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REPUBLICAN REFERENCE
Area (sq.km)
28,748
Population
3,490,435
Capital
Tirana
Currency
Lek
President
Mr. Rexhep Meidani
Private sector
% of GDP
45%
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Background:
In 1990 Albania ended 44 years of xenophobic communist rule and established a multiparty democracy. The transition has proven difficult as corrupt governments
have tried to deal with high unemployment, a dilapidated infrastructure, widespread gangsterism, and disruptive political opponents. International observers
judged local elections in 2000 to be acceptable and a step toward democratic development, but serious deficiencies remain to be corrected before the 2001
parliamentary elections |
Update No: 057
The Albanians are in better shape than of yore. It is still a very poor country, the poorest in Europe on all accounts. But it now has a future.
In the immediate aftermath of liberation in 1991 the economy went into free fall. The party of labour of Albania, the communists, changed their name to the
Socialist Party of Albania and won the first genuine multi-party elections since the 1920s. But it was replaced by the opposition Democratic Party of Albania
in early 1992. The government did a brave thing in that year, which no government for instance has yet dared to do in Russia - it privatised land. This was
fundamental in an economy still more than half agricultural. Things began to look up as peasant incomes grew.
But there was a huge downside to the radical reformism of the government. People began to experiment with financial schemes, from which they could obtain
loans, offering their landholdings as collateral.
1996 was an election year and the government of the day under Sali Berisha, head of the Democratic Party of Albania, and then president, began to loosen the
purse-strings. Inflation, which had been modest for an economy in early transition, took off, reaching double figures; while a series of pyramid financial
schemes, in which large numbers had unwisely invested their savings, collapsed. GDP fell by 8% in the course of 1997.Naturally people began to be nostalgic
for communism. The socialists, having boycotted rigged elections in May 1996, won elections in July 1997. The Communists were back
They resumed a reform course, stalled by their predecessors, and things began to improve, GDP rising by 8% in 1998, 7% in 1999 and 8% again in 2000.The
economy was greatly helped by two boons, the repatriation of funds from the more than 300,000 émigré workers and the Kosovo War, which brought a flood of aid
and assistance from abroad. The presence of NATO troops helped to re-establish stability and curb banditry.
The economy continued to boom in 2001, allowing the socialists to win re-election. With growth still in the 7-8% range and remarkably low inflation, the
population were prepared to give the incumbents another chance, although the opposition under Belisha cried foul.
The state budget for 2002 envisages 7% growth in GDP and 2.4% inflation (see below). Generally the country is doing well under adverse circumstances.
Ahead beckons membership of the EU, another fruit of the war. The Europeans have lost their scorn for the Albanians. It is very important in this respect if
their membership bid is to be successful, that the Albanians should make clear their opposition to terrorism, because as Muslims and with a tradition of
banditry they are bound to remain suspect in the new hyper-security conscious age. Moreover, there is a formidable mafia in this country which is suspected
amongst other depredations of organising a conduit into Europe of drugs from Afghanistan, as well as economic refugees from mainly Moslem countries.
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ENERGY
Albanian government to consider more imports of electric power
The Albanian Electric Energy Corporation (KESh) has made sure of a quantity of electric energy to be imported in the coming days.
"After ensuring the import of more electric energy, we'll now present to the government a proposal for electric energy purchasing," the Albanian minister of
state for energy, Dritan Prifti, stated on 17th January to the media, ATA News Agency has reported.
Bulgaria and the British company, EFT, are two sources which will improve the situation of electric energy supply in Albania, said Prifti.
The minister said that EFT had agreed to sell KESh 2m kWh of energy daily, for a period of two weeks, whereas the state electric energy company of Bulgaria
ensured the supplementary amount of energy for the next three months.
But the price of electric energy that these two sources offer, according to Minister Prifti, "is more expensive, 4.3 cent per kWh and 4.5 per cent kWh,
because the demand for electric energy in the Balkan region continues to be at maximal levels."
If the government approves the purchase of the electric energy at these prices, "the amount of energy supply for consumers is expected to rise."
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FINANCIAL NEWS
Albania's 2002 budget envisages 7 per cent growth, 2-4 per cent inflation
The budget of the Albanian state for 2002, envisages an economic growth of 7 per cent and inflation 2-4 per cent, ATA News Agency has reported.
In addition, the budget law also envisages growth of budgetary revenues as result of good management and increase of expenditures.
According to the Finance Ministry, the budget reflects the economic, financial and social policies to be applied during 2002 that coincide with the Strategy
of Economic and Social Development of the country.
The budgetary revenues to be deposited, in particular taxes and customs duties incomes, are expected to increase to 17.2 per cent as against 16.2 per cent
of Gross Domestic Production in 2001. The total revenues of the state budget are predicted to amount to 157.711bn lek.
In the state expenditures, an increase by 11-12 per cent is expected, reducing the general budget deficit to 8.4 per cent of the Gross Domestic Production as
against 9.2 in 2001. It is envisaged that total expenditures of the state budget will amount to approximately 212.848bn lek during 2002.
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FOREIGN ECONOMIC RELATIONS
Albania and Macedonia sign free trade agreement
Albania and Macedonia signed a free trade agreement in mid-January, marking a major step towards free trade in the southeastern European region, Skopje's
economics ministry said. The agreement was signed by Macedonian Secretary for Economy Violeta Maksova and Albanian deputy Minister for Trade and Co-operation
Ajel Skeli, the ministry said.
According to the agreement, bilateral trade is to undergo liberalisation during a six-year transition period. The free trade agreement complies with
principles and guidelines of the World Trade Organisation, the European Union and the Memorandum on understanding and liberalisation of trade among the
Southeast European States, signed last June in Brussels, Skopje said.
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