Albania ‘resists’ fear of global crises

TIRANA, March 30 – Albanian authorities continue to oppose any idea that the effects of the global crisis have already covered the tiny Balkan country.
Despite this, last week the central Bank of Albania warned the government against increasing budget expenditure as this could put the macroeconomic stability of the country at risk. The BoA called for a tighter fiscal policy saying the government has no room to offer further fiscal stimulus.
“This is the maximum that the government can do to halt the cost increases for debt refinancing,” the bank’s board of directors said. “The budget deficit was 5.7 percent of the GDP in 2008, much higher than the previous year, while public debt increased to 55.6 percent of the GDP,” the statement said.
Government expenditures have contributed to a sharp increase in imports of goods that has been followed with a negative impact on the county’s current account.
The current spending rate exceeds by 0.5 percent the fiscal deficit target agreed between the government and the IMF.
Albania’s current account deficit rose to 14.7 percent of the GDP in 2008, the highest ever registered. As a result of the debt increase, interest rates jumped to 9.17 percent for 12-month treasury bills, the highest rate since 2002.
The Albanian currency, the Lek, lost 6 percent of its value in February against the Euro.
But central government, including Prime Minister Sali Berisha, have insisted the country’s economy is healthy.
The opposition, on the other side, says Albania has been hit by the downturn in the global economy and the government should recognize the risks that come with this. They mention the fall of remittances and also of commercial exchange.
Minister of Economy Genc Ruli said last week at the Crans Montana forum held in capital Tirana that Albania’s exports during the first two months of 2009 had remained at the same levels with those of the previous year, something he considered to be a very promising fact at a time when the global economy has been struck by global crisis.
“The World Trade Organization has foreseen a decrease of 1% of the world trade but in Albania the physical trade volume has been on the increase during the first two months of this year”, Ruli said.
Budgetary incomes are in line with the Ministry’s forecast.
The Albanian Government stresses that the reforms undertaken by the current government are the main factor for the country’s good level of immunity in the crisis.
“For 2008, we expect the final result of economic growth to be at the range of 8% and annual inflation at 3.1%,” said Ruli.
“Direct investment levels in Albania has experienced a 60% increase in 2008 compared to the previous year,” he pointed out.
Albania is one of the countries with the lowest fiscal burdens in Europe.
“The Government has managed to eliminate all previous bureaucratic hurdles related to investment possibilities,” said Berisha also present at the forum, adding “the Government has also managed to modernize the country’s fiscal system and to adopt a new system related to taxes”.
Trying to facilitate the economic activities of businesses, the government has decreased the price of energy and has modernized the infrastructure, he said.
Berisha acknowledged, however, that Albania was experiencing few budgetary difficulties, also calling for more FDI in the country where authorities would make the utmost so that the projects and investments in Albania turn into success stories.
“Albania’s NATO membership implies further guarantees for your investments, the country and the region. We are already present in all NATO military missions.
Soon we shall go ahead with the application process for the EU candidate country. All EU countries have already ratified the SAA with Albania,” he said.
Head of the Crans Montana Forum Jean-Paul Carteron also called for more FDI in Albania considering it one of the leading countries in the Western Balkans.