TIRANA, May 3 – The International Monetary Fund is optimistic of Albania’s growth prospects for next few years but says improving the business climate will be key to accelerate growth.
Jens Reinke, the IMF resident representative in Albania, says Albania has a great potential to improve its investment climate by improving the way the government and the judiciary work.
“The country has severe challenges in the field of the rule of law, which includes areas such as contract enforcement, land title and the rights of individuals and companies vis-à -vis government institutions,” Reinke said in an interview published by the Foreign Investors Association of Albania (FIAA).
The IMF official also stressed the need for the adoption and implementation of the long-awaited justice reform, which has also been set a pre-condition by the European Commission to open accession talks with Albania after the country was granted EU candidate status in mid-2014.
“Judicial reform is major step forward and it is maybe the biggest turning point for the country in recent years and in the foreseeable future. If judicial reform is implemented well, the country might well be on the way to joining Western Europe as a modern, reliable state,” said Reinke.
Speaking about the country’s economic outlook for 2016 and 2017, Reinke said Albania will continue suffering a non-conducive external environment affecting exports due to low commodity prices.
“There should be an impetus to reform because improved efficiency in the economy and improved efficiency in government spending and public investment would drive further growth,” said Reinke.
Signs of a recovery in oil prices will be very positive for Albania, particularly with regard to continued investment in the oil sector in Albania and of course with regard to government revenues from oil, he added.
Affected by a sharp drop in international oil and metal prices, Albania’s poorly diversified exports continue suffering this year after declining by 5 percent in 2015.
The high level of non-performing loans, currently at about 17 percent compared to a peak level of 25 percent in mid-2014 and sluggish credit growth remain key concerns for the IMF which has been assisting the Albanian government through a three-year Euro 331 million loan.
The Albanian government has made it clear there will be no tax cuts for 2017, defying business calls for a return to a 10 percent flat tax regime after the corporate income tax and taxes on rents, dividends and non-capital gains increased to 15 percent, but says it is working to improve the business climate by facilitating procedures and reducing red-tape.
Economy Minister MilvaEconomi says the government is working on improving the Doing Business indicators after Albania lost 35 places to rank 97th out of 189 countries in the latest Doing Business report published by the World Bank.
“In order to improve the business climate, a new National Business Centre has been created that serves as a business one-stop shop. In addition, we are working on simplifying procedures for licenses and authorizations, as well as introduce and expand the usage of e-licensing,” she said.
