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Update No: 059

The Albanians now have a new government, having been without one for several weeks since January 29th. The ruling Socialist Party has been beset by internal feuds after winning a handsome election victory last year.
One faction is led by the leader of the party, Fatos Nano, the other by the recently resigned premier, Ilir Meta. Nano accused Meta, at 32 the youngest premier in Europe, of being guilty of "corruption, fascism" and goodness knows what else, all of which Meta stoutly denies, calling Nano "an irresponsible politician" in return.
A compromise has been reached under the premiership of the young reformer, Pandeli Majko. Meta offered his support to Majko and wanted to become interior minister, a very key post in highly security-conscious Albania. Nano vetoed this and Meta has withdrawn, Stefan Cipa, a 43-year old agronomist, being chosen instead. Four ministers from the old government have kept their posts, including the key figure, Foreign Minister Arta Dade.
The resolution of the crisis is none too soon, as Albania is grappling with the consequences of a harsh winter. The economy had recovered from a crisis in 1997, growing by 7-8% from 1998 onwards, enabling the re-election of the socialists last year. Moreover, this was with remarkably low inflation.
Spring is round the corner and should get the economy off to a new start. With a new government of reformist stamp, a highly cooperative Western world in the aftermath of the Kosovo War of 1999 and a flow of aid and credit, the future still looks promising for the Albanians. But there is a long way to go for what remains one of the poorest countries in Europe.

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AGRICULTURE

Balkan states committed to cooperation in field of agriculture

The Balkan states have agreed to cooperate in the field of agriculture through the creation of a centre of development for agriculture, ATA has reported.
In a meeting held in Bulgaria recently, the deputy ministers of agriculture of the Balkan countries, emphasized that agriculture is among the important factors in the economic and social stability of the Region. According to Albanian deputy minister of agriculture, Vjollca Ibro, the participants in the meeting urged from all Balkan states to coordinate their efforts to profit from international agreements and the programs for development policies. According to a statement signed by the participants in the meeting, the Ministries of Agriculture of the Balkan countries must create structures for the protection of agricultural products, and boost the exchange of experience in the development of the agricultural processing industry. Sources from the Ministry of Agriculture said that the next routine meeting will be held in Albania. 

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ENERGY

Americans to train KESH directors for a year

The U.S Energy Association (UESA) has started a partnership and training programme with KESH, aimed at the improvement of technical and financial parameters, ATA News Agency has reported.
"The financial management of the Corporation", is the first training course with economists and financiers, which started these days. "The specified time for various training of KESH specialists will be 12 months," official sources of the Albanian Power Corporation, (KESH) told ATA. 
The principles, the means, the leading of a power company which operates in a market economy, to meet its objectives, are the main issues to be discussed during seminars and different workshops organised by UESA.

Albania to import "considerable quantities" of petroleum for processing

The production of petroleum in Albania is expected to increase in the coming years by nearly 140,000 tons, APC (Albanian Petroleum Corporation)stated, ATA News Agency has reported.
Compared to the production in 2001, the increase in gasoline production will be 35 per cent higher in 2005 with an annual increase of 7 per cent.
To achieve this goal, in addition to Albanian production imported petroleum will provide considerable quantities of petroleum, aiming to increase processing quantity in the Petroleum refinery of Ballsh in southwestern Albania.
According to APC sources, the import of petroleum will be assured from different sources. 
Investment in APC is forecast to increase by 80 per cent more this year.
The experiment of using new technologies this year in the extraction of petroleum is the main objective.

Albanian premier urges "outright restructuring" of state-own energy company

In a meeting with chiefs of the Albanian Energy Distribution Corporation (KESH) on 25th February, Albanian Prime Minister Pandeli Majko urged a radical restructuring of the company which, according to Majko, does not only fail to supply electric energy correctly, but also steals energy to the detriment of the citizens, ATA News Agency has reported.
"There is a system within KESH, which treats citizens unscrupulously," said the PM in the meeting, demanding a radical outright restructuring at all levels and putting before the law the energy thieves within the structures of the Albanian Energy Distribution Corporation.
The premier urged a quick improvement of the structure for the tax collection. "The invoice should not be a fine for the citizens," said Majko. He added that KESH should urgently start the restructuring of both energy generation and distribution sectors, to open the way to the privatisation of the electric energy network.
PM Majko said that the newly-appointed minister of Energy, Viktor Doda, who knows very well the problems in the energy sector, will solve the pending problems in this sector as soon as possible.

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FOREIGN ECONOMIC AFFAIRS

Macedonia, Albania sign free trade agreement

In order to continue their objectives for complete trade liberalisation in the region, Macedonia and Albania recently signed a Free Trade Agreement, Nova Makedonija has reported. Due to the different levels of development in the two economies and the difference in the gross domestic product, the agreement does not require the same input from both countries. 
Macedonia has removed the import customs duty for most of the Albanian industrial products, whereas the import customs duty for Macedonian products imported into Albania will be removed gradually over the next six years. 
This agreement envisages a duty-free exchange of almost 90 per cent of the products after six years. Agricultural and food products are to be exchanged according to the quota principle. 
The overall trade exchange between Macedonia and Albania is over US$9m. Macedonia has achieved a significant surplus in the trade exchange, because its exports to Albania are worth US$7.9m, and Albanian goods worth US$1.2m are imported. 
Economy Minister Besnik Fetai says that this agreement should contribute to a greater bilateral exchange. "This agreement complies with WTO [World Trade Organization] regulations, EU legislation and the Trade Liberalisation Memorandum among the countries from southeastern Europe within the framework of the Stability Pact. 
It is very suitable, and it is also very important for us that Albania as a WTO member has average customs rates of 8 per cent," Fetai explains. The country has signed eight bilateral free trade agreements so far.

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FOREIGN LOANS & DEBT

IMF, WB to keen an eye on future developments

As uncertainty remains a constant in the future of the Albanian government, the International Monetary Fund (IMF) has delayed its approval of US$30m in aid, while the World Bank (WB) cautions that another US$70m in loans are at risk, New Europe has reported.
Despite the ruling Socialist Party of Albania's (PSSh) appointment of Pendeli Majko as new premier, unsettled squabbles within the leadership still appear rife as long as PSSh Chairman, Fatos Nano, and recently-resigned Prime Minister Ilir Meta continue feuding.
Subsequently, the IMF is not quite so positive regarding the country's future developments. Volker Treichel, head of the Tirana IMF office, said recently that the Fund postponed a board meeting scheduled for 8th February in Washington meant to approve US$30m in aid. Meanwhile, Eugene Scanteie, the WB's country manager for Albania, warns that US$70m set aside for three development schemes is also at risk. Scanteie, in an interview with RFE/RL, reconfirmed the WB's commitment, through the International Development Association (IDA), to support the country's development efforts. The IDA provides long-term loans at zero per cent interest to the poorest of developing countries.
Scanteie said: "Concerning the IDA credits scheduled for board consideration by June 2002, we should stress that their appraisal, negotiation and eventual approval are dependent on Albania's ability to continue its previous good performance. The World Bank technical teams are working hard, together with the competent authorities, to bring these projects to the board on schedule. Some of these teams are currently in Tirana. We hope the current government crisis can be quickly resolved, so economic matters can again receive the attention they deserve. We're determined to work closely with the government to continue supporting Albania's development and poverty reduction efforts."
Since 1991, Albania has received some US$570m in loans. By 2000, per capita earnings in the country had more than quadrupled to almost US$1,100 per annum. However, a number of initiatives in the region recently lost momentum, such as the EU's Stability Pact for southeastern Europe.

Albanian debt to Germany rescheduled

Recently an agreement was signed with the German government on the postponement of payment of Albania's debt, based on Terms of Reference of "Club of Paris," of October 1999, ATA News Agency has reported.
The bill, which is expected to be passed into law by Albania's Assembly, states that all the payments of the principal and interests, which should have been paid and were not paid from 1st July 1999, to 30th July 2000, which amount to DM4,629m or 2,367m euro, will be postponed and will be paid with 10 equal and 6-month consecutive instalments, starting from 30th June 2001 to 31st December 2005.

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