CIA Says Albania Has Poor Business Environment
Albanian Daily News
Published August 9, 2017
The US Central Intelligence Agency (CIA) recently updated the data for Albania, whereby the economy of Albania. According to the agency Albania’s economy has improved steadily and economic growth is expected to be up to 3.8% in 2017.
“Complex tax codes and licensing requirements, poor judicial system, endemic corruption, poor contract enforcement, ownership issues and outdated infrastructure contribute to the poor business environment in Albania, making it difficult to attract foreign investments,” the CIA reports.
The CIA notes that close trade, remittance, and banking sector ties with Greece and Italy make Albania vulnerable to spillover effects of possible debt crises and weak growth in the euro zone.
Remittances, a significant catalyst for economic growth, declined from 12-15% of GDP before the 2008 financial crisis to 5.8% of GDP in 2015, mostly from Albanians residing in Greece and Italy.
The agricultural sector, which accounts for almost half of employment but only about one-fifth of GDP, is limited primarily to small family operations and subsistence farming, because of a lack of modern equipment, unclear property rights, and the prevalence of small, inefficient plots of land.
Albania’s electricity supply is uneven despite upgraded transmission capacities with neighboring countries. However, the government has recently taken steps to stem non-technical losses and has begun to upgrade the distribution grid. Better enforcement of electricity contracts has improved the financial viability of the sector, decreasing its reliance on budget support. Also, with help from international donors, the government is taking steps to improve the poor road and rail networks, a long standing barrier to sustained economic growth.
Albania’s 2017 budget aims to reach a small primary surplus, which the Albanian Government plans to achieve by strengthening tax collection amid moderate public wage and pension increases. The country continues to face high public debt, exceeding its former statutory limit of 60% of GDP in 2013 and reaching 71% in 2016.