Albania is ranked better than Montenegro, Serbia, Bosnia and Herzegovina, Bulgaria, Romania and even top trade partners Italy and Greece in the economic freedom report.
TIRANA, Jan. 14 – Albania climbed four steps to 54th in the 2014 Index of Economic Freedom published by the Heritage Foundation and the Wall Street Journal, ranking better than most of its regional competitors.
Albania’s economic freedom score is 66.9, making its economy the 54th freest in the 2014 Index. Its overall score has increased by 1.7 points, with notable improvements in investment freedom and trade freedom. Albania is ranked 25th among the 43 countries in the Europe region, and its overall score is above the world average.
Albania achieved its best ever result in the Index of Economic Freedom in 2010 when the country ranked 53rd. In 2013, the country ranked 58th while back in 2012 and 2011 it ranked 57th and 69th respectively.
Albania is ranked better than Montenegro, Serbia, Bosnia and Herzegovina, Bulgaria, Romania and even top trade partners Italy and Greece in the 2014 economic freedom report.
Over the 20-year history of the Index, Albania has advanced its economic freedom score by about 17 points, a top 20 improvement. With score increases in nine of the 10 economic freedoms, Albania has risen gradually into the “moderately free” category. “Notable structural reforms have included trade liberalization, privatization, implementation of competitive flat tax rates, and modernization of the regulatory environment. Along with the effective maintenance of low inflation, greater monetary stability has also been achieved.”
The reports notes political interference in the judiciary and rising fiscal deficits in recent years have increased public debt to above 60 percent of GDP, the legal limit set in 2008.
Albania officially welcomes foreign investment, but red tape and insufficient protection of property rights discourage investment, says the report.
The opposition Democratic Party said the Heritage Foundation report appreciated reforms made by the Democrats in the past eight years in power, which the new government is hiding.
Commenting on the report, Economy Minister Arben Ahmetaj said the Socialist Party-led government considers this report as a good first step which will be followed by a series of actions to resolve the immediate issues in the government-business relations.
“2014 will be the year of the initiation of structural reforms. Albania is becoming more and more attractive to foreign investors and our government remains committed to improving the business climate in Albania,” said Ahmetaj.
The 20th annual edition of the Index of Economic Freedom covers 186 countries, evaluating their performance in four broad areas of economic freedom נrule of law, regulatory efficiency, limited government and open markets. It ranks the surveyed economies on the basis of 10 indicators, including property rights, freedom from corruption, fiscal freedom and government spending. Based on their aggregate grades, countries are classified into five groups: free, mostly free, moderately free, mostly unfree or repressed.
Business climate
Doing business in Albania has become more difficult in the past three global crisis years, says the latest Doing Business 2014 report published by the World Bank and the International Finance Corporation. The report ranked Albania 90th in a 189 country-list, eight places worse compared to the revised 2013 ranking, and better only compared to Serbia among regional countries.
With a total tax rate of 31.7 percent and 357 hours needed to comply with 42 tax payments, Albania ranks one of the worst performing in the Eastern Europe for paying taxes. The World Bank Paying Taxes 2014 report ranks Albania 146th among 189 economies on considerably higher total tax rates and especially hours to comply with tax payments.
The report says Albania is among few economies which made the payment of taxes easier.” In Albania, corporate income taxes are now paid quarterly rather than monthly,” says the Doing Business report about the only reform singled out in Albania.
Albania lost six places in the 2013-2014 Global Competitiveness report published by the World Economic Forum, ranking 95th among 148 economies on deteriorating basic requirements, efficiency enhancers and innovation and sophistication factors. In this year’s report, Albania was sandwiched between Jamaica and Kenya, lagging behind all regional countries, except for Serbia which ranked 101st. Albania ranked 89th in the 2012-2013 global competitiveness report and 78th in the 2011-2012 report.
The report shows corruption remains the most problematic factor for doing business in Albania for 25.5 percent of respondents, followed by access to financing for 20.3 percent, inefficient government bureaucracy at 12.7 percent, tax regulations at 11.6 percent, and crime and theft at 9.8 percent.
