Commission staff working document - Albania 2008 progress report accompanying the Communication from the Commission to the European Parliament and the Council - Enlargement Strategy and Main Challenges 2008-2009 {COM(2008) 674}
Date: 2008-11-05
Institutions: European Commission
Subjects: Albania, accession to the European Union, enlargement of the Union, pre-accession strategy, report

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COMMISSION OF THE EUROPEAN 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 PARLIAMENT AND THE COUNCIL 

Enlargement Strategy and Main Challenges 2008-2009 

{COM(2008) 674}

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

Introduction .................................................................................................................. 4 

Preface.......................................................................................................................... 4 

Context ......................................................................................................................... 4 

Relations between the EU and Albania........................................................................ 4 

Political criteria ............................................................................................................ 6 

Democracy and the rule of law .................................................................................... 6 

Human rights and the protection of minorities .......................................................... 11 

Regional issues and international obligations ............................................................ 17 

Economic criteria ....................................................................................................... 18 

The existence of a functioning market economy ....................................................... 19 

The capacity to cope with competitive pressure 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 

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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 

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COMMISSION STAFF WORKING DOCUMENT 

ALBANIA 2008 Progress Report 

1. 

INTRODUCTION 

1.1. 

Preface 

Since March 2002, the Commission has reported regularly to the Council and Parliament on 
the  progress  made  by  the  countries  of  the  Western  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 basis of the economic criteria for membership; 

–  reviews  Albania's  capacity  to  implement  European  standards,  that  is,  to  gradually 
approximate  its  legislation  and  policies  to  the  acquis,  in  line  with  the  Stabilisation  and 
Association Agreement and the European Partnership priorities. 

The  period  covered  by  this  report  is  1  October  2007  to  early  October  2008.  Progress  is 
measured on the basis of decisions taken, legislation adopted and the measures implemented. 
As  a  rule,  legislation  or  measures  which  are  under  preparation  or  awaiting  parliamentary 
approval have not been taken into 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  contributions  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 regarding Albania in its separate communication 
on enlargement2, based on the technical analysis contained in this report. 

1.2. 

Context 

Albania is a potential candidate 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 
2 

The rapporteur for Albaniais Mr Libor Rouček. 
Enlargement Strategy and Main Challenges 2008-2009. 

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Albania signed a Stabilisation and Association Agreement (SAA) with the EU in June 2006. 
The  SAA  provides  a  framework  of  mutual  commitments  on  a  wide  range  of  political,  trade 
and economic issues. Trade-related parts of the 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  provisions  of  the  1992  Trade,  Commercial  and 
Economic  Cooperation  Agreement  (TCECA)  will  remain  in  force  until  the  SAA  is  ratified. 
Albania also benefits from the EU's autonomous trade measures.  

The  EU  provides  guidance  to  the  Albanian  authorities  on  reform  priorities  through  the 
European Partnership. Progress on these reform priorities is encouraged and monitored by 
political  and  economic  dialogue  with  Albania.  This  dialogue  is  conducted  via  Ministerial 
Troika,  joint  committee  and  consultative  task  force  (CTF)  meetings  at  ministerial  level  and 
working party meetings at deputy minister level. 

A Ministerial Troika meeting with Albania in March 2008 focused 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 contribute 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  was  held  in  April  2008.  The  visa  facilitation 
agreement simplifies procedures for issuing visas to certain categories of citizens of Albania, 
including students, scholars, businesspeople, journalists and tourists. 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 obligations and procedures for the authorities of both 
Albania  and  EU  Member  States  on  when  and  how  to  take  back  people  who  are  illegally 
residing on their territories.  

Since  2007,  pre-accession  financial  assistance  to  Albania  is  provided  under  the  Instrument 
for Pre-Accession Assistance (IPA). The EC allocated 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  implemented  by  the  EC  Delegation  in 
Tirana.  The  management  of  aid  on  a  decentralised  basis  is  a  medium-term  objective  for 
Albania.  The  IPA  Framework  Agreement  was  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  Agreements  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  the  European  integration  process  over  the  period 

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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  understanding was signed in December 2007. The 
country is also participating in the Entrepreneurship and Innovation Framework Programme, 
following the signature of the memorandum of understanding in June 2008. 

2. 

POLITICAL CRITERIA 

This section examines progress made by Albania towards meeting the Copenhagen political 
criteria, which require stability of institutions guaranteeing democracy, the rule of law, human 
rights and respect for and protection of minorities. It also monitors regional cooperation, good 
neighbourly  relations  with  enlargement  countries  and  Member  States,  and  respect  for 
international obligations. 

2.1. 

Democracy and the rule of law 

Constitution 

In  April  2008,  parliament  adopted  a  package  of  constitutional  amendments  based  on 
consensus  between  the  two  largest  parties,  relating  to  the  electoral  system,  election  of  the 
President and the mandate of the Prosecutor General.  

As  part  of  the  constitutional  amendments,  the  Albanian  electoral  system  changed  from  a 
mixed  to  a  regional  proportional  system  (140  proportional  representation  seats  filled  from 
party  lists  in  regions  corresponding  to  existing  administrative  boundaries).  Smaller  parties, 
including those representing 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 the 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 approximate 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  resulted  in  progress  in  judicial  and  electoral 
reforms.  However,  more  remains  to  be  done  to  enhance  the  constructive  dialogue  between 
political parties and with stakeholders on implementation 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  elections  in  2009,  a  key  European 
Partnership priority. 

The  parliamentary  committee  on  European  integration  contributed  to  improving  awareness 
about the EU integration process. However, no progress has been made on enhancing the role 

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of parliament in monitoring  implementation of  SAA  obligations.  The  low  level  of  expertise 
available to parliament had an adverse effect 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 June and eventually approved a 
second set of nominees in July. This process raised concerns about the independence of State 
institutions from the executive.  

Preparations for the electronic civil registry and 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 printed certificates. A sound civil registry 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  between  the  major  political  parties  has  allowed  for 
progress  in  addressing  key  European  Partnership  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  coordinator  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-ministerial  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 filled and additional staff have been recruited. 

In  March  2008,  guidelines  for  inter-institutional  coordination  on  European  integration  were 
adopted  by  the  government.  In  June,  the  MoEI  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  Coordination  (DSDC),  which  is  responsible  for  all 
external assistance. 

The National Strategy for Development and Integration (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  important  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 development 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. 

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With  regard  to  policy  formulation,  coordination  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-related policy work, under the government rules 
of  procedure,  are  not  fully  applied.  The  weaknesses  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  continued  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 capacity, coordination, and strategic planning for 
EU integration remains necessary.  

Public administration 

In  December  2007,  the  government  adopted  amendments  to  the  Law  on  evaluation  of  the 
performance of civil servants. In January 2008, a new reward system 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 training plans and covering local government bodies. 
However, the role of the DoPA in ensuring implementation of the Civil Service Law and the 
capacity of the Training Institute of Public Administration (TIPA) 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  procedures.  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  recruitment,  job  classification  and 
promotion criteria consistently. Full enforcement 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  July  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 the civil service and increase 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 priority. Further progress is needed to establish an 
independent, merit-based, professional civil service. 

Judicial system 

Judicial procedures have remained 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 and vision for the judiciary, going beyond adoption 
of  individual  pieces  of  legislation,  is  still  missing.  What  is  needed  now  is  to  adopt  a 

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comprehensive  strategy  on  judicial  reform,  to  complete  the  legal  framework  and  to  provide 
sufficient human and financial resources for implementation. 

Some  progress  can  be  reported  with  the  adoption,  in  February  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 restricted to graduates of the magistrates' school. 
However, the law fails to clarify the separate competences of the inspectorates of the Ministry 
of  Justice  and  of  the  High  Council  of  Justice.  This  raises  serious  concerns  about  the 
independence of the judiciary. 

A  law  has  been  prepared  on  privatisation  of  the  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  all  courts  and  has  been 
expanded to cover criminal cases. The system registers cases electronically and assigns them 
to  judges  randomly.  However,  further  training  on  its  use  is  needed.  The  court  system 
continues to be problematic, with procedures 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  transcripts,  which  remain  mostly  handwritten.  Due  to 
overcrowding,  many  courts  cannot  allow  public  access  to  hearings.  This  hinders  the 
transparency and efficiency of the courts. The State budget allocated to the judiciary remains 
insufficient  for  the  normal  operation  of  most  courts.  Overall,  judicial  infrastructure  requires 
considerable strengthening. 

The magistrates' school remains an important institution for training judges and prosecutors, 
including  on  SAA-related  issues.  Adequate  support  for  the  school  from  the  State  budget  is 
needed to ensure sustainability. More continuous 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 independent 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 chairpersons. There has been some limited improvement in the internal 
functioning of the HCJ. The new system for the professional evaluation of judges by the HCJ 
is  proceeding  slowly.  The  situation  of  the  judges  affected  by  the  abolition  of  eight  small 
district courts in September 2007 remains unsettled.  

In April 2008, a cooperation agreement was signed 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,  raised  concerns  about  the  independence  of  the 
general  prosecutor's  office  from  the  executive.  On  several  occasions,  the  government 
attempted to interfere with ongoing investigations, in breach of the constitutional principle of 
accountability to law. Overall, the independence, transparency and efficiency of the judiciary 
remain key European Partnership priorities to be addressed. 

Some progress can be reported on witness protection. The 2007 Law on State police upgraded 
the witness protection unit into a directorate. At  present there are 60  persons in the witness 

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protection  programme.  The  2008  budget  allocated  to  the  programme  marks  an  increase. 
However,  further  amendments  to  the  Law  on  witness  protection  have  not  yet  been  adopted. 
The lack of reliable witness protection continues to be problematic.  

No developments can be reported on establishing a strategy and a national coordination body 
dealing with blood-feuds. Albania still lacks reliable data on the number of families affected 
by this phenomenon. 

Overall,  there  has  been  limited  progress  in  judicial  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 fight against corruption. Perception of corruption 
has improved; nonetheless corruption remains a particularly serious problem in Albania. 

In  April  2008,  the  Law  on  Commercial  enterprises  was  aligned  with  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  protocol  to  the  Council  of  Europe  Criminal 
Law Convention on corruption was ratified in 2005.  

The  2007-2013  National  Strategy  for  Development  and  Integration  (NSDI)  contains  anti-
corruption elements but lacks a strategic framework for implementation with objectives and 
funding  that  can  be  monitored.  A  cross-cutting  anti-corruption  strategy  for  2007-2013,  with 
an  action  plan,  was  adopted  in  October  2008.  However,  implementation  needs  to  start  and 
monitoring  mechanisms  remain  to  be  assessed.  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  seizure  of  assets  stemming  from  corruption. 
Recommendations  regarding  the  rules  on  financing  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 report to parliament, the HIDAA identified 110 cases 
of  conflicts  of  interest.  However,  Albania  lacks  strong  and  independent  supervisory  or 
auditing authorities. The HIDAA plays only a limited role in this regard. 

The scope of the immunity from criminal investigation and prosecution of a number of State 
officials and members of parliament 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 transparency in funding of political parties remain to be improved.  

Efforts  have  been  made  to  reduce  opportunites  for  corruption  in  areas  such  as  tax 
administration, business services, property restitution and public procurement, by introducing 
electronic  systems..  Since  December  2007,  electronic  procedures  have  been  introduced  for 
taxation,  public  procurement,  licensing  and  business  registration.  However,  the  results  and 
impact of these procedures remain to be assessed.  

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The institutional set-up and inter-agency coordination in the fight against corruption remain 
weak.  A  Department  of  Internal  Administrative  Control  and  Anti-Corruption  within  the 
Council  of  Ministers  reports  directly  to  the  Prime  Minister.  However,  there  is  no  effective 
institutional framework to coordinate, 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  their  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 officials were dismissed for bribery. In addition, the Office of 
internal  control  (OIC)  in  the  Interior  Ministry,  the  unit  investigating  corruption  by  police 
officers,  has  taken  disciplinary  measures  against  100  policemen  on  bribery  charges.  The 
government  has  stepped  up  its  efforts  to  prosecute  some  corruption  cases.  In  2007,  224 
officials  were  identified  as  involved  in  corruption  and  conflict  of  interest,  53  of  them  were 
arrested  and  prosecuted.  Regarding  high  level  corruption,  one  former  deputy  minister  has 
served  a  one-year  jail  sentence.  However,  a  more  systematic  approach  is  needed  to  tackle 
corruption overall, particularly widespread bribery in the judiciary, police, health and customs 
sectors. 

The  explosion  of  an  ammunition  depot  at  Gerdec  in  March  2008  is  currently  under 
investigation  for  alleged  lack  of  enforcement  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 immunity 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  European  Partnership  priority. 
However, the declared commitment of the authorities to fight corruption 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 sale 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  Convention  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  during  the  reporting  period.  The  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 marked by the political will to guarantee human rights to all its 

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citizens.  The  strong  role  played  by  the  Human  Rights  Ombudsman  has  contributed  to 
reducing  human  rights  violations.  Nevertheless,  effective  implementation  of  legislation 
continues to raise concern in key areas, such as prevention of torture and trafficking. 

Civil and political rights 

With  regard  to  prevention  of  torture  and  ill-treatment  and  the  fight  against  impunity, 
there have been reports of use of excessive force 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,  torture  and  arbitrary  behaviour.  The 
General  Prosecutor  brought  charges  against  four  former  senior  officials  of  the  State 
Intelligence  Service.  Criminal  charges  have  been  brought  and  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 work effectively, particularly 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,  designed  in  accordance  with  European  standards, 
should help reduce the overcrowding. 

However, general prison conditions remain below standards. Due to lack of space, prisoners 
were  reportedly  being  held  in  large  groups  in  small  cells  or  returned  to  police  stations. 
Prisoners with mental illnesses were being kept in cells with other prisoners or minors in cells 
with  adults.  Progress  on  developing  rehabilitation  schemes,  such  as  education,  work  and 
social  programmes  for  detainees,  has  been  limited.  An  effective  monitoring  and  inspection 
system for prisons is still missing. 

Several  prisons  have  been  refurbished  to  improve  living  conditions.  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 investment strategy and 
to allocate corresponding State funds. 

In April 2008, amendments to the Law on the rights and treatment of prisoners entered into 
force,  including  during  pre-trial  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  and  pre-trial  detention 
system, but overcrowding continues and detention standards remain very poor. 

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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 respect. Preparation of the strategy for the transition 
to digital broadcasting is advancing. In April 2008, the Regulation on the licensing of digital 
broadcasting was adopted. (See also Information Society and media section.) 

Selective  pressure  was  put  on  opposition-oriented  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  criminal  influence.  The  National  Council  on  Radio 
and  Television  (NCRT)  continued  to  face  accusations  of  political  bias  in  favour  of  media 
linked  to  the  government.  There  is  no  effective  legislation  to  ensure  transparency  of  media 
ownership and funding. 

Adoption  of  the  laws  to  amend  both  the  Criminal  and  Civil  Codes  by  decriminalising  libel 
and defamation is still pending. The 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 reported on adoption of key bylaws on media policy. The NCRT and 
parliament have jointly prepared the action plan 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 system and poor infrastructure. 

Overall, Albania has continued to make progress on freedom of expression, a key European 
Partnership priority. It now needs to improve implementation of the existing legislation and to 
advance on key issues regarding decriminalisation of defamation, adoption of legislation on 
access to public information and transparency 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  actively  monitoring  respect  of  human  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  government  and  the  private  sector.  Financial  and 
management capacity have to be strengthened, aiming at future sustainability of the sector. 

As regards freedom of religion, the inter-faith climate continues 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. 

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Economic and social rights 

The  People's  Advocate  (human  rights  ombudsman)  continued  to  play  an  active  role  in 
monitoring  and  protecting  human  rights.  In  2007,  the  institution  received  4,233  complaints 
from  citizens  and  reviewed  2,567  of  them.  Most  of  the  complaints  were  appeals  against 
decisions by the Ministry of Economy, Trade and Energy, the Immovable 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 reported. The Law on gender equality 
was  adopted  in  July  2008.  The  national  strategy  on  gender  equality  and  eradication  of 
domestic  violence,  together  with  a  three-year  action  plan,  were  adopted  in  December  2007 
including  provisions  on  vulnerable  women  such  as  trafficking  victims.  According  to  police 
sources  trafficking  decreased  sharply  in  2007,  although  NGOs  claim  that  many  cases  went 
unreported.  Several  trafficking  networks  were  dismantled.  In  May  2008  the  Domestic 
Violence  Law  was  amended.  A  new  unit  on  domestic  violence  was  established  within  the 
Ministry  of  Labour.  The  responsible  authorities  organised,  with  assistance  by  UN  agencies, 
capacity building activities for social and health workers, police and local authorities. 

However,  the  strategy  on  the  prevention  of  domestic  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 employment and other policies. What is needed now 
is  to  allocate  sufficient  human  and  financial  resources  to  ensure  full  implementation  of  the 
existing legislation. 

Overall,  there  has  been  some  further  progress  on  strengthening  women's  rights.  However, 
Albania  continues  to  be  a  source  and  transit  country  for  the  trafficking  of  women,  often 
minors, for sexual exploitation. Trafficking of women 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 Convention on the Rights of the Child in March 2008. Parliament 
adopted  amendments  to  the  Criminal  Code  in  April  2008  regarding  the  exploitation  of 
children, which is now recognised 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 vaccination certificates often lead as to de facto exclusion 
from school. 

Regarding  juvenile  justice,  community  service  sentences  started  in  late  2007  at  the  Tirana 
Court. Up to April 2008, 38% of all sentences 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  introduction  of  a  probation  system.  However,  in  cases 
involving  minors,  judges  do  not  sufficiently  apply  alternatives  such  as  probation.  Probation 
and parole are available as alternatives to detention, but there are no qualified social workers 
or probation officers to supervise them. 

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Children's rights to education have improved. The 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  protection  of  children  at  risk.  The  strategy  on  foster 
care  was  approved  in  2008  as  part  of  the  new  sectoral  strategy  for  social  protection.  A 
bilateral  agreement  on  protection  and  assistance  to  child  victims  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 processing, footwear and clothing industries. 

Overall, further progress has been made on children's rights but more is needed on ensuring 
appropriate resources for implementation 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, the government adopted the Social 
Protection  and  Social  Inclusion  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  completed.  The  Ministry  of  Labour  has  drafted 
standards for delivery of social services to people with disabilities. (See also Employment and 
social  policies  section).  Albania  has  not  signed  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,  implementation  of  the  Regulation  on  mental  health 
approved in 2007 has been slow. There is still no law on free legal assistance for people with 
disabilities. Access to employment remains a major problem for people with disabilities.  

Overall, there has been further progress regarding 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  Council  into  a  National  Social  and  Economic 
Council.  It  also  delays  the  revision  of  the  Law  denying  the  right  to  strike  to  some  State 
employees, which is not in line with the European Social Charter. The National Strategy for 
Development  and  Integration  2007-2013  (NSDI)  foresees  the  strengthening  of  social 
dialogue. However, the position of both trade unions and employers' organisations continue to 
be very weak and the social dialogue remains at an early stage. 

legal  definition  of  discrimination  or  specific  anti-discrimination 

As  regards  anti-discrimination  policies,  there  has  been  little  progress  on  establishing  a 
legislation. 
proper 
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  government  has  taken  no  action  to  combat 
discrimination on the grounds of sexual orientation 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  increasing  legislative  efforts,  is  to  develop  an 
action programme to counter discrimination, including on grounds of sexual orientation and 
gender identity. 

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With  regard  to  property  rights,  the  main  issues  remain  first  registration  of  real  estate, 
property restitution, compensation and legalisation of informal constructions. The Immovable 
Property  Registration  Office  (IPRO)  has  continued  first  registration  in  different  parts  of  the 
country.  Several  decisions  by  the  European  Court  of  Human  Rights  found  violations  in  the 
form  of  improper  proceedings  and  lack  of  enforcement  in  the  context  of  restitution  and 
compensation  procedures.  Unresolved  property  issues  have  undermined  efforts  to  develop  a 
functional  land  market  and  kept  foreign  investment  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  electronic  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  for  lack  of  data.  A  complete  valuation  map 
covering every regions would facilitate 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  informal  constructions  have  been  regularised, 
mainly around major urban centres.  

Overall, there has been progress 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  are  advancing  moderately.  Uncertainties  about  property  rights 
persist. 

Minority rights, cultural rights and protection of minorities 

With regard to cultural rights, the constitution provides for protection of the civil, economic, 
social  and  political  rights  of  minority  groups  and  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  Egyptian  community  is 
seeking the status of an ethno-cultural minority. The government has made efforts to include 
it in various activities for minorities and socially vulnerable groups. Development of minority 
policies  requires  up-to-date  statistics  on  all  minorities.  Albania  has  no  accurate  data  on 
minorities. 

Albania is continuing to make efforts to fulfil its commitments under the Council of Europe 
Framework Convention for the Protection of National 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 concentration of minorities. Albania 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 areas with a high concentration of 
minorities,  public  schools  that  provide  ethnic  minorities  with  minority  education  are  not 

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sufficient. Three privately run Albanian-Greek schools have been established in Tirana, Korça 
and  Himara.  The  Civil  Service  Law  allows  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  the  integration  of  Roma  was  issued,  showing 
insufficient human and financial resources for proper implementation. 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  two  people,  the  Secretariat  is  understaffed  to 
perform its tasks. Efforts must be stepped up to coordinate the Roma Decade Action Plan with 
other existing strategies and provide sufficient human and financial resources to implement it. 

The  level  of  school  enrolment  amongst  Roma  children  remains  low,  despite  efforts  by  the 
government to facilitate registration and implementation of the second chance project. More 
needs to be done to tackle specific gender issues in the Roma community and to prepare more 
Roma to qualify as teachers. Registration of Roma with the authorities remains a problem.  

Roma continue to face very difficult living conditions and discrimination, with poor access to 
education, social protection, healthcare, 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 remains a serious concern. What is needed now 
is to ensure that appropriate human and financial 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  United  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  principles  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 commitments 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 number of regional political and economic fora and 
initiatives,  including  in  a  transition  from  the  Stability  Pact  to  a  more  regionally  owned 
framework  with  the  South  East  European  Cooperation  Process  (SEECP)  and  the  Regional 
Cooperation Council (RCC).  

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Albania  has  been  satisfactorily  implementing  the  Central  European  Free  Trade  Agreement 
(CEFTA) and is progressing on the first transitional phase of the European Common Aviation 
Area  (ECAA)  agreement.  Albania  is  party  to  the  Energy  Community  Treaty  and  is  making 
headway towards meeting its obligations under the Treaty. 

Albania became a full member of the Barcelona 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 frequent 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  Muriqan/Sokobine.  Relations  with  Bosnia  and  Herzegovina  have 
intensified. The country has decided to open an embassy in Tirana. Albania 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  position  regarding  Kosovo3.  Albania 
welcomed  the  decision  on  the  establishment  of  the  EU  mission  in  Kosovo.  Albania  has 
recognised Kosovo's declaration of independence and established diplomatic relations.  

Italy remains Albania's main political and economic partner and its largest EU trade partner, 
followed  by  Greece,  which  is  also  considered  an  important  strategic  partner.  A  bilateral 
agreement with Italy in line with the European Convention for judicial assistance in criminal 
cases has been signed.  

Albania  has  received  an  invitation  to  join  the  North  Atlantic  Treaty  Organisation  (NATO), 
and the Protocol of Accession to the Washington Treaty has been signed. 

Overall,  Albania  has  continued  to  foster  positive  relations  with  its  regional  partners,  both 
multilaterally and bilaterally. Albania's continued constructive stance on the Kosovo issue and 
on maintaining good neighbourly relations with other enlargement 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 European Council in Copenhagen in June 1993, which stated that 
membership  of  the  Union  requires  the  existence  of  a  functioning  market  economy  and  the 
capacity to cope with competitive pressure and market forces within the Union. 

3 

under UNSCR 1244/1999 

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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 establishment 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 Monetary Fund three-year 2006–2009 PRGF/EFF4 programme 
in  the  country.  In  2008,  the  government  supplemented  the  longer-term  strategy  framework, 
adopting  the  National  Strategy  for  Development  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 Fiscal and Macroeconomic 
Framework  2009–2011  and  the  Medium-Term  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 the summer of 2007 and 
continuous  electricity  shortages.  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 continuing large-scale remittances inflows (12% of 
GDP).  Unreliable  electricity  supply  continued  to  pose  a  heightened  risk  to  sustainable 
economic  growth.  The  average  per  capita  income  in  2007  was  around  22%  of  the  EU27 
average5, up from 21% in 2006. Overall, economic growth remained strong and speeded up, 
while the general income level remained low.  

External balances deteriorated, resulting in a current 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  contributed  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 continued to deepen in the 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 remained high and continued to widen.  

Net capital inflows increased, covering the current account deficit 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  telecommunication  sector.  Other  capital  inflows  (mainly 
foreign  borrowing  by  the  private  sector  and  non-residents'  deposits)  rose,  reaching  3.2%  of 

4 
5 
6 

The Poverty Reduction and Growth Facility (PRGF) and the Extended Fund Facility (EFF) 
In purchasing power standards (PPS) 
The data for 2006 is updated (compared to the Progress Report 2007) throughout the report according to 
the recent revision of statistics  

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GDP in 2007. However, from the fourth quarter of 2007 onwards the current account deficit 
exceeded  net  capital  inflows,  leading  to  a  decrease  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  financial  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 integration to the international capital markets, while the banking 
sector  is  well  capitalised  and  mainly  financed  by  households'  deposits.  However,  the 
continuous  widening  of  the  current  account  deficit  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 employed persons increased as a result of 
higher employment in the non-agricultural private sector. In total, the labour force (the sum of 
employed  and  unemployed)  decreased  by  around  0.4%,  indicating  some  movement  of 
unemployed persons to inactivity. Wages in the public sector increased 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 performance slightly improved, but 
rigidities remained relatively high. However, due to the significant informal economy, labour 
market data may not correctly reflect the actual dynamics of the labour market.  

The  central  bank  continued  to  implement  a  policy  of  implicit  inflation  targeting  and  an 
independent  float.  The  objective  of  maintaining  consumer  price  inflation  at  3%  with  a 
fluctuation  band  of  ±1  percentage  point  was  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 three quarters of 2008, inflation remained within the target range 
(measured as a 12-month average annual inflation), although in some months 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 decelerating) credit growth 
and extensive remittances inflows. The increase in money supply (M37) remained relatively 
high (14% year-on-year in July 2008). Exchange rate fluctuations against the euro remained 
limited,  with  some  temporary  small-scale  depreciation  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 deficit increasing to 3.5% of GDP 
in 2007 – up from 3.3% in 2006. Fiscal policy remained 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 indebtedness (as a ratio 

7 

Monetary aggregate M3 includes currency outside banks, as well as demand and time deposits.  

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of GDP), despite a delayed fiscal consolidation. 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 introduction of a 10% flat 
personal  income  tax  was  accompanied  by  an  increase  in  income  tax  revenues.  The 
management of local government finances remained poor, resulting in low revenue collection 
and  limited  spending.  Public  spending  followed  the  strategic  priorities  of  higher  public 
investments, keeping the increase in current expenditures constrained. Personnel expenditures 
were maintained at 6% of GDP, and interest expenditures were reduced 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  implementation  kept  capital  expenditures  significantly 
below projections. Regarding fiscal strategies, the 2008 budget projected a sharp deterioration 
of fiscal balances with a fiscal deficit of 7.9% of GDP, due to extensive capital expenditures 
amounting  to  9.8%  of  GDP.  A  mid-2008  budget  revision  reduced  the  deficit  projection  to 
5.2% by increasing revenue projections and cutting public investments. On the revenue side, 
the  reduction  of  corporate  profit  tax  from  20%  to  10%  in  January  2008  brought  about  a 
change in the public revenue structure. Corporate tax revenues decreased, compensated by an 
increase  in  excise  duties.  Overall,  the  administration  of  public  finances  improved,  but  the 
fiscal stance loosened owing to ambitious public investment plans.  

The  macroeconomic  policy  mix  was  broadly  adequate,  with  an  increased  emphasis  on 
structural reforms. Monetary policy remained sound, while fiscal strategies prioritised higher 
public investments over further fiscal consolidation. Widening fiscal imbalances may lead to 
instabilities  and  prevent  fiscal  policies  from  playing  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  limited,  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  enterprises  continued  to  be  mainly  in  the 
services  and  agricultural  sectors.  The  privatisation  of  large-scale  enterprises  advanced 
significantly. The contract to sell an 85% stake 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  progress.  The  government  also  concluded  tenders  on  consultancy 
for  the  privatisation  of  its  12.6%  share  of  the  mobile  telephone  operator  AMC,  and  of  a 
majority of the insurance company INSIG. Privatisation 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 the 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 the 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 registration services was improved by increasing the 
number  of  electronic  services  and  registration  centres  across  the  country.  The  improved 
services  framework,  together  with  more  rigorous  inspections  by  the  authorities,  addressed 

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ways for reducing the widespread informality of business. The simplified procedures allowed 
for a significant increase in the number of initial registration of businesses. 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 issuance of construction permits, which showed 
a  sharp  40%  drop  in  2007.  Regarding  market  exit  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  concluded  in  the  courts  in  recent  years.  Overall, 
administrative  procedures  for  the  establishment  of  businesses  were  simplified  considerably. 
However, there remains room for further improvements.  

Legal system 

The government took a number of steps to strengthen the judicial system and the fight against 
corruption.  A  number  of  electronic  public  services  (including  the  electronic  public 
procurement system) were introduced in order to increase transparency. The general judiciary 
reform  continued,  with  the  adoption  of  a  law  on  the  organisation  and  functioning  of  the 
judiciary.  Inspections  of  courts  and  public  agencies  were  stepped  up  and  legal  procedures 
were  initiated  against  officials  responsible  for  violations.  Legal  certainty  was  increased  by 
establishing a legal basis for a new 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  cadastral  areas  were  prepared  for  the  initial 
registration  of  land,  and  preparatory  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  adverse  impact  on  the  quality  of  public  services. 
Overall,  the  legal  framework  for  contract  enforcement  was  strengthened,  but  the  judiciary 
remained weak and uncertainty about real 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 funds. The adoption of the law on securities in 
March  2008  provides  some  basis  for  the  development  of  the  capital  market.  Insurance 
companies  continued  to  be  the  other  main  intermediaries  in  the  financial  sector,  with  total 
assets of close to 2% of GDP. The banking sector 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. Competition in the banking sector increased, while the 
concentration  of  assets  declined.  Profit  rates  of  banks  remained  relatively  strong  (return  on 
assets was 1.3% in June 2008, comparable to that 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  well-functioning  banking  sector,  continued  to 
increase at a rapid pace, while the role of the non-bank financial sector remained limited.  

The  stability  of  the  financial  sector  remained  satisfactory,  supported  by  a  favourable 
economic environment and strengthened financial supervision. Capital adequacy remained on 
average far above the minimum requirement (with ratios of 17.3% and 12%, respectively, in 
June 2008), albeit somewhat lower than at end-2006. The quality of credit remained relatively 
high and the share of non-performing loans in total loans remained low, although it increased 

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to  close  to  4%  in  March  2008  (up  from  3.1%  at  end-2006).  Strong  -  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 transparency to the banking system. Overall, the financial system remained 
sound, addressing the growing risks of a possible deterioration of credit quality. 

3.2. 

The  capacity  to  cope  with  competitive  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.  The  functioning  of  market  mechanisms  still 
remained  seriously  distorted  by  unreliable  energy  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-University Education was established, and new 
guidelines  for  secondary  schools  and  standards  for  post-graduate  programmes  were 
introduced. In total, public spending on education rose to 3.3% of GDP in 2007 (from 2.9% in 
2006). To promote employment, the government introduced a partial compensation of training 
costs and a temporary compensation of social insurance 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 created for increasing the relatively low quality of human capital, 
but their effects on the labour market remained unclear.  

Physical capital accumulation continued at a rate comparable to 2006, although slower than in 
earlier years. The ratio of total investments to GDP was 29.2% in 2007. Public investments 
focused  on  the  energy  sector  and  on  road  construction.  Net  foreign  direct  investment  (FDI) 
inflows  increased  significantly  (to  5.9%  of  GDP  in  2007),  mainly  owing  to  strong  inflows 
from  large-scale  privatisation  in  the  telecommunication  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  reconstruction  of  railways  and  ports  progressed.  The  hydro-
power based electricity sector continues to lack 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  plant  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 continued in the remaining sectors under state ownership, largely as 
part of the preparations for privatisation. In the oil production sector, the restructuring of the 
ARMO oil refinery and the oil producer Albpetrol made progress and an investment plan for 
the  oil  refinery  was  submitted  to  the  government  as  an  obligatory  document  for  the  tender 

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procedures. In the electricity sector, preparations for the restructuring and privatisation of the 
loss-making power corporation (KESH) made progress. However, electricity tariffs remained 
below cost-recovery levels, thus contributing to financial losses. Electricity supply remained 
unreliable. Overall, restructuring of enterprises 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  remained  broadly  unchanged,  with  the  largest 
production  being  in  the  services  sector.  The  mining  sector  contributed  significantly  to  the 
increase  in  total  production  and  exports,  although  its  share  of  total  production  stayed 
relatively  low.  The  agricultural  sector  remained  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  economy  broadly  maintained  its  structure,  with 
considerable scope for further expansion of the services and industrial sectors, 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  subsidies  to  consumers.  The  recent  sharp  increase  in 
global fuel prices triggered an exemption from the excise duty on fuels for producers in the 
agricultural and industrial sectors, as well as for certain energy 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  considerably,  with  total  foreign  trade  in  goods  and 
services reaching 81% of GDP in 2007 (compared to 72% in 2006). Trade increased mainly 
due to an increase in imports, while competitiveness 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, while the share of the trade in goods with the EU 
declined  slightly  to  64%  (down  from  69%).  The  decline  was  partly  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  competitiveness  in  trade  with  the  EU  continues  to  be 
reflected in a very high concentration of export partners (more than two thirds of total exports 
of  goods  are  destined  for  one  country,  namely  Italy).  Imports  (also  in  terms  of  trading 
partners) continued to show a considerably more mixed picture, with two main trade partners 
accounting  for  less  than  50%  of  total  imports.  Overall,  the  EU  continued  to  be  the  main 
partner  in  international  economic  relations,  while  overall  international  integration  remained 
limited.  

4. 

EUROPEAN 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  Association  Agreement  and  the  European  Partnership 

8 

CEFTA or Central European Free trade Agreement  

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priorities. It also analyses Albania’s administrative 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  Standardisation  (DGS)  has  used  numerous 
promotional  tools  to  raise  the  private  sector’s  awareness  of  the  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  standards  continued  to  grow  in  the  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  adopted  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 stakeholder groups which will monitor DGS activities. 
In accordance with the new law, DGS will be the enquiry point for the agreement on technical 
barriers to trade under the World Trade Organisation (TBT/WTO). Preparations 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  legislation  is  being  drafted.  The  national  strategy  on 
accreditation, which is part of the newly adopted mid-term strategy on quality infrastructure 
development,  has  been  approved.  The  quality  management  system  of  the  Directorate  for 
Accreditation  (DA)  has  been  updated  to  bring  it  into  line  with  EN  ISO/IEC  17011.  Two 
technical  committees  were  established  to  develop  accreditation  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  Cooperation  (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 continues 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 provided 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  submitted  to  the  DA  in  December 
2007.  Some  of  DGM’s  seven  laboratories  took  part  in  laboratory  inter-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. 

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A new Law on metrology transposing provisions of the old approach directives was adopted 
in  February  2008.  It  sets  up  a  decentralised  metrology  system  and  deregulates  some 
metrological activities, such as calibration and verification  of  measuring  instruments  in  use. 
The  government  approved  a  regulation  concerning  national  measurement  standards. 
Regulations on relations between DGM and other designated laboratories and on supervision 
have also been drafted. To facilitate involvement of the private sector, DGM has identified the 
requirements for legal persons performing particular legal metrology tasks. It has also signed 
a  mutual  recognition  arrangement  with  the  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  surveillance  for  2007-2013  was  approved  in  November 
2007.  It  is  based  on  three  sectoral  strategies,  one  on  consumer  protection  and  market 
surveillance  for  industrial  products,  one  on  food  products  and  the  other  on  pharmaceutical 
products.  The  respective  implementing  institutions  are  the  Ministry  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  consumers  on  dangerous  products  (e.g.  toys  and 
electrical equipment) and have taken measures to withdraw such products from the market.  

Albania has made some progress in approximating its horizontal legislation and its product-
specific  technical  regulations  to  the  acquis.  Legislation  has  been  amended  to  transpose  the 
directives  on  toys,  simple  pressure  vessels,  pressure  equipment,  low-voltage  equipment  and 
electromagnetic compatibility. However, in the case of the old approach directives, the only 
progress which can be reported is in the field of metrology.  

A Law on consumer protection which broadly takes into account the relevant EU standards 
was  adopted.  The  new  law  provides  the  legal  basis  for  settlement  of  disputes,  with  a 
Consumer Protection Commission and a Consumer Protection Council as the decision-making 
and  consultative  bodies  respectively.  However,  these  bodies  have  not  yet  been  established. 
(See the paragraph on market surveillance 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  administrative  infrastructure  exists,  but  the 
capacity  of  the  various  authorities  and  institutions  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 qualifications 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 

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property  rights  are  still  discouraging  establishment.  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  (general  partnerships,  limited  partnerships,  limited 
liability companies and joint-stock companies). However, the new Company Law falls short 
of addressing the issues of cross-border mergers and takeover bids. Preparations in this area 
are advancing.  

No progress can be reported on auditing. The issue of statutory audits 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 million over the last two years and with 100 or 
more  employees  need  to  apply  IAS.  The  National  Accounting  Council  is  responsible  for 
supervising  and  monitoring  implementation  of  the  accounting  standards.  Further  efforts  are 
needed to build a credible and properly functioning financial reporting framework, especially 
for  small  and  medium-sized  enterprises.  Enforcement  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 providing services on a temporary basis and providing them via a 
permanent  establishment.  The  government  issued  decisions  on  licensing  and  assets.  As 
regards postal services, a draft text establishes weight limits in the reserved area and tariffs for 
the universal service provider, and the government plans to liberalise Albania’s postal market 
by 2009. The regulatory authority for postal services was established 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  reported  concerning  financial  services.  The  Bank  of  Albania  has 
adopted  several  of  the  implementing  regulations  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 offer 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  management.  However,  further  administrative  capacity  would  be 
necessary in order to take into account developments in the banking sector. 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 schemes, which account for two thirds of all non-life 
insurance.  The  recent  entry  of  three  foreign  insurance  companies  has  not  resulted  in  any 

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diversification  of  the  Albanian  market.  Motor  third-party  liability  (MTPL)  has  not  yet  been 
liberalised and the mandatory green 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  into  force,  aiming  to  approximate  Albania’s 
legislation to a number of directives, such as the Markets in Financial Instruments Directive 
and  those  on  prospectuses,  transparency,  insider  dealing  and  credit  institutions.  Three  more 
decrees were approved relating to insurance brokerage, reserve funds and insurance damage 
assessors. 

The  Financial  Surveillance  Authority  (FSA)  launched  a  computerised  system  for  MTPL  - 
known  as  the  national  data  centre  –  as  provided  for  under  the  Fourth  and  Fifth  Motor 
Insurance  Directives.  The  system  aims  to  make  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  present,  90%  of  the  FSA’s  overall 
budget is financed from its own resources; the 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  legislative  framework  on 
foreign  exchange  is  being  revised,  but  the  process  has  not  yet  been  completed.  Significant 
restrictions still remain to the full liberalisation 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  accelerate  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  house  has  increased.  The 
number of credit and debit cards in use has also 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 intermediation continues to be relatively low.  

Preparations in the field of free movement of capital and payment systems 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  provided  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  during  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. Migration 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 

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Albania’s  first  free  zone  in  the  port  of  Duress.  38  customs  warehouses  were  authorised  in 
2008. 

The Combined Nomenclature 2008 for the classification 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 standards. Control of dual-use goods has been 
implemented  in  the  risk  management  system.  However,  no  progress  can  be  reported  on 
effective control of intellectual property rights by customs authorities. 

Further  progress  is  needed  on  approximation  to  EU  practices,  in  particular  on  simplified 
procedures,  rules  of  origin,  valuation  methods  (greater  use  of  transaction  value)  and  transit 
(ATA  Convention).  A  study  of  the  economic  impact  of  the  ATA  carnet  procedure  was 
performed.  An  agreement  needs  to  be  signed  between  the  customs  DG  and  a  guarantor 
national association. The compliance with the Interim Agreement of Albania’s tax regime for 
imported cars needs to be determined. 

As  regards  administrative  and  operational  capacity,  legislation  was  approved  in  July  2008 
increasing  the  staff  of  the  customs  administration  by  27  posts.  The  procedure  to  establish  a 
qualified  pool  of  trainers  has  started  and  training  activities  were  organised  on  customs  and 
tariff issues, free trade agreements and TIR procedures. However, a training strategy has not 
yet  been  established.  A  new  performance  indicators  system  has  been  defined  to  facilitate 
career  development.  However,  the  system  only  allows  individual  assessments.  Customs 
officials still do not have civil servant status. 

As  regards  infrastructure  development,  work  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  being  established  and  procedures  have  been 
launched  for  construction  of  10  other  smaller  BCPs.  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  requiring  payment  of  the  full  tax  assessed  plus  a 
15%  fine  before  lodging  a  court  appeal  against  decisions  of  the  tax  administration  was 
abolished. The taxation system is becoming simpler, 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, particularly as regards income tax and 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 taxpayers are now registered in 
the integrated tax system. E-tax procedures are being implemented and are already being used 
by  taxpayers  to  file  their  returns  and  pay  their  taxes.  The  Directorate  for  Registration  and 
Taxpayer Services came into operation 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 provided to staff of the tax administration. Disciplinary measures 
have been taken against staff failing to perform as required by their duties.  

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However,  the  overall  tax  collection  rates  remain  low,  especially  from  local  governments. 
There  is  a  need  to  increase  the  capacity  of  local  government  tax  offices,  especially  in  the 
framework of fiscal decentralisation. A comprehensive tax collection and control strategy has 
not yet been developed and the informal economy is still high. 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 concerning the  definition of small wine producers  and 
certain cases of reimbursements of excise on fuel.  

Overall, preparations in the field of taxation are advancing moderately. Efforts are needed to 
approximate  Albanian  legislation  to  the  acquis,  ensure  its  compliance  with  the  Interim 
Agreement and reinforce the administrative capacity to curb the informal economy and reduce 
tax evasion.  

4.1.5.  Competition 

Progress  continued  in  the  anti-trust  field.  The  Albanian  Competition  Authority  (ACA) 
recruited additional staff and filled all its 35 posts. 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 structure 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 authorities. These included the Bank of Albania, the Ministry of Economy, 
Trade  and  Energy,  the  Regulatory  Entity  of  Telecommunications,  the  Association  for  the 
Protection  of  Consumers,  the  Directorate-General  of  Customs  and  the  Agency  for  Public 
Procurement.  Competition  culture  in  Albania  is  slowly  evolving.  Businesses  have  started  to 
submit complaints about anti-competitive practices. This points to growing public awareness 
of the benefits of competition enforcement.  

The  ACA  imposed  fines  of  2%  of  total  turnover  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  ACA  also  decided  to  impose  fines  on  bread 
producers  and  cement-makers  for  violation  of  competition  rules.  The  ACA  issued 
recommendations  on  the  telecommunications  market.  It  continued  its  investigation  into  the 
insurance  market,  concluded  a  sectoral  investigation  on  the  energy  market  and  started 
analysing  the  banking  sector.  It  also  assessed  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 implementing rules on horizontal aid and of guidelines 
on aid in the form of compensation for public services. The staff of the State Aid Department 
(SAD)  continued  to  receive  training,  including  on  aid  in  the  utilities  sector.  The  SAD 
provided advice on several legislative drafts and continued to raise awareness among State aid 
providers. A report on the inventory of existing aid schemes was approved in January 2008, 
and  the  annual  report  on  State  aid  for  2007  was  approved  in  July  2008.  The  State  Aid 
Commission  took  eight  decisions  on  cases  notified  by  aid  providers.  Albania  has  started 
preparations  for  implementing  the  State  aid  provisions  in  the  iron  and  steel  protocol  to  the 

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Interim Agreement. However, no decision on granting State aid to the iron and steel sector has 
yet been taken. Further efforts are needed as regards implementation. 

Overall, preparations in the area 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  first  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  procedures  without  prior  publication  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 procurement directives.  

The  capacity  of  the  Public  Procurement  Agency  (PPA)  was  strengthened  by  recruiting  10 
additional  staff.  The  PPA  continued  to  organise  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 further 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 established 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 framework 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  contracting  authorities.  Current  procedures  for 
handling complaints still do not meet recognised international standards.  

Albania introduced electronic procurement at the end of 2007. It is now used by all ministries 
and  also  by  the  Power  Corporation  and  the  Directorate-General  for  Roads.  However,  its 
application  is  hampered  by  technical  problems  and  the  insufficient  IT  capacity  of  many 
contracting authorities.  

Overall, preparations in the area of public procurement are advancing. However, there is no 
coherent, comprehensive strategy for further development of the procurement system in either 
the  medium  or  long  term.  Further  approximation  is  required  in  all  areas  of  public 
procurement, particularly for concessions and utilities.  

4.1.7. 

Intellectual property law 

There  has  been  limited  progress  on  intellectual  property  rights.  The  Albanian  Copyright 
Office  (ACO)  signed  memoranda  of  understanding  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 fighting piracy and enforcing the copyright law. 
Joint  inspections  were  carried  out  with  the  tax  administration  in  several  cities,  and 
administrative  fines  were  imposed  for  infringements  of  copyright.  However,  the  number  of 
cases  of  violation  of  copyright  law  brought  to  court  is  low.  Amendments  to  the  provisions 
implementing  the  Customs  Code  relating  to  intellectual  property  rights  and  brand  controls 
were  adopted  in  order  to  allow  products  to  be  classified  as  “fake”,  “pirated”  or  “liable  to 

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infringe  the  rights  of  patent  or  certificate  owners”.  The  draft  national  strategy  on  culture 
partially addresses issues regarding protection of copyright. However, a national strategy on 
intellectual property rights has not yet been prepared. 

Several public information campaigns on intellectual property rights were organised and ACO 
staff  received  specific  training  on  copyright  and  law  enforcement  issues.  However,  the 
capacity  of  the  ACO  needs  to  be  strengthened  by  further  training  and  additional  human 
resources.  Currently,  a  single  copyright  inspector  is  supposed  to  cover  the  entire  country. 
There are plans for regional copyright offices, but these have not yet been established. 

There  has  been  some  progress  as  regards  industrial  property  rights.  A  new  Law  on 
industrial property rights was adopted in July 2008. Its implementing legislation is still being 
drafted.  A  Board  of  Appeal  was  established  in  the  Directorate  for  Patents  and  Trademarks 
(DPT)  and  the  Directorate  completed  the  reorganisation  of  its  computer  system.  The  DPT 
organised training seminars and activities to promote the values of industrial property rights, 
and  the  European  Patent  Office  (EPO)  provided  assistance  to  both  the  DPT  and  ACO.  A 
bulletin  of  industrial  property  rights  containing  records  of  registrations  and  changes  of 
intellectual property rights titles is published and 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. Preparations for its ratification are underway. 

The  capacity  of  both  the  ACO  and  the  DPT  require  further  strengthening.  Piracy  and 
counterfeiting  remain  widespread.  Enforcement  is  hampered  by  insufficient  inspection 
capacity and the low level of fines under the current 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 intellectual property rights that are brought to court is still too 
low.  Further  efforts  are  needed  to  improve  inter-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  areas  of  intellectual  and  industrial  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 adopted. Its main objective is to reduce the 
level  of  unemployment  to  a  level  comparable  to  that  in  EU  countries  by  2013.  New 
employment promotion programmes have been adopted, providing subsidies to employers for 
training  and/or  hiring  jobless  persons.  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 impact of such programmes are still lacking. 

Minimum wages and pensions continued to increase and legislation increasing the base level 
of  unemployment  benefit  was  approved.  A  computer-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  market  demand  is  not  sufficient,  and  the  capacity  of  the  labour 
offices to carry out labour market surveys is not strong enough. Also the capacity of regional 
labour offices remains limited. 

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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 Ministers adopted a decision on the determination of dangerous 
substances.  A  working  group  has  been  set  up  to  draft  the  national  strategy  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  established,  although  they  lack  adequate  physical 
resources. The Directorate for Health and Safety at Work was reorganised and strengthened, 
but it does not have adequate capacity to assess rights at work and its technical resources are 
poor. The Gerdec incident in March 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  and  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, protecting children and ensuring social inclusion 
of minorities, the disabled and the elderly. The 2008 budget provides 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 increase in the economic assistance provided. The 
strategy  also  provides  for  decentralisation  of  services  to  local  government.  43  community-
based  services  and  29  residential  services  for  the  disabled  and  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  applicable  to  social  care  services.  However, 
analyses  of  poverty  and  social  exclusion  are  not  sufficiently  developed,  including  enhanced 
poverty monitoring. (See also political criteria - economic and social rights.)  

Efforts have been made to improve the financial sustainability of the social insurance scheme. 
Procedures  for  pensions  and  social  insurance  have  been  improved.  Work  has  started  on  a 
centralised digital social security archive which will allow electronic registration of individual 
accounts and contributors and payment of benefits.  

Overall,  preparations  in  the  areas  of  employment  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 framework 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.) 

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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  previous  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’ salaries are planned in the years ahead. 

The National Council of Pre-University Education 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  entry  exams  for  universities  (“State  matura”)  is 
continuing  and  participation  by  disabled  students  in  the  scheme  is  being  facilitated.  A  new 
digital  central  system  for  university  admissions  has  been  established  and  career  counselling 
for  higher  education  applicants  has  been  introduced.  Programmes  to  develop  teachers’ 
professional  qualifications  have  continued.  Legislation  to  liberalise  the  textbook  market  has 
been approved. A scheme for subsidising purchases of textbooks was introduced for students 
from vulnerable groups and families receiving social assistance.  

Work  on  development  of  the  Albanian  qualifications  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 implementation 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 also being made to make vocational education 
and  training  (VET)  more  attractive  and  to  involve  potential  employers  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 infrastructure is hampering development 
of  this  sector.  Efforts  are  needed  to  consolidate  and  expand  the  network  of  vocational 
education centres and to foster closer links between education and the labour market. 

The National Tempus Office (NTO) has improved its monitoring capacity and its cooperation 
with the Ministry of Education and Science. However, further efforts by the NTO are required 
to increase participation in the programme by improving the quality of the projects submitted 
by Albanian universities. Preparations in the field of education are advancing moderately.  

There  has  been  some  progress  in  the  area  of  research.  Since  January  2008,  Albania 
participates  in  the  Seventh  EC  Framework  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 national research capacity, including investment 
in research infrastructure and incentives to attract students to science. Efforts are also required 
to increase cooperation with other international partners.  

A  mid-term  budgetary  plan  for  scientific  research  for  the  period  2009-2011  has  been 
approved, marking an annual increase of 35% in the national 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 policy. 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 Albanian researchers working abroad to return. 

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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 European Euraxess service. 

Overall, preparations in the area of research are advancing moderately. 

4.1.10.  WTO issues 

Albania is continuing to implement its relevant WTO obligations. 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  economic  cooperation.  Albania  is  working  on 
identification  of  training  needs  to  enhance  its  trade  policy-making  capacity.  The  WTO 
concluded  successfully  the  assessment  of  the  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  the  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 Centre for Business (NRC) can  register a new 
business  in  a  single  day.  The  number  of  steps  required  for  registering  a  business  has  been 
reduced and registration costs are now approximately 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-operation between the NRC and the chambers of commerce and 
industry. However, further efforts are required to strengthen the 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-declaration. Work is in progress to identify other 
licences  that  could  be  removed.  However,  licensing  and  post-registration  processes  require 
further simplification and the removal of licences needs to be accompanied by a strengthening 
of  the  supervision  capacities  of  public  agencies  in  order  to  guarantee  the  standards  that 
safeguard consumer rights.  

An  online  commercial  register  was  established,  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 tax from 20% to 10%. Businesses can file their 
tax  returns  and  social  contributions  declarations  electronically  in  12  cities  including  Tirana. 
Electronic payment of taxes is also possible through certain banks. A new law on companies 
was  adopted  in  April  2008  following  the  approval  of  the  new  SME  strategy  in  2007.  The 
Bankruptcy law was adopted, providing a more efficient framework for market exit. The Law 
on Chambers of Commerce and Industry was amended to remove the mandatory requirement 
for companies to register with the Chamber. The Business Advisory Council has been active 
in  representing  business  interests.  However,  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 guarantee fund are being implemented. The law on 

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leasing has been amended. In June 2008 the government approved the regulatory framework 
for the implementation of a € 30 million credit facility agreed between Albania and Italy. Its 
Project  Management  Office  has  been  established.  However,  further  efforts  are  required  in 
order to improve the competitiveness of the SME sector. 

Overall,  Albania  has  taken  steps  to  significantly  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 resolution 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  adopted,  thereby  providing  the  legal  basis  for 
agricultural  and  rural  development  policy.  The  government  approved  the  Agriculture  and 
Food Sector Strategy and the cross-cutting Rural Development Strategy for the period 2007-
2013. A new law on food was approved which provides support for geographical 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 production, 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 activities and media presence. Cooperation with the 
Agricultural  Technology  Transfer  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 managing authority responsible for programming rural 
development  support  measures  and  for  leading  the  monitoring  and  reporting  process  was 
established. A study on the setting up and functioning of the payment agency provided for in 
the  Law  on  agriculture  and  rural  development  was  completed.  The  Agency  is  due  to  be 
operational in 2009. 

However, structural weaknesses such as land fragmentation, poor marketing 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  increase.  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 general 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 compliance with EU legislation. The State budget supported prophylactic 
measures against brucellosis, tuberculosis, anthrax, and classical swine fever. The government 
has taken measures to promote registration of small ruminants. Funds have been allocated for 
the  registration  of  all  bovines  by  the  end  of  2008.  However,  implementation  of  registration 

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has been delayed and only 40-45% of this target 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 considered to be equivalent to 
the Community system. Specific guarantees concerning histamine are still requested for each 
consignment of fish and fishery products intended for the EU market. Albania is developing 
its  own  capacity  for  histamine  testing.  However,  further  progress  in  upgrading  and 
accreditation of laboratories is still necessary. 

There has been limited progress in the phytosanitary sector. Amendments have been adopted 
to  the  Law  on  the  Plant  Protection  Service  and  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 improving the legal  framework on  agriculture and 
rural development, food safety, veterinary and phytosanitary policy, but further efforts are still 
required in order to enhance the capacity of all actors involved. Preparations 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 member of the International Commission for the 
Conservation of Atlantic Tuna. Regarding inspection and control, the fines 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 directorate of Fisheries Policies in the Ministry 
of Environment, Forestry and Water Administration does not have inspection vessels. It has to 
rely on the Border Police, which does not have appropriate training for fisheries inspection. 
Albania  is  making  progress  towards  the  establishment  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 fisheries 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  approved.  The  National  Environmental  Law  was 
amended  and  the  government  approved  a  Decision  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 concerning the development 
of the Clean Development Mechanism (CDM). Some activities have been carried out in the 
field of civil protection. 

Limited  progress  can  be  reported  on  air  quality  in  urban  areas.  Additional  monitoring 
equipment was provided and contracts were signed 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 monitoring of air quality. 

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There  has  been  little  progress  in  the  area  of  waste  management.  The  government  adopted 
some implementing regulations. Apart from the rehabilitation 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  hotspots,  in  particular  for  the  Copper  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  assessment  of  environmental  hot  spots  has  started.  However,  Albania 
lacks a modern system of waste collection, disposal and recycling, and has not set up a clear 
strategy  for  the  safe  disposal  of  hazardous  waste.  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 country, but it is not yet operational. Four others are in the final 
stages of construction. Pollution of bathing waters remains a serious problem in some places 
due  to  direct  discharges  from  sewerage  systems  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  implementation  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 field 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 evaluation 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  National  Environmental  Strategy  has  not  yet  been 
approved. Further efforts are needed towards ratification and implementation of international 
conventions.  

is  making  slow  progress,  but 
Overall  approximation  of 
implementation  and  enforcement  are  still  lagging  behind.  Preparations  in  the  field  of  the 
environment are advancing slowly.  

the  acquis 

legislation 

to 

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4.2.4.  Transport policy 

There has been some progress in the area of trans-European transport networks. Albania 
continued to participate actively in the implementation 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 continued 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 the Ministry of Public 
Works, Transport and Telecommunications. The Institute will be responsible for maintaining 
and updating the Albanian National Transport Plan (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. Albania is granting unrestricted 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  Directorate  (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 Management Unit was established in July 2008. 
Work  is  in  progress  on  the  review  of  necessary  legislation,  and  on  the  financial  and 
organisational  requirements.  The  GRD  has  started  work  on  the  establishment  of  the  Road 
Asset Management System and has introduced performance-based maintenance contracts in a 
number  of  Regional  Roads  Directorates.  The  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, illegal constructions 
along new roads and limited level of education of drivers, continue to pose a serious problem 
to road safety. Preparations in the field 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  Regional  Transport  Network  for  a  South  East  European  Railway 
Transport  Area",  aimed  at  the  gradual  market  opening  of  the  rail  transport  market.  From 
January  2008  the  reorganization  of  Albanian  railways  became  effective.  The  aim  of  the 
reorganisation  is  to  separate  passenger,  freight,  infrastructure  and  services  branches  into 
individual  business  units.  However,  the  business  plan  for  the  Albanian  railways  has  not  yet 
been adopted. Preparations in the rail transport sector are lagging behind. 

Progress  in  the  area  of  maritime  transport  has  been  limited.  The  parliament  adopted 
legislation on the accession to the International Convention for the control and management 
of ballast water of vessels. Legislation aimed 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 Administration. However, substantial efforts are still 
required in order to improve maritime safety. Albania's very high rate of detention for vessels 

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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 Albanian 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  progress  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  Agreement  (ECAA),  has  not  yet  been  confirmed.  Work  is  in 
progress on the implementation of the first transitional phase of the ECAA. However, there 
have  been  delays  in  implementing  the  corrective  action  plan  approved  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  still  required  to  strengthen  the 
administrative  capacity  of  the  CAA,  as  its  new  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 monitor their establishment. 

Activities to improve the security of energy supply have continued. Construction of the Vlora 
thermal  power  plant  is  in  progress.  Albania  has  signed  25  concession  agreements  for 
construction  of  small  hydro-power  plants,  and  a  further  87  proposals  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  interconnection  line  Elbasan–
Podgorica and on the National Dispatch centre. However, Albania 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 not sufficient to meet domestic demand. Limited 
interconnection capacity continues 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  and  approved  the  market  rules,  in  order  to 
ensure  the  necessary  framework  for  the  opening  and  the  functioning  of  the  wholesale  and 
retail market. As from January 2008 all non-domestic consumers became eligible consumers 
and were granted the right to choose their own suppliers in line with the requirements of the 
Energy  Community  Treaty.  However,  all  customers  except  one  have  chosen  to  remain  as 
tariff customers in 2008. A monitoring structure was established within the ERE to allow the 
implementation  of  its  market  monitoring  responsibilities.  Most  licensing  and  authorisation 
review  procedures  are  now  in  place.  However,  ERE  needs  to  increase  its  decision  making 
capacities  and  ensure  transparency  of  the  decision  making  process.  The  process  of 
restructuring the electricity company KESH continued. The Transmission System Operator is 
unbundled and has drawn up its financial statements. Legislation establishing the Distribution 
System Operator as an independent entity was approved and the process for its privatisation is 
ongoing. 

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Electricity tariffs were increased by an average of 15 % in March in an effort to bring them 
closer  to  cost  recovery  levels.  Technical  losses  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 Energy 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  hydroelectric  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  Radiation  Protection  Commission  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  require  strengthening. 
Efforts  need  to  continue  to  ensure  compliance  with  Euratom  Treaty  requirements  and 
procedures, in particular as regards the environmental monitoring and radiation protection in 
the context of medical and industrial applications. Albania has not yet signed the Convention 
on Nuclear Safety and the Joint 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  regards  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  restructuring  the  electricity 
company KESH and stabilising its financial situation, as well as on the security 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  electronic  communications,  aimed  at 
transposing  the  2002/2003  EU  regulatory  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 agreements with the rural operators. Based on 
the new primary law, a tariff methodology addressing the tariffs of the three largest operators 
(fixed and mobile) at both wholesale and retail level was approved in June 2008. It started to 
be  applied  on  1  September,  leading  to  overall  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  strategy  and  related  policy  documents,  and 
secondary  legislation  for  the  implementation  of  the  new  law  on  electronic  communications 
have  not  yet  been  adopted.  Market  liberalisation  and  competition  are  still  at  an  early  stage. 
Overall,  there  is  lack  of  competition  safeguards  such  as  tariff  rebalancing,  good  reference 
interconnection  offers,  carrier  selection  and  pre-selection,  number  portability  and  local  loop 
unbundling.  The  legislative  amendment  of  2006  allowing  operators  to  apply  for  urban  and 
regional  licences  in  addition  to  the  rural  and  national  licences  did  not  have  the  expected 
impact in 2007. 

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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 Entity or TRE). The agency needs to develop the 
necessary expertise for implementing and enforcing the new legislation. Overall, 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 operational in September 2007. Its main objective is 
the co-ordination of all activities in the field 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 law on e-signature, and for data protection, as 
well as legislation on e-commerce and e-documents, 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.  Preparations  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 drafted in cooperation with international bodies and the relevant 
actors.  The  National  Council  of  Radio  and  Television  (NCRT)  adopted  regulations  on  the 
licensing  of  digital  broadcasting  and  on  the  criteria  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  frequency  bands  174-230MHz  and  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 radio 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 resources. 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  components  –  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  framework.  A  Central  Harmonisation  Unit  for  FMC 
was established in July 2008 as a Directorate within the Treasury. Its director and one of its 
three other staff members 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, but they continue to perform mainly inspection 

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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 Parliament 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 progress 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 Albanian statistical 
office (INSTAT) was increased, its salary scales were upgraded and additional staff have been 
recruited. Working conditions at INSTAT headquarters improved. Offices were renovated and 
the  IT  infrastructure  was  upgraded.  A  new  organisational  structure  for  INSTAT  has  been 
prepared  and  provides  for  a  reduction  in  the  number  of  regional  offices  by  merging  district 
offices at the level of  prefectures. The multi-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  monetary  and  financial  statistics.  However, 
cooperation agreements should also be signed 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 register 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 census is scheduled for 2011 and INSTAT has 
initiated  preparatory  activities.  However,  measures  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  accounts  have  been  prepared  from  2005,  but  further 
work is needed to fully align the national accounts with ESA 95. 

The  coverage  of  business  statistics  has  been  improved  since  the  beginning  of  2008. 
Concerning  agricultural  statistics,  the  preparation  of  a  census  on  agriculture  has  started. 
However, efforts are required to ensure that agriculture statistics comply with EU standards, 
and cooperation between INSTAT and the Ministry of Agriculture needs to be enhanced. 

Overall,  there  has  been  progress  in  the  field  of  statistics.  Preparations  are  advancing,  but 
further  improvements  are  still  necessary  in  key  areas,  such  as  macro-economic,  regional, 
business and agricultural statistics. 

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4.3. 

Justice, freedom and security 

4.3.1.  Visa, border, control, asylum and migration 

There  has  been  some  progress  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 company 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 for ID cards and to ensure adequate document security. 

The EC-Albania visa facilitation agreement entered into force in January 2008. The dialogue 
on visa liberalisation between the EU and Albania 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 the roadmap in September 2008. 

Albania operates a visa-free regime for all EU Member States. It signed a visa-free agreement 
with  the  former  Yugoslav  Republic  of  Macedonia  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, includes 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, visas 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  progress  in  the  field  of  border  control.  The  new  Law  on  State  Border 
Control  was  approved  in  January  2008.  The  Albanian  State  Police  (ASP)  has  prepared  a 
progress  report  on  implementation  of  the  National  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 improvements, further investments are required to 
improve  the  infrastructure  at  border  crossing  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.  Several  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 sound legal basis for cross-border cooperation. However, cross-
border cooperation needs further improvement and institutionalisation. 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.  Construction  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 senior border guards. A broader 
longer-term training policy, aiming at building capacity to detect falsified documents, illegal 
migrants or victims of trafficking, has yet to be implemented. 

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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, albeit slowly. Civilian command 
of the coast guard, in line with Ohrid commitments, is still 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.  Equipment  to  patrol  the  blue  border  needs 
upgrading.  Specialised  training  and  closer  coordination  between  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  Department  for  Citizenship  and  Refugees  are  not 
sufficient to fulfil the obligations under the 1951 Convention relating to the status of refugees, 
particularly  for  implementation  of  the  pre-screening  system.  Coordination  with  the  border 
police  is  weak.  Asylum  procedures  at  reception  centres  are  not  applied  in  a  standardised 
manner. The infrastructure needs upgrading. 

A  more  effective  data  management  system  for  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 Management System (TIMS) introduced at 15 border 
crossing points needs to be turned into an effective tool for data collection and management. 

Overall, Albania continues partially to meet 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 Migration, including the associated Action Plan. 
The Ministry is actively coordinating implementation of the strategy, 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 for seasonal agricultural work. This border is 
the  most  critical  entrance  point  for  illegal  immigrants  to  the  EU  from  Albania.  In  the  first 
eight months of 2008, a total of 9,382 persons were apprehended 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  first  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  Migration  is  upgrading  reception  and  processing 
facilities for illegal migrants at several of the main border crossing points. However, facilities 

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overall  are  poor.  Cooperation  with  neighbouring  countries  on  illegal  migration  needs  to  be 
enhanced. 

In January 2008, new regional directorates were established within 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  protocols  with  Greece  and  the  Czech  Republic. 
Negotiations are underway for renewing the readmission 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-Albania  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  significant  problem,  especially  at  the  Albanian–Greek 
green border. Albania continues partially to meet its targets 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, particularly the private sector, remains largely cash-
based. In terms of mechanisms to control cash 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, several 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  are  now  in  line  with  international  standards. 
Although 
the  MoneyVal 
recommendations, it is still not fully aligned with the acquis. Better definition of concepts and 
implementation guidelines are needed.  

instruments,  such  as 

international 

incorporates 

law 

the 

A national strategy to prevent and fight against money laundering and financing 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.  Premises  and  equipment  levels  have  improved. 
However, the FIU's capacity remains limited. Staff turnover remains a concern. Coordination 
and cooperation with the Prosecutor's Office remains problematic.  

A  new  office  to  combat  money  laundering,  within  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  police  also  results  in 
unprocessed  intelligence,  which  is  subsequently  lost.  The  investigative  and  enforcement 
capacity of the police and the Prosecutor General remain weak. 

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Under the Prosecutor General, a task force has been established. The Joint Investigation Unit 
for the Fight against Economic Crime and Corruption (JIU) is now operational. However, the 
administrative capacity of the JIU requires further strengthening.  

Progress  can  be  reported  as  regards  unregistered  currency  exchanges.  The  Bank  of  Albania 
approved  new  regulations  on  licensing  and  supervision  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 against 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 period 2004–2010 is in place, but implementation is 
hampered by the scant human and financial resources 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  schools  and  universities  and  on  the  handling  of 
narcotics. The Ministry of the Interior's order against the cultivation 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  valid  strategy  for  drug  demand  reduction  and  the 
availability of the services provided - including treatment and prevention - remains limited. 

Drug-related prosecutions have increased. Large amounts of cocaine and cannabis have been 
confiscated. By contrast, seizures of heroin at border crossing points have fallen by roughly 
50%.  

The  government  continues  to  make  use  of  joint  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 counter-narcotics continued. Additional 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,  cultivation  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.  Other  areas  in  which  progress  has  been  made 

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include  border  and  port  security,  training  reforms  and  establishment  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 career structures for officers. The 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  experience  and  qualifications, 
completed  in  June  2008,  highlighted  skills  gaps,  particularly  in  specialist  departments.  In 
addition, the practice of removing previously trained and competent staff from their posts is 
adversely  affecting  the  police.  Another  problem  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 human resources is still unsatisfactory. 

In April 2008, a cooperation agreement was signed 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 parallel 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 cooperation and better exchange of information. 
Europol  and  Albania  are  also  working  on  conclusion  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 fighting 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  prosecutors  continued  to  hamper  the  fight 
against  organised  crime.  Although  cooperation  between  organisations  has  improved  at  high 
levels, at operational level it is still problematic. The standardisation of case reporting will be 
the key to progress here. 

At present, there is a lack of capacity to engage 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  May  2008,  police  officers  working 
within  the  judicial  police  units  of  the  Prosecutor's  Office  have  returned  to  the  ASP.  This 

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should help to improve cooperation and reduce any overlaps. However, investigative capacity 
within the police and the General Prosecutor's Office remains weak. 

Cooperation  between  Interpol  Tirana  and  other  countries  has  continued,  particularly  at 
borders with Greece. The number of wanted Albanians 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 cooperation, several criminal organisations operating abroad 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,  coordination  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 Ministry 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  the  area  of  victim  protection  and  identification. 
Albania  continues  to  be  a  source  country  for  human  trafficking,  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  women  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 beings. A database on victims of trafficking has 
been installed at the Department for Border Police and Migration, but is not yet operational. 

The  Office  of  the  National  Anti-Trafficking  Coordinator  (ONAC)  coordinated  the 
consultation process leading to the adoption, in July 2008, of the National Strategy to Combat 
Human Trafficking and the National 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- trafficking strategy, particularly regarding victim 
protection. 

The ONAC held meetings with neighbouring countries to enhance regional cooperation. An 
additional  protocol  was  signed  with  the  former  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.  Coordination  between  NGOs  and  law  enforcement  bodies  needs  to  be 
improved. Coordination and cooperation among the recently established structures at central 
and local levels (responsible authority 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  alternative  protection  and  assistance  for  victims  of 
trafficking. Training for law enforcement officials within the anti-trafficking sector should be 
enhanced. 

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Albania  is  only  partially  meeting  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  terrorism  was  ratified  in  2005.  Strategies,  action 
plans and operational responses to the threat of terrorism in Albania 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 institutions 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-terrorism framework are still at the 
early stages.  

4.3.6.  Protection of personal data 

There has been progress in the area of protection of personal data. The new Law on protection 
of personal data entered into force in April 2008. In September 2008, the Commissioner for 
Data  Protection  was  appointed  by  parliament  and  the  structure  for  the  independent  data 
protection supervisory authority was agreed. Overall, preparations in the field of protection of 
personal data are advancing. 

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STATISTICAL ANNEX 

STATISTICAL DATA (as of 29 September 2008) 
Albania 

Basic data 
Population (thousand) 
Total area of the country (km²) 

National accounts 
Gross domestic product (GDP) (million national currency) 
GDP (million euro) 
GDP (euro per capita) 
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) 
SI: Employment growth (national accounts, % change on previous year) 
Labour productivity growth: GDP growth per person employed (% 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 
Industry 
Construction 
Services 

Final consumption expenditure, as a share of GDP (%) 
Households and NPISH, as a share of GDP (%) 
General government, as a share of GDP (%) 
Gross fixed capital formation, as a share of GDP (%) 
Changes in inventories, as a share of GDP (%) 
Exports of goods and services, relative to GDP (%) 
Imports of goods and services, relative to GDP (%) 

Industry 
Industrial production volume index (2000=100) 

Inflation rate 
SI: Consumer price index (CPI), (total, % change on previous year) 

Balance of payments 
Balance of payments: current account total (million euro) 
Balance of payments current account: trade balance (million euro) 
Balance of payments current account: exports of goods (million euro) 
Balance of payments current account: imports of goods (million euro) 
Balance of payments current account: net services (million euro) 
Balance of payments current account: net income (million euro) 

Note
1) 

Note

Note

Note

Note

1998 
3 354 
28 750 

1999 
3 373 
28 750 

2000 
3 058 
28 750 

2001 
3 063 
28 750 

2002 
3 084 
28 750 

2003 
3 103 
28 750 

2004 
3 120 
28 750 

2005 
3 135 
28 750 

2006 
3 149 
28 750 

2007 
3 153 
28 750 

2005 

2004 

2001 

2003 

2000 

1999 

1998 

2002 
409 209 471 578  523 043 583 369 622 711 694 098 750 785 814 797 891 000 
4 705 
1 525 
: 
: 
4.2 
: 
: 
: 
: 

3 209 
951 
: 
: 
13.5 
: 
: 
: 
: 

3 945 
1 290 
: 
: 
6.7 
: 
: 
: 
: 

2 419 
721 
: 
: 
9.0 
: 
: 
: 
: 

5 881 
1 885 
: 
: 
5.7 
: 
: 
: 
: 

4 541 
1 482 
: 
: 
7.9 
: 
: 
: 
: 

7 239 
2 299 
: 
: 
5.5p 
: 
: 
: 
: 

6 561 
2 093 
: 
: 
5.8p 
: 
: 
: 
: 

5 048 
1 627 
: 
: 
5.8 
: 
: 
: 
: 

2006 

28.8 
7.4 
5.0 
58.8 
102.4 
92.2 
10.3 
21.0 
0.3 
10.8 
34.6 

1998 
: 

1998 
8.7 

1998 
-61 
-537 
185 
722 
-38 
69 

25.8 
7.3 
6.0 
60.9 
92.7 
82.7 
10.0 
23.0 
0.7 
15.8 
32.2 

1999 
: 

1999 
-1.0 

1999 
-129 
-626 
258 
884 
96 
71 

25.5 
7.8 
8.3 
58.5 
86.0 
76.6 
9.5 
31.7 
2.4 
17.9 
38.1 

2000 
: 

2000 
4.2 

2000 
-185 
-897 
277 
1 174 
12 
115 

23.6 
7.3 
10.4 
58.6 
80.9 
70.5 
10.4 
38.4 
1.3 
18.4 
39.0 

2001 
: 

2001 
3.5 

23.4 
6.9 
12.0 
57.6 
86.0 
74.8 
11.2 
37.9 
0.8 
19.6 
44.3 

2002 
: 

2002 
1.7 

23.5 
8.7 
13.7 
54.0 
86.1 
75.2 
10.9 
40.5 
-1.8 
20.4 
45.1 

2003 
: 

2003 
3.3 

22.3 
10.0 
13.9 
53.8 
89.2 
78.2 
11.0 
37.2 
-4.0 
22.0 
44.4 

2004 
: 

2004 
2.2 

2001 
-316 
-1 149 
340 
1 489 
100 
150 

2002 
-444 
-1 218 
348 
1 567 
-8 
116 

2003 
-350 
-1 177 
395 
1 572 
-72 
132 

2004 
-340 
-1 277 
486 
1 762 
-41 
138 

20.7p 
9.7p 
14.3p 
55.3p 
87.0p 
76.2p 
10.8p 
36.3p 
1.2p 
22.8p 
47.3p 

2005 
: 

2005 
2.0 

2005 
-589 
-1 477 
530 
2 007 
-140 
131 

2007 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

2006 
: 

2006 
2.5 

2006 
-471 
-1 658 
631 
2 290 
-32 
209 

2007 
: 

2007 
3.1 

2007 
-832p 
-2 104p 
786p 
2 890p 
13p 
217p 

EN 

51 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance of payments current account: net current transfers (million euro) 

of which government transfers (million euro) 

Foreign Direct Investment (FDI) in the reporting economy (million euro) 

Public finance 
General government deficit/surplus, relative to GDP (%) 
SI: General government debt, relative to GDP (%) 

Financial indicators 
Gross foreign debt of the whole economy, relative to GDP (%) 
Gross foreign debt of the whole economy, relative to total exports (%) 
Money supply: M1 (banknotes, coins, overnight deposits, million euro) 
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro) 
Money supply: M3 (M2 plus marketable instruments, million euro) 
Total credit by monetary financial institutions to residents (consolidated) (million euro) 
Interest rates: day-to-day money rate, per annum (%) 
Lending interest rate (one year), per annum (%) 
Deposit interest rate (one year), per annum (%) 
euro exchange rates: average of period - 1 euro = … national currency 
Effective exchange rate index (2000=100) 
Value of reserve assets (including gold) (million euro) 

External trade 
Trade balance: all goods, all partners (million euro) 
Value of exports: all goods, all partners (million euro) 
Value of imports: all goods, all partners (million euro) 
Terms of trade (export price index / import price index, %change to the previous year) 
Share of exports to EU-27 countries in value of total exports (%) 
Share of imports from EU-27 countries in value of total imports (%) 

Demography 
Natural growth rate: natural change (births minus deaths) (per 1000 inhabitants) 
Net migration rate: immigrants minus emigrants (per 1000 inhabitants) 
Infant mortality rate: deaths of children under one year of age per 1000 live births 
Life expectancy at birth: male (years) 
Life expectancy at birth: female (years) 

Labour market 
Economic activity rate (15-64): share of population aged 15-64 that is economically active (%) 
SI: Employment rate (15-64): share of population aged 15-64 that is in employment (%) 

Share of male population aged 15-64 that is in employment (%) 
Share of female population aged 15-64 that is in employment (%) 

SI: Employment rate of older workers (55-64): share of population aged 55-64 that is in 
employment (%) 
Employment by main sectors (%) 

445 
73 
40 

1998 
-11.8 
53.5 

1998 
17.0 
156.3 
496 
1 180 
1 418 
105 
: 
25.0 
16.5 

330 
156 
39 

1999 
-9.0 
53.7 

1999 
16.1 
101.6 
701 
1 631 
1 993 
135 
: 
25.8 
9.1 

586 
105 
157 

2000 
-7.6 
60.2 

2000 
17.0 
94.9 
936 
1 995 
2 475 
175 
: 
24.0 
8.0 

583 
31 
231 

2001 
-6.9 
58.5 

2001 
17.2 
93.1 
1 113 
2 376 
3 069 
217 
: 
11.9 
7.8 

667 
41 
141 

2002 
-6.1 
63.9 

2002 
22.1 
112.5 
1 154 
2 453 
3 148 
292 
: 
16.0 
9.3 

767 
53 
157 

2003 
-4.9 
61.5 

2003 
21.1 
103.5 
1 053 
2 542 
3 261 
369 
: 
10.5 
7.6 

839 
61 
267 

2004 
-5.1f 
58.3 

2004 
19.0 
86.5 
1 354 
3 066 
3 973 
548 
: 
13.7 
6.0 

897 
61 
209 

2005 
-3.4 
55.3 

2005 
16.6 
73.0 
1 833 
3 431 
4 654 
982 
: 
12.2 
5.6 

1 011 
43 
250 

2006 
-3.3 
59.7 

2006 
16.9 
: 
2 011 
3 882 
5 478 
1 554 
: 
11.2 
5.5 

1 043p 
60p 
466p 

2007 
: 
: 

2007 
: 
: 
1 994 
4 068 
6 157 
2 326 
: 
13.6 
6.3 

169.164 146.960  132.580 128.470 132.360 137.510 127.670 124.190 123.080  123.630 

: 
573 

1998 
-565 
185 
750 
5.4 
94.2 
88.0 

1998 
12.5 
-6.8 
15.0 
: 
: 

1998 
: 
: 
: 
: 

: 

: 
488 

: 
697 

: 
853 

: 
902 

: 
908 

: 
1 103 

: 
1 144 

: 
1 429 

: 
1 564 

1999 
-754 
329 
1 083 
11.0 
95.6 
82.8 

1999 
12.8 
-110.8 
12.2 
71.7 
76.4 

1999 
68.3 
55.7 
69.0 
42.3 

: 

2000 
-896 
283 
1 179 
-6.1 
93.2 
80.7 

2000 
11.4 
-9.8 
13.8 
72.1 
78.6u 

2000 
66.2 
55.0 
66.0 
44.1 

: 

2001 
-1 145 
340 
1 486 
1.3 
91.3 
80.3 

2001 
12.5 
-5.7 
10.8 
72.1 
77.5 

2001 
62.3b 
52.1b 
64.0b 
39.6b 

: 

2002 
-1 259 
331 
1 590 
-1.5 
92.6 
77.0 

2003 
-1 252 
395 
1 648 
-1.7 
93.8 
74.3 

2004 
-1 344 
479 
1 823 
0.8 
90.9 
70.5 

2005 
-1 212 
906 
2 118 
-18.9 
93.2 
67.2 

2002 
9.5 
-3.4 
10.2 
72.1 
77.9 

2002 
61.8 
52.1 
63.9 
39.7 

: 

2003 
9.3 
-3.9 
8.4 
72.1 
78.6 

2003 
60.1 
51.1 
62.6 
39.1 

: 

2004 
8.1 
-3.1 
7.8 
72.1 
78.6 

2004 
58.8 
50.3 
61.2 
38.9 

: 

2005 
7.2 
-2.6 
7.6 
72.1 
78.6 

2005 
57.8 
49.7 
60.0 
38.8 

: 

2006 
: 
: 
: 
25.3 
: 
: 

2006 
5.5 
-4.4 
7.4 
73.9 
78.0 

2006 
53.7 
48.7 
58.8 
38.1 

: 

2007 
: 
: 
: 
-2.5 
: 
: 

2007 
5.9 
-0.4 
5.6 
: 
: 

2007 
: 
: 
: 
: 

: 

Note

Note

2) 

3) 
4) 

Note

Note
1) 

Note
5) 
5) 
5) 
5) 

EN 

52 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
Agriculture 
Industry 
Construction 
Services 

SI: Unemployment rate: share of labour force that is unemployed (%) 

Share of male labour force that is unemployed (%) 
Share of female labour force that is unemployed (%) 

Unemployment rate of persons < 25 years: share of labour force aged <25 that is unemployed 
(%) 
SI: Long-term unemployment rate: share of labour force that is long-term unemployed (%) 

Social cohesion 
Average nominal monthly wages and salaries (national currency) 
Index of real wages and salaries (index of nominal wages and salaries divided by the CPI) 
(2000=100) 
SI: Early school-leavers: share of population aged 18-24 having not completed upper 
secondary education and not currently in education or training (%) 

Standard of living 
Number of passenger cars per 1000 population 
Number of subscriptions to cellular mobile telephone services per 1000 population 

Infrastructure 
Density of railway network (lines in operation, per 1000 km²) 
Length of motorways (thousand km) 

Innovation and research 
SI: Spending on human resources (public expenditure on education) relative to GDP (%) 
SI: Gross domestic expenditure on research & development, relative to GDP (%) 
SI: Percentage of households who have Internet access at home (%) 

Environment 
SI: Total greenhouse gases emissions, CO2 equivalent (tons, 1990=100) 
SI: Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP 2004) 
SI: Share of renewable energy in electricity consumption (%) 
SI: Road freight transport as a share of total inland freight transport (modal split of freight 
transport) (%) 

Energy 
Primary production of all energy products (thousand TOE) 
Primary production of crude oil (thousand TOE) 
Primary production of hard coal and lignite (thousand TOE) 
Primary production of natural gas (thousand TOE) 

Net imports of all energy products (thousand TOE) 
Gross inland energy consumption (thousand TOE) 

Note

Note

Note

Note

Note

70.8 
7.7 
1.0 
20.5 
: 
: 
: 

: 

: 

72.1 
7.7 
1.0 
19.2 
18.4 
16.4 
21.4 

: 

: 

71.8 
5.4 
1.2 
21.5 
16.8 
14.9 
19.3 

: 

: 

57.7b 
6.0b 
6.1b 
28.5b 
16.4 
14.2 
19.9 

: 

: 

57.7 
7.6 
6.1 
28.6 
15.8 
13.6 
19.1 

26.8 

: 

58.2 
7.2 
6.0 
28.5 
15.0 
12.9 
18.2 

: 

: 

58.5 
8.1 
5.5 
27.9 
14.4 
12.4 
17.5 

: 

: 

58.5 
7.9 
5.5 
28.1 
14.1 
12.1 
17.2 

: 

: 

58.0 
8.0 
5.7 
28.3 
13.8 
11.8 
16.8 

: 

: 

5) 
5) 
5) 

: 
: 
: 
: 
: 
: 
: 

: 

: 

Note

1998 
: 

1999 
: 

2000 
: 

2001 
: 

2002 
: 

2003 
: 

2004 
: 

2005 
: 

2006 
: 

2007 
: 

: 

: 

1998 
27.1 
: 

1998 
: 
: 

1998 
3.2 
: 
: 

1998 
: 
510.2 
: 

: 

: 

1999 
27.3 
: 

1999 
: 
: 

1999 
3.3 
: 
: 

1999 
: 
427.4 
: 

: 

: 

2000 
37.4 
: 

2000 
13.9 
: 

2000 
3.1 
: 
: 

2000 
: 
394.4 
: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

2001 
43.6 
120.8 

2002 
48.2 
259.4 

2003 
56.4 
370.6 

2004 
60.9 
403.6 

2005 
62.2 
488.0 

2006 
71.4 
561.7 

2001 
14.3 
: 

2001 
3.3 
: 
: 

2001 
: 
383.1 
: 

2002 
15.0 
: 

2002 
3.0 
: 
: 

2002 
: 
353.9 
: 

2003 
15.0 
0.0 

2003 
3.1 
: 
: 

2003 
: 
369.2 
: 

2004 
15.1 
0.0 

2004 
3.2 
: 
: 

2004 
: 
383.9 
: 

: 

: 

2007 
: 
: 

2007 
: 
: 

2007 
3.2 
: 
: 

2007 
: 
: 
: 

: 

2007 
: 
281 
: 
10 
: 
: 

2005 
15.0 
0.0 

2005 
3.2 
: 
: 

2005 
: 
: 
: 

: 

2005 
: 
: 
0 
11 
: 
: 

2006 
15.5 
0.0 

2006 
3.1 
: 
: 

2006 
: 
: 
: 

: 

2006 
: 
: 
0 
11 
: 
: 

: 

: 

: 

: 

: 

: 

: 

1998 
1 345 
365 
49 
17 
626 
1 971 

1999 
1 113 
323 
33 
14 
761 
1 874 

2000 
987 
314 
20 
12 
858 
1 845 

2001 
933 
335 
15 
8 
1 001 
1 934 

2002 
896 
308 
5 
8 
965 
1 861 

2003 
1 012 
359 
19 
12 
1 043 
2 055 

2004 
1 178 
443 
19 
9 
1 080 
2 258 

EN 

53 

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 
Agricultural production volume index of goods and services (producer prices, previous 
year=100) 
Total utilised agricultural area (thousand hectare) 
Livestock: cattle (thousand heads, end of period) 
Livestock: pigs (thousand heads, end of period) 
Livestock: sheep and goats (thousand heads, end of period) 
Production and utilisation of milk on the farm (total whole milk, thousand tonnes) 
Crop production: cereals (including rice) (thousand tonnes, harvested production) 
Crop production: sugar beet (thousand tonnes, harvested production) 
Crop production: vegetables (thousand tonnes, harvested production) 

Note

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

: 

: 

: 

: 

: 

102.9 

105.1 

101.2 

: 

1 144 
705 
83 
2 923 
861 
603 
56 
605 

1 144 
720 
99 
3 061 
907 
498 
40 
610 

1 144 
728 
103 
3 045 
948 
566 
42 
620 

1 139 
708 
106 
2 933 
984 
503 
39 
677 

1 140 
690 
114 
2 773 
1 010 
519 
39 
669 

1 121 
684 
132 
2 919 
1 060 
489 
50 
675 

1 122 
654 
143 
2 739 
1 064 
499 
40e 
678 

1 077 
655 
147 
2 701 
1 076 
511 
40e 
685 

1 120 
634e 
152e 
2 770e 
1 102e 
508 
: 
688 

: 

: 
: 
: 
: 
: 
: 
: 
: 

SI: Structural Indicator  
e : estimate  
f : forecast  
p : provisional  
b : break in serie  

1. 

2. 

3. 

4. 

5. 

Source: Eurostat. Break in series in 2000. 

Debt Outstanding Disbursed (DOD) cumulative stock covering external public debt and external publicly guaranteed debt, but excluding IMF credits. Total exports are calculated according to the 
national accounts concepts. 

Average weighted rate applied on new 12-month loans over the respective months, on 12-month maturity. 

Deposit interest rate represents the average weighted rate for newly accepted deposits over the respective months, on 12-month maturity. 

Administrative data; unemployment refers to registered unemployment. 

EN 

54 

EN