The government has assessed positively its performance as far as economic figures are concerned. The GDP parameters as well as inflation and other financial data show that the system is more or less liquid and stable. One of the most positive developments has been the expansion and enrichment of the banking sector especially due to the contribution of foreign-owned banks and the regulatory policies of the central bank. 2006 is almost behind us and the government has prepared the budget for 2007 in November, the same time when it was approved by the parliament despite controversy over many important issues. What is in the agenda for 2007?
Tirana Times recapitulates the most strategic events that are expected to shape the economic arena of next year:
European Integration: having signed the Stabilization and Association Agreement (SAA) in June of 2006 and having started to implement the Interim Agreement in December of the same year, Albania has barely started to experience the changes that this brings along. Zero or lower customs fees, lower tariffs and fewer trade barriers have opened the European markets for Albanian producers. Many local businesses are concerned if they will survive the competitiveness of the European colleagues. The governments challenge seems to be the support to businesses without a change in taxes or subsidies. The budget predicts lower subsidies for this year. The government has decided to offset the loss in financial terms for the removal of custom fees without affecting the taxation schemes.
Regional cooperation: Albania and Kosova both entered the regional free trade agreement of CEFTA last week. They joined nine new partners in signing an important agreement for free trade. Albania signed free trade agreement with Turkey this week and is in the same negotiating process with Croatia and Montenegro.
Salaries: budgetary employees such as those in the education and health sectors are expected to benefit form a rise in salaries. While pensions have been increased during the end of this year, teachers, doctors as well a many other workers in these fields wait for a rise none less than 20 percent.
Taxes: July will be a happy month for trade sector because the government has decided to reconsider its Vale Added Tax scheme and differentiate it for some products especially agriculture related items. The energy sector will have lower VAT from 20 to 19 percent, a change that will be continued every year till 2009.
Labor numbers: borrowing the experience from Social security numbers elsewhere in the United States and Europe, Albania has decided to give to all working people a labor number under which will be recorded all important tax contributions. The issue of this personal identification number will contribute to the fight against informal economy.
Privatization of state-owned enterprises: The telecommunication company Albtelecom and the energy company KESH are still largely state-owned. Within February Telecom is expected to pass to the Turkish hands of Turkish Telecom and Calik Enerji which competed as a consortium in 2005. This transaction will be followed by the immediate launch of the third mobile operator in Albania, eagle Mobile. Customers expect for lower prices given the break of the alleged monopoly scheme of the current companies: AMC and Vodafone. The government ha started the divisional separation of KESH in order to facilitate and quicken the privatization of the energy outlet which once again failed to avoid a power crisis. The national energy strategy recommends that KESH has to be split into three separate divisions and all 83 hydroelectric power plants are to be sold or be given in concession. Part of the strategy is also the privatization of domestic oil companies that mange the current reserves.
Infrastructure: the largest part of budget was allocated to strategic investment in the infrastructure sector focusing on roads, ports and bridges. Tirana International Airport and the Durres Port will have new passenger terminals. The highway between Durres and Prishtina is expected to get new completed segments. Thermal power plants in order to reduce the hydropower dependence are due to be on the building agenda. The most important project is about a thermal plant in Vlora and will be financed by a group of important investors including the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the World Bank and Albanian power utility KESH.
Air Transportation: Low-cost air companies have started operating in Albania making access to neighboring countries easier. Albanian BelleAir flies to Athens, Istanbul and several destinations in Italy. Italian Myair flies to Bari in Italy. The latest information from the airport shows that fourteen air carriers now have flights to and from Tirana on 25 international destinations, compared to 15 air carriers and 28 destinations in the summer.
