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Update No: 060 - (18/04/02)

New government forms
Since March, the Albanians have had 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.

Internal dissensions
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 Nano vetoed this and Meta has withdrawn, Stefan Cipa, a 43-year old agronomist, being chosen instead.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.

Economy recovers
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 and summer 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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FOREIGN ECONOMIC RELATIONS

Albania, Macedonia sign free trade agreement

A Free Trade Agreement between Albania and Macedonia was signed on 29th March in Tirana, by Albanian Economy Minister Ermelinda Meksi and that of Macedonia, Besnik Fetahi, ATA News Agency has reported. 
The agreement stipulates that several items are exempted from customs tariffs, mainly agricultural ones from Albania to Macedonia and vice versa.
Thus, Albanian producers can export to Macedonia such products as dairy, vegetables, fruits, beverage, meat by-products and so on. The same products will be imported by Macedonia free of customs tariffs.
In addition, the minister of economy of Macedonia, Besnik Fetahi, stated in a press pronouncement that quotas have been determined for industrial products, which can be exported by both countries without customs tariffs such as tobacco, bread, fruit juice and so on. 
The signing of this agreement predicts the increase of the trade exchanges between the two countries. Currently, the Albanian exports towards Macedonia account for 2.5 per cent of the total of exports.

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FOREIGN LOANS & AID

Italian government to give 172m euro economic package to Albania

The Albanian government has approved the draft protocol of cooperation and development between Albania and Italy for the period 2002-2004, ATA News Agency has reported. According to the press office of the Council of Ministers Italian assistance will focus in the support of vital sectors of economy like energy, infrastructure, watermains, education and culture.
The assistance package was compiled having in mind the implementation of the projects already started. The package will be worth €172m, €130m of which will be soft credit and €42m grant. The financial assistance in the form of grant will cover mainly the non-productive sectors like education and culture. The new package foresees €42m being spent on energy, while the transport sector will get €24m which will cover the road section between Shkoder and Hani i Hotit and 12m for the second stage of funding for Vlora port.
The new package puts special emphasis on the credit support of the small and middle-sized enterprises, as a feature of stability for the economic development of the country.

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TELECOMMUNICATIONS

Albanian Telecom privatisation postponed again

"Expression of interest" on the part of the foreign companies, interested in buying the state shares of Albtelecom has been postponed for the third time, ATA News Agency has reported. 
The Government's consultant for the strategic privatisation of the public sector, IMI, recently proposed to the government the postponement of the deadline of 14th of June for the "Expression of Interest." 
Having no clear view as to which ministry should respond, from the judicial point of view about the privatisation, has also influenced the slow-down of the process of expression of interest, experts of the telecommunication's sector say. 
The new structure of the government determines that the General Directory of Telecommunications is put under the Ministry of Transport while the directories of privatisation should go under the guidance of Ministry of Economy. But up to now, none of the directories has left the halls of the former Ministry of Economy and Privatisation. 
After the failure of the first deadline of 22nd February, the government fixed 22nd March as the new deadline for the foreign companies that would like to buy Albtelecom . 
According to the privatisation timetable for the public associations of the fixed telephone service, it is anticipated that 2nd July 2002 be the date when the government should declare the buyer of the controlling package of Albtelecom. 
After this "expression of interest" the government expects the start of the second stage. The consultant and transparency commission has 15 days to select the companies which meet the criteria determined by the Albanian government on the privatisation of "Albtelecom."
Then the selected companies should introduce their offers to buy the state shares of the Albtelecom company. And after the consideration of the offers presented, the final stage of negotiations will start, during which there will be the direct recognition of Albtelecom or the so-called "Due diligence" on the part of the foreign companies, which last about ten days. 
During this period the representatives of the foreign companies will have direct contacts with heads of Albtelecom and they will see detailed technical and technological figures, the quality of management and so on. And then it is the turn of the companies to prepare an "obligatory offer" within a period of three weeks. 
These offers will be presented to the Consultancy and Transparency Committee which in turn will determine the three first strategic companies which will remain in the race to the end. That will be followed by the negotiating stage, during which there will be a discussion on the conditions and the criteria buyers of Albtelecom should meet. But it will be the Council of Ministers that will make the final decision on the new owner of Albtelecom. 
The Albanian parliament has already approved the privatisation formula of Albtelecom, when it determined that the strategic investor it will be offered 51 per cent up to 76 per cent of the shares of the company's capital; 3 per cent of the shares will be offered to the public association Albapost and about 20 per cent to the former owners of the land and to the Albtelecom employees. 

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