EBRD: Albania should pursue reforms in key sectors

Albania should pursue reforms in key sectors, the European Bank for Reconstruction and Development (EBRD) said on its Transition Report 2018-2019. According to the Bank, short-term the priorities are to further liberalize the market, enforce payment discipline in state-owned companies, and improve the regulatory framework to ensure cost-reflective tariff-setting.
Another key priority is related to the transparency of infrastructure projects. The report highlights that Albania’s requirements in areas such as roads, railways, and ports remain numerous, but it is vital that investment projects are tendered according to best practice competitive rules and standards.
In the meantime, it is crucial to tackling factors that are holding back credit growth.
“Non-performing loans have declined but remain high by regional standards and are holding back credit growth; efforts to reduce them further should be intensified,” EBRD says.
The report has also pointed out that GDP growth during the previous year was driven equally by private consumption and investment.

Report findings

  • The Lek has been appreciating against the euro in recent years, and particularly during 2018.
  • The economy will likely benefit from enhanced foreign investor interest, especially if there is further progress in the EU approximation process. However, downside risks remain, associated with the embedded structural weaknesses in public administration and infrastructure.
  • The speed of EU approximation remains conditional on (among other things) tangible progress in implementing judicial reform, in particular with regard to the law on a re-evaluation of judges and prosecutors, known as the vetting law, and progress in the fight against corruption and organized crime. The EC has also urged the government to pursue civil service reform, including a change of their recruitment model, basing it fully on candidates’ professional achievements (rather than on their political orientation, as is currently sometimes the case).
  • Progress in business environment reforms has been mixed.
  • Plans to develop and diversify renewable energy sources are advancing.

 /EBRD/