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Albania

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  ALBANIA

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 January 2002

Long the poorest country in Europe, Albania is showing definite signs of improvement. After a crunch in 1997 that saw the collapse of investment pyramid schemes and impoverishment of many people, it began to benefit from the impact of the Kosovo War in 1999.
Faced with over 200,000 refugees, it received huge help from the international community, aid workers coming to the country in droves. It was dramatically put on the map.
The presence of NATO forces improved the poor security situation to some degree, making life more difficult for bandits. But the steep rise in foreign currency in circulation increased the scope and means for corruption, which remains a grave problem.
A government of young reformers in the ruling Socialist Party, under Premier Ilir Meta, have pushed through wide-ranging reforms, selling off state assets, mainly to foreigners. At US$143m in 2000 its foreign direct investment (FDI) might not seem so high, but it was a threefold rise on FDI in 1999, the previous year. Growth of GDP was 7% in 2000, with miraculously low near-zero inflation.
Albania has been co-operating closely with the US against terrorists, who have for years been using Tirana as a base (some 70% of Albanians are Muslim). The CIA and the Albanian secret services are long aware of the need for vigilance in this area. It is believed that the Taleban used Albanian ports as a conduit for Afghan drugs into Europe and the West. 
The US has commenced a 10-year restructuring of the Albanian army. Albania is virtually a member of NATO. It will be a lot longer before it joins the EU. But even that is no longer inconceivable. Albania is no longer a Balkan backwater of a country, but a minor player of rising geopolitical and economic significance in its region.

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BANKING

Key bank's deposits up in October


At the end of the 10-month period of the current year, the [Savings Bank] savings deposit in dollars have marked an increase of US$3.39m, as compared to the end of the nine-month period of the current year, ATA News Agency has reported.
At the end of October, some US$53,63m are in those kinds of deposits, as compared to the US$50.24m deposited at the end of September of the same year.
During October the savings deposits in lek at this bank also increased. At the end of October 2001, some 131bn lek have been deposited in its savings deposits in lek.
After the publication of the news of the postponement of the privatisation deadline of the Savings Bank in the media, its deposits in lek have shown a remarkable increase.
The Savings Bank, currently included in the privatisation process, was created in 1991 and owns around 80 per cent of the deposits in lek, 35 per cent of deposits in [foreign] currency and 82 per cent of the treasury bond market...

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CONSTRUCTION

Albania to start port reconstruction in Vlore

The implementation of the project for the reconstruction of the existing site of ferries, financed by the Albanian government with a fund of 16m lek will begin in the port of Vlore town this year, ATA News Agency has reported.
Sources from the port's department told ATA that "the investment expected will enable the upgrading of handling of cargo anchored in Vlore port."
The project is part of investments envisaged for the Vlore port during the current years which aim at its extension and modernisation. Under the CROSSBORDER programme and with EU financing, the implementation of the project for building the new quay for ferries, worth US$5m, has begun.

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ENERGY

Albania opens tender for providing 1.5bn kWh electricity


The Albanian government has allocated US$46.5m from the state budget to purchase 1.5bn kWh of electric power, ATA News Agency has reported. 
According to sources from Albanian Electroenergytic Corporation, negotiations with competing firms have kicked off in order to select the winner.

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FOREIGN INVESTMENT

Failure to observe law "main obstacle" to foreign investment


The poor performance of the laws in the field of economy and the insufficient infrastructure are the main obstacles for foreign investors in Albania, according to the Agency of Services of Foreign Investments (FIAS), ATA News Agency has reported.
Representatives of this agency underlined, during the discussions on the situation of investments, that along these problems the foreign investors see as an obstacle in their activities even the long procedures and failure to meet the contracts.
According to the Ministry of Economic Cooperation and Trade the foreign direct investments in Albania during the years 1992-2000, amount to US$598m.
According to data from the Albanian Institute of Statistics, some 2422 companies with foreign capital operate in Albania, out of which 1532 are joint ventures and 890 companies totally with foreign capital.

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FOREIGN LOANS & DEBT

Albania reschedules debt of 2.4m euro owed to Germany


The Government of Albania's Republic and that of Federal Republic of Germany signed an agreement on postponement of payments of Albania's debt, based on the Terms of the Reference of Paris Club in October 1999, ATA News Agency has reported.
According to the Ministry of Finance, on the basis of this agreement all payments of the principal and interest which should have been paid and have not been paid from 1st April 1999 until 30th June 2002 along with the capitalised interest will be put off and will be paid by ten equal 6-month instalments until 31st December 2005. The total amount of the debt to be re-scheduled is 2.4m euro.
For implementation of this agreement three other agreements were signed for the credits extended by KfW an agreement of consolidation was signed between KfW and the Republic of Albania; for the old debt in Roubles Clearing is signed an additional agreement to the Agreement of 13th July 1994 between KfW and Bank of Albania; for the old debt in DM an agreement between Bank of Albania and a consortium made up of HERMES Kreditversicherungs-Aktiengesellschaft, Hamburg and PwC Deutsche Revision Aktiengesellschaft Wirtschaftsprufungsgesellschaft, Frankfurt over Main, was signed.

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TRANSPORT

World Bank to finance feasibility study for Durres-Morine road


The winning company which will carry out the feasibility study of Durres-Morine road is expected to be announced shortly, sources from the Ministry of Transport inform, ATA News Agency has reported.
The World Bank will finance the feasibility study worth US$600,000. According to official sources, so far some three different preliminary projects have been put forward.
One version forecasts Durres-Shkoder-Fushe Arrez-Kukes route. Another version forecasts Durres-Milot-Fushe Arrez-Kukes and the third proposal forecasts a new road in Fan river valley, with a tunnel in the vicinity of Kalimash with an estimated cost of US$90m.
The deadline for the completion of the feasibility study is six months, according to official sources, after which, the project will be presented to foreign donors for financing and construction.

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