- Real Estate: Rental prices in shopping centers show big fall says Colliers

- PM CNN interview stirs unusual debate on EU integration

- President Topi new political party is likely

- Suspected Drugdealer killed in mafia style action

- Albania accepts Hong Kong as “Chinese territory”

- Albania performance estimated as average from the EBRD transition index

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- Real Estate: Rental prices in shopping centers show big fall says Colliers

The rental prices in Tirana’s shopping centers saw 30-50 per cent drop this year due to increased economic difficulties and growing competition, the real estate agent Colliers announced in its report.

“The retail market in Tirana continues its dynamic activity – an additional 41,200 m2 is expected by end of 2011 – with the opening of Tirana East Gate, the city’s newest and largest shopping centre. The retail market experienced an increase in vacancy rates reaching 10.8% and a significant decrease in rental prices in some shopping centers in the range of 30-50%, in H1 2011. High street and secondary retail streets continue to report a drop of 20-30% in retail sales and a high turnover of shops,” Colliers underlined in the report.

Although a poor country with just 2700 euro GDP per capita, Albania is currently full with seven shopping centers while another one is expected to open soon.

The shopping center mania started back in 2005, when the first department store QTU opened 6 km outside Tirana. Several other projects followed soon. One of the shopping centers was taken over by the banks due to unpaid loans this year while others show difficulties to attract customers.

Furthermore, the retail sales this year showed an unusual decline of 6 per cent due to growing economic difficulties among Albanians.

Colliers report can be read in full here: http://dsg.colliers.com/document.aspx?report=1818.pdf

- PM CNN interview open unusual debate on EU integration

The Prime Minister Sali Berisha was asked by a CNN journalist during an interview this week what he except to earn from EU integration of Albania, a question that stirred an unusual debate among Albanians on possible benefits and costs from the integration process. Berisha replied to CNN that for him, EU integration is a dream, without getting into details on cost/benefits.

Albania has no known euro-skeptics among politicians or among opinion makers and intellectuals. Some newspapers attempted unsuccessfully to debate on EU integration but dropped the topic almost immediately. Albania is currently under the Stabilization and Association Agreement with EU, which comes due in 2013. According to the MSA, in 2013 EU will decide whether to accept Albania’s membership or to postpone the MSA for another 5 years.

Panorama, Shqip

- President Topi new political party is likely

The President Bamir Topi announced on Thursday in an interview for Top Channel that he plans to stay in politics after his mandate comes due early next year and that he may create a new right wing party. Mr. Topi, 54, was elected president from the ruling Democratic Party of the Prime Minister Sali Berisha. Over the last few years, Berisha had often attacked Topi publicly and effectively closed the door for his return in the DP. Berisha had accused Topi as the man behind the nationalistic campaign “the Movement Black and Red” as a political party against the government. Black and Red are the national colors of Albania.

Top Channel, Shqip.

- Suspected Drugdealer killed in mafia style action

Armando Andoni, a known drugdealer and US Marshals fugitive was killed on Monday 25 Sept. in a mafia style action that left no traces behind. Andoni, also known as Arjan Selimi, escaped from US in 1998 while on bail for the transportation of 1000 kg of cannabis. He was arrested in 2004 in Albania after a multinational law enforcement operation to cut drug smuggling in Latin America, Europe and US.

There had been quite few mafia style killings in Albania this year, including Skerdelajd Konomi, a judge in Vlora, who was killed with a bomb in his car.

Leaked US cables, Shqip, Gazeta Shqiptare

- Albania accepts Hong Kong as “Chinese territory”

Albania removed visa requirements with Hong Kong this week and referred to the “special administrative region of the People’s Republic of China”. Albania had adhered to the one China policy and strictly follows it. The Minister of Foreign Affairs Edmond Haxhinasto used the sentence “the Chinese territory of Taiwan” while speaking in a television talk show.

Official law publication

- Albania performance estimated as average from the EBRD transition index

Albania’s road toward open market economy was evaluated as poor or average in a list of 14 indicators compiled by the European Bank for Reconstruction and Development, in the Transition Index, a tool created by EBRD to follow the transition in Eastern Europe and Central Asia.

As for 2010, Albania performed well in Small scale privatization, where it scored 4 out of 4.6 points, in price liberalization and trade liberalization. Albania underperformed in enterprise restructuring, scoring just 2.33 points, in competition policy, just 2 and in Securities markets & non-bank financial institutions.

“More private capital is needed to help finance infrastructure investment, especially in transport and electric power. The priority is to accelerate the preparation of investment projects while ensuring that tenders are carried out in an open and transparent manner.

The system of tariff-setting at the municipal level is often non-transparent and politicized and hinders restructuring and investment in this sector. Reforms in this area should be pushed forward as soon as possible. The level of development in the non-banking financial sector is still quite low by regional standards. A key priority in this regard is to come to a resolution on the sale of INSIG, which is scheduled for this year,” the report noted.

EBRD report can be found here: http://www.ebrd.com/downloads/research/transition/tr10assess.pdf

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Disclaimer Notice

Weekly news report is a service of Albanianeconomy.com to offer a short review of the major events occurred during the week. It is published on Monday and includes the events occurred in the previous seven days. The main source of information is the local newspapers and televisions and AlbanianEconomy.com doesn’t verify the accuracy of the reports, so doesn’t bear responsibility on the veracity of the information reported.

You can send a request for this report by e-mail at gjerebara@albanianeconomy.com to receive it directly to your email address every Monday.

- The Prime Minister Berisha visits New York: Albania vote on Palestinian membership bid remains unclear

- Opposition regional councilors switch sides

- Miners strike continues with no end in sight

- Bribery in Albania and Bosnia the highest in the region – UN reports

- Albania sovereign bonds priced at 9.6 per cent

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- The Prime Minister Berisha visits New York: Albania vote on Palestinian membership bid remains unclear

The Prime Minister Sali Berisha visited New York between 19 and 22 September in the occasion of the yearly meeting of the General Assembly of the United Nations Organization. Mr. Berisha used the event to meet leaders from various countries in order to forward the cause of Kosovo Independence recognition and for advertising Albania as an investment destination.

Some of the Tirana’s newspapers stated that the diplomatic activity of Berisha this year was weaker than in the same occasion in 2010 and that the Prime Minister had much fewer meetings with head of states and prime ministers. Tema newspaper in opposition claimed that the Prime Minister is largely isolated now as the result of its democratic backsliding during the last two years. Pro-government media published informal photos that show Mr. Berisha embracing the US Secretary of State Hillary Clinton.

On the issue of Palestinian UN membership bid, Berisha said that he fully supported the existence of Palestine as a state, but also the US stance on the issue, but did not indicate straightforward how Albania will vote.

Sources: keshilliministrave.al, Shqip, Tema, Koha Jone, VOA.

- Opposition regional councilors switch sides

Opposition Socialist Party lost its majority in the regional council of Berati in south of the country and won a hardly fought battle to keep its majority in the regional council of Fieri, after some of the councilors elected in 8 May elections decided to switch sides and join the government coalition. Newspapers suggest that the event reflects bigger troubles for the weakened opposition, which is also suffering internal fights among different groups.

The Socialist Party held the power in Albania between 1997 and 2005 and its officials had a reputation for corruption. But the money seems to have gone with the power lost six years ago and the Socialist Party seems to have lost also its ideology and structures, according to Servet Pellumbi, a retired SP official.

Shqip, Gazeta Shqiptare

- Miners strike continues with no end in sight

Miners in the Bulqiza mine complex started a second indefinite hunger strike this week after the Union failed to reach an agreement with the Austrian owned Albanian Chrome company (ACR) who operates the mine through a concessionary agreement. The miners had requested higher wages and better working conditions along with full payment of the salaries for the last three months when they were on strike, plus the dismissal of the ACR appointed director of the complex. The Company had accepted all the conditions except the director dismissal but the Union said that its conditions were non-negotiable.

Meanwhile, in Tirana the opposition Socialist Party accused the government for managing a criminal organization in the mining sector in the expenses of the miners. The Minister of Economy Nasip Naço said in the parliament that the Union has a hidden agenda that aims to kick out of the country the company and to take the mine for some local businessmen. Naço did not explain whom the local businessmen behind the Union are, but in the last three months, the Union doesn’t accept to give up to any of its request and that if the company agrees on their terms, then, they add new requests.

Top Channel, News 24

- Bribery in Albania and Bosnia the highest in the region – UN reports

An UN Office on Drugs and Crime Report on Corruption in Western Balkans unsurprisingly discovered that Albania and Bosnia on the top on bribery followed in a long distance from Croatia and Kosovo. In Albania, the majority of bribes ends up in the pockets of medics and paramedics and is paid by citizens to receive better treatment. In the majority of cases officials ask directly or indirectly for money in exchange for their service. The UN report was co-financed by the European Commission and used structured interviews with citizens as method. The interviewed citizens were randomly selected from the adult population. Macedonia is the least corrupted country in the region according to the report.

Bribery prevalence and purpose

Macedonia: 6.2 per cent of the adult population paid at least one bribe in the last 12 months. Speeding up official procedure was the main reason. 50 per cent of the bribes were paid for this.

Serbia: 9.3 per cent of the adult population paid at least one bribe in the last 12 months. 38 per cent of bribes were paid to Speed up procedure and 18 per cent to receive better treatment, mainly in public hospitals.

Montenegro: 9.7 per cent of the adult population paid at least one bribe in the last 12 months. Speeding up procedures 31.9%, receiving better treatment, 18% and avoiding fines, 17%, were the main reason for bribing officials.

Kosovo: 11.1 per cent of the adult population paid at least one bribe in the last 12 months.

Croatia: 11.2 per cent of the adult population paid at least one bribe in the last 12 months.

Bosnia and Herzegovina: 20.7 per cent of the adult population paid at least one bribe in the last 12 months. Avoid fines was the main reason with 25 per cent.

Albania: 19.3 per cent of the adult population paid at least one bribe in the last 12 months. The majority of bribes were paid in public hospitals to receive better treatment. In 50 per cent of the cases the need to pay was after implicit request from the officials and 14.5 per cent the request was explicit.

For further information: http://www.unodc.org/documents/data-and-analysis/statistics/corruption/Western_balkans_corruption_report_2011_web.pdf

- Albania sovereign bonds priced at 9.6 per cent

Yields on Albania’s euro denominated bonds jumped to 9.6 per cent during the last few months, the highest ever, reported this week Bloomberg.

“Yields on Albania’s 300 million euros ($409 million) of 7.5 percent bonds due in 2015 jumped 69 basis points, or 0.69 percentage point, in the past month to a record 9.6 percent, according to data compiled by Bloomberg,” the agency said. Albania sold its ever sovereign bonds last October to pay for the Durres-Kukes highway that links Albania with Kosovo and is dubbed “The Road of the Nation” or “The Patriotic Highway”.

Xhentil Demiraj the country’s debt management director, said to daily “Shqip” in Tirana that the yield increase is not related to the economic development of Albania but is rather result of the increased risk related to the European debt crisis.

Albania doesn’t intend to issue new bonds in the near future and can wait up to 2015 to return to the international market.

Bloomberg, Shqip

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Disclaimer Notice

Weekly news report is a service of Albanianeconomy.com to offer a short review of the major events occurred during the week. It is published on Monday and includes the events occurred in the previous seven days. The main source of information is the local newspapers and televisions and AlbanianEconomy.com doesn’t verify the accuracy of the reports, so doesn’t bear responsibility on the veracity of the information reported.

You can send a request for this report by e-mail at gjerebara@albanianeconomy.com to receive it directly to your email address every Monday.

Gjergj Erebara Tirana
Tirana, 6 July 2011 (albanianeconomy.com) Albania’s GDP growth stood at 3.4 per cent in the first quarter of 2011, down from 5.4 per cent registered in the fourth semester of 2010, INSTAT said.

Transport, industry and construction registered the biggest growth this year, while telecommunication and services registered negative growth.

The construction sector was helped by abundant government investments in infrastructure that preceded the May 8 local elections, while negative growth in the telecommunication sector was mainly a result of lower mobile phone rates.

INSTAT has published quarterly data on economic growth since the third semester of 2008. Since then, the preliminary estimates have often been revised mainly downwards, prompting discussions about the credibility of preliminary government estimates, with some experts complaining of political pressure to prompt positive forecasts.

Albania’s government has often been at odds with the International Monetary Fund, IMF, and with the opposition, over economic growth forecasts.
The centre-right cabinet of Prime Minister Sali Berisha estimates GDP growth at 3.5-4.0 per cent for 2011, a forecast that allows for planned increase in expenditure.

But the IMF conservatively estimates 2.7 per cent growth this year. It has urged the ministry of finance to cut spending and increase taxes in order to keep the budget deficit and the ballooning public debt at bay. Source: Balkaninsight

Gjergj Erebara Tirana
24 JUN 2011

“The flat tax can be raised to 12-15 per cent, [from the current 10 per cent] as a way to cut the deficit and the stock of public debt,” IMF representative Gerwin Bell said on Thursday in a joint press conference with Albania’s Minister of Finance Ridvan Bode and the Governor of Albania’s Central Bank, Ardian Fullani.

Fullani was also concerned about the country’s debt level and called on the centre-right government of Sali Berisha to increase structural economic reform in order to reinvigorate economic growth.

“Economic growth in the country had been financed in the last 20 years by raising debt, by immigrant remittances and by foreign direct investments,” he said. “Now we cannot increase the debt further and remittances are slowing and we need structural reforms to move forward,” Fullani added.

However, in contradiction to IMF and Bank recommendations to cut spending, the government plans to further increase its public debt from 60 per cent of GDP in 2010 to 62-63 per cent of GDP in 2013.

The new loans will finance a new highway linking Tirana with the industrial city of Elbasan and a new parliamentary complex in the capital.

Despite the IMF recommendations Finance Minister Bode remained adamant in support of the government’s expenditure plan questioning the Fund’s forecast of the country’s economic growth.

“Statistical models don’t always come true in the real world,” Bode said.

“We believe that this year will continue [with weak sales] despite some promising signs,” Ilir Hebovija, the deputy director of the Association told to News 24 TV.

“Prices had been slashed b y 10-15 per cent and the fall is higher in the periphery of Tirana but still the demand remains weak,” he added.
Albania saw a boom in construction during the last decade caused by very low housing stock inhered by the Communism and by banks eagerness to build up the mortgage sector.

The International Financial Crisis that started in 2008 cooled down prices and demands. Several construction companies had cut investments and several new apartment blocks remains unfinished.

Since the first quarter 2009, about 1200 Albanians had found a job every semester but the pace of growth is far from enough to reduce the unemployment in the towns and underemployment in the countryside.

The official unemployment fell to 13.4 per cent in the first quarter 2011. According to INSTAT, Albania has an workforce of 1.06 million in March, from which 506,000 are considered “self-employed in agriculture”, 248k are in non-farm private payroll while 165k works in public sector.

Since unemployment doesn’t officially exist in rural areas, the real unemployment in urban areas is estimated at about 30 per cent. About half of the self-employed in agriculture is estimated to work in very small plots and are considered underemployed.

Food and non-alcoholic beverages prices fell 2.6 per cent compared to April but remained steadily higher than the objective year on year basis. Foodstuff, tobacco, transport and healthcare prices showed the highest increase this year while lower prices were registered for clothing and footwear.

The Central Bank of Albania had an inflation target of 2-4 per cent per year. Since February, the CPI had remained firmly above the target fueled by a mix of the higher prices of imported goods, diminishing value of the local currency lek and the tax increases on tobacco. The Bank of Albania had increased its main interest by 0.25 per cent to 5.25 per cent in March but had given no indication for further increases.

Besar Likmeta Tirana

07 JUN 2011 The Arab News daily reported on Monday that talks over the loan were held on Sunday between Saudi officials and former deputy of finance and MP Sherefedin Shehu.

“The Kingdom, in a gesture of solidarity and support for Albania, is willing to finance the parliament project,” Sheu told Arab News.
The new assembly will be built on the site of the former pyramid-shaped mausoleum of Albania’s Stalinist dictator Enver Hoxha, which for the last two decades has served as a cultural centre.

Twelve international architectural firms took part in the tender for the building’s construction, which was won by the Swiss firm Coop Himmelblau, headed by famed architect Wolf D Prix.

Albania’s government had previously said that it planned to spend only up to €40 million on the new assembly.

Prix’s architectural firm is known for its bravura designs and complex forms – but also for repeated cost overruns in its projects.

This was the second competition held for a new parliamentary building in as many years. After the first project was discarded, the government spent nearly a million euro in August on renovating the current assembly.

Three months later, in November 2010, Prime Minister Sali Berisha announced that the government would tear down the Tirana pyramid and build a the new home for parliament there.

The proposal has provoked fierce debate, as the government has already spent €2 million on transforming the pyramid into a national theatre.Source: Balkaninsight

Banking system earnings reached 1.5 BN leks, (10.5 million euro) for the fourth month period from January to April 2001, a 47 per cent fall compared with the same period of the previous year.

Underperforming loans jumped to 15.2 per cent of the portfolio at the end of April from 14.7 per cent in March and showed a 27 per cent increase compared with 2010.

Underperforming loans were the main reason for the sluggish profits since banks activity continued to grow during the period. Assets reached for the first time 1 trillion lek (7.2 billion euro) as result of deposit increase. Deposits reached 841.1 BN leks or 5.9 BN Euro, a 13.8 per cent increase compared to the previous year. Individual customers increased their deposit holdings in the banks by 16 per cent while corporate customer deposits remained unchanged. Loans portfolio increased by 8.6 per cent to 510 BN leks (3.59 BN Euro) in April.

Mounting underperforming loans indicates continued difficulties among businesses and mistakes made by banks during the big loans boom in Albanian economy experienced between 2004 and 2007.

Albanians show their tendency to save during this period while the domestic consumption had remained very weak during the last year.

“The program aimed at restoring fiscal sustainability and safeguarding financial stability, by exercising restraint on current spending and bolstering the government’s deposits with the CBK. Elements of the 2011 budget—in particular the large increase in the wage bill—deviated from program commitments. As a result, no program review could be completed. During this mission, staff and the authorities reached staff-level agreement on a Staff Monitored Program to establish a track-record that could lead to an IMF-supported arrangement in 2012”, – the Fund declared in a press release.

Since 2008, the government has adopted an increasingly expansionary fiscal stance, financing deficits from cash buffers, asset sales, and donor support. The general government balance shifted from a surplus of more than 7 percent of GDP in 2007 to a deficit of 2.6 percent in 2010. Capital spending has been the expansion’s main driver. In 2010, construction started on a highway linking Pristina with the Albanian border. Costs are estimated at more than 20 percent of annual GDP. This year, spending pressures spread to current expenditures, with large increases in public sector wages and war related benefits.
“The outlook is subject to large downside risks, from both domestic and external sources. Domestic risks include economic policy missteps and political disturbances. External risks include weaker growth in Europe. This could reduce incomes of Kosovars living abroad, thus limiting remittances and capital inflows, and forcing a contraction in domestic demand. Lower remittances could also affect the banking system by reducing deposits as well as debtors’ capacity to service their debts” the IMF noted.
The Stand-By Arrangement was approved in July 2010 with total value of 108.9 million euro. The first tranche of 22.1 million had been disbursed.
Kosovo enjoyed robust economic growth in the 2000s, with the structure of growth tilted toward domestic demand. Remittances from Kosovars living abroad boosted consumption, while foreign direct investment fuelled construction activity. By contrast, the export sector has remained small. GDP per capita remains among the lowest in Europe. Social challenges loom large, with unemployment estimated at about 40 percent of the workforce.