EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 5.11.2008 
SEC(2008) 2692 
  
COMMISSION STAFF WORKING DOCUMENT 
 
ALBANIA 2008 PROGRESS REPORT  
 
  
accompanying the 
 
COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
 
Enlargement Strategy and Main Challenges 2008-2009
 
{COM(2008) 674}
EN 2   EN TABLE OF CONTENTS 
1. Introduction................................................................................................................ .. 4 
1.1. Preface................................................................................................................... ....... 4 
1.2. Context ................................................................................................................... ...... 4 
1.3. Relations between the EU and Albania........................................................................ 4 2. Political criteria .......................................................................................................... .. 6 
2.1. Democracy and the rule of law .................................................................................... 6 2.2. Human rights and the protection of minorities .......................................................... 11 2.3. Regional issues and international obligations............................................................ 17 3. Economic criteria ....................................................................................................... 18 3.1. The existence of a functioning market economy ....................................................... 19 3.2. The capacity to cope with competitive pre ssure and market forces within the Union
............................................................................................................................... ..... 23 
4. European standards .................................................................................................... 24 4.1. Internal market ........................................................................................................... 25 
4.1.1. Free movement of goods............................................................................................ 25 4.1.2. Movement of persons, services and right of establishment ....................................... 26 
4.1.3. Free movement of capital........................................................................................... 28 4.1.4. Customs and taxation ................................................................................................. 28 4.1.5. Competition............................................................................................................. ... 30 
4.1.6. Public procurement .................................................................................................... 31  
4.1.7. Intellectual property law ............................................................................................ 31 4.1.8. Employment and social policies................................................................................. 32 4.1.9. Education and research .............................................................................................. 34 4.1.10. WTO issues ............................................................................................................. ... 35 
4.2. Sectoral policies ......................................................................................................... 35 
4.2.1. Industry and SMEs..................................................................................................... 35  
4.2.2. Agriculture and fisheries............................................................................................ 36 4.2.3. Environment............................................................................................................. .. 37 
4.2.4. Transport policy ........................................................................................................ . 39 
4.2.5. Energy .................................................................................................................. ...... 40 
EN 3   EN 4.2.6. Information society and media................................................................................... 41 
4.2.7. Financial control....................................................................................................... .. 42 
4.2.8. Statistics .............................................................................................................. ....... 43 
4.3. Justice, freedom and security ..................................................................................... 44 4.3.1. Visa, border, control, asylum and migration.............................................................. 44 4.3.2. Money laundering ...................................................................................................... 46  
4.3.3. Drugs................................................................................................................... ....... 47 
4.3.4. Police.................................................................................................................. ........ 47 
4.3.5. Fighting organised crime and terrorism ..................................................................... 48 4.3.6. Protection of personal data......................................................................................... 50 
EN 4   EN COMMISSION STAFF WORKING DOCUMENT 
ALBANIA 2008 Progress Report 
1. INTRODUCTION  
1.1. Preface 
Since March 2002, the Commission has reported regularly to the Counc il and Parliament on 
the progress made by the countries of the We stern Balkans region. This progress report 
largely follows the same structure as in the previous years. The report: 
– briefly describes the relations between Albania and the Union; 
– analyses the situation in Albania in terms of the political criteria for membership; 
– analyses the situation in Albania on the basi s of the economic criteria for membership; 
– reviews Albania's capacity to implement Eur opean standards, that is, to gradually 
approximate its legislation and policies to the acquis , in line with the Stabilisation and 
Association Agreement and the Eu ropean Partnership priorities. 
The period covered by this re port is 1 October 2007 to ea rly October 2008. Progress is 
measured on the basis of decisions taken, legisl ation adopted and the measures implemented. 
As a rule, legislation or measures which ar e under preparation or awaiting parliamentary 
approval have not been taken in to account. This approach ensures equal treatment across all 
reports and permits an objective assessment. 
The report is based on information gathered  and analysed by the Commission. In addition, 
many sources have been used, including contribu tions from the government of Albania, the 
Member States, European Parliament reports1 and information from various international and 
non-governmental organisations. 
The Commission draws detailed conclusions rega rding Albania in its separate communication 
on enlargement2, based on the technical analysis  contained in this report. 
1.2. Context 
Albania is a potential candi date for EU membership. 
The Stabilisation and Association Agreement (SAA) between Albania and the EU was signed 
in June 2006. An Interim Agreement has been in force since December 2006. 
1.3. Relations between the EU and Albania 
Albania is participating in the Stabilisation and Association Process  (SAP). 
                                                 
1 The rapporteur for Albaniais Mr Libor Rou ček. 
2 Enlargement Strategy and Main Challenges 2008-2009. 
EN 5   EN Albania signed a Stabilisation and Associati on Agreement (SAA) with the EU in June 2006. 
The SAA provides a framework of mutual commi tments on a wide range of political, trade 
and economic issues. Trade-related parts of th e SAA are being implemented under an Interim 
Agreement while ratification of the SAA is being completed. The Interim Agreement entered into force in December 2006. Cooperation provis ions of the 1992 Trade, Commercial and 
Economic Cooperation Agreement (TCECA) will rema in in force until the SAA is ratified. 
Albania also benefits from the EU's autonomous trade measures.  
The EU provides guidance to the Albanian au thorities on reform priorities through the 
European Partnership . Progress on these reform prioriti es is encouraged and monitored by 
political and economic dialogue with Albania. This dialogue is cond ucted via Ministerial 
Troika, joint committee and consultative task fo rce (CTF) meetings at ministerial level and 
working party meetings at deputy minister level. 
A Ministerial Troika meeting wi th Albania in March 2008 focuse d on key political priorities, 
including regional issues. The annual joint committee met in December 2007 to oversee the 
proper functioning of the Interim Agreement and the TCECA. Two CTF and six working 
party meetings took place between October 2007 and October 2008. CTF meetings focused 
on political accession criteria and rule of law issues. Each CTF meeting resulted in 
jointlyagreed recommendations for action by the Albanian authorities. Working party 
meetings focused on economic, internal market and sectoral issues and reported to the joint 
committee. 
In July 2008, Albania signed an agreement to cont ribute 62 soldiers to the military operations 
of the European Union mission in Chad  and in Central Africa (EUFOR). 
Following the entry into force of the EC/Albania agreement on visa facilitation  in January 
2008, the first meeting of the joint committee wa s held in April 2008. The visa facilitation 
agreement simplifies procedures for issuing visas to certain categories of citizens of Albania, 
including students, scholars, busin esspeople, journalists and tour ists. Under the terms of this 
agreement, citizens of Albania either pay a reduced  visa fee or receive a visa free of charge. 
Implementation of the readmission agreement that  entered into force in 2006 is proceeding 
smoothly. This agreement sets out clear obligati ons and procedures for the authorities of both 
Albania and EU Member States on when and how to take back pe ople who are illegally 
residing on their territories.  
Since 2007, pre-accession financial assistance  to Albania is provide d under the Instrument 
for Pre-Accession Assistance (IPA). The EC a llocated a total of € 70.7 million in 2008. The 
Multi-Annual Indicative Planning Document (MIPD) for 2008 -2010 for Albania under IPA was adopted in September 2008 . Main focus areas continue to be justice and home affairs, 
administrative capacity-building, economic and social development and democratic 
stabilisation. Ongoing CARDS and IPA assistance is impl emented by the EC Delegation in 
Tirana. The management of aid on a decentra lised basis is a medium-term objective for 
Albania. The IPA Framework Agreement wa s signed on 18 October 2007. The Financing 
Agreement for the National Programme for 2007 under the Transition Assistance and Institution Building Component was signed on 22 January 2008 and the implementation of the programme has started. The Financing Ag reements for the cross-border cooperation 
programmes were signed in April 2008. 
As regards support for civil society , € 4 million has been earmarked for projects to enhance 
the role of civil society and the media in th e European integration process over the period 
EN 6   EN 2008-2010. Albania received support  from EU member states through the EU Monitoring and 
Information Centre for Civil Protection (MIC) to  help deal with the immediate aftermath of 
the Gerdec explosion in March 2008. 
As regards Community programmes , Albania is participating in the 7th Research Framework 
programme for which a memorandum of unde rstanding was signed in December 2007. The 
country is also participating in the Entrep reneurship and Innovation Framework Programme, 
following the signature of the memora ndum of understanding in June 2008. 
2. POLITICAL CRITERIA  
This section examines progress made by Alba nia towards meeting the Copenhagen political 
criteria, which require stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protect ion of minorities. It also mon itors regional cooperation, good 
neighbourly relations with enlargement coun tries and Member States, and respect for 
international obligations. 
2.1. Democracy and the rule of law 
Constitution In April 2008, parliament adopted a pack age of constitutional amendments based on 
consensus between the two larges t parties, relating to the electoral system, election of the 
President and the mandate of the Prosecutor General.  
As part of the constitutional amendments, th e Albanian electoral sy stem changed from a 
mixed to a regional proportiona l system (140 proportional repres entation seats filled from 
party lists in regions corres ponding to existin g administrative boundaries). Smaller parties, 
including those represen ting national minorities, contested this change, claiming that it would 
effectively bar them from parliament. They also argued that changes to the method for 
electing the President and to the mandate of th e Prosecutor general, had not been sufficiently 
discussed.  
Parliament 
Parliament has further consolidated its role as a focus for political debate. A considerable 
number of laws have been passed to approxi mate the Albanian legislation to the EU acquis . 
Political forces have started to cooperate on major issues. This consensus between the ruling 
majority and the largest opposition party has resu lted in progress in j udicial and electoral 
reforms. However, more remains to be done to enhance the constructive dialogue between 
political parties and with stakeholders on impl ementation of reforms, which are key European 
Partnership priorities.  
In July 2008, parliament established an ad-hoc  committee to draft the Electoral Code. 
Completion of the electoral reform will require timely adoption of an all-inclusive and transparent Electoral Code to allow free and fair general el ections in 2009, a key European 
Partnership priority. 
The parliamentary committee on European inte gration contributed to  improving awareness 
about the EU integration process. However, no progress has been made on enhancing the role 
EN 7   EN of parliament in monitoring implementation of  SAA obligations. The low level of expertise 
available to parliament had an adverse eff ect on the quality of EU -related legislation.  
Relations between parliament and the President became difficult at times. Parliament rejected 
the presidential appointments of judges to the High Court in J une and eventually approved a 
second set of nominees in July. This process ra ised concerns about th e independence of State 
institutions from the executive.  
Preparations for the electronic civil registry a nd address system were completed in September 
2008 to provide the basis for ID cards, voters' lists, and biometric passports. Civil registry 
offices have started issuing pr inted certificates. A sound civil re gistry and address system is 
the cornerstone of reliable voters' lists and of reliable documents. Sufficient human and 
financial resources must still be allocated to ensure coordination and sustainability of this key European Partnership priority. Preparations for voters' lists ahead of the elections must be 
handled with transparency and efficiency. 
Overall, a more constructive dialogue betwee n the major political parties has allowed for 
progress in addressing key European Partnershi p priorities. Amendments to the Electoral 
Code remain to be adopted well ahead of the next parliamentary elections. 
Government 
The Ministry of European Integration (MoEI) enhanced its role of coordinating European 
integration. However, the role of  the MoEI as the central coor dinator of the EU integration 
process needs further consolidation. Not all draft legislation is systematically checked for alignment with the SAA and the acquis  . Moreover, the functions of  the European integration 
units across the 13 line ministries have not been standardised, and several of the units remain 
understaffed. Specialised training programmes for public administration on EU-related issues 
are needed. The inter-minister ial committee on European integration chaired by the Prime 
Minister met only twice.  
The staffing situation at the MoEI has improved. The total number of staff increased from 67 
to 77 in 2008. Senior positions have been f illed and additional staff have been recruited. 
In March 2008, guidelines for in ter-institutional coordination on European integration were 
adopted by the government. In June, the Mo EI prepared gap assessment reports on 
approximation to the acquis  in key sectors. These are used to update the National Plan for the 
Implementation of the SAA. Efforts have been  stepped up to improve coordination with the 
Department of Strategy and Donor Coordina tion (DSDC), which is responsible for all 
external assistance. 
The National Strategy for Development and In tegration (NSDI) was adopted in March 2008 
after limited consultations with civil society. It  foresees 36 sectoral strategies, of which 17 
have been adopted so far. The sectoral strategies are an impor tant part of the government's 
Integrated Planning System (IPS) to match government policies with the budget process under 
the Medium Term Budget Programme. However,  cost estimates and performance indicators 
for each of the sectoral strategies under the NSDI remain insufficient and uneven. 
The government adopted its first regional develo pment strategy in November 2007 as part of 
its longer-term decentralisation reform. During 2008, the MoEI strengthened coordination on 
regional development with several line ministries , with a view to eventual preparations for 
Structural Funds. 
EN 8   EN With regard to policy formulation, coordinatio n with civil society remains weak. The inter-
ministerial consultation arrangements on draft laws work poorly in practice. The existing 
requirements for public consultation on EU-rela ted policy work, under the government rules 
of procedure, are not fully applied. The weakne sses in implementation of legislation and in 
enforcement of judicial decisions need to be addressed. The current arrangements for co-
ordinating European affairs, particularly within the MoEI, need to be reinforced. 
Overall, Albania has continue d to make some progress in strengthening its government 
structures with a view to addressing its SAA commitments, a key European Partnership 
priority. However, further strengthening of cap acity, coordination, and strategic planning for 
EU integration remains necessary.  
Public administration 
In December 2007, the government adopted amen dments to the Law on evaluation of the 
performance of civil servants. In January 2008, a new reward syst em for civil servants entered 
into force. However, turnover of staff due to  political pressures has continued. The Civil 
Service Law regulating public administration is in  place, but it is not applied systematically. 
The Department of Public Administration (DoPA)  is currently drafting a strategy on public 
administration reform including sectoral traini ng plans and covering local government bodies. 
However, the role of the DoPA in ensuring im plementation of the Civil Service Law and the 
capacity of the Training Institut e of Public Administration (TIP A) remain weak. The capacity 
of the Department of Public Administration to steer the civil service towards an independent, 
merit- based and professional body needs further strengthening. 
The absence of sound accountability mechanisms  in public administration increases the 
opportunities for bypassing established procedur es. Appointments have continued along 
political party lines in contravention of the Civil Service Law. The authority of the DoPA requires strengthening in order to  implement the official recrui tment, job classification and 
promotion criteria consistently. Full enforcemen t of the Civil Service Law and adoption of the 
Strategy for public administration reform will be key to progress in this regard. 
Public sector salaries were increased in Ju ly 2008. The government continues to encourage 
Albanian graduates of foreign universities to join  the civil service. The training plan for civil 
servants has been revised to reflect real needs better. However, frequent  replacements of civil 
servants are undermining the independence of th e civil service and incr ease the opportunities 
for bribery of public officials. 
Overall, the public administration is continuing to stabilise, but the lack of transparency and 
accountability in appointments is endangering its independence. What is now needed is to 
further strengthen public sector governance  by enhancing the impartiality of public 
administration, a key European Partnership priorit y. Further progress is needed to establish an 
independent, merit-based, prof essional civil service. 
Judicial system 
Judicial procedures have remain ed slow and lack transparency. 
In March 2008, a cross-party National Pact on Justice was endorsed by the main political 
parties. However, a clear reform strategy a nd vision for the judici ary, going beyond adoption 
of individual pieces of legislation, is stil l missing. What is needed now is to adopt a 
EN 9   EN comprehensive strategy on judicial reform, to complete the legal framework and to provide 
sufficient human and financial resources for implementation. 
Some progress can be reporte d with the adoption, in Febr uary 2008, of the Law on the 
organisation of the judiciary which sets salary  scales and merit-based criteria for judicial 
appointments. The recruitment of judges is restri cted to graduates of the magistrates' school. 
However, the law fails to clarify the separate co mpetences of the inspectorates of the Ministry 
of Justice and of the High C ouncil of Justice. This raises  serious concerns about the 
independence of the judiciary. 
A law has been prepared on privatisation of th e bailiff system for the enforcement of civil 
court rulings. However, enforcement of  judgments by bailiffs remains slow. 
A computerised civil case management system is now installed in al l courts and has been 
expanded to cover criminal cases. The system registers cases electronically and assigns them to judges randomly. However, fu rther training on its use is needed. The court system 
continues to be problematic, with proce dures remaining slow and non-transparent. 
The serious crimes court building in Tirana is nearing completion. Courts lack adequate space 
for archives and equipment for court transcri pts, which remain mostly handwritten. Due to 
overcrowding, many courts cannot allow public access to hearings. This hinders the transparency and efficiency of the courts. Th e State budget allocated to  the judiciary remains 
insufficient for the normal operation of most cour ts. Overall, judicial infrastructure requires 
considerable strengthening. 
The magistrates' school remains an important in stitution for training judges and prosecutors, 
including on SAA-related issues. Adequate su pport for the school from the State budget is 
needed to ensure sustainability. More conti nuous specialised training for judges is needed.  
Constitutional court rulings have been issued on the role of parliamentary investigative 
commissions, including the case of the dismissal of the former  General Prosecutor Sollaku, on 
the role of the executive in relation to inde pendent State bodies and on standards for issuing 
government decrees. 
The High Council of Justice (HCJ) has undertaken  a number of initiatives, including public 
hearings on new court chairpers ons. There has been some limited improvement in the internal 
functioning of the HCJ. The new system for th e professional evaluati on of judges by the HCJ 
is proceeding slowly. The situation of the j udges affected by the abolition of eight small 
district courts in September 2007 remains unsettled.  
In April 2008, a cooperation agreement was signe d between the Prosecutor General and the 
State police, including measures to improve timely completion of investigations . However, 
the investigative capacity of the prosecution service remains weak. ( see also Justice, freedom 
and security section)  The lack of consultation over the initial drafting of the Prosecutor 
General Law, which remains to be adopted, ra ised concerns about th e independence of the 
general prosecutor's office from the executi ve. On several occasions, the government 
attempted to interfere with ongoing investigations , in breach of the constitutional principle of 
accountability to law. Overall, th e independence, transparency a nd efficiency of the judiciary 
remain key European Partnershi p priorities to be addressed. 
Some progress can be reported on witness pr otection. The 2007 Law on State police upgraded 
the witness protection unit into a directorate. At present there are 60 persons in the witness 
EN 10   EN protection programme. The 2008 budget allocated  to the programme marks an increase. 
However, further amendments to the Law on wi tness protection have not yet been adopted. 
The lack of reliable witness protect ion continues to be problematic.  
No developments can be reported on establis hing a strategy and a national coordination body 
dealing with blood-feuds. Albania still lacks reli able data on the number of families affected 
by this phenomenon. 
Overall, there has been limited progress in j udicial reform, mainly on the legal framework. 
However, the justice system continues to function poorly due to shortcomings in 
independence, accountability  and transparency.  
Anti-corruption policy  
Further efforts have been undertaken in the fi ght against corruption. Perception of corruption 
has improved; nonetheless corruption remains a particularly serious problem in Albania. 
In April 2008, the Law on Commerc ial enterprises was aligned w ith the Council of Europe 
Civil Law Convention on corruption. Albania had ratified the Council of Europe Civil Law 
and Criminal Law conventions on corruption in  2000 and 2001 respectively. Alignment of the 
national legislation is ongoing. The additional pr otocol to the Council of Europe Criminal 
Law Convention on corruption was ratified in 2005.  
The 2007-2013 National Strategy for Developmen t and Integration (NSDI) contains anti-
corruption elements but lacks a strategic fram ework for implementation with objectives and 
funding that can be monitored. A cross-cutt ing anti-corruption st rategy for 2007-2013, with 
an action plan, was adopted in October 2008. Ho wever, implementation needs to start and 
monitoring mechanisms remain to be assesse d. Much work is still needed on changing 
behaviour and procedures in  the public administration. 
In December 2007, the Council of Europe Group of States against Corruption (GRECO) 
adopted its report on Albania. Eleven of GRECO's thirteen recommendations have been 
adopted, including the criminalisation and se izure of assets stemming from corruption. 
Recommendations regarding the rules on financ ing of political parties have yet to be 
addressed.  
The Law on conflict of interest was adopted in 2007. The High Inspectorate for Declaration 
and Auditing of Assets (HIDAA) is an independent body which collects revenue declarations 
from public officials. In its 2007 annual repor t to parliament, the HIDAA identified 110 cases 
of conflicts of interest. However, Albania lacks strong and indepe ndent supervisory or 
auditing authorities. The HIDAA plays only a limited role in this regard. 
The scope of the immunity from criminal inve stigation and prosecution of a number of State 
officials and members of parliame nt and the procedures established to lift their immunity still 
need to be addressed. The Law on financing of political parties remains to be adopted. 
Judicial accountability and transp arency in funding of political pa rties remain to be improved.  
Efforts have been made to reduce opportun ites for corruption in areas such as tax 
administration, business services, property restit ution and public procurement, by introducing 
electronic systems.. Since December 2007, electroni c procedures have been introduced for 
taxation, public procurement, licensing and bu siness registration. However, the results and 
impact of these procedures remain to be assessed.  
EN 11   EN The institutional set-up and inter-agency coordi nation in the fight against corruption remain 
weak. A Department of Intern al Administrative Control and Anti-Co rruption within the 
Council of Ministers reports directly to the Pr ime Minister. However, there is no effective 
institutional framework to coor dinate, monitor, and implement anti-corruption policies across 
public administration. 
Other law enforcement and judicial entities have significant powers for the prevention and 
repression of corruption, but th eir activities remain largely uncoordinated. The investigative 
capacity of the law enforcement bodies in  corruption cases remains very limited. ( See also  
Justice, Freedom and Security, section on money laundering ) 
The government has had some success in the fight against petty corruption and bribery. A 
number of low to middle-level o fficials were dismissed for brib ery. In addition, the Office of 
internal control (OIC) in the Interior Minist ry, the unit investigati ng corruption by police 
officers, has taken disciplinary measures ag ainst 100 policemen on bribery charges. The 
government has stepped up its efforts to pr osecute some corruption cases. In 2007, 224 
officials were identified as involved in corrup tion and conflict of inte rest, 53 of them were 
arrested and prosecuted. Regarding high leve l corruption, one former deputy minister has 
served a one-year jail sentence. However, a mo re systematic approach is needed to tackle 
corruption overall, particularly widespread briber y in the judiciary, polic e, health and customs 
sectors. 
The explosion of an ammun ition depot at Gerdec in Ma rch 2008 is cu rrently under 
investigation for alleged lack of enforcemen t of health and safety regulations. Limited 
progress can be reported in the management and disposal of small arms and light weapons and 
of explosives and remnants of war, which remain a serious problem in Albania. Other 
allegations concerning the accident relate to  arms smuggling and corruption. The then 
Minister of Defence was dismissed and his imm unity lifted. To ensure credibility on the fight 
against corruption, the allegations around this case need to be tackled with resolve as part of 
the ongoing investigation. 
Overall, Albania has continued to address corruption, a key Eu ropean Partnership priority. 
However, the declared commitment of the author ities to fight corrupti on needs to be backed 
up by rigorous implementation, as corruption remains widespread. 
2.2. Human rights and the protection of minorities 
Observance of international human rights law As regards ratification of human rights instruments , in December 2007 Albania ratified the 
Optional Protocols to the UN Convention on the sa le of children, child prostitution and child 
pornography, and on children in armed conflicts. The European Charter for Regional and 
Minority Languages has yet to be ratified. 
The European Court of Human Rights  (ECtHR)  delivered five judgments finding that 
Albania had violated the European Conve ntion on Human Rights (ECHR) and related 
protocols. Measures have yet to be taken to enforce these judgments. A total of 79 new 
applications to the ECtHR were made duri ng the reporting period. Th e total number of 
pending cases before the Court regarding Albania is 146. 
Albania has an extensive legal framework on promotion and enforcement of human rights  
and the government's record is ma rked by the political will to gua rantee human rights to all its 
EN 12   EN citizens. The strong role pl ayed by the Human Rights Ombudsman has contributed to 
reducing human rights violations. Nevertheless,  effective implementation of legislation 
continues to raise concern in key areas, su ch as prevention of to rture and trafficking. 
Civil and political rights 
With regard to prevention of torture and ill-trea tment and the fight against impunity , 
there have been reports of use of excessive fo rce and ill-treatment by police officers, most of 
them during pre-trial detention. However, some  efforts have been made by law enforcement 
agencies to prosecute and indict  cases of ill-treatment, tort ure and arbitrary behaviour. The 
General Prosecutor brought charges against four  former senior officials of the State 
Intelligence Service. Criminal  charges have been brought a nd disciplinary measures taken 
against police officers for abuse of office. In compliance with the amendments made to the Criminal Code on torture, the People’s Advocate launched in March 2008 a national 
campaign on torture prevention, in cooperation with  the Centre for Rehabilitation of Torture 
Victims . 
Overall, further steps have been taken to prevent torture and ill-treatment of detainees, but 
considerably better enforcement of human rights rules and proper prosecution of abusers are still required. 
As regards access to justice , Albanian legislation provides for free legal aid for first and 
second instance courts, but the system does not wo rk effectively, particul arly for minorities, 
such as the Roma. 
With regard to the prison system , overcrowding of prisons and pre-trial detention centres 
continued in 2008. There were 4,932 detainees at the beginning of May 2008, almost 1,500 
above capacity. Construction of two new prisons (Fushë-Kruja and Korça) and of the Vlora 
pre-trial detention centre is complete. A new detention centre for juveniles in Kavaja and a new pre-trial detention centre together with  a psychiatric facility in Durrës are under 
construction. These new establishments, designe d in accordance with European standards, 
should help reduce the overcrowding. 
However, general prison conditions remain belo w standards. Due to la ck of space, prisoners 
were reportedly being held in  large groups in sma ll cells or returned to police stations. 
Prisoners with mental illnesses we re being kept in cells with ot her prisoners or minors in cells 
with adults. Progress on developing rehabili tation schemes, such as education, work and 
social programmes for detainees, has been lim ited. An effective monitoring and inspection 
system for prisons is still missing. 
Several prisons have been re furbished to improve living c onditions. Planning of six new 
detention-centres has started, in  line with the 2004 Master Plan  for the Pre-Trial Detention 
System. However, the government still needs to  develop a long-term in vestment strategy and 
to allocate correspond ing State funds. 
In April 2008, amendments to the Law on the right s and treatment of pr isoners entered into 
force, including during pre-tria l detention. Amendments to expand and facilitate application 
of alternative sentences have been drafted, but are progressing slowly. 
Overall, further progress has been made in  improving the prison an d pre-trial detention 
system, but overcrowding continues and detention standards remain very poor. 
EN 13   EN Freedom of expression , including in the media, are guaranteed by the Albanian constitution. 
However, the intermingling of business, political  and media interests continues to affect the 
development of independent media. 
A new broadcasting law is under preparation.  It will have a major impact on the media 
landscape in Albania. Implementation of the EU/Council of Europe joint action plan on the 
reform of media legislation is key in this resp ect. Preparation of the strategy for the transition 
to digital broadcasting is advancing. In Apr il 2008, the Regulation on the licensing of digital 
broadcasting was adopted. ( See also Information Society and media section. ) 
Selective pressure was put on opposition-orient ed media, including accusations of alleged 
funding from organised crime groups. The lack of transparency about ownership and funding 
leaves the media open to accusations of crimin al influence. The National Council on Radio 
and Television (NCRT) continued to face accusati ons of political bias  in favour of media 
linked to the government. There is  no effective legislation to en sure transparency of media 
ownership and funding. 
Adoption of the laws to amend both the Crimin al and Civil Codes by decriminalising libel 
and defamation is still pending. Th e NCRT monitoring capacity is restricted to news bulletins 
and advertisements. The technical capacity of the NCRT for wider monitoring needs 
reinforcing.  
Some progress can be reporte d on adoption of key bylaws on media policy. The NCRT and 
parliament have jointly prepared the action pl an on media reform and drafted the strategy on 
digitalisation. 
Regarding the printed media, few newspapers reach a significant readership, due mainly to a 
malfunctioning distribution syst em and poor infrastructure. 
Overall, Albania has continued to make progr ess on freedom of expression, a key European 
Partnership priority. It now needs to improve im plementation of the existing legislation and to 
advance on key issues regarding decriminalisat ion of defamation, adopti on of legislation on 
access to public information and tr ansparency of media ownership. 
No restrictions on  freedom of assembly and association  are to be reported. 
The legal framework for civil society organisations  remains open and non-restrictive. Civil 
society organisations are activ ely monitoring respect of hu man rights and fulfilment of 
Albania's obligations under the SAA. However,  civic engagement remains low. Albania has 
only a limited number of influential NGOs and policy institutes. Funding of civil society 
depends largely on foreign donor  financing. Coordination mechanisms to enhance civil 
society participation in policy making remain weak. 
Civil society should increase its capacity for advocacy and public relations, networking, and 
development of partnerships with the govern ment and the private sector. Financial and 
management capacity have to be strengthened, ai ming at future sustainability of the sector. 
As regards freedom of religion , the inter-faith climate continue s to be positive and mutually 
tolerant. However, the full restitution of property and other belongings to religious 
communities remains an issue to be addressed as part of the overall property restitution efforts. 
EN 14   EN Economic and social rights 
The People's Advocate (human rights ombudsman ) continued to play an active role in 
monitoring and protecting human rights. In 200 7, the institution rece ived 4,233 complaints 
from citizens and reviewed 2,567 of them. Most of the complaints were appeals against 
decisions by the Ministry of Economy, Trad e and Energy, the Immova ble Property Registry 
Offices, the Ministry of Interior , the Ministry of Defence, the Ministry of Justice and the 
courts.  
With regard to women's rights,  some progress can be repor ted. The Law on gender equality 
was adopted in July 2008. The national strate gy on gender equality and eradication of 
domestic violence, together with a three-year  action plan, were adopted in December 2007 
including provisions on vulnerabl e women such as trafficking victims. According to police 
sources trafficking decrease d sharply in 2007, although NGOs claim that many cases went 
unreported. Several traffick ing networks were dismantle d. In May 2008 the Domestic 
Violence Law was amended. A new unit on domestic violence was established within the Ministry of Labour. The respons ible authorities organised, with assistance by UN agencies, 
capacity building activities for social and heal th workers, police and local authorities. 
However, the strategy on the prevention of do mestic violence has not been enforced due to 
lack of implementation mechanisms. The proportion of women having suffered from domestic violence is significant and increasing . Witness protection remains weak with the 
result that victims of trafficking are reluctant to  report their traffickers to the police. Political 
representation and the employment rate among  women remain low. Albania is advancing 
moderately on mainstreaming gender in employme nt and other policies. What is needed now 
is to allocate sufficient human and financial resources to ensu re full implementation of the 
existing legislation. 
Overall, there has been some further progre ss on strengthening wome n's rights. However, 
Albania continues to be a source and transit country for the trafficking of women, often 
minors, for sexual exploitation. Trafficking of wo men and domestic violence remain issues of 
serious concern.  
With regard to children's rights , some progress can be reported with the entry into force of 
the Optional Protocol to the C onvention on the Rights of the Ch ild in March 2008. Parliament 
adopted amendments to the Criminal Code in April 2008 regardin g the exploitation of 
children, which is now recognise d as a criminal offence. 
The streamlining of the birth registration procedures has somewhat improved school 
attendance, access to health and other social services for Roma children
. Despite the 
implementation of the second chance project, school enrolment of Roma children remains 
low. Procedures such as requiring vacci nation certificates often lead as to de facto  exclusion 
from school. 
Regarding juvenile justice, co mmunity service sentences starte d in late 2007 at the Tirana 
Court. Up to April 2008, 38% of all sentence s imposed community service. In March 2008, 
special sections for minors were established in  six district courts. Amendments to the Penal 
Code have been drafted, including introductio n of a probation system. However, in cases 
involving minors, judges do not sufficiently appl y alternatives such as probation. Probation 
and parole are available as alte rnatives to detention, but ther e are no qualified social workers 
or probation officers to supervise them. 
EN 15   EN Children's rights to education have improved. Th e net primary school enrolment rate for 2008 
is 92%. However, in the areas populated by Roma communities, access can go down to 13%. Progress has been made in the area of protecti on of children at risk. The strategy on foster 
care was approved in 2008 as part  of the new sectoral strate gy for social protection. A 
bilateral agreement on protection and assistance to child vict ims of trafficking was signed 
between Albania and Greece in 2007.  
Child labour remains widespread. The number of  children working in the formal sector is 
increasing (737,000 in 2007 compared  with 533,000 in 2006). Most of  these children are girls 
primarily employed in the fish proce ssing, footwear and clothing industries. 
Overall, further progress has been made on ch ildren's rights but more is needed on ensuring 
appropriate resources for implemen tation and on child labour issues. 
With regard to socially vulnerable and/or persons with disabilities , 103,000 families 
benefit from social assistance at present. In January 2008, th e government adopted the Social 
Protection and Social Incl usion Strategy for 2008-2013. This includes new economic 
assistance schemes for poor families and social services for children, minorities, the disabled, 
the elderly and victims of trafficking. 
Implementation of the National Strategy for persons  with disabilities has been slow and the 
procedural framework has not yet been comp leted. The Ministry of Labour has drafted 
standards for delivery of social serv ices to people with disabilities. ( See also Employment and 
social policies section ). Albania has not signe d the UN Convention on the rights of people 
with disabilities. In the field of mental health, one community centre has been reconstructed 
and two new centres opened. However, implemen tation of the Regulation on mental health 
approved in 2007 has been slow. Ther e is still no law on free le gal assistance for people with 
disabilities. Access to employment remains a major problem for people with disabilities.  
Overall, there has been further progress regardin g socially vulnerable people, but measures to 
support them remain limited and better coordination of government agencies could improve 
the results. 
As regards  labour and trade-union rights, the absence of a revised labour law is hampering 
the transformation of the National Labour C ouncil into a National Social and Economic 
Council. It also delays the re vision of the Law denying the ri ght to strike to some State 
employees, which is not in line with the Europe an Social Charter. Th e National Strategy for 
Development and Integration 2007-2013 (NSDI) foresees the strengthening of social 
dialogue. However, the position of both trade uni ons and employers' organisations continue to 
be very weak and the social dialogue remains at an early stage. 
As regards anti-discrimination policies , there has been little pr ogress on establishing a 
proper legal definition of discrimination or  specific anti-discrimination legislation. 
Appropriate institutional support for victims of all violence needs to be ensured. There is 
continuing serious hostility in public and the media towards the lesbian, gay, bisexual and 
transgender (LGBT) community. The govern ment has taken no action to combat 
discrimination on the grounds of sexual orientati on and gender identity. Arbitrary arrests and 
mistreatment of LGBT persons persist. This has already led to the emigration of leading 
activists. What is needed now, in addition to in creasing legislative efforts, is to develop an 
action programme to counter discrimination, in cluding on grounds of se xual orientation and 
gender identity.
 
EN 16   EN With regard to property rights , the main issues remain first registration of real estate, 
property restitution, compensation an d legalisation of informal constructions. The Immovable 
Property Registration Office (IPRO) has continued first registrati on in different parts of the 
country. Several decisions by the European C ourt of Human Rights found violations in the 
form of improper proceedings and lack of en forcement in the context of restitution and 
compensation procedures. Unresolved property i ssues have undermined efforts to develop a 
functional land market and kept foreign inve stment below potential . A clear strategy and 
action plan to solve the numerous problems in the property sector are needed. Legal 
amendments are necessary along with closer cooperation between the relevant agencies and ministries. 
The Property Registration and Compensation Agency (PRCA) has started to register 
restitution and compensation claims in an el ectronic database. So far, the PRCA has 
completed the property valuation mapping for six regions. Valuation mapping, however, does 
not yet include industrial and tourist zones fo r lack of data. A complete valuation map 
covering every regions would fac ilitate assessment of property restitution and compensation 
issues. 
Cash compensation totalling €4 million had been  paid, by the end of 2007, to some of the 
former owners. However, an inventory of land earmarked for compensation is still not 
available. In 2008, 100,000 illegally built or inform al constructions have been regularised, 
mainly around major urban centres.  
Overall, there has been progre ss on consolidating property rights , a key European Partnership 
priority. What is needed now is to step  up the pace of restitution and compensation. 
Preparations in this field ar e advancing moderately. Uncert ainties about property rights 
persist. 
Minority rights, cultural right s and protection of minorities 
With regard to cultural rights , the constitution provides for prot ection of the civil, economic, 
social and political rights of minority groups an d the law forbids discriminatory treatment. 
Persons belonging to minorities have the right to  be taught in their mother tongue. There are 
three recognised national minorities (Greek, Macedonian  and Serbian-Montenegrin) and two 
ethno-linguistic minorities (Aromanian and Roma ) in Albania. The Eg yptian community is 
seeking the status of an ethno- cultural minority. The government has made efforts to include 
it in various activities for mi norities and socially vulnerable groups. Development of minority 
policies requires up-to-date statistics on al l minorities. Albania has no accurate data on 
minorities. 
Albania is continuing to make efforts to fu lfil its commitments under the Council of Europe 
Framework Convention for the Protection of Nationa l Minorities particularly regarding use of 
minority language and education. However, more  efforts are needed on defusing recent intra-
ethnic tensions in areas with a heavy concentr ation of minorities. Al bania has not signed the 
European Charter for Regional and Minority Languages, due to budgetary constraints. 
Schools specifically for members of the Greek and Macedonian  minorities have a 
significantly higher teacher-pupil ratio than the national average. The pupil/teacher ratio is 
approximately 6.9/1 for the Greek minority and 12.6/1 for the Macedonian  minority 
compared with the national ratio of 18/1. However, in some area s with a high concentration of 
minorities, public schools that provide ethnic  minorities with minority education are not 
EN 17   EN sufficient. Three privately run Albanian-Greek schools have been estab lished in Tirana, Korça 
and Himara. The Civil Service Law allo ws participation by minorities in public 
administration, the armed forces and the police.  However, minority representation remains 
limited.  
Overall, there has been further progress on cultural rights but further improvements are 
needed, particularly regarding collection of sound data on all minorities, a key European 
Partnership priority. 
Albania joined the Decade of Roma  Inclusion 2005-2015 in April 2008. A corresponding 
Action Plan is under preparation. In December 2007, the first Progress Report on 
implementation of the National Strategy for th e integration of Roma was issued, showing 
insufficient human and financia l resources for proper implemen tation. The unit in charge of 
monitoring implementation of the Roma Strategy  within the Ministry of Labour and Social 
Affairs (MLSA) has been up-graded to a technical secretariat. This will improve its capacity to monitor and coordinate measures with other institutions. One of the staff is a member of 
the Roma community. However, with only tw o people, the Secretar iat is understaffed to 
perform its tasks. Efforts must be stepped up to  coordinate the Roma Decade Action Plan with 
other existing strategies and pr ovide sufficient human and financ ial resources to implement it. 
The level of school enrolment amongst Roma children remains low, despite efforts by the 
government to facilitate registration and impl ementation of the second chance project. More 
needs to be done to tackle spec ific gender issues in the Roma community and to prepare more 
Roma to qualify as teachers. Registration of Ro ma with the authoritie s remains a problem.  
Roma continue to face very difficult living c onditions and discrimination, with poor access to 
education, social protection, heal thcare, housing and employment. 
Overall, there has been some limited progress in terms of measures taken by the government 
to improve the situation of the Roma, which re mains a serious concern. What is needed now 
is to ensure that appropriate human and financ ial resources are allocated to implement these 
measures effectively. 
2.3. Regional issues and international obligations 
As regards the International Criminal Court  (ICC), Albania still maintains a June 2003 
bilateral immunity agreement with the Unit ed States, granting exemptions from ICC 
jurisdiction. This does not comply with the EU Common Position on the integrity of the Rome Statute nor with related EU guiding pr inciples on bilateral immunity agreements. 
Albania needs to align with the EU position.  
Albania is still being monitored by the Parliamentary Assembly of the Council of Europe , to 
verify fulfilment of obligations and commitment s relating to its membership of the Council of 
Europe. 
Regional cooperation  and good neighbourly relations form an essential part of the process of 
moving towards the European Union. 
Albania has continued to participate in a numbe r of regional political and economic fora and 
initiatives, including in a transition from th e Stability Pact to a more regionally owned 
framework with the South East European Cooperation Process (SEECP) and the Regional 
Cooperation Council (RCC).  
EN 18   EN Albania has been satisfactorily implementing the Central European Free Trade Agreement 
(CEFTA) and is progressing on the first transitio nal phase of the Eur opean Common Aviation 
Area (ECAA) agreement. Albania is party to the Energy Community Tr eaty and is making 
headway towards meeting its obligations under the Treaty. 
Albania became a full member of the Barcelon a process in November 2007 and participated 
in the launch of the Barcelona Process: Union for the Mediterranean in July 2008. 
Albania's bilateral relations with other enlargement countries and neighbouring Member 
Sstates  have remained intensive, with fre quent bilateral contacts and visits.  
Relations with the former Yugoslav Republic of Macedonia  have remained goodwith 
reciprocal high-level visits and the conclusion  of agreements on a visa free regime, local 
border traffic and cooperation in border control.  
Relations with Montenegro  have developed further. Work started on construction of the joint 
border crossing point at Muri qan/Sokobine. Relations with Bosnia and Herzegovina  have 
intensified. The country has decided to open an embassy in Tirana. Alba nia continues to have 
good relations with Croatia. Relations have remained stable with Serbia . Relations with 
Turkey  have remained good. The Free Trade Agreement with Turkey has entered into force.  
Albania has continued to maintain  a constructive po sition regarding Kosovo3. Albania 
welcomed the decision on the establishmen t of the EU mission in Kosovo. Albania has 
recognised Kosovo's declaration of independenc e and established dipl omatic relations.  
Italy remains Albania's main political and economic partner and its largest EU trade partner, 
followed by Greece , which is also considered an impor tant strategic partner. A bilateral 
agreement with Italy in line with  the European Convention for j udicial assistance in criminal 
cases has been signed.  
Albania has received an invitation to join th e North Atlantic Treaty  Organisation (NATO), 
and the Protocol of Accession to th e Washington Treaty has been signed. 
Overall, Albania has continued to foster positive relations w ith its regional partners, both 
multilaterally and bilaterally. Albania's continue d constructive stance on the Kosovo issue and 
on maintaining good neighbourly rela tions with other enlargemen t countries has contributed 
to regional stability. 
3. ECONOMIC CRITERIA  
In examining the economic developments in Albania, the Commission's approach was guided 
by the conclusions of the Eur opean Council in Copenhagen in June 1993, which stated that 
membership of the Union requires the existe nce of a functioning market economy and the 
capacity to cope with competitive pressure  and market forces within the Union. 
                                                 
3 under UNSCR 1244/1999 
EN 19   EN  
3.1. The existence of a functioning market economy 
Economic policy essentials The government submitted the Economic and Fiscal Programme for 2007–2010 in December 
2007, setting out a coherent framework for the government's economic policies. The policies continued to support the establis hment of a functioning market economy, but suffered in some 
cases from the lack of detailed action plans. The economic strategies were broadly consistent 
with the current International Mone tary Fund three-year 2006–2009 PRGF/EFF
4 programme 
in the country. In 2008, the government supplem ented the longer-term strategy framework, 
adopting the National Strategy for Deve lopment and Integration (NSDI) for 2007–2013, 
prepared in consultation with domestic and international stakeholders. In line with the Integrated Planning System (IPS) the government  also adopted the Fisc al and Macroeconomic 
Framework 2009–2011 and the Medium-Ter m Budget Programme 2008–2010. Overall, 
political consensus on the fundamentals of  market-oriented economic policies was 
strengthened, but planning at too general a level sometimes presented a risk for the 
implementation of economic reforms.   
Macroeconomic stability 
The economy experienced strong growth despite a severe drought in th e summer of 2007 and 
continuous electricity shortage s. Extensive investments and high consumption led to a 6% 
growth in real terms in 2007 – the highest  since 2002. Economic activity was fuelled by a 
robust, though slowing credit growth and contin uing large-scale remittances inflows (12% of 
GDP). Unreliable electricity supply continued to pose a heightened risk to sustainable economic growth. The average per capita inco me in 2007 was around 22% of the EU27 
average
5, up from 21% in 2006 . Overall, economic growth re mained strong and speeded up, 
while the general income level remained low.   
External balances deteriorated, resulting in a curren t account deficit of 10.6% of GDP in 2007 
- up from 6.5%6 in 2006. The deficit widened, mainly due to an increase in the merchandise 
trade deficit (26.8% of GDP in 2007), in spite of strong growth in exports. Higher energy 
imports (30% of the total increase in imports  in 2007), resulting from a severe domestic 
drought, and demand for machinery contribute d strongly to the increase in imports. 
Merchandise exports remained more than 3.5 times lower than imports, despite a strong 
increase in mineral exports. The trade deficit co ntinued to deepen in th e first half of 2008 due 
to high imports. The surplus in services trade remained limited and surpluses of income flows and other transfers (including remittances) were lower (relative to GDP) than in the previous 
year. Overall, external imbalances re mained high and continued to widen.  
Net capital inflows increased, cove ring the current account defici t in 2007. Net foreign direct 
investment reached 5.9% of GDP in 2007 (up from 3.5% in 2006), with strong inflows from a large-scale privatisation in the telecommuni cation sector. Other capital inflows (mainly 
foreign borrowing by the private sector and no n-residents' deposits) rose, reaching 3.2% of 
                                                
 
4 The Poverty Reduction and Growth Facility (P RGF) and the Extended Fund Facility (EFF) 
5 In purchasing power standards (PPS) 
6 The data for 2006 is updated (compared to the Progress Report 2007) throughout the report according to 
the recent revision of statistics  
EN 20   EN GDP in 2007. However, from the fourth quarter  of 2007 onwards the current account deficit 
exceeded net capital inflows, leading to a decr ease in reserve assets. The stock of reserve 
assets stayed at the level of 3.3 months of imports of goods and services at end-June 2008. 
The external debt to GDP ratio fell to 24.8%  at end-2007 (down from 25.1% in 2006), with 
the public external debt ratio falling to 15.4% of GDP. The fina ncial sector external debt 
increased strongly (by 50%) due to short-term  loans and non-residents' deposits. Corporate 
sector foreign borrowing remained limited (with stock falling below 5% of GDP). In total, net 
capital inflows increased, but remained relatively low.   
The recent turmoil in the global financial markets increased risks to the Albanian economy. 
The risks to the financial sector are mitigated by the overall low level of financial intermediation and a limited integr ation to the international capital markets, while the banking 
sector is well capitalised and mainly fina nced by households' deposits. However, the 
continuous widening of the current account defic it requires increasing capital inflows that 
might be inhibited by the expected global economic slow-down. 
Labour market conditions improved in 2007 . The number of registered unemployed 
decreased, resulting in a drop in the unemployment rate (13.4% in 2007 and 13% in March 2008 - down from 13.9% in 2006). The number of em ployed persons increased as a result of 
higher employment in the non-agricu ltural private sector. In total, the labour force (the sum of 
employed and unemployed) decreased by ar ound 0.4%, indicating some movement of 
unemployed persons to inactivity. Wages in th e public sector increa sed by 17.1% on average 
in 2007, significantly more than in 2006 (7.5%), but did not add significantly to domestic 
demand pressures on inflation. Overall, the labour market pe rformance slightly improved, but 
rigidities remained relatively  high. However, due to the sign ificant informal economy, labour 
market data may not correctly reflect th e actual dynamics of the labour market.   
The central bank continued to implement a po licy of implicit inflation targeting and an 
independent float. The objective of maintaini ng consumer price inflation at 3% with a 
fluctuation band of ±1 percentage point wa s met, with inflation averaging 2.9% in 2007. 
Potential demand pressures and pressures due to price increases in the global commodities 
markets were addressed by raising the key monetary  policy interest rate. In  the second half of 
2007, the central bank raised the policy rate three times (cumulatively by 0.75 percentage 
points to 6.25%). In the first th ree quarters of 2008, in flation remained within the target range 
(measured as a 12-month average annual inflati on), although in some m onths it exceeded 4% 
(year-on-year). The main contributors to annual  inflation were food and energy prices, with 
the increase in food prices accounting for up to two thirds of annual inflation. The impact of 
domestic demand pressures was limited, despite a strong (though decelera ting) credit growth 
and extensive remittances inflows. The increase in money supply (M3
7) remained relatively 
high (14% year-on-year in July 2008). Exchange rate fluctuati ons against the euro remained 
limited, with some temporary small-scale depr eciation in March 2008. Overall, monetary 
policy remained sound, maintaining price stability.   
The fiscal stance loosened somewhat in 2007, despite a strengthening of economic growth. 
Fiscal balances deteriorated, with the general government de ficit increasing to 3.5% of GDP 
in 2007 – up from 3.3% in 2006. Fiscal policy re mained expansionary, with the budget plans 
projecting even higher deficits, mainly due to  plans for high public investment. However, 
strong economic growth made it possible to reduce the public sector inde btedness (as a ratio 
                                                 
7 Monetary aggregate M3 includes currency outside banks, as well as demand and time deposits.  
EN 21   EN of GDP), despite a delayed fiscal consolidati on. The public debt ratio fell to 53% at end-2007 
from 56% in 2006, with domestic public debt falling to 37.6% of GDP. The management of public finances improved, especially in 2008, supported by large-scale tax administration 
measures that also contributed to the extension of the tax base. The intr oduction of a 10% flat 
personal income tax was accompanied by an increase in income tax revenues. The management of local government finances rema ined poor, resulting in low revenue collection 
and limited spending. Public spending followed the strategic prioriti es of higher public 
investments, keeping the increase in current  expenditures constrained. Personnel expenditures 
were maintained at 6% of GDP, and interest  expenditures were reduc ed to 2.6% of GDP in 
2007, partly as a result of more efficient debt management. Government investments 
increased to 5.8% of GDP, but weak implem entation kept capital expenditures significantly 
below projections. Regarding fi scal strategies, the 2008 budget pr ojected a sharp deterioration 
of fiscal balances with a fiscal deficit of 7.9% of GDP, due to extens ive capital expenditures 
amounting to 9.8% of GDP. A mid-2008 budget revi sion reduced the de ficit projection to 
5.2% by increasing revenue projections and cutti ng public investments. On the revenue side, 
the reduction of corporate pr ofit tax from 20% to 10% in  January 2008 brought about a 
change in the public revenue structure. Corpor ate tax revenues decreased, compensated by an 
increase in excise duties. Overall, the admi nistration of public finances improved, but the 
fiscal stance loosened owing to am bitious public investment plans.  
The macroeconomic policy mix was broadly ad equate, with an increased emphasis on 
structural reforms. Monetary policy remained sound, while fiscal strategies prioritised higher 
public investments over further fi scal consolidation. Widening fis cal imbalances may lead to 
instabilities and prevent fiscal policies from pl aying their role. Vulnerabilities of external 
balances increased, requiring swift measures to  ensure electricity supply, the broadening of 
the export base and a more attractive investment environment.  
Interplay of market forces 
State participation in the economy remained li mited, with the private sector accounting for 
around 80% of GDP. The share of the employed in the private sector increased slightly to 
82.1% in 2007 (up from 81.9% in 2006). Public ente rprises continued to be mainly in the 
services and agricultural sectors. The privat isation of large-scale enterprises advanced 
significantly. The contract to sell an 85% stak e in the ARMO oil refinery was approved and 
the privatisation of 76% of the shares of the distribution arm of the loss-making power 
corporation (KESH) is in pr ogress. The government also c oncluded tenders on consultancy 
for the privatisation of its 12.6% share of the mobile tele phone operator AMC, and of a 
majority of the insurance company INSIG. Priv atisation of Albpetrol – the company involved 
in oil prospecting, research and development, and production – was delayed. Overall, the 
reduction of state ownership in the economy progressed, while th e remaining inefficient large-
scale state corporations continued to  contribute to market distortions.   
Market entry and exit 
The government simplified business registration procedures significantly . The introduction of 
the National Registration Centre (NRC) reduced th e time required to register a business to one 
day and provided for simultaneous  registration for the purposes of tax administration, social 
and health insurance, and the Labour Inspectorate . Registration fees were reduced to less than 
one euro. The infrastructure for business regi stration services was im proved by increasing the 
number of electronic services  and registration centres across the country. The improved 
services framework, together with more rigor ous inspections by the authorities, addressed 
EN 22   EN ways for reducing the widespread informality of  business. The simplified procedures allowed 
for a significant increase in the number of init ial registration of busin esses. The government 
also continued with the regulatory reform of licences by simplifying licensing procedures and 
reducing the number of licences. However, there is still scope for further simplification. Significant problems remained regarding the is suance of construction permits, which showed 
a sharp 40% drop in 2007. Regarding market ex it procedures, the new law on bankruptcy 
procedures was approved in May; this provided a more efficient framework for business exit, 
as no bankruptcy proceedings had been conclude d in the courts in recent years. Overall, 
administrative procedures for the establishmen t of businesses were simplified considerably. 
However, there remains room for further improvements.  
Legal system 
The government took a number of st eps to strengthen the judicial  system and the fight against 
corruption. A number of elec tronic public services (inclu ding the electronic public 
procurement system) were introduced in order to  increase transparency. The general judiciary 
reform continued, with the adoption of a la w on the organisation and functioning of the 
judiciary. Inspections of courts and public ag encies were stepped up and legal procedures 
were initiated against officials responsible fo r violations. Legal cert ainty was increased by 
establishing a legal basis for a ne w type of administrative courts  to rule on commercial cases 
and disputes between companies and public institutions. Preparations for defining property rights made progress. Offices in several cadas tral areas were prepared for the initial 
registration of land, and preparat ory work on the digitisation of  maps of the territory was 
completed. However, further efforts are required to effectively fight against corruption that 
affects the business climate and has an advers e impact on the quality of public services. 
Overall, the legal framework for contract en forcement was strengthened, but the judiciary 
remained weak and uncertainty about re al estate property rights persists.  
Financial sector development 
Financial intermediation expanded significantly, but its level remained low. Bank lending to 
the private sector rose to 31.4% of GDP in June 2008 (up from 21.4% at end-2006), while 
money supply (M3) remained above 70% of GDP. The share of other financial intermediaries 
remained low; no domestic companies were listed on the Tirana Stock Exchange and no progress was made regarding private pension f unds. The adoption of the law on securities in 
March 2008 provides some basis for the deve lopment of the capital market. Insurance 
companies continued to be the other main interm ediaries in the financial sector, with total 
assets of close to 2% of GDP. The banking sect or is wholly owned by the private sector, and 
foreign capital participation recently increased to almost 99%. Following a merger, the 
number of banks was reduced to 16. Competitio n in the banking sector increased, while the 
concentration of assets declin ed. Profit rates of banks remain ed relatively strong (return on 
assets was 1.3% in June 2008, comparable to th at of at end-2006). Banks continued to widen 
their range of lending products  and increased the number of regional offices. Overall, 
financial intermediation, dominated by the we ll-functioning banking s ector, continued to 
increase at a rapid pace, while the role of  the non-bank financial sector remained limited.   
The stability of the financial sector re mained satisfactory, supported by a favourable 
economic environment and strengthened financia l supervision. Capital ad equacy remained on 
average far above the minimum requirement (w ith ratios of 17.3% and 12%, respectively, in 
June 2008), albeit somewhat lowe r than at end-2006. The quality of credit remain ed relatively 
high and the share of non-performing loans in to tal loans remained low, although it increased 
EN 23   EN to close to 4% in March 2008 (up from 3.1% at end-2006). St rong - albeit slowing - credit 
growth and the fact that a large share of credit is denominated in foreign currencies are factors 
which demand careful handling of credit risks.  The establishment of the credit registry 
brought additional transpar ency to the banking system. Overall,  the financial system remained 
sound, addressing the growing risks of a po ssible deterioration of credit quality.  
3.2. The capacity to cope with competitiv e pressure and market forces within the 
Union 
Existence of a functioning market economy Macroeconomic stability was broadly maintained, providing economic agents with a 
supportive environment for decision-making. Th e functioning of market mechanisms still 
remained seriously distorted by unreliable ener gy supply, weak judiciary, uncertainty about 
real estate property rights and the inefficiencies  still present in the regulatory framework for 
businesses.  
Human and physical capital  
The reforms to improve the quality of labour force continued, with a strong emphasis on 
vocational training. The government adopted a strategy on employment and vocational 
training, aimed at bringing unemployment down to the average level of the EU countries by 
2013. In parallel, the National Council of Pre-Un iversity Education wa s established, and new 
guidelines for secondary schoo ls and standards for post-graduate programmes were 
introduced. In total, pub lic spending on educatio n rose to 3.3% of GDP  in 2007 (from 2.9% in 
2006). To promote employment, the government in troduced a partial compensation of training 
costs and a temporary compensation of social in surance contributions for companies that hire 
unemployed job-seekers. Proper assessments of the impact of the measures on the labour 
market continue to be constrained by limited and partly inconsistent labour market statistics. 
Overall, opportunities were creat ed for increasing the relatively low quality of human capital, 
but their effects on the labour market remained unclear.   
Physical capital accumulation continued at a ra te comparable to 2006, although slower than in 
earlier years. The ratio of total investment s to GDP was 29.2% in 2007. Public investments 
focused on the energy sector and on road cons truction. Net foreign dir ect investment (FDI) 
inflows increased significantly (to 5.9% of GD P in 2007), mainly owing to strong inflows 
from large-scale privatisation in the tele communication sector. FDI inflows were also 
significant in the financial sector. The total stock of FDI remained relatively low, reaching 19.1% of GDP in 2007. Infrastructure remained poor despite significant investment in the 
road network. Preparations for reconstructi on of railways and ports progressed. The hydro-
power based electricity sector continues to l ack the capacity to meet domestic demand. The 
number of concession agreements for building small-scale hydro-power plants has increased 
and the construction of a thermal power plan t has begun. However, these measures will 
provide only a partial solution to the electricity shortages.  Overall, capital accumulation 
continued, but capital stock remained limited .  
Sector and enterprise structure 
Enterprise restructuring conti nued in the remaining sectors u nder state ownership, largely as 
part of the preparations for privatisation. In the oil production sector, th e restructuring of the 
ARMO oil refinery and the oil producer Albpetr ol made progress and an investment plan for 
the oil refinery was submitted to the government  as an obligatory document for the tender 
EN 24   EN procedures. In the electricity se ctor, preparations for the restru cturing and privatisation of the 
loss-making power corporation (KESH) made progr ess. However, electricity tariffs remained 
below cost-recovery levels, thus contributing to financial losses. Electricity supply remained 
unreliable. Overall, restructuring of enterpri ses progressed, but major additional changes are 
needed in order to increase the competitiveness of the current or former large-scale state 
monopolies. 
The sectoral structure of the economy re mained broadly unchanged, with the largest 
production being in the services sector. The mi ning sector contribute d significantly to the 
increase in total production and exports, although its share of total production stayed 
relatively low. The agricultural sector remain ed the biggest employer, with 58% of total 
employed, but contributing only 20.7% of the GDP ( for details  see statistical annex ). The 
informal sector remains large. Overall, the eco nomy broadly maintained  its structure, with 
considerable scope for further expansion of the services and industrial se ctors, at the expense 
of inefficient agriculture.   
State influence on competitiveness  
The government kept the transfer of subsidies from the central budget at  a relatively low level 
(0.4% of GDP in 2007). Electricity  tariffs, set by a regulatory State authority, remained below 
cost-recovery levels, creating indirect subsidie s to consumers. The recent sharp increase in 
global fuel prices triggered an  exemption from the excise du ty on fuels for producers in the 
agricultural and industrial sectors, as well as for certain en ergy producers. Overall, distortions 
of competition arising from state interventions  were kept within bounds, while the energy 
sector issues remained unsolved.   
Economic integration with the EU 
The openness of the economy increased consider ably, with total foreign trade in goods and 
services reaching 81% of GDP in 2007 (compa red to 72% in 2006). Trade increased mainly 
due to an increase in imports, while competitiven ess in exports remained weak (with exports 
of goods accounting for 10% and exports of services for 18% of GDP in 2007). The EU 
continued to be the main trading partner, whil e the share of the trad e in goods with the EU 
declined slightly to 64% (dow n from 69%). The decline was part ly the result of increased 
trade with CEFTA8 countries, but mainly due to a strong increase in exports of mining 
products to Asia. The country's weak competitive ness in trade with the EU continues to be 
reflected in a very high concentr ation of export partners  (more than two thir ds of total exports 
of goods are destined for one country, namely Italy). Imports (also in terms of trading partners) continued to show a c onsiderably more mixed picture, with two main trade partners 
accounting for less than 50% of total imports. Ov erall, the EU continued to be the main 
partner in international economic  relations, while overall intern ational integration remained 
limited.   
4. E
UROPEAN STANDARDS  
This section examines Albania’s capacity gradually to approximate its legislation and policies 
to the acquis  related to the internal market, sectoral policies and justice, freedom and security, 
in line with the Stabilisation and Associa tion Agreement and the European Partnership 
                                                 
8 CEFTA or Central European Free trade Agreement  
EN 25   EN priorities. It also analyses Albania’s administ rative capacity. In each sector, the Commission’s 
assessment covers progress achieved during the reporting period and summarises the 
country’s overall level of preparations.  
4.1. Internal market 
4.1.1.  Free movement of goods 
Good progress has been made on standardisation . By the end of September 2008, Albania 
had adopted 14,424 European standards (ENs),  or 84.3% of all the ENs adopted by the 
European Committee for Standardisation (CEN) and the European Committee for Electrotechnical Standardisation (CENELEC). This  exceeds the target of  80% that had been 
set for 2008. The Directorate-General for St andardisation (DGS) has used numerous 
promotional tools to raise the pr ivate sector’s awareness of th e benefits of standardisation. 
This has led to increased use of standards ( 117% more standards were  sold during 2007 than 
in 2006 and the sales of standa rds continued to grow in th e first half of 2008). DGS has 
continued to participate in the activities of  CEN and CENELEC as an affiliate member.  
The new Law on standardisation was adopte d in February 2008 and the relevant 
implementing legislation has been drafted. This includes the establishment of a supervisory board made up of representatives of all stak eholder groups which will monitor DGS activities. 
In accordance with the new law, DGS will be th e enquiry point for the agreement on technical 
barriers to trade under the World Trade Organisation (TBT/WTO). Pr eparations in the field of 
standardisation are on track.  
Limited progress can be reported on conformity assessment . The number of accredited 
conformity assessment bodies  increased slightly.  
Further progress can be reported on accreditation . A new Law on accreditation was approved 
in November 2007 and implementing legislatio n is being drafted. The national strategy on 
accreditation, which is part of th e newly adopted mid-term strate gy on quality infrastructure 
development, has been approve d. The quality management sy stem of the Directorate for 
Accreditation (DA) has been updated to br ing it into line with EN ISO/IEC 17011. Two 
technical committees were esta blished to develop accreditati on schemes in new areas. The 
Advisory Board for Accreditation is now in operation. The DA has 14 staff and is a member 
of the International Accreditation Forum (IAF)  and an associate member of International 
Laboratory Accreditation Coopera tion (ILAC). It continues to  participate in European 
Cooperation for Accreditation (EA) activities. The DA has signed memoranda of 
understanding with all the accreditation bodies of neighbouring countries and with some 
Albanian institutions and associations and con tinues to promote accreditation. Preparations in 
this area are advancing. 
Good progress can be reported in the field of metrology . The Directorate for Metrological 
Supervision and the four regional centres of the Directorate-General for Metrology (DGM) 
are now in operation. Further training was provi ded to DGM staff. The quality management 
system in accordance with EN ISO/IEC 17025 is already being implemented in DGM. 
Applications for accreditation of two laboratories were su bmitted to the DA in December 
2007. Some of DGM’s seven laboratories took part in laboratory in ter-comparisons and 
proficiency testing at bilateral and regional levels. The national medium-term strategy on the 
development of the metrology system was adopted in December 2007. 
EN 26   EN A new Law on metrology transposing provisions of  the old approach di rectives was adopted 
in February 2008. It sets up a decentralised  metrology system and deregulates some 
metrological activities, such as calibration and ve rification of measuring instruments in use. 
The government approved a regulation concer ning national measurement standards. 
Regulations on relations between DGM and othe r designated laboratorie s and on supervision 
have also been drafted. To facilitate involvement  of the private sector, DGM has identified the 
requirements for legal persons performing particul ar legal metrology tasks. It has also signed 
a mutual recognition arrangement with th e International Committee for Weights and 
Measures (CIPM MRA). 
Progress has been made on market surveillance  and consumer protection. The new strategy 
on consumer protection and market surveill ance for 2007-2013 was approved in November 
2007. It is based on three sector al strategies, one on cons umer protection and market 
surveillance for industrial products, one on fo od products and the other on pharmaceutical 
products. The respective implemen ting institutions are the Mini stry of Economy, Trade and 
Energy (METE), the Ministry of Agriculture , Food and Consumer Protection (MAFCP) and 
the Ministry of Health (MoH). 
The capacity of the Market Surveillance Directorate (MSD) in the METE is being 
strengthened with three more staff and appropriate training on horizontal legislation. Actual 
market surveillance is carried out by the Central Technical Inspectorate (CTI), which is an independent Directorate-General of the METE. The MSD, the CTI and the customs 
authorities have provided information to c onsumers on dangerous products (e.g. toys and 
electrical equipment) and have taken measures to withdraw su ch products from the market.  
Albania has made some progre ss in approximating its  horizontal legisl ation and its product-
specific technical regulations to the acquis . Legislation has been amended to transpose the 
directives on toys, simple pressure vessels, pr essure equipment, low-voltage equipment and 
electromagnetic compatibility. However, in the case of the old appro ach directives, the only 
progress which can be reported is  in the field of metrology.  
A Law on consumer protection  which broadly takes into acc ount the relevant EU standards 
was adopted. The new law provides the legal ba sis for settlement of disputes, with a 
Consumer Protection Commission and a Consumer  Protection Council as the decision-making 
and consultative bodies respectively. However, th ese bodies have not ye t been established. 
(See the paragraph on market surveill ance above for further details.)  
Overall, preparations in this area are on track. However, most of the sectoral acquis  has yet to 
be transposed and implemented. Horizontal ad ministrative infrastructure exists, but the 
capacity of the various authorities and institutio ns will have to be improved, as it is still 
insufficient to ensure proper enforcement.  
4.1.2.  Movement of persons, services and right of establishement 
There has been some progress on movement of persons .The Law on foreigners was adopted 
in July. Its compatibility with the relevant EU standards has yet to be established. No 
developments can be reported on recognition of  professional qualificatio ns or on coordination 
of social security.  
There has been some progress on the right of establishment. 
The national registration centre 
for businesses has made registration simpler.  Registration fees have been reduced and 
licensing simplified. ( See Section 4.2.1 for further details. ) However, uncertainties about 
EN 27   EN property rights are still discouraging establishmen t. Preparations in this field are advancing 
moderately.  
There has been progress in the area of company law . A new Company Law was approved in 
April 2008. Implementing legislation has been  drafted, laying down models for the four 
different types of commercial companies (gener al partnerships, limited partnerships, limited 
liability companies and joint-stock companies) . However, the new Company Law falls short 
of addressing the issues of cro ss-border mergers and takeover bi ds. Preparations in this area 
are advancing.  
No progress can be reported on auditing . The issue of statutory a udits of annual accounts has 
not yet been addressed and an independent public oversight system still needs to be established. 
Some progress can be reported in the case of  accounting. Translation of the international 
accounting standards (IAS) was completed, and they entered into force in January 2008. 
Companies with annual revenue of over €10 milli on over the last two years and with 100 or 
more employees need to apply IAS. The Na tional Accounting Council is responsible for 
supervising and monitoring implementation of the accounting standards. Further efforts are 
needed to build a credible and properly func tioning financial reporting framework, especially 
for small and medium-sized enterprises. Enfo rcement of financial reporting needs to be 
tightened up. 
There has been little progress as regards freedom to provide services . No clear distinction 
has yet been made between provi ding services on a temporary basis and providing them via a 
permanent establishment. The government is sued decisions on licen sing and assets. As 
regards postal services, a draft text establishes we ight limits in the reserved area and tariffs for 
the universal service provider, and the government plans to libe ralise Albania’s postal market 
by 2009. The regulatory authority for postal services was estab lished following the adoption 
of the Law on electronic communications in May 2008. However, separation of regulatory 
functions from policy-making has not yet been achieved.  
Some progress can be reporte d concerning financial servi ces. The Bank of Albania has 
adopted several of the implementing regulatio ns provided for by the Law on banks of June 
2007. Regulations were adopted on risk management  for the activities of branches of foreign 
banks and on the internal audit system in banks  and branches of foreign banks. Foreign banks 
operating under an Albanian licence can now of fer services through branches whilst enjoying 
the same rights and treatment as Albanian banks . Further efforts are needed to approximate 
the banking legislation to the acquis, particularly to the Capital Requirements Directive.  
The Supervision Department of the Bank of Albania was reinforced by adding staff and 
providing training on the Basel II principles, credit risk, market risk, risk management, 
operational risk and crisis mana gement. However, further admi nistrative capacity would be 
necessary in order to take into account devel opments in the banking sect or. A credit registry 
was brought into operation, thus strengthening supervision and improving risk management 
for banks. Cooperation between supervisors of domestic and foreign competent authorities 
needs to be strengthened.  
No substantial progress can be reported in the insurance field. The insurance market continues 
to be dominated by obligatory insurance scheme s, which account for two thirds of all non-life 
insurance. The recent entry of three foreign insurance companies has not resulted in any 
EN 28   EN diversification of the Albanian market. Motor third-party liability (M TPL) has not yet been 
liberalised and the mandatory gr een card tariffs are still set by the Ministry of Finance. The 
Ministry also sets minimum and maximum tariffs for MTPL. This limits competition. 
New legislation on securities has entered in to force, aiming to approximate Albania’s 
legislation to a number of directives, such as the Markets in Financial Instruments Directive 
and those on prospectuses, tran sparency, insider dealing and credit institutions. Three more 
decrees were approved relating to insurance br okerage, reserve funds and insurance damage 
assessors. 
The Financial Surveillance Authority (FSA) la unched a computerised system for MTPL - 
known as the national data centre – as prov ided for under the Fourth and Fifth Motor 
Insurance Directives. The system aims to ma ke it easier to track down uninsured vehicles. 
The FSA organised seminars and training sessions on insurance and pension fund issues. 
However, further measures are needed to strengthen its capacity to cope with the growth in the market and to secure the authority’s independence. The FSA employs 45 staff, although 
its approved organisation chart has provision for 58. At presen t, 90% of the FSA’s overall 
budget is financed from its own resources; th e remaining 10% comes from the State budget.  
4.1.3.  Free movement of capital 
No progress can be reported on free movement  of capital. The legi slative framework on 
foreign exchange is being revised, but the pr ocess has not yet been completed. Significant 
restrictions still remain to the full liberali sation of capital movements required under the SAA. 
There was some progress in the field of  payment systems . The Bank of Albania launched an 
electronic data transmission project to accelera te primary market auctions of government 
securities. The number and value of transactions and of payments processed by the Albanian 
inter-bank payment system and the Albanian  electronic clearing hous e has increased. The 
number of credit and debit cards in use has al so increased and the network of terminals using 
them has been expanded. However, Albania continues to be a predominantly cash-based 
economy. The degree of financial intermedia tion continues to be relatively low.  
Preparations in the field of free movement of capital and payment system s remain at an early 
stage. 
4.1.4.  Customs and taxation 
There has been some progress in the area of customs . Albania took measures to ensure timely 
implementation of the tariff reductions provide d for in the Interim Agreement. The upward 
trend in revenue collection has continued, despite a reduction of the average level of customs 
tariffs. Collection of customs duties duri ng the period from October 2007 to May 2008 
exceeded the projected amount by 6%.  
Computerisation of customs houses has been completed and all customs declarations are 
processed using the ASYCUDA ++ computerised system. Migr ation to the ASYCUDA Word 
system is in progress. However, efforts are required to define an  IT strategy in the long term. 
Use of computerised risk analysis modules has been extended, but the physical inspection rate 
(20-25%) is still high by European standards. Risk  assessment and controls need to be revised 
and strengthened, including for assessing the declared transaction value. Albania has 
implemented the TIR convention and procedures. Steps have been taken towards establishing 
EN 29   EN Albania’s first free zone in the port of Duress. 38 customs warehouses were authorised in 
2008. 
The Combined Nomenclature 2008 for the classi fication of goods in trade with the EU was 
adopted. The concept of binding origin information was introduced in May 2008. New provisions were also introduced on the role of  customs in protecting intellectual property 
rights providing for approximation to European st andards. Control of du al-use goods has been 
implemented in the risk management system . However, no progress can be reported on 
effective control of intellectual prop erty rights by customs authorities. 
Further progress is needed on approximation to EU practices, in particular on simplified 
procedures, rules of origin, valuation methods (g reater use of transac tion value) and transit 
(ATA Convention). A study of the economic impact of the ATA carnet procedure was 
performed. An agreement needs to be signe d between the customs DG and a guarantor 
national association. The compliance with the In terim Agreement of Alba nia’s tax regime for 
imported cars needs to be determined. 
As regards administrative and operational capac ity, legislation was ap proved in July 2008 
increasing the staff of the customs administra tion by 27 posts. The procedure to establish a 
qualified pool of trainers has started and trai ning activities were organised on customs and 
tariff issues, free trade agreements and TIR pro cedures. However, a training strategy has not 
yet been established. A new performance indicat ors system has been defined to facilitate 
career development. However, the system on ly allows individual assessments. Customs 
officials still do not have civil servant status. 
As regards infrastructure development, wo rk has started on a project to improve the 
infrastructure of most first, second and third category border crossing  points (BCP). A joint 
border crossing point with Montenegro is be ing established and pr ocedures have been 
launched for construction of 10 other smaller BCP s. The infrastructure of Tirana customs 
house is being improved.   
Overall, preparations in the field of customs are advancing, but further efforts are needed on 
legislative alignment and implementation.  
There has been progress in the field of taxation.  A Law on procedures for the tax 
administration was approved with the aim of reducing the informal economy and improving 
the business environment. The provision requiri ng payment of the full tax assessed plus a 
15% fine before lodging a court appeal agai nst decisions of the tax administration was 
abolished. The taxation system is becoming simp ler, as approximately 95% of taxpayers are 
subject to the 10% flat tax on income. The tax reforms have shown a positive path towards increased tax collection, particul arly as regards income tax an d corporate tax revenue. Albania 
has started an assessment of the compliance of its tax legislation with  the Code of Conduct on 
business taxation.  
Computerisation of tax offices is progressing and 90% of all ta xpayers are now registered in 
the integrated tax system. E-tax procedures ar e being implemented and are already being used 
by taxpayers to file their retu rns and pay their taxes. The Di rectorate for Registration and 
Taxpayer Services came into oper ation to provide assistance on  tax matters. A manual for the 
Internal Audit Directorate in the tax administration has been  drafted and training on tax 
control and audit issues was pr ovided to staff of the tax admi nistration. Disciplinary measures 
have been taken against staff failing to perform as required by their duties.  
EN 30   EN However, the overall tax collection rates remain low, especially from local governments. 
There is a need to increase th e capacity of local government tax offices, especially in the 
framework of fiscal decentralisation. A compre hensive tax collection and control strategy has 
not yet been developed and the informal economy is still hig h. Consultation with the business 
community needs to be enhanced  to dispel insecurity about the legislative environment and 
facilitate implementation of tax reforms. The conformity of some changes to the VAT rates 
for imported printed materials with Albania’s obligations under the Interim Agreement needs 
to be assessed.  Compliance with European standards needs to be established in the case of 
amendments to the excise legislation concerni ng the definition of small wine producers and 
certain cases of reimburseme nts of excise on fuel.  
Overall, preparations in the fi eld of taxation are advancing mode rately. Efforts are needed to 
approximate Albanian legislation to the acquis,  ensure its compliance with the Interim 
Agreement and reinforce the administrative capac ity to curb the informal economy and reduce 
tax evasion.  
4.1.5.  Competition 
Progress continued in the anti-trust fiel d. The Albanian Competition Authority (ACA) 
recruited additional staff and filled all its 35 pos ts. ACA staff participated in training seminars 
in Albania and abroad. The code of ethics of  the Competition Authority was approved and 
parliament approved the authority’s stru cture and organisation chart in May 2008. 
The ACA contributed to the promotion of a competition culture by organising workshops, 
producing competition policy documents and signing memoranda of understanding with 
various regulatory auth orities. These included  the Bank of Albania, the Ministry of Economy, 
Trade and Energy, the Regulatory Entity of Te lecommunications, the Association for the 
Protection of Consumers, the Directorate-Gene ral of Customs and the Agency for Public 
Procurement. Competition culture in Albania is  slowly evolving. Businesses have started to 
submit complaints about anti-competitive practi ces. This points to growing public awareness 
of the benefits of competition enforcement.  
The ACA imposed fines of 2% of total tu rnover on two mobile telephony companies for 
abuse of their dominant position on the market. A court decision has not yet been taken on the 
appeals filed by the two companies. The AC A also decided to impose fines on bread 
producers and cement-makers for violation of competition rules. The ACA issued 
recommendations on the telecommunications mark et. It continued its investigation into the 
insurance market, concluded a sectoral inves tigation on the energy market and started 
analysing the banking sector. It also assesse d several merger notifications. The Law on 
competition is to a large extent in line with the acquis. However, further efforts are needed on 
adopting implementing legislation in the field of competition. 
There has been progress in the area of State aid . The legal and institutional framework has 
been strengthened by the approval of implementi ng rules on horizontal ai d and of guidelines 
on aid in the form of compensation for public se rvices. The staff of the State Aid Department 
(SAD) continued to receive training, including  on aid in the utilities sector. The SAD 
provided advice on severa l legislative drafts  and continued to raise awareness among State aid 
providers. A report on the inventory of existi ng aid schemes was approved in January 2008, 
and the annual report on St ate aid for 2007 was approved in July 2008. The State Aid 
Commission took eight decisions on cases notif ied by aid providers. Albania has started 
preparations for implementing the State aid provis ions in the iron and steel protocol to the 
EN 31   EN Interim Agreement. However, no decision on granti ng State aid to the iron and steel sector has 
yet been taken. Further efforts are needed as regards implementation. 
Overall, preparations in the ar ea of competition are well on track.  
4.1.6.  Public procurement 
There has been limited progress in the area of public procurement . The legislative 
framework of the public procurement system has not changed substantially. The Public 
Procurement Law was amended twice. The firs t amendment partially revised provisions on 
use of negotiated procedures in cases of extreme urgency. The second concerns purchases of 
electricity. It exempts domestically produced  energy from the law and introduces new 
provisions allowing use of negotiated procedur es without prior public ation of a contract 
notice. It also allows use of framework agreements for purchasing electricity. This 
amendment is not fully in line with the relevant  provisions of the EC pr ocurement directives.  
The capacity of the Public Procurement Ag ency (PPA) was strengt hened by recruiting 10 
additional staff. The PPA continued to organi se training seminars on public procurement. 
However, contracting authorities still require more in-depth practical  training to strengthen 
their operational capacity and professionalism. The role of the PPA as the central coordinating 
and advisory authority for legal and procedural reforms needs fu rther strengthening to ensure 
consistent development in all areas of public procurement. Legislative activities in certain 
areas of public procurement are still split between various stakeholders. 
The Public Procurement Advocate was establishe d as an independent institution reporting to 
parliament. However, it has no particular executive powers and its functions duplicate the 
monitoring tasks of the PPA. The institutional frame work for remedies is not in line with the 
acquis . Decisions on appeals are taken by the same unit of the PPA that is responsible for 
interpreting the law and giving advice to contra cting authorities. Cu rrent procedures for 
handling complaints still do not meet r ecognised international standards.  
Albania introduced electronic procurement at the end of 2007. It is now us ed by all ministries 
and also by the Power Corporation and the Di rectorate-General for Roads. However, its 
application is hampered by technical proble ms and the insufficient IT capacity of many 
contracting authorities.  
Overall, preparations in the area of public procurement are a dvancing. However, there is no 
coherent, comprehensive strategy for further development of the procurement system in either 
the medium or long term. Further approxima tion is required in all areas of public 
procurement, particularly for concessions and utilities.  
4.1.7.  Intellectual property law 
There has been limited progre ss on intellectual property right s. The Albanian Copyright 
Office (ACO) signed memoranda of understandi ng with the Competition Authority, the 
National Council of Radio and Television, the National Cinematography Centre and the tax 
and customs administrations, with the aim of fi ghting piracy and enforcing the copyright law. 
Joint inspections were carried out with the tax administration in several cities, and administrative fines were imposed for infringe ments of copyright. Howe ver, the number of 
cases of violation of copyright  law brought to court is low. Amendments to the provisions 
implementing the Customs Code relating to in tellectual property rights and brand controls 
were adopted in order to allow products to be classified as “fake”, “pirated” or “liable to 
EN 32   EN infringe the rights of patent or certificate owners”. The dr aft national stra tegy on culture 
partially addresses issues rega rding protection of copyright. Ho wever, a national strategy on 
intellectual property rights has not yet been prepared. 
Several public information campaigns on intelle ctual property rights we re organised and ACO 
staff received specific traini ng on copyright and law enforcement issues. However, the 
capacity of the ACO needs to be strengthen ed by further training and additional human 
resources. Currently, a single co pyright inspector is supposed to cover the entire country. 
There are plans for regional copyright offices , but these have not ye t been established. 
There has been some progress as regards industrial property rights . A new Law on 
industrial property rights was adopt ed in July 2008. Its implementi ng legislation is  still being 
drafted. A Board of Appeal was established in the Directorat e for Patents and Trademarks 
(DPT) and the Directorate completed the reor ganisation of its computer system. The DPT 
organised training seminars and ac tivities to promote the values of industrial property rights, 
and the European Patent Office (EPO) provide d assistance to both the DPT and ACO. A 
bulletin of industrial property ri ghts containing records of registrations and changes of 
intellectual property rights titles is published a nd an on-line version is available on the DPT 
website. The Administrative Council of the EPO approved Albania’s request for accession to 
the European Patent Convention. Prepara tions for its ratific ation are underway. 
The capacity of both the ACO and the DPT require further strengthening. Piracy and 
counterfeiting remain widespread. Enforcem ent is hampered by insufficient inspection 
capacity and the low level of fines under the curr ent legislation, plus the lack of appropriate 
awareness, experience and qualifications in this field on the part of the courts. The number of 
infringement cases regarding inte llectual property rights that ar e brought to court is still too 
low. Further efforts are needed to improve in ter-institutional  cooperation and the ability of 
customs authorities to detect counterfeit products. The general level of awareness on 
intellectual property rights and their benefits is still low. 
Overall, preparations in the ar eas of intellectual and industria l property rights are not very 
advanced. 
4.1.8.  Employment and social policies 
There has been some progress in the area of employment policy . The Employment and 
Vocational Training Strategy for 2008-2013 was adopt ed. Its main objective is to reduce the 
level of unemployment to a level comparable to that in EU countries by 2013. New employment promotion programme s have been adopted, providi ng subsidies to employers for 
training and/or hiring jobless pe rsons. One of the programmes specifically targets jobless 
women. Measures to promote employment of young graduates have been stepped up. 
However, monitoring and assessment of the im pact of such program mes are still lacking. 
Minimum wages and pensions continued to incr ease and legislation increasing the base level 
of unemployment benefit was approved. A com puter-based information system is being 
developed in the head office of  the national employment service and in two regional offices. 
Databases on vacancies, jobseekers and training  activities have been established. However, 
the system is not yet extended to all offices . In general, the link between the vocational 
training offered and labour mark et demand is not sufficient, and the capacity of the labour 
offices to carry out labo ur market surveys is not strong enough. Also th e capacity of regional 
labour offices remains limited. 
EN 33   EN In the field of social policies , preparations for amendment of the labour law  are underway.  
Regarding  health and safety at work , some progress has been made in the legislative area. In 
March 2008 the Council of Mini sters adopted a decision on the determination of dangerous 
substances. A working group has been set up to  draft the national st rategy for health and 
safety at work. The staff of the State Labour  Inspectorate was increased from 130 to 167 and 
12 regional directorates have now been establ ished, although they lack adequate physical 
resources. The Directorate for Health and Safe ty at Work was reorga nised and strengthened, 
but it does not have adequate cap acity to assess rights at work and its technical resources are 
poor. The Gerdec incident in Ma rch 2008 illustrates Albania’s shortcomings on occupational 
health and safety at work and the need for enhanced cooperation between the labour 
inspectorate and the tax administration. 
Social dialogue  is still at a developing stage, and the position of trade unions and employers’ 
organisations alike remains weak. (See also political section – human rights and the 
protection of minorities.)  
The social protection a nd social inclusion  strategy for 2008-2013 was adopted. It aims at 
reforming the economic assistance scheme for poor families and cash payments for groups in need, setting up community social services, pr otecting children and ensu ring social inclusion 
of minorities, the disabled a nd the elderly. The 2008 budget provi des for 1.3% of the GDP to 
support the poor and vulnerable. Improvements in  the method of determination of the number 
of poor families have already resulted in an in crease in the economic assistance provided. The 
strategy also provides for decentralisation of  services to local government. 43 community-
based services and 29 residentia l services for the disabled a nd elderly came into operation 
during 2007. The Inspectorate of Social Services has been set up to supervise, at central and 
local levels, the implementation of standards a pplicable to social care services. However, 
analyses of poverty and social exclusion are no t sufficiently developed,  including enhanced 
poverty monitoring. ( See also political criteria - economic and social rights.)   
Efforts have been made to improve the financia l sustainability of the so cial insurance scheme. 
Procedures for pensions and social insuranc e have been improved. Work has started on a 
centralised digital social security archive whic h will allow electronic re gistration of individual 
accounts and contributors and payment of benefits.  
Overall, preparations in the areas of em ployment and social policies are advancing 
moderately. ( See also human rights and the protection of minorities section on social 
inclusion, anti-discrimination and equal opportunities. )  
There has been some progress in the area of public health policy . The national strategy for 
development and integration includes a number of  public health-related activities. Albania has 
approximated some of its legislative framewor k to the EU standards by approving legislation 
on blood transfusions A training plan for school teachers has been prepared and structures 
have been established for tobacco control. However, implementation of the new legislation on blood transfusions is still outstanding and the implementation of the Law on health protection 
against tobacco products is generally poor. The Law on health care has not yet been adopted. 
Overall, administrative capacity in the field of  public health remains weak and inequalities 
persist in rural areas. Preparations in  this area are not very advanced. ( See also political 
section on mental health. ) 
EN 34   EN 4.1.9.  Education and research 
Some progress can be reported in the area of education . The education budget for 2008 was 
increased by 12% in comparison with the previ ous year. According to the plans, this trend 
will continue over the period 2009-2011. Salaries for pre-university teachers were raised and 
further increases of teachers’ salari es are planned in the years ahead. 
The National Council of Pre-University Educa tion was set up, including  independent experts 
and representatives from the national and local administrations. It aims  at providing advice on 
national programmes and strategies, curriculum  reform, budgets and evaluation standards. 
Implementation of the scheme on final and entr y exams for universities (“State matura”) is 
continuing and participation by disabled students in the scheme is being facilitated.  A new 
digital central system for unive rsity admissions has been established and career counselling 
for higher education applicants has been introduced. Programmes to develop teachers’ 
professional qualifications have continued. Legi slation to liberalise the textbook market has 
been approved. A scheme for subsidising purch ases of textbooks was introduced for students 
from vulnerable groups and families receiving social assistance.  
Work on development of the Albanian qualifi cations framework has continued. Parliament 
approved an extension of the duration of  compulsory education from eight to nine years. A 
master plan has been prepared for implementa tion of an e-school programme to enhance use 
of information technologies in schools. The government is taking measures to increase 
enrolment in secondary education. Efforts are al so being made to make vocational education 
and training (VET) more attrac tive and to involve potential em ployers in the preparation of 
programmes. An excellence fund provided funding for 25 students in 2007.  
However, enrolment in secondary education in rural areas is still lagging behind. Continued 
efforts are required on vocational training. Poor VET infrastructu re is hampering development 
of this sector. Efforts are needed to cons olidate and expand the network of vocational 
education centres and to fost er closer links between edu cation and the labour market. 
The National Tempus Office (NTO) has improve d its monitoring capacity and its cooperation 
with the Ministry of Educati on and Science. However, furthe r efforts by the NTO are required 
to increase participation in the programme by improving the quality of the projects submitted 
by Albanian universities. Prepar ations in the field of education are advancing moderately.  
There has been some pr ogress in the area of research . Since January 2008, Albania 
participates in the Seventh EC Framewor k Programme on research and technological 
development (FP7) as an associated country  and has taken measures to increase its 
participation in FP7. However, successful participation by Albania in FP7 will imply 
enhancing both administrative capacity and na tional research capacity, including investment 
in research infrastructure and incentives to attr act students to science. Efforts are also required 
to increase cooperation with ot her internationa l partners.  
A mid-term budgetary plan for scientific  research for the period 2009-2011 has been 
approved, marking an annual incr ease of 35% in the nationa l budget for research. The budget 
for research and development doubled in 2008. However, its share of the total budget (0.16%) is still very low.  
Albania has started to redesign its research po licy. Improvement of the links between research 
institutes and universities is being addressed. The Fundex and Brain Gain programmes were 
launched with the aim of encouraging young Albani an researchers working abroad to return. 
EN 35   EN Establishment of a centre for promotion and implementation of international and national 
research cooperation programmes is being considered. Albania’s national Euraxess mobility portal and network need to be integrated with the Eu ropean Euraxess service. 
Overall, preparations in the area of  research are advancing moderately. 
4.1.10.  WTO issues 
Albania is continuing to impl ement its relevant WTO obligati ons. The Directorate for Trade 
Policy in the Ministry of Economy, Trade and Energy acts as the secretariat for WTO issues 
via its section on WTO relations and ec onomic cooperation. Albania is working on 
identification of training needs to enhan ce its trade policy-making capacity. The WTO 
concluded successfully the assessment of th e EC-Albania Interim Agreement. Albania 
participated actively in this process. 
4.2. Sectoral Policies 
4.2.1.  Industry and SMEs 
There has been progress in th e field of industry and SMEs. As from June 2008, Albania is 
taking part in the entrepreneurship and innovation pillar of the Competitiveness and Innovation Programme. Progress has been made in implementing the European Charter for 
Small Enterprises. The National Registration Ce ntre for Business (NRC) can register a new 
business in a single day. The number of step s required for registeri ng a business has been 
reduced and registration costs are now approxima tely 1 Euro. The NRC increased its staff and 
has 19 operational windows in different municipalities. There are plans to open 12 additional windows and to enhance co-opera tion between the NRC and the chambers of commerce and 
industry. However, further efforts are required to strengthen th e capacity in the NRC branches 
of the municipalities.  
Licensing procedures are being reviewed and simplified. Licensing requirements have been 
reduced. 64 of the 151 licences identified in 18 sectors of the economy were removed and 
another 21 licences were changed into self-decla ration. Work is in progress to identify other 
licences that could be removed. However, li censing and post-registration processes require 
further simplification and the re moval of licences needs to be  accompanied by a strengthening 
of the supervision capacities of public agenci es in order to guarantee the standards that 
safeguard consumer rights.  
An online commercial register was establis hed, the law on e-signature was approved and a 
start was made on implementing e-procurement. The fiscal burden on enterprises was reduced 
in January 2008 by the lowering of the profit ta x from 20% to 10%. Businesses can file their 
tax returns and social c ontributions declarations electronic ally in 12 cities including Tirana. 
Electronic payment of taxes is also possibl e through certain banks. A new law on companies 
was adopted in April 2008 following the appr oval of the new SME strategy in 2007. The 
Bankruptcy law was adopted, providing a more e fficient framework for market exit. The Law 
on Chambers of Commerce and Industry was am ended to remove the mandatory requirement 
for companies to register with the Chamber. The Business Advisory Council has been active in representing business interests. Howeve r, participation by business and corporate 
associations in legislative processes could be enhanced. 
The government approved the establishment of  six industrial parks. In addition, the 
competitiveness fund and the export credit gua rantee fund are being implemented. The law on 
EN 36   EN leasing has been amended. In June 2008 the go vernment approved the regulatory framework 
for the implementation of a € 30 million credit f acility agreed between Albania and Italy. Its 
Project Management Office has been establishe d. However, further efforts are required in 
order to improve the competitiveness of the SME sector. 
Overall, Albania has taken steps to significa ntly improve the business environment. The 
regulatory framework is now more conducive to  operating a business. However, further 
efforts are needed on contract enforcement and property rights, as well as on the effectiveness 
and transparency of conflict reso lution mechanisms. Preparations in the field of industry and 
SME are advancing .  
4.2.2.  Agriculture and fisheries 
Some progress has been made in the area of agriculture and rural development . The Law 
on Agriculture and Rural Development was a dopted, thereby providing the legal basis for 
agricultural and rural development policy. Th e government approved the Agriculture and 
Food Sector Strategy and the cross-cutting Ru ral Development Strategy for the period 2007-
2013. A new law on food was approved which provi des support for geogra phical indications 
and for origin labelling of products. However, this law has yet to be  implemented. Direct 
support to farmers continued and was further extended with the aim of encouraging the 
production and consolidation of commercial farms. It is directed at new plantations of fruit 
trees, olive trees and vineyards, livestock farms, greenhouse producti on, and drop irrigation. 
The budget for 2008 is about € 7 million.  
The extension services were reinforced. The Agricultural Information Centres received 
equipment and increased their publication activit ies and media presence.  Cooperation with the 
Agricultural Technology Transf er Centres has resulted in 25 on-farm research projects 
involving a large number of farms, and in a wide  range of training activities. Organic farming 
was an important part of the extension programmes. 
In the field of rural development, the mana ging authority responsible  for programming rural 
development support measures and for leadi ng the monitoring and reporting process was 
established. A study on the setting up and functi oning of the payment agency provided for in 
the Law on agriculture and ru ral development was completed. The Agency is due to be 
operational in 2009. 
However, structural weaknesses such as land fragmentation, poor mark eting systems and the 
low level of technical education of farm operators  still affect the competitiveness of the sector 
and its capacity for meeting the demand for food products. Agricultural output continued to 
grow at a slower rate than the economy as a whole, and the trade deficit in agricultural and 
processed agricultural products continued to increas e. Albania is not self-sufficient, even in 
traditional products such as milk and dairy products, vegetables and meat.  
There has been limited progress in the area of food safety, veterinary and phytosanitary 
policy . The new law on food adopted in January 2008 establishes the gene ral principles for 
food and feed hygiene. The adoption of its implementing legislation has started. The 
government approved a number of regulations on the control of animal diseases; however, 
these are not in full complianc e with EU legislation. The St ate budget supported prophylactic 
measures against brucellosis, tuberculosis, anthrax, and classi cal swine fever. The government 
has taken measures to promote registration of sm all ruminants. Funds have been allocated for 
the registration of all bovines by the end of 2008. However, implementation of registration 
EN 37   EN has been delayed and only 40-45% of this targ et had been reached by the end of September 
2008.  
No progress can be reported as regards the upgrading of agri -food establishments. 
The system of controls of live bivalve molluscs still cannot be c onsidered to be equivalent to 
the Community system. Specific guarantees concerning histamine are still requested for each consignment of fish and fishery products inte nded for the EU market. Albania is developing 
its own capacity for histamine testing. Ho wever, further progress in upgrading and 
accreditation of laboratorie s is still necessary. 
There has been limited progress in the phytosanitary sector. Am endments have been adopted 
to the Law on the Plant Protection Service an d to the regulations on the registration and 
placing on the market of plant protection products . The capacity of Border  Inspection Posts in 
the veterinary and phytosanitary sectors has been strengthened by the drafting of legislation 
and by the provision of equipment and training. 
Overall, there has been some progress in im proving the legal framework on agriculture and 
rural development, food safety, veterinary and ph ytosanitary policy, but further efforts are still 
required in order to enhance the capacity of all actors involved. Pr eparations in these areas are 
advancing moderately.  
There has been some progress in the field of fisheries regarding inspection, control and 
international cooperation. Albania became a memb er of the Internati onal Commission for the 
Conservation of Atlantic Tuna. Regarding inspec tion and control, the fi nes imposed for illegal 
fisheries increased substantially. However, collection rates are poor but confiscation of 
equipment and withdrawal of licences are used as deterrents. Law enforcement and 
implementation require further attention. The dir ectorate of Fisheries Po licies in the Ministry 
of Environment, Forestry and Water Administra tion does not have inspect ion vessels. It has to 
rely on the Border Police, which does not have appropriate training fo r fisheries inspection. 
Albania is making progress towards the esta blishment of an EU-compliant log book and 
fishing fleet register. However, a landing data system is still at  an early preparatory stage. 
Preparations in the field of fi sheries are advancing moderately. 
4.2.3.  Environment 
Some progress can be reported in the area of horizontal legislation . The second part of the 
National Methodology for Environmental Impact Assessment (EIA) was approved. A sector 
strategy for the environment was also appr oved. The National Environmental Law was 
amended and the government approved a Decisi on on public involvement in environmental 
decision making. However, implementation of the EIA legislation needs to be improved. With 
regard to climate change, some efforts can be noted, in particular c oncerning the development 
of the Clean Development Mechanism (CDM). So me activities have been carried out in the 
field of civil protection. 
Limited progress can be reported on air quality i n urban areas. Additional monitoring 
equipment was provided and contracts were sign ed for air quality monitoring. Emissions from 
the vehicle fleet and from large industries have been slightly reduced. However, there is no 
clear long-term policy on how to abate the air pollution and reduce emissions from these two 
sources. Enforcement of existing legislation on  vehicle emissions and fuel quality is weak. 
Albania is only at an early stage in terms of the monito ring of air quality. 
EN 38   EN There has been little progress in the area of waste management . The government adopted 
some implementing regulations. Apart from the reha bilitation of the Sharra landfill there have 
been no developments as regards municipal waste management. Uncontrolled dumping and 
burning of waste still represent environmental and health hazards . Work is in progress on the 
rehabilitation of toxic hotspot s, in particular for the Coppe r Smelter in Rubik, the Nitrate 
Fertilizer Plant in Fier, the Chemical Plant in Durres and the Ballshi oil refinery. A project for 
the identification and assessmen t of environmental hot spots has started. However, Albania 
lacks a modern system of waste collection, disp osal and recycling, and has not set up a clear 
strategy for the safe disposal of hazardous wa ste. Preparations in the field of waste 
management are not advanced. 
There has been some progress in the field of water quality.  The number of drinking water 
monitoring stations has increased substantially and the level of access to water supply systems 
has improved slightly. However, surface waters are severely affected by urban and industrial 
pollution. Water supply and sanitation systems remain outdated. There is only one waste 
water treatment plant in the count ry, but it is not yet operational. Four others are in the final 
stages of construction. Pollution of bathing wate rs remains a serious problem in some places 
due to direct discharges from sewerage sy stems or from industry. A National Strategy for 
Water supply and Sewerage has not yet been approved. Preparations  in this field are 
moderately advanced. 
There has been some progress in the area of nature protection.  The Habitats Directive has 
been further transposed and a law for impl ementation of the CITES Convention has been 
adopted. Protected areas now account for 11.4% of  the national territory. However, additional 
training and adequate resources need to be provided to the staff operating in these areas. 
Approximation to the Wild Birds and Habitats directives needs to continue. Efforts are still required to meet Albania's commitments on environment under the Energy Community 
Treaty. Preparations in this fi eld are moderately advanced. 
Some progress can be reported on industrial pollution and  risk management. The law on 
environmental protection has been amended to ensure transposition of some provisions in 
these areas. 
There are no developments to report on chemicals  and genetically modified organisms . 
Legislation has been adopted on evalua tion and management of environmental noise  and on 
maximum levels of noise  in certain environments. Preparations in this field are still at an early 
stage. 
Further efforts are required to strengthen the administrative capacity  of all institutions 
involved in environmental policy making and enforcement.  Inter-institutional cooperation and 
coordination still needs improving. The Nationa l Environmental Strategy has not yet been 
approved. Further efforts are needed towards ra tification and implementation of international 
conventions.  
Overall approximation of  legislation to the acquis  is making slow progress, but 
implementation and enforcement are still lagging be hind. Preparations in the field of the 
environment are advancing slowly.  
EN 39   EN 4.2.4.  Transport policy 
There has been some pr ogress in the area of trans-European transport networks . Albania 
continued to participate actively in the impl ementation of the Memorandum of Understanding 
signed in 2004 for the development of the Core  Regional Transport Network, and in the South 
East Europe Transport Observatory (SEETO) by up-dating and implementing the multi-annual plan 2008-2012. Work has con tinued on corridor VIII projects  as well as on the north-
south axis roads. The Durres-Kukes-Morine road remains one of Albania's priorities. 
The government has set up the Institute of Transport as a service unit to th e Ministry of Public 
Works, Transport and Telecommunications. The In stitute will be respons ible for maintaining 
and updating the Albanian National Transport Pl an (ANTP) and establishing and maintaining 
a central Transport Data Base for all modes of  transport in Albania. The National Transport 
Strategy was adopted in August 2008. 
There has been some progress as regards road transport . The admission to the occupation of 
road passenger and goods transport operator and the recognition of documents required for the 
activity was regulated by new legislation. Al bania is granting unres tricted access through its 
territory to Community transit traffic in line with the Interim Agreement. However, further 
simplification of freight transport traffic by road  is still required, for both international and 
transit traffic. 
The reorganisation of the General Roads Direct orate (GRD) into an agency contracting out 
road construction and maintenance to private firms is underway. The Reform Implementation 
Team was established in May 2008 and the Ma nagement Unit was established in July 2008. 
Work is in progress on the review of nece ssary legislation, and on the financial and 
organisational requirements. The GRD has star ted work on the establishment of the Road 
Asset Management System and has introduced pe rformance-based maintenance contracts in a 
number of Regional Roads Directorates. Th e budget for road signalling was increased. 
However, sustained efforts are still needed in order to improve the quality of road 
maintenance. Poor condition of roads, together with defective signalling, illega l constructions 
along new roads and limited level of education of  drivers, continue to pose a serious problem 
to road safety. Preparations in the fiel d of road transport are advancing slowly. 
Progress has been very limited  in the  rail transport sector. In December 2007, Albania 
signed the "Addendum to the Memorandum of Understanding on the Development of the 
South East Europe Core Regi onal Transport Network for a S outh East European Railway 
Transport Area", aimed at the gradual market  opening of the rail tr ansport market. From 
January 2008 the reorganization of Albanian railways became effective. The aim of the 
reorganisation is to separate pa ssenger, freight, infrastructure and services branches into 
individual business units. However, the busines s plan for the Albanian railways has not yet 
been adopted. Preparations in the ra il transport sector are lagging behind. 
Progress in the area of maritime transport  has been limited . The parliament adopted 
legislation on the accession to the Internationa l Convention for the control and management 
of ballast water of vessels. Legislation aime d towards membership to the Paris Memorandum 
of Understanding on Port State Control was also approved. 
The updating of the Master Plan for the Port of  Durres was finalised in July. Work has begun 
on the establishment of a new Maritime Administ ration. However, substantial efforts are still 
required in order to improve maritime safety. Al bania's very high rate of detention for vessels 
EN 40   EN that are considered substandard, pursuant to  the Paris Memorandum of Understanding, 
remains critical. The June 2008 black list of the Paris MoU still rates the Albanian flag as 
very high risk and the performance of the Albani an Register of shipping is assessed as low. 
Preparations in the field of maritime transport are at a very early stage. 
No progress can be reported on combined transport . 
There has been further pr ogress in the field of air transport . The draft new Air Code was 
completed. Its alignment with the acquis , in line with Albania's commitments under the 
European Common Aviation Agr eement (ECAA), has not yet been confirmed. Work is in 
progress on the implementation of the first tran sitional phase of the ECAA. However, there 
have been delays in implementing the corre ctive action plan appr oved in August 2007 to 
address the deficiencies identified within Albania's Civil Aviation Authority (CAA) as regards safety oversight of the country's airlines. Efforts are st ill required to strengthen the 
administrative capacity of the CAA, as its ne w organisational structure has not yet been 
finalised. Preparations in the field of air transport are advancing moderately. 
4.2.5.  Energy 
Some progress has been made as regards oil stocks . The government amended the Decision 
"On the maintenance and managing of the emergency oil stocks". These stocks are now based 
on 60 days' average consumption instead of on 30 days. However, mechanisms need to be put 
in place to properly mon itor their establishment. 
Activities to improve the security of energy supply have continued. Construction of the Vlora 
thermal power plant is in progress. Alba nia has signed 25 concession agreements for 
construction of small hydro-power plants, a nd a further 87 proposal s are under evaluation. 
Preparations are underway for the signature of  a concession agreement for the rehabilitation 
of the thermal power plant in Fier. Work started on the interconn ection line Elbasan–
Podgorica and on the National Disp atch centre. However, Albani a has continued to be unable 
to ensure security of electricity supply.  The country is overly dependent on hydro-electric 
plants, and its own generation resources are no t sufficient to meet domestic demand. Limited 
interconnection capacity conti nues to hinder Albania's capacity to import electricity. 
There has been some progress in the field of the internal energy market. A law on the gas 
sector was adopted in June 2008 . The government approved the electricity market model and 
the Energy Regulatory Authority (ERE) revised a nd approved the market rules, in order to 
ensure the necessary framework for the openi ng and the functioning of the wholesale and 
retail market. As from January 2008 all non-do mestic consumers became  eligible consumers 
and were granted the right to c hoose their own supplie rs in line with the requirements of the 
Energy Community Treaty. However, all customer s except one have chosen to remain as 
tariff customers in 2008. A monito ring structure was established within the ERE to allow the 
implementation of its market monitoring respons ibilities. Most licen sing and authorisation 
review procedures are now in place. Howeve r, ERE needs to increase its decision making 
capacities and ensure transparency of the decision making process. The process of 
restructuring the electricity company KESH c ontinued. The Transmission System Operator is 
unbundled and has drawn up its financial statemen ts. Legislation establishing the Distribution 
System Operator as an independent entity was approved and the process fo r its privatisation is 
ongoing. 
EN 41   EN Electricity tariffs were increased by an average of 15 % in March in an effort to bring them 
closer to cost recovery levels. Technical lo sses were reduced and bill collection increased. 
However, further efforts are still necessary in  these areas. Large power  imports continued to 
impair the financial situation of KESH. The revised National En ergy Strategy has not yet been 
adopted. 
There has been no progress on the implementation of the energy efficiency  law of 2005. 
There has been some progress in the hydroelect ric sector, but the development and use of 
other renewable energy  sources remains at an early stage. 
There has been limited progress in the field of nuclear safety and radiation protection . The 
regulatory framework includes the Radiati on Protection Commissi on and the Radiation 
Protection Office as regulatory and executive bodies respectively. The government approved 
legislation on the import of radiological  instruments and radioactive sources. 
However, the independence and capacities of the regulatory bodies re quire strengthening. 
Efforts need to continue to ensure comp liance with Euratom Treaty requirements and 
procedures, in particular as regards the environmental monito ring and radiation protection in 
the context of medical and indus trial applications. Albania ha s not yet signed the Convention 
on Nuclear Safety and the Join t Convention on the Safety of Spent Fuel Management and on 
the Safety of Radioactive Waste Management . Proper attention should be given to the 
prevention of illicit trafficking of nuclear and other radioactive materials. 
Overall, preparations are advancing as regard s the reform of the internal energy market. 
However, weaknesses in the electricity sector  continue to hinder economic growth and the 
social development of the country. Efforts need  to continue on restru cturing the electricity 
company KESH and stabilising its financial situa tion, as well as on the se curity of electricity 
supply, which are key European partnership priorities.  
4.2.6.  Information society and media 
There has been some progress in the area of electronic communications and information 
technologies . The new primary legislation on el ectronic communications, aimed at 
transposing the 2002/2003 EU re gulatory framework, entered into force in June 2008. In 
December 2007 a regulation on access and interconnection was approved and the incumbent land line operator amended the interconnection ag reements with the rural operators. Based on 
the new primary law, a tariff me thodology addressing the tariffs of  the three larg est operators 
(fixed and mobile) at both wholesale and reta il level was approved in June 2008. It started to 
be applied on 1 September, leading to ove rall tariff reductions. A third mobile telephony 
operator became operational in March 2008 and the telecommunications regulatory entity carried out a public call for expressions of interest for a fourth operator. 
However, an electronic communications st rategy and related policy documents, and 
secondary legislation for the implementation of the new law on electronic communications 
have not yet been adopted. Market liberalisatio n and competition are still at an early stage. 
Overall, there is lack of competition safegua rds such as tariff rebalancing, good reference 
interconnection offers, carrier selection and pr e-selection, number porta bility and local loop 
unbundling. The legislative amendm ent of 2006 allowing operato rs to apply for urban and 
regional licences in addition to the rural and national licences did not have the expected 
impact in 2007. 
EN 42   EN There is insufficient administrative capacity in the Ministry of Transport, Public Works and 
Telecommunications and in the Agency for Electronic and Postal Communications AEPC (the former Telecommunications Regulatory Ent ity or TRE). The agency needs to develop the 
necessary expertise for implementing and enforci ng the new legislation. Ov erall, preparations 
in the area of electronic communications are advancing moderately. 
There has been some progress as regards information society  services . The National Agency 
on Information Society (NAIS) became operatio nal in September 2007. Its main objective is 
the co-ordination of a ll activities in the fiel d of information and communications technology, 
and currently it has a staff of 20. The law on e-signature was adopted in February 2008. 
However, the implementing legislation for the la w on e-signature, and fo r data protection, as 
well as legislation on e-commerce and e-documen ts, has not yet been finalised. The national 
strategy for information society is still in preparation and there has been no progress as 
regards legislation on conditional access. Prepar ations in the area of information society 
services are at an early stage. 
There has been progress as regards audiovisual policy . The strategy for the transition to 
digital broadcasting is being draf ted in cooperation with internat ional bodies and the relevant 
actors. The National Council of Radio and Te levision (NCRT) adopted regulations on the 
licensing of digital broadcasting and on the crit eria for granting licences for terrestrial and 
analogue television broadcasting at national level. The Final Acts of the Regional Radio 
Communication Conference for the planning of the digital terrestrial broadcasting service in 
parts of regions 1 and 3 in the freque ncy bands 174-230MHz a nd 470-862 MHz (RRC-06) 
were ratified, as were the Final Acts of the Regional Radio Communication Conference for 
the revision of the 1961 Stockholm Agreement. 
The NCRT enhanced its administrative capacity and increased its staff. It transformed its 
Complaints Council into an Ethics Council. The Ethics Council has played a positive role in self-regulation, encouraging the drafting of a code  of ethics by each ra dio and TV operator, 
with the aim of unifying these codes into a single code.
 However, the NCRT's monitoring 
capacity is limited by its insufficient technical re sources. Overall, preparations in the field of 
audiovisual policy are advancing, but work on the Action Plan on media reform agreed with 
the European Commission and the Council of Europe needs to be stepped up. ( See also 
political section) . 
4.2.7.  Financial control 
There has been modest progress in the area of Public Internal Financial Control  (PIFC). A 
new draft Organic Budget Law was adopted by Parliament in June 2008. It introduces 
framework provisions on PIFC and its compone nts – namely financial management and 
control (FMC), internal audit and a central  harmonisation function. It also includes an 
undertaking to issue a separate law on FMC and an Inspection Law in the coming period. 
Hence, the Internal Audit Law adopted in 2007 will need to be amended in order to make it 
consistent with the overall PIFC legal fram ework. A Central Harmonisation Unit for FMC 
was established in July 2008 as a Directorate with in the Treasury. Its director and one of its 
three other staff member s have been appointed. 
The 2005 PIFC Policy Paper and its Action Plan  have not yet been updated. Managerial 
accountability and subsequent development of Financial Management and Control systems 
are still at an embryonic stage. Decentralised internal audit units  have been established in all 
ministries and in some government agencies, bu t they continue to perform mainly inspection 
EN 43   EN and control tasks and their lines of reporting are not clear. Managers' awareness of PIFC 
continues to be limited. 
As regards external audit , the operational independence of the Supreme Audit Institution 
(SAI) has been enhanced, with the Budget Committee of the Parlia ment having the sole right 
to approve its budget. However, the SAI law is  still not fully in line with the INTOSAI 
standards and will need amending, especially as regards the criteria for dismissal of the Chairman and the remit and scope of audit. There has been limited pr ogress in moving away 
from inspection activities towards financial and systems-based audits. The Development 
Strategy for 2009-2013 still needs to be formulated so as to strengthen the institution and its 
audit performance. 
Overall, preparations in the area of financial control are advancing slowly. 
4.2.8.  Statistics 
There has been progress in statistical infrastructure . The budget of the Al banian statistical 
office (INSTAT) was increased, its salary scales were upgraded and additional staff have been 
recruited. Working conditions at INSTAT headquarters improve d. Offices were renovated and 
the IT infrastructure was upgraded. A new or ganisational structure for INSTAT has been 
prepared and provides for a reduction in the nu mber of regional offices by merging district 
offices at the level of prefectures. The mu lti-annual statistical programme 2007 – 2011 was 
adopted by the Parliament . The Bank of Albania and INSTAT signed a cooperation 
agreement with the view to improving mone tary and financial statistics. However, 
cooperation agreements should also be signe d with other producers of statistics. 
Some progress has been made in classifications and registers. Most major statistical 
classifications are in place and comply with EU standards. However, a classification of 
statistical regions comparable to the NUTS level 2 classification is not yet established. The quality of the statistical business re gister still needs to be improved. 
Noticeable progress has been made in some key sectoral statistics . Concerning demographic 
and social statistics, the results of the household budget survey and the labour force survey 
2007 have become available. The population ce nsus is scheduled for 2011 and INSTAT has 
initiated preparatory activities. However, meas ures are still required in order to ensure 
comprehensive registration of all demographic events. 
Efforts are needed to improve statistics on regional level in order to satisfy new demands 
generated by the on-going decentralisation process. In  the field of regional statistics, data are 
collected mainly from administrative sources and only at county level. As regards macro-
economic statistics, quarterly national account s have been prepared from 2005, but further 
work is needed to fully align the national accoun ts with ESA 95. 
The coverage of business statistics has been improved since the beginning of 2008. 
Concerning agricultural statistics, the prep aration of a census on ag riculture has started. 
However, efforts are required to ensure that agriculture statistics comply with EU standards, and cooperation between INSTAT and the Minist ry of Agriculture needs to be enhanced. 
Overall, there has been progre ss in the field of st atistics. Preparations  are advancing, but 
further improvements are still necessary in key areas, such as macro-economic, regional, 
business and agricultural statistics. 
EN 44   EN 4.3. Justice, freedom and security 
4.3.1.  Visa, border, control, asylum and migration 
There has been some progr ess with management of visas.  Preparations for a reliable civil 
registry and a uniform address system are making headway. Computerisation of the civil 
registry data has been completed. In September,  civil registry offices started issuing printed 
certificates. In July 2008, a comp any was awarded the contract for production and distribution 
of ID cards and biometric passports. Completion of the civil registry and address system is 
vital as a source of data fo r ID cards and to ensure adequate document security. 
The EC-Albania visa facilitation agreement en tered into force in January 2008. The dialogue 
on visa liberalisation between the EU and Alba nia was launched and a roadmap, specifying 
the measures to be taken, was presented to Albania in June 2008. Albania delivered a first 
report on implementation of th e roadmap in September 2008. 
Albania operates a visa-free regime for all EU Me mber States. It signed a visa-free agreement 
with the former Yugoslav Republic of Macedon ia in February 2008. Currently, the positive 
and negative lists are not fully harmonised with  the EU visa list, but preparations are 
underway. 
The Law on Foreigners, adopted in July 2008, incl udes amended rules for issuing visas at the 
border. For residence permits of  over three months, a visa will also be required when the law 
enters into force in December 2008. For now, vi sas issued at the border are limited either to 
humanitarian reasons or to tourist visas mainly  for Latin American countries which are on the 
EU positive list. Initial steps have been taken to set up a national visa centre. Overall, Albania 
has continued to make moderate  progress on visa management. 
Albania has made progr ess in the field of border control . The new Law on State Border 
Control was approved in January 2008. The Al banian State Police (ASP) has prepared a 
progress report on implementation of the Nati onal Integrated Border Management (IBM) 
Strategy and the associated Action Plan. Implementation of the IBM objectives for 2008 is 
ongoing and advancing moderately, particularly as regards IT aspects of border crossing 
points and infrastructure. However, despite impr ovements, further investments are required to 
improve the infrastructure at border crossi ng points (BCP). 15 of the 26 border crossing 
points have been linked electronically via the Total Information Management System (TIMS) 
and equipped with the relevant facilities. Seve ral cross-border meetings  were held between 
the border police of Albania and the former  Yugoslav Republic of Macedonia, Greece and 
Montenegro. Local border police officers cooperate  with their counterparts across the border. 
Staffing levels in the border police force remain low. The existing bilateral agreements on police cooperation provide a s ound legal basis for cross-borde r cooperation. However, cross-
border cooperation needs furthe r improvement and institutiona lisation. Negotiations to set up 
a working arrangement with FRONTEX have started. 
Construction of the Murriqan joint border crossing point (JBCP) with Montenegro was 
launched in May 2008. C onstruction of a joint BCP with the former Yugoslav Republic of 
Macedonia has started at Xhepisht Trebishtit. 
Specialised training has been given to 446 mid-ranking and seni or border guards. A broader 
longer-term training policy, aiming at building capacity to detect falsified documents, illegal 
migrants or victims of traffick ing, has yet to be implemented. 
EN 45   EN The Law on the Coast Guard, adopted in 2007, includes separation of tasks between the 
border police and the coast guard  and is being implemented, al beit slowly. Civilian command 
of the coast guard, in line with Ohrid commitments, is st ill pending. A joint operations centre 
to coordinate sea operations has not yet been  established. The administrative and operational 
capacity of the coast guard remains weak. E quipment to patrol the blue border needs 
upgrading. Specialised training and closer coordination be tween the border police and 
customs authorities are needed. 
Overall, Albania continues partially to meet its  objectives in the field of border control, but 
the human resources remain insufficient to carry out these tasks efficiently. 
There is limited progress to report on asylum  issues. An efficient asylum system is not in 
place. The review of the legal framework for approximation to EU Standards has not been 
completed. Since January 2008, eight persons have requested asylum in Albania. One of them 
has been granted temporary asylum on humanitarian grounds. 
Financial and human resources at the Depart ment for Citizenship and Refugees are not 
sufficient to fulfil the obligations  under the 1951 Conven tion relating to the st atus of refugees, 
particularly for implementation of the pre-sc reening system. Coordi nation with the border 
police is weak. Asylum procedures at recepti on centres are not applied in a standardised 
manner. The infrastructure needs upgrading. 
A more effective data management system fo r asylum and migration is required; more 
resources need to be provided to establish a migrant registry and for mapping Albanian 
migrants abroad. The Total Information Manage ment System (TIMS) introduced at 15 border 
crossing points needs to be turned into an e ffective tool for data collection and management. 
Overall, Albania continues partially to m eet its targets in the field of asylum. 
Some progress can be reported in the area of migration . In May 2008, the Ministry of Labour 
and Social Affairs (MLSA) established a Coordination and Monitoring Plan for 
implementation of the National Strategy on Migr ation, including the a ssociated Action Plan. 
The Ministry is actively coordi nating implementation of the st rategy, but the inter-ministerial 
coordination mechanism has not been established yet. Preparations for implementation of the 
migration strategy are proceeding, albeit slowly. 
Seasonal peaks of illegal migration remain problematic, especially  on the border between 
Albania and Greece, owing to the high demand fo r seasonal agricultural work. This border is 
the most critical entrance point for illegal immi grants to the EU from Albania. In the first 
eight months of 2008, a total of  9,382 persons were apprehe nded at the border, up from 5,955 
for the whole of 2007. Although no cases of illegal  migrants across blue borders have been 
reported, there is still a need to strengthen  border surveillance by  providing adequate 
infrastructure. 
Detection of illegal migration has improved due to the enhanced detection capability of the 
border police. Figures for the fi rst half of 2008 show higher refusal rates for entry into 
Albania. Detection of falsified foreign passports  in the first half of 2008 already equals the 
total figure reported in 2007. 
The Department for Border Police and Migr ation is upgrading reception and processing 
facilities for illegal migrants at several of the main border crossing points. However, facilities 
EN 46   EN overall are poor. Cooperation with  neighbouring countries on illeg al migration needs to be 
enhanced. 
In January 2008, new regional dire ctorates were established with in the border and migration 
police. The border police consists of eight regional directorates  and 34 border police stations, 
12 of which serve as readmission points. A Return and Readmission Unit was established within the Department for Border Police and Migration. However, human resource allocations remain inadequate, especially during peak seasonal inflows. 
Albania signed protocols implementing the EC -Albania readmission agreement with Austria 
and the Benelux countries and draft prot ocols with Greece and the Czech Republic. 
Negotiations are underway for renewing the read mission protocol with Italy and for signing 
protocols with France, Slovenia and Slovakia. Border and migration police staff cuts could 
limit Albania's capacity to meet its obligations under the readmission agreement. 
Albania has signed readmission agreements with  Croatia and the former Yugoslav Republic 
of Macedonia. The provisions in the EC-A lbania readmission agreement concerning 
readmission of third-country nationals entered into force in May 2008. The other parts of the 
agreement had entered into force on 1 May 2006. A closed reception centre is under 
construction, but accommodation of third-country nationals remains inadequate. 
Overall, illegal migration remains a significan t problem, especially at  the Albanian–Greek 
green border. Albania continues partially to meet its target s in the field of migration. 
4.3.2.  Money laundering 
Limited progress has been made in the fight against money laundering , which continues to 
be a major problem. Albania's economy, particular ly the private sector, remains largely cash-
based. In terms of mechanisms to control cas h transactions, there is no strategy in place. 
The Law on money laundering and financing of terrorism was adopted in May 2008, but by-
laws to implement it are pending. In 2008, severa l regulations were adopted on the handling 
of confiscated assets. Training courses were organised for banks  and notaries. Thresholds for 
reporting of transactions were lowered and ar e now in line with international standards. 
Although the law incorporates internationa l instruments, such as the MoneyVal 
recommendations, it is still not fully aligned with the acquis . Better definition of concepts and 
implementation guidelines are needed.  
A national strategy to prevent and fight agains t money laundering and fi nancing of terrorism 
has not yet been adopted. 
The General-Directorate for the Prevention of  Money Laundering, (Financial Intelligence 
Unit - FIU), under the Ministry of Finance, is responsible for collection, analysis and dissemination of financial intelligence. Prem ises and equipment levels have improved. 
However, the FIU's capacity remains limited. Staff turnover remains a concern. Coordination and cooperation with the Prosecuto r's Office remains problematic.  
A new office to combat money laundering, with in the State police, became operational in 
January 2008. However, the link between criminal intelligence and investigations remains weak. The lack of coordination between the judiciary and the polic e also results in 
unprocessed intelligence, which is subsequent ly lost. The investigative and enforcement 
capacity of the police and the Pr osecutor General remain weak. 
EN 47   EN Under the Prosecutor General, a task force has been established. The Joint Investigation Unit 
for the Fight against Economic Crime and Corru ption (JIU) is now opera tional. However, the 
administrative capacity of the JI U requires further strengthening.  
Progress can be reported as regards unregiste red currency exchanges. The Bank of Albania 
approved new regulations on licensing and supe rvision of foreign exchange offices. The 
number of officially licensed foreign exchange  offices increased significantly. Controls at 
border crossing points have also been tightened up.  
Overall, preparations in the fight agains t money laundering are at an early stage. 
4.3.3.  Drugs 
There has been limited progress in the fight against drugs, but drug trafficking remains a 
serious concern.  
A National Strategy against Drugs for the peri od 2004–2010 is in place, but implementation is 
hampered by the scant human and financial re sources allocated. The administrative capacity 
to implement the strategy needs to be further developed. 
Some progress can be reported in the form of the signature, in November 2007, of Joint 
Orders on the prevention of drug use in scho ols and universities and on the handling of 
narcotics. The Ministry of the In terior's order against the cultiv ation of narcotics entered into 
force in early 2008. The authorities initiated some 2,000 drug-related prosecutions in 2007. 
To date, there has been no coherent and va lid strategy for drug de mand reduction and the 
availability of the services provided - includi ng treatment and prevention - remains limited. 
Drug-related prosecutions have increased. Larg e amounts of cocaine a nd cannabis have been 
confiscated. By contrast, seizures of heroin at border crossing point s have fallen by roughly 
50%.  
The government continues to make use of join t counter-narcotic task forces, which include 
representatives of the Ministry of the Interior, the border police, the tax police, the road police 
and the customs authorities. Inter-agency cooperation has improved and international 
cooperation in the field of count er-narcotics continued. Additiona l emphasis should be placed 
on the training of counter-narcotics personnel. 
In 2008, a new central storage facility for seized  drugs and a new centre for the destruction of 
drugs were built. However, the procedures for storing, analysing and destroying seized drugs 
lack transparency. 
On the production side, an action plan to fight cultivation of narcotic plants was approved in 
March 2008. Over the reporting period, cultivati on of cannabis has been further reduced. 
However, Albania remains a source country for cannabis. There is no government crop-
substitution programme.  
Overall, Albania is making moderate progress in the fight against drugs. 
4.3.4.  Police 
There has been continued progress in management of the State police , with the entry into 
force in 2008 of the new State Police Law. Ot her areas in which progress has been made 
EN 48   EN include border and port security, training reforms and establishm ent of border control 
information systems, such as databases and passport and fingerprint control IT systems. However, unclear lines of responsibility and poor accountability among the relevant bodies 
remain causes for concern.  
The Albanian State Police Law is having a positive effect on the behaviour of police 
managers, on recruitment and on car eer structures for officers. Th e internal control structures 
are being developed. However, staffing levels at  the Albanian State Police (ASP) are not yet 
stabilised. The transfer of police officers on the basis of experi ence and qualifications, 
completed in June 2008, highlighted skills gaps , particularly in specialist departments. In 
addition, the practice of removing previously trained and competen t staff from their posts is 
adversely affecting the police. Another prob lem is that staff who have failed basic 
competence tests are retained within the State police training programme for up to three years. 
The overall management of police huma n resources is still unsatisfactory.  
In April 2008, a cooperation agreement was sign ed between the State police and the General 
Prosecutor (GP) to define responsibilities with  the aim of reducing any potential overlap 
during investigations. Despite a pilot scheme of  standardised case reporting forms, there has 
been little progress in establishing police case  reporting systems. Investigative capacity, both 
in the police force and at the General Prosecutor's office, remains weak. It is hampered by lack of cooperation and para llel investigative structures  inside the GP's office.  
More efforts are needed to develop reliable crime statistics. Many crimes go unreported and 
the low level of recorded offences remains unexplained. 
Albania has started implementing the strategic agreement with Europol which entered into 
force in May 2007. This provides for closer co operation and better exchange of information. 
Europol and Albania are also working on c onclusion of an operational agreement for 
exchanges of personal data. Albania ratified the South-East Europe Police Cooperation 
Convention, which entered into force in 2007. Implementation of the community policing 
strategy has started. 
Overall, preparations concerning policing are continuing to advance, but structural 
improvements need to be followed by operational results. 
4.3.5.  Fighting organised crime and terrorism 
Limited progress can be reported in the fight against organised crime , which is a key 
European Partnership priority. The national strategy for fighti ng organised crime was adopted 
in July 2008, but remains to be implemented. Organised crime continues to be a serious 
problem in Albania. 
Difficulties in cooperation between police and pr osecutors continued to hamper the fight 
against organised crime. Although cooperation between organisations has improved at high 
levels, at operational level it is still problema tic. The standardisation of case reporting will be 
the key to progress here. 
At present, there is a lack of capacity to enga ge in longer-term operations aimed at the higher 
echelons of organised crime. This problem is exacerbated by the lack of capacity for 
intelligence-led policing, which hampers such operations. There are no manuals for prosecutors giving guidance on investigations. Since Ma y 2008, police officers working 
within the judicial police units  of the Prosecutor's Office have returned to the ASP. This 
EN 49   EN should help to improve cooperation and reduce a ny overlaps. However, investigative capacity 
within the police and the General Prosecutor's Office remains weak. 
Cooperation between Interpol Tirana and othe r countries has continued, particularly at 
borders with Greece. The number of wanted Alba nians that have been traced and returned to 
Albania has increased. In the first half of 2008,  62 extraditions to Albania took place. As a 
result of international cooperati on, several criminal organisations  operating abro ad have been 
dismantled and gang leaders arrested. 
The national action plan against the trafficking of stolen vehicles was adopted in April 2008. 
Implementation is underway. However, coordi nation between the various law enforcement 
bodies remains an issue. 
Regarding police use of criminal intelligence databases, the MEMEX information servers are 
still located at the Mini stry of the Interior (MoI) and not at police headquarters. Improvements 
in the way in which the State police gathers and uses intelligence are critical in order to reap 
the full benefits of the MEMEX technology. 
There has been some progress in the fight against trafficking in human beings . However , 
much remains to be done, particularly in th e area of victim protect ion and identification. 
Albania continues to be a sour ce country for human trafficki ng, particularly of women and 
girls for sexual exploitation. Children are also trafficked for begging and other forms of child 
labour. Approximately half of all Albanian trafficking victims are under the age of 18. 
Internal sex trafficking of wo men and children is on the rise, particularly from the Roma 
minority . 
The Criminal Code was amended in February 2008 to strengthen the legal framework for 
criminal prosecution of trafficking in human be ings. A database on victims of trafficking has 
been installed at the Department for Border Po lice and Migration, but is not yet operational. 
The Office of the National Anti-Traffick ing Coordinator (ONAC) coordinated the 
consultation process leading to the adoption, in July 2008, of the National Strategy to Combat 
Human Trafficking and the Na tional Action Plan for 2008-2010. The strategy for protection 
of child victims of trafficking was also adopted. However, much remains to be done, particularly in terms of victim protection. More political will and better coordination are 
needed for the implementation of the anti- tra fficking strategy, particul arly regarding victim 
protection. 
The ONAC held meetings with  neighbouring countries to e nhance regional cooperation. An 
additional protocol was signed with the fo rmer Yugoslav Republic of Macedonia in 2008 
which includes referral and assisted return of  victims. Agreements have been signed with 
Montenegro, the former Yugoslav Republic of Macedonia and Kosovo on exchanges of information regarding cross- border criminal activities. 
However, the lack of reliable statistics and of a proper capacity for identifying victims is 
hampering progress. Coordinati on between NGOs and law enfo rcement bodies needs to be 
improved. Coordination and cooperation among the r ecently established stru ctures at central 
and local levels (responsible au thority and regional anti-trafficking committees) is still weak. 
The national referral mechanisms are not yet operational; there is no nationwide coverage 
(especially in remote areas) and no alternat ive protection and assistance for victims of 
trafficking. Training for law enforcement officials within th e anti-trafficking sector should be 
enhanced. 
EN 50   EN Albania is only partially meeti ng its objectives in the fight against trafficking in human 
beings. 
In the fight against  terrorism , Albania has continued to make headway . The Council of 
Europe Convention on the prevention of terror ism was ratified in 2005. Strategies, action 
plans and operational responses to the threat of terrorism in Albani a are under preparation. A 
National Counter-Terrorism Strategy is being drafted, including the police, intelligence and security services together with a number of other stakeholders. The capacity and integration 
of the various institu tions involved has continued to improve.  
Overall, in the fight against organised crime,  Albania is continuing to make moderate 
progress. Albania is only partially meeting its objectives in the fight against trafficking in 
human beings. Preparations for a more efficient counter-terrori sm framework are still at the 
early stages.  
4.3.6.  Protection of personal data 
There has been progress in the area of protectio n of personal data. The new Law on protection 
of personal data entered into force in Ap ril 2008. In September 2008, the Commissioner for 
Data Protection was appointed by parliament and the struct ure for the independent data 
protection supervisory authority was agreed. Overal l, preparations in the field of protection of 
personal data are advancing.  
 
EN 51   EN STATISTICAL ANNEX  
STATISTICAL DATA (as of 29 September 2008)            
Albania            
            
Basic data Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Population (thousand) 1) 3 354 3 373 3 058 3 063 3 084 3 103 3 120 3 135 3 149 3 153 
Total area of the country (km²)  28 750 28 750 28 750 28 750 28 750 28 750 28 750 28 750 28 750 28 750 
            
National accounts Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Gross domestic product (GDP) (million national currency)  409 209 471 578 523 043 583 369 622 711 694 098 750 785 814 797 891 000 : 
GDP (million euro)  2 419 3 209 3 945 4 541 4 705 5 048 5 881 6 561 7 239 : 
GDP (euro per capita)  721 951 1 290 1 482 1 525 1 627 1 885 2 093 2 299 : 
GDP (in Purchasing Power Standards (PPS)  per capita)  : : : : : : : : : : 
SI: GDP (in PPS per capita, EU-25=100)  : : : : : : : : : : 
SI: Growth rate of GDP (national currency, at constant prices , % change on previous year)  9.0 13.5 6.7 7.9 4.2 5.8 5.7 5.8p 5. 5p : 
SI: Employment growth (national accounts, % change on previous year)  : : : : : : : : : : 
Labour productivity growth: GDP growth per person employ ed (% change on previous year)  : : : : : : : : : : 
SI: Unit labour cost growth (national accounts, % change on previous year)  : : : : : : : : : : 
SI: Labour productivity (GDP in PPS per person employed, EU-25=100)  : : : : : : : : : : 
Gross value added by main sectors (%)                      
Agriculture  28.8 25.8 25.5 23.6 23.4 23.5 22.3 20.7p : : 
Industry  7.4 7.3 7.8 7.3 6.9 8.7 10.0 9.7p : : 
Construction  5.0 6.0 8.3 10.4 12.0 13.7 13.9 14.3p : : 
Services  58.8 60.9 58.5 58.6 57.6 54.0 53.8 55.3p : : 
Final consumption expenditure, as  a share of GDP (%)  102.4 92.7 86.0 80.9 86.0 86.1 89.2 87.0p : : 
Households and NPISH, as a share of GDP (%)  92.2 82.7 76.6 70.5 74.8 75.2 78.2 76.2p : : 
General government, as a share of GDP (%)  10.3 10.0 9.5 10.4 11.2 10.9 11.0 10.8p : : 
Gross fixed capital formation, as a share of GDP (%)  21.0 23.0 31.7 38.4 37.9 40.5 37.2 36.3p : : 
Changes in inventories, as a share of GDP (%)  0.3 0.7 2.4 1.3 0.8 -1.8 -4.0 1.2p : : 
Exports of goods and services, relative to GDP (%)  10.8 15.8 17.9 18.4 19.6 20.4 22.0 22.8p : : 
Imports of goods and services, relative to GDP (%)  34.6 32.2 38.1 39.0 44.3 45.1 44.4 47.3p : : 
            
Industry Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Industrial production volume index (2000=100)  : : : : : : : : : : 
            
Inflation rate Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
SI: Consumer price index (CPI), (tot al, % change on previous year)  8.7 -1.0 4.2 3.5 1.7 3.3 2.2 2.0 2.5 3.1 
            
Balance of payments Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Balance of payments: current account total (million euro)  -61 -129 -185 -316 -444 -350 -340 -589 -471 -832p 
Balance of payments current account: trade balance (million euro)  -537 -626 -897 -1 149 -1 218 -1 177 -1 277 -1 477 -1 658 -2 104p 
Balance of payments current account: exports of goods (million euro)  185 258 277 340 348 395 486 530 631 786p 
Balance of payments current account: imports of goods (million euro)  722 884 1 174 1 489 1 567 1 572 1 762 2 007 2 290 2 890p 
Balance of payments current account: net services (million euro)  -38 96 12 100 -8 -72 -41 -140 -32 13p 
Balance of payments current account: net income (million euro)  69 71 115 150 116 132 138 131 209 217p 
 
EN 52   EN Balance of payments current account: net current tr ansfers (million euro)  445 330 586 583 667 767 839 897 1 011 1 043p 
of which government transfers (million euro)  73 156 105 31 41 53 61 61 43 60p 
Foreign Direct Investment (FDI) in the reporting economy (million euro)  40 39 157 231 141 157 267 209 250 466p 
            
Public finance Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
General government deficit/surplus, rela tive to GDP (%)  -11.8 -9.0 -7.6 -6.9 -6.1 -4.9 -5.1f -3.4 -3.3 : 
SI: General government debt, relative to GDP (%)  53.5 53.7 60.2 58.5 63.9 61.5 58.3 55.3 59.7 : 
            
Financial indicators Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Gross foreign debt of the whole economy, relative to GDP (%)  17.0 16.1 17.0 17.2 22.1 21.1 19.0 16.6 16.9 : 
Gross foreign debt of the whole economy, relative to total exports (%) 2) 156.3 101.6 94.9 93.1 112.5 103.5 86.5 73.0 : : 
Money supply: M1 (banknotes, coins, overnight deposits,  million euro)  496 701 936 1 113 1 154 1 053 1 354 1 833 2 011 1 994 
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro)  1 180 1 631 1 995 2 376 2 453 2 542 3 066 3 43 1 3 882 4 068 
Money supply: M3 (M2 plus marketable instruments, mill ion euro)  1 418 1 993 2 475 3 069 3 148 3 261 3 973 4 654 5 478 6 157 
Total credit by monetary financial institutions to resident s (consolidated) (million euro)  105 135 175 217 292 369 548 982 1 5 54 2 326 
Interest rates: day-to-day money rate, per annum (%)  : : : : : : : : : : 
Lending interest rate (one year), per annum (%) 3) 25.0 25.8 24.0 11.9 16.0 10.5 13.7 12.2 11.2 13.6 
Deposit interest rate (one year), per annum (%) 4) 16.5 9.1 8.0 7.8 9.3 7.6 6.0 5.6 5.5 6.3 
euro exchange rates: average of period - 1 euro = … nat ional currency  169.164 146.960 132.580 128.470 132.360 137.510 127.670 124.19 0 123.080 123.630 
Effective exchange rate index (2000=100)  : : : : : : : : : : 
Value of reserve assets (inc luding gold) (million euro)  573 488 697 853 902 908 1 103 1 144 1 429 1 564 
            
External trade Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Trade balance: all goods, all partners (million euro)  -565 -754 -896 -1 145 -1 259 -1 252 -1 344 -1 212 : : 
Value of exports: all goods, all partners (million euro)  185 329 283 340 331 395 479 906 : : 
Value of imports: all goods, all partners (million euro)  750 1 083 1 179 1 486 1 590 1 648 1 823 2 118 : : 
Terms of trade (export price index / import price index, %change to the previous year)  5.4 11.0 -6.1 1.3 -1.5 -1.7 0.8 -18.9 2 5.3 -2.5 
Share of exports to EU-27 countries in value of total exports (%)  94.2 95.6 93.2 91.3 92.6 93.8 90.9 93.2 : : 
Share of imports from EU-27 countries in value of total imports (%)  88.0 82.8 80.7 80.3 77.0 74.3 70.5 67.2 : : 
            
Demography Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Natural growth rate: natural change (births minus deaths) (per  1000 inhabitants) 1) 12.5 12.8 11.4 12.5 9.5 9.3 8.1 7.2 5.5 5.9  
Net migration rate: immigrants minus emigrant s (per 1000 inhabitants)  -6.8 -110.8 -9.8 -5.7 -3.4 -3.9 -3.1 -2.6 -4.4 -0.4 
Infant mortality rate: deaths of children under one year of age per 1000 live births  15.0 12.2 13.8 10.8 10.2 8.4 7.8 7.6 7.4 5.6 
Life expectancy at birth: male (years)  : 71.7 72.1 72.1 72.1 72.1 72.1 72.1 73.9 : 
Life expectancy at birth: female (years)  : 76.4 78.6u 77.5 77.9 78.6 78.6 78.6 78.0 : 
            
Labour market Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Economic activity rate (15-64): share of  population aged 15-64 that is economically active (%) 5) : 68.3 66.2 62.3b 61.8 60.1 5 8.8 57.8 53.7 : 
SI: Employment rate (15-64): share of population aged 15-64 that  is in employment (%) 5) : 55.7 55.0 52.1b 52.1 51.1 50.3 49.7 48.7 : 
Share of male population aged 15-64 that is in employment (%) 5) : 69.0 66.0 64.0b 63.9 62.6 61.2 60.0 58.8 : 
Share of female population aged 15-64 that is in employment (%) 5) : 42.3 44.1 39.6b 39.7 39.1 38.9 38.8 38.1 : 
SI: Employment rate of older workers (55-64): share of population aged 55-64 that is in 
employment (%)  : : : : : : : : : : 
Employment by main sectors (%)                      
 
EN 53   EN Agriculture  70.8 72.1 71.8 57.7b 57.7 58.2 58.5 58.5 58.0 : 
Industry  7.7 7.7 5.4 6.0b 7.6 7.2 8.1 7.9 8.0 : 
Construction  1.0 1.0 1.2 6.1b 6.1 6.0 5.5 5.5 5.7 : 
Services  20.5 19.2 21.5 28.5b 28.6 28.5 27.9 28.1 28.3 : 
SI: Unemployment rate: share of labour force that is unemployed (%) 5) : 18.4 16.8 16.4 15.8 15.0 14.4 14.1 13.8 : 
Share of male labour force that is unemployed (%) 5) : 16.4 14.9 14.2 13.6 12.9 12.4 12.1 11.8 : 
Share of female labour force that is unemployed (%) 5) : 21.4 19.3 19.9 19.1 18.2 17.5 17.2 16.8 : 
Unemployment rate of persons < 25 years: shar e of labour force aged <25 that is unemployed 
(%)  : : : : 26.8 : : : : : 
SI: Long-term unemployment rate: share of labour force t hat is long-term unemployed (%)  : : : : : : : : : : 
            
Social cohesion Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Average nominal monthly wages and salaries ( national currency)  : : : : : : : : : : 
Index of real wages and salaries (index of nom inal wages and salaries divided by the CPI) 
(2000=100)  : : : : : : : : : : 
SI: Early school-leavers: share of popul ation aged 18-24 having not completed upper 
secondary education and not currently in education or training (%)  : : : : : : : : : : 
            
Standard of living Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Number of passenger cars per 1000 population  27.1 27.3 37.4 43.6 48.2 56.4 60.9 62.2 71.4 : 
Number of subscriptions to cellular mobile telephone serv ices per 1000 population  : : : 120.8 259.4 370.6 403.6 488.0 561.7 : 
            
Infrastructure Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Density of railway network (lines in operation, per 1000 km²)  : : 13.9 14.3 15.0 15.0 15.1 15.0 15.5 : 
Length of motorways (thousand km)  : : : : : 0.0 0.0 0.0 0.0 : 
            
Innovation and research Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
SI: Spending on human resources (public expenditure on education) relative to GDP (%)  3.2 3.3 3.1 3.3 3.0 3.1 3.2 3.2 3.1 3.2 
SI: Gross domestic expenditure on research & development, relative to GDP (%)  : : : : : : : : : : 
SI: Percentage of households who have Internet access at home (%)  : : : : : : : : : : 
            
Environment Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
SI: Total greenhouse gases emissions, CO2 equi valent (tons, 1990=100)  : : : : : : : : : : 
SI: Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP 2004)  510.2 427.4 394.4 383.1 353.9 369.2 383.9 : : : 
SI: Share of renewable energy in electric ity consumption (%)  : : : : : : : : : : 
SI: Road freight transport as a share of total in land freight transport (modal split of freight 
transport) (%)  : : : : : : : : : : 
            
Energy Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Primary production of all energy products (thousand TOE)  1 345 1 113 987 933 896 1 012 1 178 : : : 
Primary production of crude oil (thousand TOE)  365 323 314 335 308 359 443 : : 281 
Primary production of hard coal and lignite (thousand TOE)  49 33 20 15 5 19 19 0 0 : 
Primary production of natural gas (thousand TOE)  17 14 12 8 8 12 9 11 11 10 
Net imports of all energy products (thousand TOE)  626 761 858 1 001 965 1 043 1 080 : : : 
Gross inland energy consumption (thousand TOE)  1 971 1 874 1 845 1 934 1 861 2 055 2 258 : : : 
 
EN 54   EN Electricity generation (thousand GWh)  5.1 5.4 4.7 3.7 3.2 4.9 5.5 5.5 5.6 3.0 
            
Agriculture Note 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 
Agricultural production volume index of goods  and services (produc er prices, previous 
year=100)  : : : : : 102.9 105.1 101.2 : : 
Total utilised agricultural area (thousand hectare)  1 144 1 144 1 144 1 139 1 140 1 121 1 122 1 077 1 120 : 
Livestock: cattle (thousand heads, end of period)  705 720 728 708 690 684 654 655 634e : 
Livestock: pigs (thousand heads, end of period)  83 99 103 106 114 132 143 147 152e : 
Livestock: sheep and goats (thousand heads, end of period)  2 923 3 061 3 045 2 933 2 773 2 919 2 739 2 701 2 770e : 
Production and utilisation of milk on the farm (total wh ole milk, thousand tonnes)  861 907 948 984 1 010 1 060 1 064 1 076 1 1 02e : 
Crop production: cereals (including rice) (thousand tonnes, harvested production)  603 498 566 503 519 489 499 511 508 : 
Crop production: sugar beet (thousand tonnes, harve sted production)  56 40 42 39 39 50 40e 40e : : 
Crop production: vegetables (thou sand tonnes, harvested production)  605 610 620 677 669 675 678 685 688 : 
 
SI: Structural Indicator  
e : estimate  f : forecast  
p : provisional  
b : break in serie  
1. Source: Eurostat. Break in series in 2000. 
2. Debt Outstanding Disbursed (DOD) cumulative stock cove ring external public debt and external publicly guaranteed debt, but e xcluding IMF credits. Total exports are calculated according to the 
national accounts concepts. 
3. Average weighted rate applied on new 12-month loans  over the respective months, on 12-month maturity. 
4. Deposit interest rate represents the average weighted rate for newly accepted deposits over the respective months, on 12-mon th maturity. 
5. Administrative data; unemployment  refers to registered unemployment.