What is left behind:
Inflation
During the second half of the year, the inflation arte escaped the target set by the central bank of Albania, causing the latter to increase twice the normal rate of interest in a quest to keep prices down. The target rate of inflation is around three percent, while recent estimations place the real price level increase at around four percent, which is also the target limit set by the International Monetary Fund. The current level harms those who are in the economically distressed categories whose salaries and pension increases have been significantly corroded by inflation
Pending privatizations
Although some privatization transactions were finally wrapped up during 2007, others will have to wait until, perhaps, 2009 including the state-run oil extracting and refinery company, ARMO, KESH’s distribution unit, as well as the shares of the insurance company INSIG. Such large-scale public assets are a magnet for foreign investors because they usually belong to strategic nation-wide industries. Foreign experts have urged that the state not be completely removed after the sales of these industries, but assume a new regulating role as in other countries.
Energy crisis and concessions on power plants
The energy crisis and power rationing remained severe in Albania this year with experts claiming that in 2007 the crisis has been the most severe so far. A continuous dry season was the reason offered officially, though regional problems and very high import prices of energy helped to worsen the situation. Also this year, the leadership of KESH passed from Andi Beli to Gjergj Bojaxhi with significant management improvements.
The long-term strategies to improve the energy situation in Albania, where the major hydro-power plants are technologically outdated, include the construction of several thermo-power plants and hydro-power plants offered to foreign investors in ROT concession plans. Prime Minister Berisha has also mentioned the possibility of a nuclear power plant being built, which has been fiercely opposed by the opposition and environmental experts based mainly upon concerns for safety.
Negative international reports
A series of international reports about Albania in 2007 have all reflected a deteriorating situation. The report on tourism development ranks Albania last in the global scale, as does the environmental report exposing serious environmental issues in the country. The recent report of the World Economic Forum, an important and prestigious publication that serves as a guide for potential investors as well as international bodies such as the EU, has ranked Albania in the 107th place as far as its economic productivity is concerned. The Transparency International Corruption report placed Albania as the third most corrupt country on its global list.
National Registration Center
Within the first three months of its operations, the National Registration Center has signed up nearly 2,850 new businesses. Applying the ‘one-stop-shop’ model, the NRC offers considerable facilities and shorter processing times for businesses which want to register themselves as a new activity. The operational cost is also much lower.
Tourism balances
Both tourism in Albania and tourism by Albanians in neighboring countries increased this year, balancing out the revenues with expenses. Around 650 million euro was spent in Albania by tourists through mid-December, not including the revenues that will be taken in during the end-of-the year festivities. On the other hand, a total of 58,000 Albanian tourists visited the sites in Montenegro, Macedonia, Croatia and Turkey and spent approximately an equal amount of money.
What to be looking forward to:
Debt increases
Public debt will increase significantly during 2008 since the government will borrow funds to complete the Durres-Kukes infrastructure project (85.4 billion lek of foreign debt) and other major road segments.
Supermarket networks
Malls and supermarkets such as QTU, and the smaller CONAD and Euromax, will be the main microeconomic stories of 2008, though actually beginning operations during the last days of this year. Their expansion outside Tirana will bring quality standards and more constant prices to a majority of middle class consumers, but will also reduce the chances of success for small business owners who operate neighborhood grocery stores.
Third mobile operator to be launched
After the completion of the privatization of Albtelecom, the Turkish consortium ȡlik now has gained complete ownership of its fixed-line monopoly in the telecommunication industry in Albania. ȡlik, under the agreement signed with Economy Minister Genc Ruli, is supposed to launch the third mobile operator, named Eagle Mobile. This move is expected to introduce more competitiveness in the market which has been long operated by only two companies, Vodafone and AMC.
Land ownership compensations
The problems connected to land ownership, real estate and compensation for legalized buildings have received media coverage recently, especially after the direct involvement of President Bamir Topi, a traditional supporter of property rights. Despite the allocation of 50 million lek for compensation from state budget, the amount is too low to cover all claims for compensation. Significant problems remain in the property maps, especially in the suburbs of the capital as well as on the sea coast.
