (including our Forum) draws the attention of our heritage state bodies. We hope that the culture ministry comes out of its shell and becomes more cooperative with local and international stakeholders. We hold to our approach that cultural heritage needs another vision," the Forum says in a statement.

Inscribed on UNESCO as a rare example of an architectural character typical of the Ottoman period, Gjirokastra, situated in the Drinos river valley in southern Albania, features a series of outstanding two-story houses which were developed in the 17th century. The town also retains a bazaar, an 18th-century mosque and two churches of the same period. The 13th-century citadel provides the focal point of the town with its typical tower houses.

"The destruction of buildings in Gjirokastra is a never-ending process. The media often report on damage. The risk of collapse has never been bigger. The removal of 236 buildings from the list of second-category (publicly announced in February 2017) with no prior debate, but hiding it with an administration act which they call the announcement of second-category monuments is ominous news,” says the Forum.

“Instead of maintaining and restoring the buildings, the solution chosen is removing them from the list. In addition, Gjirokastra faces a new intentional man-made threat, the by-pass that seeks to stifle it like an ugly yoke," the Forum says.

Earlier this month, architect Besnik Aliaj also condemned the situation in Gjirokastra which is threatened by constant landslides, putting at risk the local landmark castle.

"The rock and soil beneath the Castle of Gjirokastra have collapsed! The situation is urgent! The 2006 study-survey predictions unfortunately, are proven by the dramatic situation created recently! It is time to unite the powers to save Gjirokastra," Aliaj recently wrote on social media.

Last year, UNESCO’s World Heritage Committee called on Albanian authorities to carefully examine plans on a bypass road in the southern city of Gjirokastra before proceeding with its implementation.

“The carrying capacity and scale of the Bypass Road project should be re-assessed as regard to the real need for transportation and to minimize its potential adverse impact on the integrity of the site,” said UNESCO in its 2017 State of Conservation Report.

The Gjirokastra Foundation that submitted the 'stone city's' application as one of the most endangered says the bypass will seriously damage the structural and visual integrity of the Centre, which is the essence of the outstanding value of the site. “Moreover, two vernacular buildings will be demolished," it adds.

Albanian experts say the bypass design project, already approved by the National Restoration Council, risks destroying part of the museum city of Gjirokastra and endangers the surrounding area.

In a petition to the country’s highest authorities last year, architects, academics and culture heritage specialists warned the proposed concrete modern structure would ruin the town’s late Middle Ages architecture and poses a threat to the local landmark castle.

Albanian archaeologist Moikom Zeqo has earlier said the bypass project also endangers the 13th century local landmark castle, already damaged by a late 2016 earthquake in Ioannina, neighbouring Greece, some 90 km off Gjirokastra.

Zeqo has warned it is categorically prohibited to intervene in the city’s historic center with modern time elements because of destroying the unity of the historic centre.

“This is also determined by law. We cannot intervene because of ruining what is known as the address of the city’s memory. This must not be allowed. It’s wrong,” says Zeqo, adding that the concrete work and its weight pose a severe threat to the already weak geological structure of the foundations where the castle and the city itself lie.

The government has insisted the project will further boost tourism in town by easing traffic and creating pedestrian zones.

Already 12 years under UNESCO protection, Gjirokastra is currently having its Çerçiz Topulli square and Bazaar Pass area rehabilitated.

Last year, the UNESCO World Heritage Committee also urged Albania to maintain the moratorium on new constructions within the property and buffer zones until the approval of integrated urban conservation and development tools for the protection and management of Gjirokasta and Berat, both of which inscribed on UNESCO as a rare example of an architectural character typical of the Ottoman period.

Because of illegal construction posing a threat to place Gjirokastra on the List of World Heritage in Danger, Albania authorities imposed a moratorium on construction in October 2013.
                    [post_title] => Experts worried over neglect to Albania’s gems as two sites make it to Europe’s most endangered  
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                    [post_date] => 2018-01-29 11:50:07
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                    [post_content] => TIRANA, Jan. 29 - As Albania's central bank prepares to apply de-euroisation measures in a bid to reduce the current high level of Euro-denominated loans and deposits in the country’s banking system, experts estimate Albania has to significantly reduce its euroisation levels in order to avoid annual losses of dozens of millions of euros.

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 euroisation 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 reduced the banking system’s refinancing needs and the possible size of the portfolio of domestic financial assets.

Experts estimate Albania’s current euroisation 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.

“This result places Albania in the category of Bosnia and Herzegovina, Bulgaria, and Macedonia, for which euroization is close to the benchmark value predicted by the model. However, the level of euroization in Albania is increasing and, thus, diverging from its empirical benchmark, calling for measures to stop and reverse the deposit euroization trend,” it adds.

The 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.

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.

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.

Albania’s central bank has been holding its key rate to a historic low of 1.25 since May 2016, but the pass-through of its easier monetary policy has been poorly reflected on boosting credit, which has been struggling to return to positive growth rates in the past few years, negatively affected by a declining but still high level of non-performing loans and poor demand by both businesses and households.

 

Euroisation vs deeuroisation

 Small and open economies, such as Albania, tend to be more euroized, experts say in the IMF working paper, adding that remittances, which amount to a high share of GDP in Albania, lift the euroization benchmark.

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.

Experts estimate the optimal level of euroization for a small and open economy with strong economic links to the euro area is higher than zero, but lower than the levels observed in many candidate and potential candidate countries for European Union accession in the Western Balkans.

“Conceptually, there is an optimal euroization level, below which the costs of deeuroization measures outweigh the benefits. The costs of euroization include losses of seigniorage, which amount to 0.6 percent of GDP each year in Albania, impairment of monetary policy transmission, and financial stability risk due to unhedged exchange rate exposure in the economy and the absence of a lender of last resort in foreign currency,” experts say in the IMF working paper.

On the other hand, financial euroization supports financial sector deepening. “Measures to mitigate intermediation in foreign currency make such intermediation more expensive, go against public preferences, hinder access to attractive funding sources, and deprive investors of portfolio diversification opportunities. Disincentives to intermediation in foreign currency may not lead to a proportional increase in local currency intermediation, resulting in some disintermediation or slowdown in financial deepening,” experts add.

The report shows domestic interbank payments in euros represent approximately 20 percent of total domestic interbank payments in Albania. Euro-denominated transfers represent on average 24 percent of the value of total banking system transfers for corporations and 39 percent of the value of total transfers for households.

Some 90 percent of euro transactions consist of wire transfers between individuals. There is also a widespread use of euros for cash transactions between banks and customers. Approximately 35 percent of cash transactions are denominated in euros, of which 40 percent are not related to placing deposits or paying loans but to direct payments between customers. These figures support the notion of a pervasive use of euro banknotes as a means of exchange, especially for larger value transactions, experts say.

In a report examining the euro’s international role, the European Central Bank says unofficial loan and deposit euroisation 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 euroisation is determined by factors such as confidence in the domestic currency, trade relations with the euro area and remittances.

The Euro is a common currency in real estate, car sales while huge inflows from several major energy-related foreign direct investment and the rapidly growing tourism sector have taken Europe’s single currency to an eight-year low of 133.6 lek with a negative impact on the country’s exports.

“Agents in the [Western Balkan] region continue to prefer euro cash for reasons that are predominantly related to trust. In particular, depreciation expectations and memories of past crises are important determinants of households’ decisions on whether to save or pay in euro cash,” say the European Central Bank in a report.

Albania's central bank says de-euroisation measures, intended at reducing the current high levels of foreign currency in the country’s banking system, will become effective in the first half of this year.
                    [post_title] => Albania’s euroisation needs to drop by 10% to avoid annual losses of €67 mln, IMF experts say
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                    [post_content] => TIRANA, Jan. 29 - The opposition’s protest rally  in Tirana this Saturday gathered thousands calling for the Rama government to resign over its alleged ties with organized crime and fostering of corruption.

Most protesters arrived in Tirana from other municipalities.

Hundred of police forces were assigned to monitor the rally and make sure there were no violent incidents or disruption of public order.

The opposition asked for a temporary government that could guarantee free elections in the country.

Rally speakers accused the government of closely cooperating with criminal, drug-trafficking gangs and of making past communist methods part of the current reality.

Leader of the Democratic Party (DP) Lulzim Basha told the crowd the Rama government has fallen after cooperating with criminal gangs.

According to Basha, Saturday marked the fall of this “illegitimate” government and the creation of an anti-mafia government that fights crime and aims to support the country’s judicial reform and free elections.

“Albanians have realized justice is not a piece of paper and some words, but real punishment of the big fish of crime and corruption. There will be no Europe, no justice, no security, no employment and no future with a government led by bandits,” Basha said.

He also said the present government is aiming to have absolute power by concentrating the country’s political and economic will in the hands of a few people and by making citizens looks for a better life abroad.

“Edi Rama’s Albania looks like bankrupted African and Asian states, where drug trafficking is run by the country’s heads,” he added.

He highlighted the opposition’s aim is to give the country a freely-elected government that supports European values and fosters economic and social well-being for everyone.
                    [post_title] => Thousands rally to protest against government
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                    [post_date] => 2018-01-26 09:40:57
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                    [post_content] => TIRANA, Jan. 22 - Albanians are leaving the country at a record-breaking pace, but unlike previous years, they are no longer seeking asylum, choosing instead to fly under the authorities’ radar to migrate illegally, a new study published this week shows.

According to the data, 200,000 to 250,000 people left Albania in 2017 alone, including adjustments for those who are temporarily and legally abroad. The figure is close to the population of Albania’s second largest city, Durres and about 10 percent of the country’s population.

The research, conducted by Monitor magazine, found that despite measures taken by Albanian authorities to decrease the country’s outward migration , INSTAT data shows that during 2017 the number of citizens leaving the country was far greater than those returning. 

A graph showing Albanians’ migration trend has three main peaks: 2011, which was the year when EU removed the visa-free regime; 2015, which reached a maximum of asylum applications; and 2017, which is the year people are leaving without any declaration or information on their plans or whereabouts.

Monitor Director Ornela Liperi said the lack of a proper population census makes this indirect method of subtracting the number of those who return from the total of those who leave the country as the only way to pinpoint increasing migration numbers.

“The pace with which Albanians left during the first ten months of 2017 is similar to that of 2015 -- a record breaking year. People leave due to the lack of alternatives, especially the young people. Firms, banks, call-centers -- they are all cutting down on human resources. The largest private employer momentarily is a gambling company,” Liperi told Albanian media.

Part of these hidden ways of leaving consist of Albanians breaking their three-month free visa period illegally and then staying in the country of destination without declaring their migrant status.

Though there are still those seeking asylum, the largest part of Albanians try to find jobs and housing without disclosing any kind of personal information, which leads to a loss of their whereabouts.

Departure numbers also include those migrating legally with long-term plans to be out of Albania. 

“I think we should ring the alarm bells, because Albania is losing its medical experts and professionals, as well as its youth and human resource. With this tempo, the population is growing old and deep socio-economic issues are starting to appear,” Gëzim Tushi, a sociologist told the Voice of America’s Albanian Service. 

Experts agree that such drastic spikes in numbers usually also indicate strong reasons that lead people to take the decision to leave their country.   

Obvious reasons for Albanian citizens leaving their home country include high unemployment, low incomes, lack of trust in state institutions perceived as corrupt and inefficient, real or perceived lack of job perspectives and unrealistic expectations compared to income in Western European countries, according to 2016 study conducted Tirana-based Cooperation and Development Institute.

However, none of these factors qualify Albanians as potential asylum-seekers in Europe. With most of them being rejected and deported back, experts agree this might be the reason many are simply choosing to vanish, migrating illegally instead. 

 

 
                    [post_title] => Shrinking Albania: New, ‘silent’ migration trend hit record numbers in 2017
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                    [post_date] => 2018-01-25 11:52:08
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                    [post_content] => TIRANA, Jan. 25 - The Albanian government has approved fast track negotiation procedures with a Turkish consortium that has offered to build a new airport in Vlora, southern Albania, making it the country’s second international airport and breaking the monopoly the country’s sole international airport has enjoyed to date.

The fast track procedures are aimed at paving the way for the airport's construction by mid-2018 through a special law and contract that will be approved by Parliament.

Infrastructure Minister Damian Gjiknuri said the Turkish consortium has offered to invest Euro 100 million for the new airport in Vlora in details that will be determined during a 90-day negotiation period with government representatives.

“One thing is for sure. This airport whose construction will kick off in record time is a work that will turn the page not only on southern Albania, but also Albania and Albanians who will have a new travel alternative. Albanians will have one of the best airports in South-East Europe and Albanian tourism will get a huge impetus," said minister Gjiknuri.

The airport is located 133 km, a 2-hour drive from Tirana, making it competitive only in case it attracts low-cost carriers.

While the investment will be private, the Albanian government is expected to guarantee the concessionaire a minimum annual income in traffic guarantees in return for the investment and operation over a period of time that will be determined during the negotiations.

The concession contract is expected to be similar to the Durres-Kukes highway linking Albania to Kosovo which is set to become the country’s first toll road this year. In addition to the average €5 tolls the concessionaire will collect, the Albanian government will pay the investor a total of €65 million in the next 30 years, at an average of €2.16 million annually, in traffic guarantees in return for highway investment and maintenance.

The Turkish consortium that has offered to build the Vlora airport is composed of Cengis, Kalyon and Kolin Construction, three companies also involved in the construction of Istanbul's third airport, multi-billion dollar investment that will partially launch operations by February 2018.

The project to build a regional airport in Vlora, southern Albania, comes as part of the assistance the Albanian government has been receiving from the Turkish government and its Turkish Airlines, to open up new airports and set up its national carrier in a bid to offer passengers a new alternative to Tirana International Airport, the country’s sole international airport, and reduce current ticket prices, among the region’s highest.

The government says it is also planning to make operational the Kukes airport, a United Arab Emirates investment in north-east Albania, which has been ready for use since 2007, but only became available in mid-2016 after the country's sole airport had its exclusive rights on international flights lifted in return for extending its concession term for 2 years until 2027.

In addition to the Vlora airport, which is expected to mainly cover unserviced regional countries, the government also plans to build a new tourist airport in Saranda, southernmost Albania, one of the country's top destinations.

The operation of two new airports could extend TIA's concession by another six years, depending on the year they become operational.

Prime Minister Rama has earlier unveiled the ‘Air Albania’ national carrier will initially connect Tirana to regional unserviced countries such as Kosovo, Macedonia, Montenegro and Bosnia and Herzegovina and several Western Europe destinations.

Due to expensive prices and low number of low-cost carriers, more and more Albanian passengers have been travelling through neighboring Kosovo, Macedonia or Montenegro airports in the past few years.

Some 17 airlines connect Tirana to European destinations, mostly Italy where most passengers fly considering an estimated community of some 500,000 Albanian migrants in the neighbouring country across the Adriatic.

The Tirana International Airport, which in October 2016 was taken over by a Chinese consortium, handled about 2.2 million passengers in 2016, being the country’s main hub.

Italian carriers have the major market share in Albania’s air transport industry following the bankruptcy of an Albanian-owned company in 2013.

 

Environmental concerns 

The airport's location at the Akerni village, some 20 km outside Vlora, an area where a small military air base used to operate, has also triggered environmental concerns, with a watchdog warning the airport investment and its operation threatens a protected area.

The Protection and Preservation of Natural Environment in Albania, an environmental NGO, says the airport's proposed location at Akerni village threatens the "Vjosa-Narta Protected Landscape, a 194 km2 area rich in wetlands and aquatic birds encompassing the Narta Lagoon along with the delta of the Vjosa River and its surrounding areas with freshwater wetlands, marshlands, reed beds, woodlands, islands and sandy beaches.

"The construction of this kind of infrastructure threatens the ecologic integrity of this area because of the habitat alienation during the investment phase and disturbance during the operational phase. In addition, this construction violates the regulatory and legal norms on protected areas. National and international standards and legislation on the management of protected areas and areas of special natural values, prohibit the construction of these kind of structures that have a devastating impact on the ecosystem," says PPNEA Association.

“Vjosa-Narte represents one of the important areas regarding the special biodiversity values, especially for avifauna. This area is well known internationally as an International Biodiversity Area; it is part of Emerald Network as an area of special conservation interest at a global level; it is known by BirdLife International as a key biodiversity area for birds; it is an area under the evaluation of Natura 2000 in Albania and above all, it is part of the protected areas," the watchdog says, appealing to the government to reconsider the airport's location.

 

Local residents happy

Local residents see the construction of the new airport as a new opportunity that gives added value to their lands, where the salt business is one of the few employment opportunities in the local marshlands.

"Akerni is a village that has relied on salt and extracting salt, including me all my life, I hope we will not get disappointed," a local resident told reporters.

"We were hopeless and were constantly worried about our children’s future in this area," another resident told a local TV.

The Novosela local government administrator Kanan Shakaj describes the investment as a golden opportunity.

"It was a dream that came true. Having an elite tourism without an airport is meaningless. Tourists can come easier and the local area and its infrastructure and employment develop," Shakaj says.
                    [post_title] => Fast-track procedures on new Vlora airport okayed amid environmental concerns
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                    [post_date] => 2018-01-19 13:43:03
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                    [post_content] => TIRANA, Jan. 19 – The Albanian government has reviewed its mid-term macroeconomic scenario slightly revising upward the country’s GDP growth for the 2018-2021 period, but delaying the public debt target of 60 percent of the GDP for 2021 in considerably more optimistic forecasts compared to what international financial institutions predict for the Balkan country.

In its 2019-2021 macroeconomic and fiscal framework that the Albanian government approved this week, the ruling Socialist Party expects the country’s GDP growth to recover from an expected 3.9 percent in 2017 to 4.2 in 2018 and gradually accelerate by 0.1 percentage points to 4.5 percent by 2021 when its second consecutive term of office expires.

Meanwhile, public debt, currently hovering at 71.5 percent of the GDP, a high level for Albania’s stage of development is expected to achieve the 60 percent target only by 2021, compared to an initial 2020 target in the previous 2018-2020 macroeconomic framework.

“Fiscal policies on the mid-term 2019-2021 period will be clearly oriented toward fiscal consolidation and guarantee an optimal level of investment at 5 percent of the GDP. Fiscal consolidation and the reduction of public is crucial to reduce macroeconomic risks holding back economic growth and triggering macroeconomic instability,” says the finance ministry.

“The fiscal consolidation targets that the public debt level as a percentage of the GDP will continue its safe downward trend it embarked on in 2016. Public debt is expected to drop to 66.4 percent of the GDP in 2019, 63.5 percent in 2020 and to 59.9 percent in 2021,” it adds.

The Albanian government expects the 4.2 to 4.5 percent growth from 2018 to 2021 to be fuelled by internal demand such as private consumption and investment while net exports are forecast to have a small impact.

The finance ministry expects private consumption to improve as a result of recovering consumer confidence and improvements in the labor market which will likely be transmitted in a gradual increase in salaries boosting households’ disposable income. Easier lending standards are also expected to boost consumer loans although consumers are expected to continue being characterized by a ‘prudent consumption behavior.’

The gradual increase in investment is expected to be triggered by a better capacity utilization rate, currently ranging between 60 t0 70 percent, the acceleration of economic growth and easier lending standards.

The government says the completion by 2018 of the Trans Adriatic Pipeline and the Devoll Hydropower, the two major energy-related projects that have fueled FDI and economic growth in the past few years, are expected to have a negative impact on investment starting this year as the overwhelming majority of machinery and equipment has already been imported.

Investment growth is expected to slow down to 4.8 percent in 2018, down from about 10 percent in 2017 and imports are also expected to slow down to 2.5 percent, down from 5.1 percent in 2017.

Albania’s debt servicing cost has sharply declined in the past three years as interest rates remain at a historic low, but costs are expected to increase as central banks are putting an end to the easier monetary policies.

Albania spent about 36 billion lek (€270 million) in debt interest rates in 2016, some 3.4 percent of the GDP, compared to about 5 percent of the GDP for about a decade until 2013 with a negative on public investment, especially priority infrastructure, health and education.

 

IMF, World Bank scenarios

The Albanian government’s forecasts are sharply more optimistic compared to what the International Monetary Fund and other international financial institutions expect for the Albania.

The IMF expects Albania’s growth to range between 3.7 to 3.9 percent from 2018 to 2021 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 World Bank’s forecast is even more pessimistic as it expects the Albanian economy to slow down to 3.5 percent in 2018 and 2019.

The IMF's public debt forecast is even more pessimistic, with the Washington-based lender of last resort expecting the country's public debt to only drop to 64 percent of the GDP by 2021, in a forecast that excludes commitments for public-private partnerships but incorporates central and local government of about 1.1 percent of the GDP, some €120 million.

The International Monetary Fund has warned the Albanian government’s ambitious Euro 1 billion public private partnership project could create hidden costs which if included in the debt stock could take it to 71 percent of the GDP.

In a calculation, excluding existing PPPs and assuming the construction phase of newly-proposed PPPs takes four years and costs €1 billion, the IMF expects Albania’s public debt to increase to 73.4 percent of the GDP in 2018 and only slightly drop to 70.9 percent by 2021, which is about 11 percent of the GDP higher compared to the Albanian government’s target of bringing debt down to 60 percent by 2020 and eying a long-term debt target of 45 percent of the GDP.

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.

The Arbri Road linking Albania to Macedonia, some 150 schools, hospitals and healthcare facilities are on the PPP agenda for the next four years which the government intends to use as a replacement for the expected decline in foreign direct investment along with a package of tax incentives on the tourism sector as two major energy related projects complete their investment stage by 2018.

The government intends to repay concessionaires over 12 years in annual instalments while road concessionaires are also expected to collect tolls to meet investment costs.

The Albanian government expects GDP to increase from €11.6 billion in 2017 to about €15 billion in 2021, making Albania one of the region's fastest growing economies at an average of more than 4 percent.

However, Albania, whose consumption and GDP per capita is at only a third of the EU average, will need 35 years to catch with the EU average income if it continues growing under the current 4 percent rate and 20 years if growth accelerates to an annual 5 percent, World Bank officials have said citing an optimistic scenario.

In a recent report, the World Bank says it could take about six decades for Albania and other EU aspirant economies to catch up with the average EU income unless current sluggish GDP growth doubles to 5 or 6 percent.
                    [post_title] => Albania revises growth, debt targets in optimistic scenario turned down by IMF, World Bank
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            [post_content] => TIRANA, Feb. 1 – There has been concern in Albania over talks behind closed doors with Greece about a new maritime border agreement after the Greek foreign minister indicated in a media interview Albania had agreed to make territorial concessions.

Opposition and civil society representatives have expressed concern about lack of transparency in the talks, while the government has said it is acting in the best interest of Albanians and for critics to wait for a final agreement to be made public.

Albanian lawmakers called Minister for Europe and Foreign Affairs Ditmir Bushati to a hearing focused on the content of his meetings with Greek counterpart Nikos Kotzias.

Bushati confirmed a new Maritime Border Agreement and the separation of sea boundaries was discussed.

Concerning the new agreement, Kotzias told Greek media Skai the Greek territorial waters would expand about 12 square miles.

A Maritime Border Agreement with Greece was first negotiated in 2009, when the Democratic Party was in power and Sali Berisha was prime minister, but it was overthrown for being unconstitutional as Albania was to lose maritime territory under the deal.

There was a huge popular uproar at the time, with the Albanian public being very sensitive to any government trying to “sell the sea” as critics put it. A similar uproar has started this week before the details of a new deal have been fully released.

Uninformed of the new agreement terms, opposition MPs and a big part of the population asked for more details to make sure this new deal benefits Albanians and the country.

Bushati responded to these accusations through his personal Facebook account, saying the new Maritime Border Agreement will be made respecting the Constitution, as well as internal and international regulations.

President Ilir Meta also issued a statement, saying he is carefully following its progress and, taking into consideration every concern, will act accordingly to the Constitution.

The talks over the maritime border a part of larger package of discussions to address long-standing issues between Albania and Greece.

Bushati also said Greece is taking steps to remove the law of war hampering relations between the countries since WWII.

He added the Korca meeting last week picked up on topics open for half a decade, such as the remains of Greek soldiers who died on Albanian soil during the Italian-Greek war.

A deal on finding and burying the remains of Greek soldiers in Albania was also made in the past according to Bushati but went through improvements in order to enable excavation, identification and burial supervision from both sides.

The group of Albanian experts has worked with devotion, and has been helped by an american expert. The process will be finalized collectively,” Bushati said.

He added that aside from historic topics, the ministers also discussed current issues, such as the apostille stamps of Albanian documents, which are estimated to cost around $4 million annually, as well as the rights and living conditions of half a million Albanians living in Greece.

In addition it was confirmed the licence of automobiles, trade and investment agreements between the two countries and even each country’s dissatisfaction with the use of different school history texts were also discussed.

Democratic Party (DP) MPs however, asked for more transparency concerning Albania-Greece relations.

DP MP Tritan Shehu expressed concerns about the transparency of Albanian diplomats in the Ministry of Foreign Affairs and asked for more details on the evaluated proposals and agreements to make sure they actually benefit citizens.

Meanwhile, local media reported Kotzias too was asked by Greek conservatives on the topics discussed behind closed doors between him and Bushati.

Kotzias also said the chief diplomats’ main topics of discussion were historic issues left open for years, while adding noteworthy progress has been made in solving them for the common interest of the people and in accordance with shared european values and rules.

It was also reported by local media, however, that Kotzias denied there was any discussions on the Cham topic, which is of particular importance to Albania.

The Ministry of Foreign Affairs in Albania also issued a statement saying the Cham topic is not yet on the table for discussion.

The diplomatic relations between the countries have witnessed a positive turn lately, with concrete steps taken by both sides to substantially solve some of the long-standing, above-mentioned issues.

Last year, Tirana approved the construction of a second cemetery in Bularat for the Greek soldiers that died on Albanian soil during WWII, while President Ilir Meta granted Greek-born Archbishop Anastasios Yannoulatos Albanian citizenship at the end of 2017 — a decision that was enthusiastically welcomed in Athens.

Similarly, Kotzias said last December that Athens is looking to find legal avenues to revoke the war law that has hampered Albania-Greece relations since the end of WWII.

Greece and Albania are tied by geography and people. Based on 2011 census data, there were 480,851 Albanian migrants living in neighboring Greece, the country’s second top trading partner and a main source of remittances. That’s on top of many indigenous Albanian-speakers of Greek nationality, the Arvanites of southern Greece. There is also a small Greek minority in southern Albania, in a couple of municipalities where Greek is the official language alongside Albanian.

 
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