COMMISSION STAFF WORKING DOCUMENT ALBANIA 2012 PROGRESS REPORT accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Enlargement Strategy and Main Challenges 2012-2013
Date: 2012-10-10
Institutions: European Commission
Subjects: Albania, Community acquis, accession criteria, economic reform, political reform

EUROPEAN 
COMMISSION 

Brussels, 10.10.2012  
SWD(2012) 334 final 

COMMISSION STAFF WORKING DOCUMENT 

ALBANIA 2012 PROGRESS REPORT 

accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 

Enlargement Strategy and Main Challenges 2012-2013 

{COM(2012) 600 final}

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TABLE OF CONTENTS 

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

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

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

Relations between the EU and Albania........................................................................ 5 

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

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

Human rights and the protection of minorities .......................................................... 16 

Regional issues and international obligations ............................................................ 23 

Economic criteria ....................................................................................................... 24 

The existence of a functioning market economy ....................................................... 24 

The capacity to cope with competitive pressure and market forces within the Union
.................................................................................................................................... 29 

Ability to take on the obligations of membership...................................................... 31 

Chapter 1: Free movement of goods .......................................................................... 31 

Chapter 2: Freedom of movement for workers .......................................................... 32 

Chapter 3: Right of establishment and freedom to provide services ......................... 33 

Chapter 4: Free movement of capital ......................................................................... 33 

Chapter 5: Public procurement................................................................................... 34 

Chapter 6: Company law............................................................................................ 35 

Chapter 7: Intellectual property law........................................................................... 36 

Chapter 8: Competition policy ................................................................................... 36 

Chapter 9: Financial services ..................................................................................... 37 

1. 

1.1. 

1.2. 

1.3. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

4.6. 

4.7. 

4.8. 

4.9. 

4.10.  Chapter 10: Information society and media ............................................................... 39 

4.11.  Chapter 11: Agriculture and rural development......................................................... 40 

4.12.  Chapter 12: Food safety, veterinary and phytosanitary policy .................................. 41 

4.13.  Chapter 13: Fisheries.................................................................................................. 42 

4.14.  Chapter 14: Transport policy ..................................................................................... 42 

4.15.  Chapter 15: Energy .................................................................................................... 44 

4.16.  Chapter 16: Taxation.................................................................................................. 45 

4.17.  Chapter 17: Economic and monetary policy.............................................................. 46 

4.18.  Chapter 18: Statistics.................................................................................................. 47 

4.19.  Chapter 19: Social policy and employment ............................................................... 47 

4.20.  Chapter 20: Enterprise and industrial policy.............................................................. 49 

4.21.  Chapter 21: Trans-European networks....................................................................... 50 

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4.22.  Chapter 22: Regional policy and coordination of structural instruments .................. 51 

4.23.  Chapter 23: Judiciary and fundamental rights ........................................................... 52 

4.24.  Chapter 24: Justice, freedom and security ................................................................. 56 

4.25.  Chapter 25: Science and research .............................................................................. 58 

4.26.  Chapter 26: Education and culture............................................................................. 59 

4.27.  Chapter 27: Environment and climate change ........................................................... 60 

4.28.  Chapter 28: Consumer and health protection............................................................. 61 

4.29.  Chapter 29: Customs Union ....................................................................................... 63 

4.30.  Chapter 30: External relations.................................................................................... 64 

4.31.  Chapter 31: Foreign, security and defence policy...................................................... 65 

4.32.  Chapter 32: Financial control..................................................................................... 66 

4.33.  Chapter 33: Financial and budgetary provisions........................................................ 67 

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1. 

INTRODUCTION 

1.1. 

Preface 

Since March 2002, the Commission has reported regularly to the Council and Parliament on 
progress made by the countries of the Western Balkans region. This is the second report on 
the  country’s  progress  following  the  publication  of  the  Commission  Opinion  on  Albania’s 
application for membership of the European Union, issued in November 2010. 

This report on progress made by Albania on preparing for EU membership: 

•  briefly describes 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  developments  as  regards  Albania’s  capacity  to  take  on  the  obligations  of 
membership, that is the acquis expressed in the Treaties, the secondary legislation and the 
policies of the Union. 

This report covers the period from October 2011 to September 2012. Progress is measured on 
the  basis  of  decisions  taken,  legislation  adopted  and  measures  implemented.  As  a  rule, 
legislation or measures which are being prepared or awaiting parliamentary approval have not 
been taken into account. This approach ensures equal treatment across all reports and enables 
an objective assessment. 

The report is based on information gathered and analysed by the Commission. Many sources 
have  been  used,  including  contributions  from  the  government  of  Albania,  the  EU  Member 
States,  European  Parliament  reports1  and  information  from  various  international  and  non-
governmental organisations. 

The  Commission  has  drawn  detailed  conclusions  regarding  Albania  in  its  separate 
communication on enlargement2, based on the technical analysis contained in this report. 

1.2. 

Context 

The Stabilisation and Association Agreement between the EU and Albania was signed in June 
2006 and entered into force in April 2009.  

Albania presented  its application  for membership of the  European Union on 28 April 2009. 
Following  a  request  by  the  Council,  the  Commission  submitted  its  Opinion  on  Albania’s 
application  in  November  2010.  In  December  2010,  the  Council  endorsed  the  Commission 
Opinion’s  recommendations.  In  its  conclusions,  the  Council  noted  that  the  opening  of 
accession  negotiations  will  be  considered  by  the  European  Council,  in  line  with  established 
practice,  once  the  Commission  has  assessed  that  the  country  has  achieved  the  necessary 
degree  of  compliance  with  the  membership  criteria  and,  in  particular,  has  met  the  key 
priorities3 set out in the Commission’s Opinion. The Commission’s 2012 progress report, like 
that of 2011, focuses on implementation of these key priorities.  

1 
2 
3 

The rapporteur for Albania is Mr Nikolaos Chountis.  
Enlargement Strategy and Main Challenges 2012-2013, COM(2012) 600.  
The  key  priorities  concern  the  following  areas:  the  proper  functioning  of  parliament;  adopting 
reinforced  majority  laws;  appointment  procedures  and  appointments  for  key  institutions;  electoral 
reform;  the  conduct  of  elections;  public  administration  reform;  the  rule  of  law  and  judicial  reform; 
fighting corruption; fighting organised crime; addressing property issues; reinforcing human rights and 

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1.3. 

Relations between the EU and Albania 

Albania is participating in the Stabilisation and Association Process.  

Overall,  Albania  has  been  implementing  its  obligations  under  the  Stabilisation  and 
Association  Agreement  (SAA)  well.  It  participated  in  the  regular  political  and  economic 
dialogue between the EU and the country through the SAA structures and contributed to the 
smooth  functioning  of  the  various  joint  institutions.  Meetings  of  the  Stabilisation  and 
Association  Committee  and  Council  were  held  in  March  and  May  2012  respectively.  Six 
subcommittee  meetings  were  held  in  the  reporting  period.  Furthermore,  the  SA  Council 
agreed to set up a special group on Public Administration Reform within the SAA structures. 
Multilateral  economic  dialogue  between  the  Commission,  EU  Member  States  and  potential 
candidate countries in the context of pre-accession fiscal surveillance took place at an expert 
meeting in May 2012. 

Visa liberalisation for citizens of Albania travelling to the Schengen area has been in force 
since  December  2010.  The  Commission  set  up  a  post-visa-liberalisation  monitoring 
mechanism  to  assess  whether  the  implementation  of  reforms  introduced  by  the  country  was 
consistent  with  the  visa  roadmap  and  sustainable.  This  was  complemented  with  an  alert 
mechanism to prevent abuses. The Commission presented its second monitoring report to the 
European  Parliament  and  the  Council  in  December  2011  and  adopted  the  third  in  August 
2012. A readmission agreement between the European Union and Albania has been in force 
since 2006. 

Pre-accession  financial  assistance  is  provided  under  the  Instrument  for  Pre-Accession 
Assistance  (IPA).  In  the  framework  of  IPA  component  I  -  Transition  Assistance  and 
Institution  Building,  the  EU  allocated  a  total  amount  of  approximately  € 530  million  for 
Albania in the period  2007-13.  The  yearly envelopes  of the National Programme under this 
component  provided  € 82  million  for  2011  and  € 86.9  million  for  2012.  The  Multiannual 
Indicative Planning Document (MIPD) for 2011-2013 envisages a sectoral approach with the 
focus  on  Justice  and  Home  Affairs,  Public  Administration  Reform,  Transport,  Environment 
and  Climate  Change,  Social  Development,  and  Agriculture  and  Rural  Development.  IPA 
assistance  in  the  framework  of  this  component  is  implemented  under  the  supervision  of  the 
EU Delegation in Tirana.  

In  the  frame  of  IPA  component  II  –  Cross-border  Cooperation,  Albania  participates  in  the 
management  and  implementation  of  three  programmes  within  the  Western  Balkans  (with 
Montenegro, the former Yugoslav Republic of Macedonia and Kosovo∗); one bilateral cross-
border  cooperation  programme  with  an  EU  Member  State  (Greece);  and  three  multilateral 
programmes  (including  EU  Member  States),  i.e.  the  ERDF  European  trans-national 
programmes ‘South East Europe’ and ‘Mediterranean’, and the Adriatic regional programme. 

Civil society has received financial support from the EU under the IPA Civil Society Facility 
(2011-2012)  and  through  the  European  Instrument  for  Democracy  and  Human  Rights.  The 
IPA  provided  support  to  national  civil  society  organisations  (CSOs)  in  the  fields  of  justice 
(access to justice, fight against corruption and monitoring/improvement of living conditions in 
detention  system),  protection  of  vulnerable  groups  (disadvantaged  women,  children  and  the 
elderly, and minority groups) and environmental protection. The objectives of this assistance 
include  wider  involvement  by  civil  society  in  decision-making,  strengthening  of  CSOs’ 

∗ 

implementing  anti-discrimination  policies;  improving  the  treatment  of  detainees  and  applying 
recommendations of the Ombudsman. For the full text of the key priorities, see COM (2010)680.  
This designation is without prejudice to positions on status, and is in line with UNSCR 1244/99 and the 
ICJ Opinion on the Kosovo declaration of independence. 

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management  and  organisational  capacity  and  improvement  of  their  legal  and  fiscal 
framework.  

The EU has co-financed Albania’s participation in the following EU Programmes: ‘Seventh 
Research  Framework  Programme’;  ‘Entrepreneurship  and  Innovation  Programme’  (EIP)  of 
the ‘Competitiveness and Innovation Framework Programme’, ‘Youth in Action’, ‘Europe for 
Citizens’ and ‘Culture’. 

2. 

POLITICAL CRITERIA 

This  section  examines  the  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  assesses  Albania’s 
progress  in  addressing  the  twelve  key  priorities  identified  in  the  European  Commission’s 
Opinion  on  Albania’s  application  for  membership  of  the  European  Union.  In  this  context, 
Albania adopted an Action Plan for addressing the recommendations of the Opinion in March 
2012.  

This  section  also  monitors  compliance  with  international  obligations,  regional  cooperation 
and good neighbourly relations with enlargement countries and Member States. 

It analyses fulfilment of the 2010 Opinion’s key priorities in particular. 

2.1. 

Democracy and the rule of law 

The  ruling  majority  and  opposition  reached  a  political  agreement  in  November  2011  which 
marked  the  end  of  the  political  stalemate  stemming  from  the  2009  parliamentary  elections. 
This  agreement  established  a  plan  and  timetable  for  carrying  out  electoral  reform,  for 
improving  the  parliament’s  rules  of  procedure  and  for  adopting  all  pending  laws  requiring 
reinforced majority. 

The ruling majority and opposition remained generally committed to the key political reforms 
stemming from this agreement and political dialogue has improved considerably  ever since. 
The process of working on the implementation of the 12 key priorities has, overall, been an 
inclusive one. Yet there were short periods of confrontational rhetoric between government, 
opposition and other state institutions, notably in relation to investigations into the events of 
21  January  2011  and  to  the  nomination  by  parliament  of  a  member  of  the  High  Council  of 
Justice.  Since  November  2011,  significant  progress  has  been  made  by  adopting  pending 
reinforced  majority  laws,  appointing  an  Ombudsman,  adopting  amendments  to  the  electoral 
code, and towards revising parliamentary rules of procedure. This created a climate of cross-
party  cooperation,  which  enabled  reform  progress  also  in  other  areas  under  the  political 
criteria. 

The presidential elections in June 2012 were conducted in line with the Constitution, but the 
political process surrounding them did not build on the positive cross-party dialogue launched 
in November. Yet, constructive dialogue resumed shortly thereafter as demonstrated notably 
by the completion of electoral reform, a key element of the November political agreement.  

Parliament 

From  November  2011,  following  the  political  agreement,  dialogue  and  rhetoric  in  the 
parliament  improved  significantly,  and  a  more  constructive  atmosphere  was  noted,  in 
particular  during  committee  and  plenary  meetings.  This  allowed  progress  in  a  number  of 
areas. 

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All  pending  laws  requiring  a  reinforced  three-fifth  majority  vote  were  adopted,  including 
notably  amendments  to  the  criminal  and  civil  code  and  the  long  pending  Law  on 
Administrative  Courts.  An  Ombudsman  was  appointed  following  a  transparent  and  merit-
based selection process with public hearings, followed by a consensual vote in the parliament. 
A hearing and voting process in parliament was conducted for the presidential nomination of 
a judge to the High Court. These are key priorities of the Opinion. 

The  working  group  on  the  improvement  of  parliament’s  rules  of  procedure  established  in 
November  2011  reached  agreement  on  a  large  number  of  draft  amendments  to  the  rules  of 
procedure  (including  two  amendments  in  relation  to  the  role  of  the  European  integration 
committee)  and  prepared  amendments  to  the  law  on  the  status  of  MPs.  Amendments  to  the 
rules of procedure are pending adoption in the Assembly. The working group did not agree on 
two  issues  raised  by  the  opposition,  namely  re-introducing  secret  voting  on  presidential 
decrees and granting equal speaking time rights to the opposition when speaking in reply to 
the Prime Minister.  

Progress  was  made  in  the  functioning  of  parliamentary  procedures  (a  key  priority  of  the 
Opinion),  with  the  adoption  of  a  considerable  number  of  acts,  including  laws,  decisions, 
resolutions  and  declarations.  In  a  significant  number  of  cases  these  were  approved  by 
consensus.  Progress  was  also  noted  in  terms  of  improving  public  consultation  in  the 
legislative  process.  Under  its  new  chairman,  the  Committee  on  European  Integration  (CEI) 
was actively involved with the Ministry of Integration in developing and monitoring relevant 
parts  of  the  Action  Plan  for  addressing  the  recommendations  of  the  Opinion.  The  CEI 
involved civil society in the review of the Action Plan. The chairman of the CEI attended the 
Stabilisation and Association (SA) Council meeting of May 2012 and for the second time it 
was possible to issue a joint statement at the SA Parliamentary Committee in July, which was 
agreed by both parties. 

However, work needs to continue to further improve the functioning  of the parliament. The 
working calendar of the parliament does not always give enough time to standing committees 
for proper review and for public hearings on draft laws, which, as a result, are often adopted 
in  an  expedited  manner  potentially  to  the  detriment  of  quality.  Draft  laws  are  often  not 
accessible to the public. Building on the recent completion of the adoption  of  pending laws 
requiring a reinforced majority, the parliament needs to create an effective targeted approach 
and  methodology  for  preparing  and  negotiating  such  laws.  Further  efforts  are  required  to 
strengthen the parliament’s oversight function, including reinforcing the use of interpellations 
with  members  of  the  government  and  written  questions  and  answers.  Work  is  needed  on 
analysing and modifying the legal framework in view of necessary enhancement of the role of 
the CEI. In this context, relations between the CEI and other parliamentary committees are to 
be improved.  

Some  progress  was  made  in  strengthening  the  administrative  capacity  of  the  parliament 
Secretariat  through training of staff and  expert advice, including  by international experts. A 
multiannual training strategy for the parliament’s staff was adopted in May 2012. The unit for 
legal  approximation  in  the  parliament  was  strengthened  by  the  hiring  of  a  further  adviser. 
Efforts  were  made  to  increase  transparency  in  the  functioning  of  the  parliament’s 
administration.  This  holds  in  particular  true  for  budgetary  aspects  through  publication  of 
expenditures’  reports  for  the  first  half  of  2012  on  the  Parliament’s  website.  However,  the 
administrative capacity of the parliament needs substantial further strengthening in particular 
in relation to the European integration agenda. 

In  July  2012  parliament  conducted  a  hearing  and  approved  the  presidential  nomination  of  a 
judge to fill one outstanding vacancy in the High Court (a key priority of the Opinion). There 

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were  no  hearing  and  voting  processes  in  parliament  for  presidential  appointments  to  the 
Constitutional Court in the reference period.  

On  11  June  2012,  Parliament  elected  Mr  Bujar  Nishani  as  President  of  the  Republic  in  the 
fourth round of the elections with 73 votes out of 76. Opposition MPs attended the session but 
did not vote. The election was in line with the Constitution, yet expectations of a consensual 
candidate were not met. In the first three rounds of the election, which would have required a 
reinforced  three-fifths  majority  vote,  no  candidates  were  officially  put  forward  as 
consultations  between  the  ruling  majority  and  opposition  had  not  led  to  the  emergence  of  a 
candidate who could gather broad support. 

On  electoral  reform,  a  key  priority  of  the  Opinion,  representatives  of  both  government  and 
opposition in the ad hoc parliamentary committee established in November 2011 worked in an 
overall spirit of constructive cooperation. The committee achieved good results and agreed on 
amendments  to  the  electoral  legislative  framework  addressing  the  majority  of  the 
recommendations of the OSCE/ODIHR 2009 and 2011 election observation missions. These 
include  provisions  on  registration  of  electoral  subjects,  gender  quotas,  electoral  campaign 
funding  and  complaints  and  appeals  mechanisms.  The  composition  of  the  Central  Election 
Commission  and  the  system  of  appointment  of  its  members  were  also  revised  in  view  of 
increasing  its  independence  and  impartiality.  The  revised  electoral  code  was  consensually 
adopted by Parliament on 19 July.  

Overall, the functioning of parliament and political dialogue has considerably improved as a 
result  of  the  November  2011  political  agreement.  This  allowed  significant  progress  to  be 
made  through  the  adoption  of  all  pending  laws  requiring  a  reinforced  majority,  the 
appointment  of  an  Ombudsman,  the  conduct  of  a  hearing  and  voting  process  for  the 
presidential  nomination  of  a  judge  to  the  High  Court,  and  adoption  of  amendments  to  the 
electoral code. It is now essential that revised parliamentary rules of procedure are adopted. 
On  11  June  2012,  a  new  president  was  elected  in  the  fourth  round  of  the  election  with  the 
votes  of  the  ruling  majority  only.  Although  in  line  with  the  Constitution,  the  presidential 
election failed to meet all expectations of inclusiveness and put a strain on the consolidation 
of  political  dialogue  and  cooperation.  This  contributed  to  a  temporary  slowdown  in  reform 
efforts in core areas requiring political consensus, which was overcome shortly thereafter.  

Government 

The  government  and  ruling  coalition  consisting  of  the  Democratic  Party  and  the  Socialist 
Movement for Integration remained in place and stable in the reference period. In March and 
June 2012, a government reshuffle took place. 

The  Ministry  of  European  Integration  (MEI),  in  cooperation  with  the  Parliamentary 
Committee for European Integration, played the key role in the revision of the Action Plan to 
address the Opinion’s key priorities. The revision process was transparent and participatory, 
and included consultations with non-governmental actors. The Action Plan has been improved 
by  clarifying  the  content  of  measures  and  specifying  deliverables.  A  monthly  monitoring 
mechanism  was  smoothly  implemented.  Good  cooperation  between  the  chair  of  the 
Parliamentary Committee on European Integration and the Minister of European Integration 
on the country’s EU reform challenges continued beyond work on the action plan, including 
through joint participation at the May 2012 EU-Albania SA Council. 

There  has  been  progress  in  updating  the  National  Plan  for  the  Implementation  of  the  SAA 
(NPISAA).  The  updated  NPISAA  was  approved  by  a  Council  of  Ministers  decision  in  July 
2012, which inter alia specifies the responsibilities for implementation as well as monitoring 
and  reporting  requirements.  The  decision  tasks  the  line  institutions  to  decide  amongst 

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the  distribution  of 

themselves 
transposition  and 
implementation  of  individual  acts  of  EU  law  within  three  months  of  entry  into  force  of  the 
decision.  Once  implemented,  this  distribution  will  be  an  important  step  towards  the 
comprehensive revision and more realistic planning of NPISAA  

responsibilities 

institutional 

for 

There  has  been  some  progress  in  coordinating  processes  for  aligning  legislation  with  the 
acquis. The MEI has continued working on legislative gap analysis. An IT  system for legal 
approximation (IMS), which is a part of ‘e-cabinet’, the government’s overall IT system, has 
been  introduced.  The  system  contains  information  on  measures  of  legal  alignment  with  the 
acquis. The introduction of the IMS increases the transparency and efficiency of the system 
for  planning  and  monitoring  the  alignment  process,  although  the  timing  and  quality  of 
relevant mechanisms require further improvement.  

The  policy-making  and  legislative  drafting  processes  in  line  ministries  are  still  subject  to 
shortfalls in prior analytical work and there is not enough transparency or consultation with 
relevant  stakeholders.  Staff  turnover  and  weaknesses  in  analytical  capacity  have  had  an 
impact  on  the  quality  of  legislation  drafted.  More  attention  should  be  paid  to  the 
implementation and enforcement of legislation. 

There  has  been  only  moderate  progress  regarding  the  coordination  of  the  EU  integration 
process.  Comprehensive  and  sustainable  capacity  development  of  the  35  interinstitutional 
working  groups  and  further  improvement  of  policy  coordination  among  institutions  is 
necessary.  

Regarding local governance, no progress was made on territorial administrative reform. Small 
local  government  units  are  in  many  cases  not  economically  sustainable.  The  Law  on 
Territorial Planning was adopted in 2009 but implementation is slow.  

There was no improvement in revenue collection by local authorities during 2011. Significant 
additional efforts are needed to strengthen both the administrative efficiency and the financial 
sustainability  of  municipalities.  Particular  attention  is  needed  in  the  areas  of  strategic 
planning,  human  resources  management  and  financial  control.  Further  efforts  are  needed  to 
ensure  transparency  and  a  strategic  approach  in  central  funding  for  municipal  projects, 
particularly  for  infrastructure.  Local  government  decision-making  lacks  transparency  and 
consultation with civil society organisations and other relevant stakeholders. 

Lengthy and over-politicised debates concerning the composition of local government bodies 
in  some  cases  hindered  their  effective  functioning  and  the  consolidation  of  representative 
democracy at local level. The existence of two separate local government associations, split in 
membership  between  the  two  main  political  parties,  has  hindered  cooperation  at  municipal 
level and weakened the position of local authorities vis-à-vis the central government. Due to 
political disagreement between the associations, Albania has not been able to select and thus 
be  represented  by  a  delegation  in  the  Congress  of  Local  and  Regional  Authorities  of  the 
Council of Europe since May 2011.  

Local  governments  have  slowly  started  implementing  the  Council  of  Ministers’  June  2011 
decision  on  the  structure  and  organisation  of  public  institutions.  The  percentage  of  civil 
servants with temporary contracts remains particularly high in local authorities.  

Overall, there has been some progress with regard to the work of government. This includes 
good progress on coordinating the EU integration process through the revision of the action 
plan  to  address  the  Opinion’s  key  priorities,  which  was  conducted  in  a  transparent  and 
participatory manner. Good cooperation between the chair of the Parliamentary Committee on 
European  Integration  and  the  Minister  of  European  Integration  on  the  country’s  EU  reform 
challenges continued, including joint participation at the May 2012 EU-Albania SA Council. 

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Legislative drafting capacity and the planning process for aligning legislation with the acquis 
need to be further improved, notably through the effective implementation of the Council of 
Ministers decision on the NPISAA. As regards local government, the decentralisation of state 
responsibilities has not been matched by appropriate transfers in administrative and financial 
resources  from  central  to  local  level.  The  existence  of  two  separate  local  government 
associations is not conducive to improving the institutional relations between central and local 
government in view of a successful and transparent decentralisation process.  

Public administration 

Progress can be reported in the field of public administration reform, which is a key priority 
of  the  Opinion.  In  May,  the  parliament  adopted  the  Law  on  Administrative  Courts  by  a 
qualified  majority.  The  law  is  an  important  step  in  reforming  the  judicial  system,  ensuring 
legal  review  of  administrative  decisions  by  independent  courts,  increasing  transparency  and 
fighting  corruption  in  the  civil  service.  The  Law  on  the  Organisation  and  Functioning  of 
Public Administration, a structural law which aims at fighting fragmentation and coordination 
deficiencies  and  creating  a  general  legal  framework  for  the  organisation  of  public 
administration,  has  been  adopted.  The  government  approved  the  draft  Law  on  the  Civil 
Service  in  August  2012  and  it  is  currently  in  parliamentary  procedure  where  it  requires  a 
qualified majority for adoption. The draft Law on General Administrative Procedures has not 
been finalised.  

There  is  some  progress  regarding  the  implementation  of  legislation  and  administrative  acts. 
The  Council  of  Ministers’  decision  on  defining  the  structure  and  organisation  of  public 
institutions has been implemented by 13 of the 14 ministries. The implementation of the Law 
on Inspections is  progressing very slowly. The  General Inspector was appointed only at the 
end  of  2011.  The  relevant  required  secondary  legislation  is  still  not  in  place.  The  Prime 
Minister’s  Order  setting  a  maximum  limit  of  2.5%  on  temporary  contracts  has  been 
considerably implemented. In most cases, the central government institutions failed to request 
approval  by  the  Department  of  Public  Administration  (DoPA)  for  recruitment  based  on 
temporary contracts or even disregarded the DoPA’s refusal.  

The DoPA still lacks the authority to play an effective role in monitoring public institutions 
under  its  remit  and  to  enforce  its  decisions.  Data  gathering  by  the  DoPA  has  improved. 
However,  problems  remain  in  terms  of  reliability  and  clear  administrative  rules  on  data 
collection and storage. The Human Resources Management Information System (HRMIS) is 
not  fully  operational.  Its  first  pilot  phase,  for  making  the  salary  module  functional,  was 
successfully concluded in five institutions in April.  

The  Training  Institute  for  Public  Administration  (TIPA)  has  conducted  training  activities  in 
accordance with the 2012-2015 training plan, despite the shortages of premises and resources. 
A working group for drafting the final report for the future opening of the Albanian School of 
Public Administration (ASPA) was established in August.  

The Civil Service Commission (CSC) has had only four of the required five members since 
September 2011, which impedes the institution’s decision-making. Its annual budget has been 
gradually  reduced  and  political  support  for  its  role  has  been  diminishing.  Nevertheless,  the 
CSC has intensified its work and carried out several inspections in public institutions. The rate 
of  execution  of  CSC  decisions  by  state  institutions  remains  very  low,  even  when  these 
decisions  are  upheld  in  court  and  become  legally  binding.  The  CSC  remains  a  significant 
independent oversight body for public institutions and a fundamentally important tool of the 
parliament for monitoring the executive’s use of the civil service. 

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The civil service continues to suffer from shortcomings related to politicisation and a lack of 
meritocracy  in  recruitment,  promotion  and  dismissal  of  civil  servants.  In  key  sectors  the 
public  administration  faces  important  challenges  in  fulfilling  its  tasks,  including  the 
management  and  follow-up  of  assistance  programmes  and  the  implementation  of  legislation 
aimed at alignment with the EU acquis.  

Little  progress  was  made  in  the  area  of  auditing.  A  new  Head  of  the  Supreme  State  Audit 
Institution (SSAI) was appointed in December 2011 and an action plan has been launched to 
strengthen  the  institution.  In  2011,  the  SSAI  conducted  152  audits,  mainly  of  legality, 
regularity  and  evaluation.  Difficulties  with  the  implementation  of  the  structure  of 
programmed  audits  and  especially  system  audits  were  evident.  The  number  of 
recommendations issued by SSAI to state authorities increased, while those non-implemented 
almost doubled compared to 2010. The SSAI report was approved by the parliament in May 
2012.  Considerable  efforts  are  needed  to  increase  the  capacities  and  the  performance  of  the 
SSAI. 

Progress was made with the appointment of the Ombudsman in December, a key priority of 
the  Opinion,  which  required  reinforced  majority  in  parliament.  The  open  and  transparent 
process resulted in a consensual decision in the parliament. A second regional office has been 
established in Fier. The institution needs sufficient financial and human resources, as well as 
continuing political support, to be able to fully implement its core duties. 

Overall,  there  has  been  progress  in  public  administration  reform  (a  key  priority  of  the 
Opinion)  mainly  through  the  adoption  of  the  Laws  on  Administrative  Courts  and  on  the 
Organisation and Functioning of Public Administration as well as through the appointment of 
the  Ombudsman.  It  is  now  essential  to  adopt  the  amendments  to  the  Civil  Service  Law. 
Further efforts are needed to implement the adopted legislation and administrative acts. The 
legislative  and  institutional  framework  for  public  administration  is  still  marked  by 
deficiencies  that  need  to  be  addressed  with  a  view  to  strengthening  professionalism, 
depoliticisation, meritocracy, transparency and accountability.  

Judicial system (See also Chapter 23 – Judiciary and fundamental rights) 

There has been moderate progress in judicial reform, which is a key priority of the Opinion. 
Implementation  of  the  July  2011  cross-cutting  Judicial  Reform  Strategy  and  the  relevant 
Action  Plan,  revised  in  March  2012,  has  started.  There  are  concerns  over  interinstitutional 
cooperation,  budget  allocations,  budget  planning,  and  the  level  of  human  resources  in  this 
sector. Albania needs to further accelerate the implementation of the judicial reform strategy 
in order to ensure the independence, efficiency and accountability of its judicial institutions. 

A number of working groups were set up within the Ministry of Justice (MoJ) to review key 
legislation in the justice sector. Adoption of these laws requires a reinforced majority vote in 
parliament. The Law on Administrative Courts was adopted in May for implementation next 
year, and the Laws on the National Judicial Conference and the Profession of Lawyer  were 
adopted in July and September respectively. The Law on Administrative Courts provides for 
first instance administrative courts to be set up at central and regional level, and for a court of 
appeal and a dedicated chamber in the High Court. This should ease the case burden of other 
courts  and  allow  specialised  judges  to  deal  with  administrative  cases,  provided  that  the 
necessary resources are allocated.  

Some  progress  has  been  made  with  regard  to  the  independence  and  impartiality  of  the 
judiciary.  A  set  of  new  rules  governing  transfers  of  judges  on  the  basis  of  their  merits  and 
other objective criteria was adopted in September 2012. Reform of the laws on the High Court 
and  the  Constitutional  Court  are  still  pending.  The  process  of  appointing  judges  to  these 

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courts  remains  an  issue  of  concern  due  to  possible  politicisation.  The  neutrality  and 
independence of these institutions are still not fully guaranteed.  

A countrywide evaluation of judges is under way. However, the new harmonised evaluation 
system  has  not  yet  been  fully  implemented.  This  has  had  an  impact  on  the  Commission’s 
work  on  transfers,  promotion  and  the  appointment  of  judges,  as  it  still  needs  to  be 
demonstrated that these are based on merit and subject to accountability.  

A new Vice-President of the High Council of Justice (HCJ) was appointed in August. Given 
the  importance  of  the  HCJ,  its  administrative  and  organisational  structure  needs  to  be 
reviewed urgently in order to increase its efficiency, accountability and transparency. 

The School of Magistrates is providing good quality curricula, including training courses on 
ethical  issues.  However,  the  school’s  budget  remains  insufficient  to  cover  its  planned 
activities.  

Further  efforts  are  needed  to  extend  the  computerised  system  of  management  and  random 
allocation of cases to all courts, in particular in Tirana, to achieve a uniform and harmonised 
system. This would also promote sound collection of statistics. Appropriate IT support for the 
courts  is  lacking,  as  is  a  strategic  approach  to  further  development  of  IT  solutions  in  the 
judicial  sector.  An  audio-recording  system  for  court  proceedings  is  gradually  being 
introduced.  

Publication of court decisions is still not systematic. Decisions are published with delays, in a 
way that is not consistent between the courts, and, in some cases, does not provide adequate 
protection of personal data. However, as from July, specific provisions entered into force on 
the  processing  and  publication  of  personal  data  within  the  judicial  system.  Further,  a  new 
judicial web portal was created in July. The updating of an electronic database at the Judicial 
Documentation Centre remains problematic due to a lack of staff.  

In  relation  to  accountability  in  the  judiciary,  steps  have  been  taken  to  address  overlapping 
inspection powers between the inspectorates of the HCJ and of the Ministry of Justice through 
the  implementation  of  a  Memorandum  of  Understanding  on  inspections;  yet,  the  risk  of 
overlapping persists. Poor drafting of judgments, in particular insufficient reasoning, remains 
an issue of concern. 

Good  progress  has  been  made  in  combating  corruption  within  the  judiciary  through  the 
adoption  of  constitutional  amendments  limiting  the  immunity  of  judges.  The  reform  allows 
for  the  investigation  and  criminal  prosecution  of  judges  without  prior  authorisation.  The 
implementation of these provisions should be carefully monitored and relevant amendments 
introduced  in  the  Code  of  Criminal  Procedure.  Poor  working  conditions,  a  lack  of  adequate 
safety arrangements for courts and judges and generally low remuneration, plus the absence 
of  adequate  controls  and  the  opaque  system  of  appointments,  promotions  and  transfers, 
continue to be key risk factors for corruption in the judiciary. 

A  code  of  ethics  for  judges  is  in  place  but  effective  implementation  remains  a  challenge. 
Inspections  have  been  carried  out  but  further  training  and  a  concrete  implementation 
mechanism  remain  essential.  An  online  procedure  allowing  citizens  to  complain  against 
judges and court proceedings was set up in May. 

Limited progress was made regarding the efficiency of the judiciary. Although a study on the 
possible  territorial  reorganisation  of  courts  and  reallocation  of  the  number  of  judges  in  the 
courts  was  made,  implementation  of  its  conclusions  was  delayed.  Court  efficiency  is  also 
hindered by the absence of an accurate civil registry and a proper address system. 

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The lack of a comprehensive legal framework on judicial administration in line with European 
standards,  with  clearly  organised  courts  and  judicial  staff,  hampers  the  transparency  and 
efficiency of court activities. Hearings often continue to be held in judges’ offices and little 
progress has been made in improving working conditions in courts. This can have a negative 
effect  on  the  impartiality  of  the  proceedings.  Some  progress  has  been  made  regarding  the 
training  of  chancellors,  court  officers  and  judicial  administrators  and  a  budget  has  been 
allocated  for  continuous  training  activities.  However,  the  overall  budget  allocated  to  courts 
and judicial staff needs to be increased to make the training sustainable.  

Court management remains poor due to a lack of human and financial resources. The annual 
budget  for  the  judiciary  has  barely  increased.  In  2012  it  amounts  to  € 69.6  million,  which 
represents 0.71% of the GDP.  

Limited  resources  also  contribute  to  the  heavy  workload  in  courts,  including  the 
Constitutional Court and the High Court, both of which have significant backlogs of cases. In 
the  case  of  the  High  Court,  the  backlog  is  also  a  reflection  of  the  Court’s  very  broad 
competence. 

The  Code  of  Civil  Procedure  and  the  Code  of  Criminal  Procedure  need  to  be  amended  to 
increase the efficiency of court proceedings. Both codes are currently under review. The new 
law on the profession of lawyer provides for enhanced procedures against lawyers in cases of 
professional  misconduct.  Further  changes  are  needed  to  effectively  address  the  problem  of 
unreasonable delays in court cases, caused by postponement of court proceedings. These are 
often due to the absence of lawyers and/or prosecutors, in criminal cases, or by the absence of 
lawyers  and/or  witnesses,  in  civil  ones.  Court  backlogs  and  the  excessive  length  of 
proceedings undermine the efficiency of the judicial system. The Chamber of Lawyers lacks 
effective supervisory and training capacities.  

Enforcement of court decisions remains weak, particularly in cases where state institutions are 
the  defendants.  Albania  has  yet  to  provide  the  Council  of  Europe  with  clear  data  on 
enforcement of decisions relating to restitution/compensation for property nationalised under 
the communist regime. The introduction of an effective remedy for the non-execution of final 
decisions is needed.  

The new private bailiff system is in place and a budget for the National Chamber of Private 
Bailiffs has been allocated for the first time.  

As regards the Law on Mediation, regulations on the activity of mediators and first licences 
have been issued. However, a Chamber of Mediators has not yet been set up. Amendments to 
the Law on Arbitration are awaiting finalisation and adoption. 

The  verdict  in  the  so-called  Gërdec  case  (the  2008  explosion  which  killed  26  people)  was 
delivered in March. Five of the 29 accused were given prison sentences ranging from 6 to 18 
years;  the  remainder  received  lower  sentences  or  were  acquitted.  Appeal  proceedings  are 
pending. In a parallel development, the Constitutional Court overturned in May a High Court 
decision  dropping  charges  against  a  former  Defence  Minister  concerning  his  alleged  role  in 
the Gërdec case; the matter will now be reconsidered by the High Court. 

In  relation  to  the  death  of  four  demonstrators  during  the  events  of  21  January  2011,  the 
criminal  proceedings  have  so  far  led  to  the  house  arrest  of  a  former  commander  of  the 
National  Guard  and  the  pre-trial  detention  of  an  officer  of  the  Guard  for  their  alleged 
involvement  in  the  shooting.  One  other  person  is  under  house  arrest,  and  another  has  been 
acquitted,  for  obstructing  justice  by  contaminating  evidence.  Investigations  on  the  alleged 
involvement  of  opposition  Members  of  Parliament  in  instigating  the  events  are  ongoing. 

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These  proceedings  need  to  be  completed  by  prosecution  and  courts  without  undue 
interference. 

Overall,  moderate  progress  has  been  made  in  addressing  judicial  reforms,  which  is  a  key 
priority  of  the  Opinion.  The  judicial  reform  strategy  and  the  relevant  action  plan  of  March 
2012  have  started  to  be  implemented.  The  Law  on  Administrative  Courts,  the  Law  on  the 
National Judicial Conference, and the Law on the Profession of Lawyer have been adopted. 
Steps  have  been  taken  to  restrict  the  immunity  of  judges.  The  new  private  bailiff  system  is 
operational.  However,  important  legislation  to  further  strengthen  the  independence, 
accountability  and  efficiency  of  the  judiciary  still  awaits  finalisation,  adoption  and 
implementation. In this respect, it is now essential that amendments to the Law on the High 
Court  are  adopted.  Court  organisation,  transparency,  case  backlogs,  and  the  rate  of 
enforcement of decisions continue to raise concern for the efficiency of the judiciary, as does 
budget allocation. The proceedings to shed light on the events of the 21 January 2011 need to 
be  completed  through  a  credible  judicial  process.  Good  progress  is  reported  in  the  fight 
against corruption in the judiciary, through the limitation of the immunity of judges. Albania 
needs  to  further  accelerate  the  implementation  of  the  judicial  reform  strategy  in  order  to 
ensure the independence, efficiency and accountability of its judicial institutions. 

Anti-corruption policy (See also Chapter 23 – Judiciary and fundamental rights) 

Moderate progress was made regarding policies to fight corruption, which are a key priority 
of the Opinion. The implementation of the anti-corruption strategy and specific measures in 
different  sectors  and  areas  under  the  2011-2013  action  plan  has  continued,  albeit  slowly. 
Reports  on  the  implementation  of  the  action  plan,  including  from  line  ministries  and  other 
relevant institutions, are not yet published on a regular basis. 

There  has  been  moderate  progress  in  strengthening  the  legal  framework.  This  includes  the 
implementation  of  recommendations  of  the  Group  of  States  against  Corruption  (GRECO) 
related to incrimination and political party financing. Amendments to the Criminal Code on 
acts of corruption by foreign officials and on imposing major penalties for corruption in the 
private sector were adopted in March 2012.  Regarding political party financing, the  Central 
Election  Commission  adopted  a  decision  in  January  2012  to  fulfil  the  GRECO’s  latest 
recommendation. 

Amendments to the Law on Notaries were passed, introducing the digitalisation of notaries’ 
activities. The implementing legislation still has to be finalised and brought into force. 

Some  progress  was  made,  through  constitutional  changes,  to  restrict  the  immunity  of  high-
level  public  officials  and  judges,  which  is  not  only  a  fundamental  obstacle  to  proper 
investigation into possible corruption cases in Albania but also contributes to the wider public 
perception of persistent impunity of some members of society in this area.  

The  Department  of  Internal  Control  and  Anti-Corruption  (DIACA)  does  not  have  sufficient 
institutional  independence,  authority  and  administrative  capacity  to  accomplish  its  tasks. 
Weaknesses in  cooperation between DIACA  and  other institutions are reflected in a lack of 
progress  in  its  reporting,  coordination  and  monitoring  activities.  Limited  staff,  particularly 
experts specialised in prevention and prosecution, and a lack of financial resources remain a 
serious constraint on the DIACA’s work.  

Efforts  were  made  to  improve  interinstitutional  cooperation.  Two  interinstitutional  working 
groups  were  set  up  to  exchange  information  and  devise  a  standardised  format  for  a 
consolidated data system for criminal offences involving corruption and organised crime. The 
High  Inspectorate  for  Declaration  and  Audit  of  Assets  (HIDAA)  signed  a  Memorandum  of 
Understanding  (MoU)  with  the  Supreme  State  Audit,  aimed  at  setting  up  a  database  on 

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suspected  corruption  in  the  public  administration.  An  MoU  has  also  been  signed  with  the 
Ombudsman. MoUs were signed between HIDAA and the Immovable Property Registration 
Office  (IPRO),  the  Agency  for  the  Legalisation,  Urbanisation  and  Integration  of  Informal 
Areas/Constructions (ALUIZNI) and the Ministry of Justice respectively in order to facilitate 
exchange of information on immovable properties. MoUs between HIDAA and both the High 
Council  of  Justice  and  the  High  Court  have  not  yet  been  drafted.  An  analysis  of  the 
implementation  and  effectiveness  of  existing  agreements  needs  to  be  conducted.  On  6  June 
2012,  a  Council  of  Ministers  decision  established  that  all  notaries  and  General  Prosecution 
will have access to the real estate registry. 

Amendments  to  the  Law  on  the  Prevention  of  Conflict  of  Interest  in  the  Exercise  of  Public 
Functions  and  the  Law  on  the  Declaration  of  Assets  and  Audit  of  Assets  and  Financial 
Obligations  of  Elected  and  Some  Public  Officials  were  adopted.  The  changes  to  these  laws 
aim to strengthen the competence and authority of HIDAA in this area and introduce certain 
legal improvements facilitating investigations. 

The Financial Investigation Unit has signed agreements on exchanging information with the 
customs service, the Immovable Property Registration Agency and the vehicle registry. The 
implementation of this agreement and the actual degree of access to information needs to be 
checked.  Digitalisation  of  the  relevant  information  remains  a  challenge.  No  progress  was 
made in setting up a central registry of bank accounts. 

Joint  Investigative  Units  (JIU)  continued  to  be  good  instruments  for  investigating  and 
prosecuting  corruption  cases.  The  HIDAA  made  progress  in  the  detection  of  suspicious 
declarations; there have been some police investigations of corruption cases and prosecution 
of low and mid-level officials has increased. However, convictions in corruption cases remain 
rare. There is not yet a convincing track record of investigations, prosecutions and convictions 
in  corruption  cases  at  all  levels  including  senior  officials.  A  lack  of  expertise  in  financial 
investigations  and  of  technical  equipment  for  special  investigative  measures  hampers  the 
effectiveness of investigations in corruption cases. A particular concern is the general culture 
of  a  reactive  approach  to  investigating  corruption  cases  and  the  almost  complete  lack  of 
proactive  investigations.  Intelligence  from  different  sources  has  not  systematically  been 
followed up on and risk assessment is not systematically used.  

Limited human and financial resources remain a constraint for the Joint Investigative Units, 
the  HIDAA,  the  Prosecutor’s  Office  and  the  different  departments  dealing  with  anti-
corruption  measures.  Internal  control  departments  often  lack  specialist  expertise  and  remain 
insufficiently  focused  on  fighting  corruption.  The  level  of  cooperation  between  law 
enforcement agencies, in particular between the police and prosecutors, remains insufficient. 
Institutions  in  charge  of  investigations,  inspections,  and  sentencing  remain  vulnerable  to 
political  pressure  and  undue  influence.  Civil  society  still  plays  a  limited  role  in  the  fight 
against  corruption.  Criminal  statistics  and  statistics  on  conflict  of  interest  cases  need  to  be 
strengthened.  

The  new  code  of  ethics  adopted  by  the  General  Director  of  Taxes  was  published  and 
disseminated. However, corruption in tax services, and particularly tax inspection, is an issue 
of great concern that seriously affects the business environment. Cameras have been installed 
at several customs border points. The effectiveness of such systems needs to be checked in the 
absence  of  other  more  targeted  measures  to  fight  customs  corruption.  There  are  not  enough 
checks on tax and customs officers’ assets. 

The  overall  planning  and  implementation  of  anti-corruption  measures  in  the  justice  system 
remains insufficient. There is not yet a track record of disciplinary measures against judges or 

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sound  auditing  of  judges’  assets.  Corruption  in  the  judiciary  remains  a  particularly  serious 
problem as the judiciary should be one of the key institutions in the fight against corruption.  

As  part  of  the  school  curriculum,  a  manual  for  teachers  has  been  drafted  as  a  pilot  to  raise 
awareness of relevant corruption risks. However, corruption in the education system remains 
an  issue  of  concern  especially  in  higher  education  establishments,  which  are  insufficiently 
inspected.  In  the  health  sector,  the  effectiveness  of  anti-corruption  measures  is  called  into 
question  by  insufficient  monitoring  of  reporting  requirements,  such  as  those  on  the  use  of 
medicines in hospitals. Bribery of medical personnel is still inadequately followed up on. 

With regard to specific preventive measures such as awareness-raising initiatives, progress is 
limited.  Existing  ‘green’  lines  and  e-templates  to  report  cases  are  insufficiently  focused  on 
fighting corruption and have yet to produce meaningful results. 

Overall, moderate progress was made in the fight against corruption, which is a key priority 
of  the  Opinion.  Steps  were  taken  to  restrict  the  unlimited  immunity  of  high-level  public 
officials  and  judges.  Some  efforts  were  made  to  improve  interinstitutional  cooperation, 
exchange  of  information  and  the  prosecution  of  generally  low  and  medium-level  cases. 
However, the absence of a proactive approach and lack of resources and equipment continue 
to  obstruct  effective  investigations.  There  is  no  adequate  track  record  of  investigations, 
prosecution and convictions at all levels. Corruption is prevalent in many areas and continues 
to be a particularly serious problem. 

2.2. 

Human rights and the protection of minorities (See also Chapter 23 – Judiciary 
and fundamental rights)  

Observance of international human rights law  

Albania made progress in acceding to international human rights instruments by  signing 
the  Council  of  Europe  Convention  on  Preventing  and  Combating  Violence  against  Women 
and Domestic Violence in December 2011. Its ratification, and that of the UN Convention on 
the  Rights  of  Persons  with  Disabilities,  signed  in  December  2009,  is  pending.  Delays  in 
application and non-compliance with judgments of the European Court of Human Rights 
(ECtHR), particularly in relation to property rights and the right to a fair trial, continue to be 
an  issue  of  concern.  During  the  reporting  period,  the  ECtHR  delivered  judgments  on  eight 
applications finding that Albania had violated rights guaranteed by the European Convention 
on Human Rights (ECHR). A total of 98 new applications have been submitted to the ECtHR 
since September 2011, bringing the total of pending applications to 379.  

As regards promotion and enforcement of human rights,  the  new  Ombudsman  has  taken 
on  a  proactive  role  since  his  appointment.  However,  the  Ombudsman’s  Office  still  has 
difficulties in securing sufficient funding to fulfil its legal obligations, notably for monitoring 
visits. The Office of the Commissioner for Protection from Discrimination (CPD) has focused 
its  activities  on  awareness  raising  and  strengthening  the  capacity  of  its  staff.  Cooperation 
agreements  have  been  signed  with  line  ministries  and  the  Commissioner  has  started  to 
the 
systematise  case  management.  Nonetheless, 
Commissioner  remains  relatively  low.  Albania’s  respect  for  human  rights  continues  to  be 
monitored by international bodies.  

the  number  of  cases  handled  by 

Civil and political rights  

There has been progress in the prevention of torture and ill-treatment and the fight against 
impunity, which is part of a key priority of the Opinion. The General Directorates of Prisons 
and  State  Police  have  carried  out  thematic  training  courses  and  inspections.  The  General 
Directorate  of  the  State  Police  set  up  a  working  group  to  address  the  Ombudsman’s 
recommendations  and  started  cooperating  with  two  NGOs  for  the  provision  of  training  and 

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monitoring  of  police  premises.  Amendments  to  the  handbook  on  the  rules  and  treatment  of 
arrested and detained persons in police stations were adopted and a new electronic database 
for  escorted  and  arrested  persons  introduced.  A  new  form  was  introduced,  based  on  the 
Istanbul Protocol, for medical staff to document cases of ill-treatment in the prison system and 
a  sample  register  model  for  treating  complaints  of  escorted  and  arrested  persons  in  police 
stations  was  approved.  Some  police  holding  cells  which  were  in  very  poor  condition  have 
been taken out of use. However, some cases of ill-treatment and excessive use of force have 
still  been  reported  and  conditions  in  some  prisons  and  police  holding  cells  remain  below 
standard.  Despite  the  positive  trend  in  this  field,  there  are  still  reports  that  procedures  for 
processing  accompanied  or  arrested  persons  were  not  systematically  observed.  Cases  of  ill-
treatment continue to be often handled through administrative rather than judicial procedures. 
The majority of the Ombudsman’s recommendations in this field were addressed to the State 
Police. There has been an increase in follow-up of the Ombudsman’s recommendations, yet a 
number of recommendations remain unimplemented or partially implemented. 

Joint work between the Ministries of Justice and Health led to a decision to build a dedicated 
special medical institution for treating mentally ill offenders, including those under mandatory 
treatment. However,  it  will  take  time for this facility to be established and concerns remain 
over the currently insufficient specialist care and treatment for this category of patients. The 
Law on Mental Health was adopted in April 2012.  

In June 2012, the Albanian State Police launched a database of persons directly involved in 
blood  feuds.  This  could  help  to  address  the  lack  of  reliable  data  in this area.  More  decisive 
action by the authorities is needed to address this problem. At the end of 2011, concern arose 
over  the  issuing  of  false  blood  feud  certificates  by  a  civil  society  organisation  enabling 
application for asylum in some EU Member States.  

Progress  has  been  made  concerning  the  prison  system,  with  continued  implementation  of 
training  programmes,  an  increase  in  the  activities  offered  to  prisoners  and  a  general 
improvement  in  the  standards  of  treatment  of  detainees.  Increased  follow-up  of  the 
Ombudsman’s  recommendations  has  had  a  positive  impact  on  detention  conditions.  Over 
recent  years,  several  new  penitentiary  facilities  have  been  built  which  need  to  be  sustained 
through  adequate  maintenance  budgets.  Adoption  of  the  regulation  for  penitentiary 
infrastructure  planning  is  pending.  Prisoners’  living  standards  continue  to  vary  according  to 
the  availability  of  food  or  equipment  provided  by  their  families.  Installation  of  locked 
cabinets  has  improved  confidentiality  of  personal  medical  data  which  needs  to  be  ensured 
through  continued  training  of  prison  staff  on  safeguarding  detainees’  right  to  privacy  and 
confidentiality. Progress on replacing individual padlocks, a safety hazard, with more modern 
systems is slow.  

The  establishment  of  the  Probation  Service  has  had  a  positive  impact  on  reducing 
overcrowding  and  preventing  reoffending.  Four  new  regional  offices  were  open  in  January 
2012 and plans for developing the Service, including hiring additional probation specialists, 
have  been  approved.  This  will  help  reduce  the  case-load  per  specialist  and  improve  the 
functioning of the Service. The Law on Electronic Monitoring of Offenders came into force in 
April 2012 and a tender was launched to select an electronic monitoring provider. Continued 
over-use of pre-trial detention for low-risk offenders and juveniles remains a concern.  

Little progress was made as regards access to justice. The implementation of the Law on Free 
Legal Aid has been slow due to insufficient budgetary allocations and a lack of coordination 
between  relevant  institutions.  Additionally,  neither  the  bylaws  regarding  the  recruitment  of 
free legal aid lawyers nor the procedures to request free legal aid are implemented effectively. 
The State Commission for Legal Aid has handled few cases and public awareness of the law 

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and  the  Commission’s  services  is  insufficient,  including  among  local  government  staff 
working  with  vulnerable  groups.  Access  to  justice  for  vulnerable  groups  is  not  ensured, 
notably  due  to  the  high  judicial  administration  fees.  The  excessive  length  of  judicial 
proceedings remains a concern.  

Freedom of expression is generally upheld in Albania. Good progress was made as regards 
defamation  with  the  adoption  in  March  2012  of  the  amendments  to  the  criminal  and  civil 
codes  abolishing  prison  sentences  and  special  protection  of  public  officials.  However, 
defamation  remains  a  criminal  offence,  exposing  journalists  to  potentially  high  fines.  The 
moratorium  on  the  use  of  defamation  suits  by  government  officials  against  journalists 
continues  to  be  generally  implemented.  On  the  other  hand,  the  number  of  defamation 
proceedings  between  politicians,  notably  MPs,  raises  concerns.  The  adoption  of  the  law  on 
Audiovisual  Media  Services  has  been  further  delayed.  The  public  broadcaster’s  editorial 
independence  from  the  government  has  not  been  strengthened.  The  government  is  still 
directly  interfering  with  managerial  appointments.  The  monthly  public  broadcasting  fee  has 
increased but the fee collection system is still not sustainable and needs to be reviewed.  

Economic pressure on the media market has further increased, affecting the already precarious 
labour  conditions  of  journalists.  A  high  number  of  journalists  work  without  formal 
employment  contract,  which  has  a  direct  impact  on  self-censorship.  There  is  still  no  self-
regulatory  body  and  the  capacity  of  journalists’  trade  unions  remains  weak.  As  regards  the 
audio-visual  and  print  media  market,  ownership  transparency  has  improved  but  sources  of 
financing  remain  opaque.  Editorial  independence  continues  to  be  hampered  by  private 
political  and  economic  interests.  There  are  concerns  that  public  advertising  is  directed  to 
television channels that are supportive of the government.  

Freedom  of  assembly  and  association  has  generally  been  respected.  The  reporting  period 
was  marked  by  several  demonstrations  by  citizens  (former  political  prisoners,  property 
claimants,  disability  organisations)  and  rallies  by  political  parties.  As  regards  civil  society 
organisations, difficult access to financial sources, particularly affecting small NGOs in rural 
areas,  still  limits  the  capacity  of  Albanian  civil  society  for  advocacy  and  networking.  The 
Agency for Support to Civil Society published its third call for proposals in November 2011 
with  a  relatively  short  deadline  for  applicants  to  acquire  and  prepare  the  necessary 
documentation.  No  progress  has  been  made  in  alleviating  the  conditions  for  voluntary 
activities in NGOs or improving the overall fiscal environment for NGOs. Social  assistance 
and  community-based  services  provided  by  Albanian  NGOs  suffer  from  a  lack  of  public 
funding. As regards institutions’ cooperation with civil society, dialogue needs to be further 
strengthened  at  central  and  local  levels.  Civil  society  is  regularly  involved  in  the  policy 
development process and in legislative drafting but consultation is often a formalistic process 
which falls short of true cooperation.  

Freedom  of  thought,  conscience  and  religion  continued  to  be  respected.  All  five  official 
religions  continue  to  receive  support  from  the  state  budget.  Discussions  on  urban  plans  for 
new religious buildings in the capital continued.  

Economic and social rights (See also Chapter 19 – Social policy and employment) 

There has been some progress regarding women’s rights and gender equality, which is part 
of  a  key  priority  of  the  Opinion.  Albania  has  started  to  implement  the  2011-2015  national 
strategy  on  gender  equality  and  the  fight  against  domestic  violence  and  gender-based 
violence,  for  instance  by  drafting  an  action  plan  including  costing  and  training  courses  for 
ministerial  gender  equality  employees.  In  July  2012,  a  Council  of  Ministers  decision  on 
gender  mainstreaming  in  the  medium-term  budget  programme  for  all  line  Ministries  was 
approved.  Coordination  between  central  and  local  government  and  awareness  of  the 

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requirements of the Strategy need to be improved. The network of full-time gender equality 
officers consists of 17 persons in municipalities and 2 in line ministries. Women continue to 
be under-represented in policy-making and politics. Electoral code amendments approved in 
August 2012 included increased penalties for parties not respecting the gender quota while not 
providing  for  rejection  of  lists  that  are  not  in  line with the quota. Stricter application of  the 
gender  quota  is  necessary  in  view  of  preparation  for  the  next  parliamentary  elections. 
Implementation of existing laws and policies on women’s rights needs to be stepped up. 

Amendments to the Criminal Code introducing sanctions of up to five years of imprisonment 
for the specific offence of domestic violence were adopted in March 2012. Awareness-raising 
has  led  to  an  increase  in  domestic  violence  cases  reported  to  the  police.  The  process  of 
strengthening the network of National Referral Mechanism for victims of domestic violence is 
on-going, albeit at a relatively slow pace. However, the system of assistance to victims is not 
fully professional, with staff often not sufficiently specialised and unaware of some policies 
implemented  by  the  central  government.  The  national  shelter  for  victims  is  operational  but 
still  relies  to  a  large  extent  on  external  funding.  Serious  concerns  over  the  running  of  the 
shelter led to changes in management which have had a positive impact on the protection of 
victims. Domestic violence still remains widespread and the need to strengthen the protection 
of  women  against  all  forms  of  violence  remains.  Albania  remains  a  source  country  for 
trafficking in human beings and recent improvements need to be complemented with a victim-
centred approach, including reintegration services and witness protection.  

There  has  been  uneven  progress  in  the  area  of  children’s  rights,  which  is  part  of  a  key 
priority of the Opinion, with policies in place but implementation remaining slow and largely 
reliant on external assistance. In April 2012 the action plan of the national strategy for child 
protection  2012-2015  was  approved,  and  implementing  measures  for  the  Law  on  the 
Protection  of  the  Rights  of  the  Child  were  adopted.  The  signature  of  a  joint  order  of  the 
Ministers of Interior and Labour, Social Affairs and Equal Opportunities in August 2012 aims 
to increase coordination for effective management of cases of children at risk of abuse. There 
are  currently  11  child  rights  units  at  regional  level  and  62  child  protection  units  (CPUs)  at 
municipal  and  commune  level.  A  programme  addressing  corporal  punishment  and 
psychological violence in schools has been launched. The National Council for the Protection 
of the Rights of the Child has so far been convened once. There is systematic reliance on civil 
society organisations to provide child protection services at local level. Dependence on donors 
puts  into  question  the  sustainability  of  such  structures  and  there  is  a  need  to  ensure  that 
decentralised  management  of  policies  is  matched  with  adequate  resources  at  local  level. 
Coordination  between  central  and  local  governmental  structures  needs  strengthening.  No 
progress  was  made  regarding  monitoring  and  support  to  children  who  leave  residential 
childcare  institutions  at  the  age  of  15.  A  Council  of  Ministers  Decision  approved  in  April 
2012,  aiming  at  increasing  the  number  of  children  in  foster  care,  provides  for  the  State  to 
cover the full costs of foster care for all eligible children from September 2012. The juvenile 
justice  strategy  and  action  plan  have  not  been  adopted.  Over-use  of  pre-trial  detention  for 
juveniles is a serious concern, with a majority of juveniles spending their whole sentence in 
pre-trial  detention.  Introducing  legal  provisions  on  children  under  the  age  of  criminal 
responsibility and on juvenile witnesses and victims of crime is needed. Internal trafficking in 
human beings, child begging and informal child labour remain issues of concern and need to 
be addressed consistently. 

There  has  been  limited  progress  in  the  implementation  of  policies  targeting  the  socially 
vulnerable  and/or  persons  with  disabilities,  which  falls  under  the  key  priority  on  anti-
discrimination.  The  inter-ministerial  working  group  drafted  and  held  consultations  on  a 
framework law on the rights of persons with disabilities but it has yet  to  be adopted. There 

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continues to be unequal access to rights due to the differentiated status of certain groups and 
the  lack  of  official  status  for  certain  disabilities.  Implementation  of  the  national  strategy  on 
persons with disabilities continues to be inadequate and the quotas for employment stipulated 
by  the  Law  on  Employment  Promotion  are  not  enforced.  The  Law  on  the  status  of  blind 
persons  and  the  Law  on  the  status  of  paraplegics  and  tetraplegic  persons  were  amended  in 
March 2012. Some associations of disabled persons have protested against the introduction of 
new  criteria  and  procedures  for  disability  benefits  related  to  energy,  public  transport  and 
telephone bills that were prompted by previous abuses of the scheme. The amendments to the 
Law on Social Assistance and Services led to the revision in February 2012 of the decision 
defining criteria, procedures and amounts of general social support payments, thus excluding 
persons  with  disabilities  from  benefiting  at  the  same  time  from  the  economic  aid  and 
disability  allowances.  The  Law  on  Pre-University  Education  adopted  in  June  provides  for 
assistant  teachers  in  classes  with  children  with  disabilities.  Until  now,  many  children  with 
disabilities have not been integrated into the public education system.  

Moderate  progress  has  been  made  regarding  the  implementation  of  anti-discrimination 
policies,  which  is  part  of  a  key  priority  of  the  Opinion.  In  April  2012,  the  Office  of  the 
Commissioner for Protection from Discrimination (CPD) launched a strategic plan for 2012-
15 and an action plan for 2012. The CPD focused on capacity building and awareness-raising 
and  was  consulted  on  draft  legislation.  Public  knowledge  of  the  Law  on  Protection  from 
Discrimination  and  awareness  of  the  right  to  appeal  to  the  CPD  remain  low.  There  remains 
under-reporting of potential cases of discrimination. In the reporting period, the CPD handled 
41 cases, including 11 ex-officio investigations. The CPD imposed an administrative sanction 
in  one  case.  There  is  a  need  to  build  a  track  record  of  cases  brought  to  final  completion  to 
encourage potential victims to bring their cases to the Commissioner.  

An  inter-ministerial  working  group,  with  civil  society  participation,  has  drafted  a  plan  of 
measures for non-discrimination on the basis of sexual orientation and gender identity 2012-
2014.  NGOs  ran  a  training  course  on  the  rights  of  lesbian,  gay,  bisexual  and  transgender 
persons  (LGBT)  for  the  public  administration.  A  diversity  festival  was  organised  by  civil 
society and financed by donors, with presence of the State authorities, in Tirana on 17 May 
2012, to mark the International Day against Homophobia and Transphobia. In the run-up to 
this event, derogatory homophobic statements were made by a member of government and a 
political  party  representative.  The  Prime  Minister  denounced  these  statements,  and  the 
Commissioner  for  Protection  from  Discrimination  investigated  the  cases  and  issued 
recommendations.  LGBT  persons  continue  to  suffer  from  discrimination  and  difficulty  in 
accessing social and health services, notably for transgender persons. 

Labour and trade unions rights have generally been respected. Dialogue has been launched 
with the trade unions on the criteria for membership of the National Labour Council. Trade 
unions  reported  that  state  institutions  were  unwilling  to  sign  collective  agreements  in  the 
public  sector.  Collective  bargaining  in  the  private  sector  remains  underdeveloped.  Gaps 
remain in the enforcement of legislation on child labour.  

As regards reforming the legal and institutional framework in the area of property rights, a 
key  priority  of  the  Opinion,  a  new  law  has  been  approved  on  registration  of  immovable 
property,  which  reorganises  the  Immovable  Property  Registration  Office  (IPRO)  as  a  self-
financing  institution  and  contains  provisions  on  digitalisation  of  property  registration. 
Amendments were made to the law on restitution and compensation for property, setting new 
criteria  for  land  evaluation  and  extending  the  deadline  for  property  restitution  and 
compensation to 2014. A new Directorate for Coordination has been set up in the Ministry of 
Justice.  

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A cross-cutting strategy and action plan for reform of property rights was adopted, following 
technical  discussions  with  the  donor  community  and  the  presentation  of  the  draft  to  some 
stakeholders. The strategy aims to complete initial registration and consolidate an electronic 
public  register  for  properties,  complete  the  processes  of  restitution,  compensation  and 
legalisation,  create  an  efficient  compensation  scheme  and  a  physical  and  financial  fund  for 
people whose property has been expropriated, contribute to fighting corruption in the sector, 
and  modernise  the  information  system  on  property  rights.  Legislation  in  force  and  future 
initiatives  in  this  sector  have  to  be  fully  coordinated  with  the  objectives  of  the  strategy. 
Territorial  planning,  institutional  coordination  and  interrelations,  and  the  setting  up  of 
efficient  monitoring  and  implementation  structures  remain  significant  challenges  in  this 
respect.  Broader  consultations  of  stakeholders  accompanied  with  determined  action  are 
needed to ensure sustainability in the implementation of the strategy.  

The land registry has not yet been completed and land and property databases remain under 
the  control  of  different  agencies  without  sufficient  coordination.  Initial  registration  of 
immovable  property  needs  to  be  completed  to  create  certainty  of  ownership.  Legal 
impediments  must  be  removed  to  facilitate  registration,  giving  owners  clear  and  undisputed 
title  to  property.  Compensation  and  restitution  claims  by  former  owners  for  property 
confiscated during the communist regime are met at a very slow rate. The Government has yet 
to communicate a clear timetable for enforcement of ECtHR judgements regarding property 
rights.  

Respect for and protection of minorities, cultural rights 

Inter-ethnic  relations  remained  good  overall,  despite  very  limited  progress  in  enhancing  the 
legislative and policy framework for the protection of minorities. The Third Opinion of the 
Advisory Committee of the Framework Convention for the Protection of National Minorities 
(FCNM)  was  published  on  in  June  2012.  The  Opinion  recommends  the  adoption  of  a 
comprehensive legislation on minorities. This would help address identified legal gaps and the 
legal  fragmentation  in  this  sector  and  clarify  state  policy  towards  minorities,  including 
establishing  proper  legal  criteria  for  the  recognition  of  minorities  and  ensuring  effective 
access  to  rights  for  all  minorities.  The  mandate  and  capacity  of  the  State  Committee  for 
Minorities have not been reviewed.  

The population and  housing  census,  which included optional questions on ethnic  origin and 
religious affiliation, took place in October 2011. The full results have not been published yet 
and it is important that the processing of data be carried out in accordance with EU standards. 
Insufficient  clarity  over  the  scope  of  application  of  fines  for  refusal  to  declare  or  false 
declarations  included  in  the  census  law  resulted  in  calls  for  boycott  on  the  part  of  some 
minority  organisations,  which,  according  to  preliminary  data,  were  not  widely  followed.  In 
December  2011,  the  Constitutional  Court  issued  an  explanatory  report  on  its  decision  on 
unconstitutionality of the inclusion of ‘nationality’ (ethnicity) in the civil registry, focusing on 
the  constitutional  principles  of  non-obligation  to  declare  ethnicity  and  of  protection  of 
sensitive personal data. This decision was criticized by representatives of the Greek minority 
who have called for full respect for the principle of self-identification. It remains to be seen 
how access to specific rights related to this civil registry entry will be guaranteed. Regarding 
cultural rights, public education in minority languages is still not available for all minority 
groups  and  Albania  has  not  adopted  the  European  Charter  for  regional  and  minority 
languages. 

Very limited progress was made as regards Roma inclusion, which is part of a key priority of 
the  Opinion.  The  government  has  approved  administrative  decisions  to  facilitate  birth 
registration  procedures;  however,  there  continues  to  be  insufficient  coordination  between 

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different  institutions  involved  in  the  registration  of  births.  Roma  have  benefited  from  the 
distribution  of  free  textbooks  for  compulsory  education  but  financial  constraints  lead  to 
continued  high  rates  of  school  drop-out  and  low  enrolment  of  Roma  children  in  pre-school 
education.  

Implementation  of  the  national  strategy  on  improving  Roma  living  conditions,  the  national 
action  plan  for  the  Roma  Decade  and  the  operational  conclusions  of  the  December  2011 
seminar on inclusion of the Roma and Egyptian communities in the framework of Albania’s 
EU  integration  continues  to  be  very  slow,  due  to  inadequate  resources  and  insufficient 
coordination of the institutions involved at local and central level. There is a need to upgrade 
the status of the Roma Technical Secretariat to enhance its capacity to effectively enforce and 
coordinate implementation of policies. Technical working groups on Roma are established in 
10 regions to monitor, evaluate and make plans to improve Roma living conditions. However, 
local  government  units  are  still  insufficiently  involved  and  aware,  with  critical  services  for 
Roma still being largely provided by civil society organisations and financed by international 
donors, which may put into question their sustainability in the medium term.  

The Roma still face very difficult living conditions and frequent discrimination, particularly 
regarding  access  to  employment  and  adequate  housing,  leading  to  marginalisation.  Despite 
much attention from the international community, civil society and the Ombudsman and some 
limited efforts by the government, the response of the central and local authorities’ towards 
relocating and assisting the remaining Roma families from those forcibly removed from their 
settlement  near  Tirana  train  station  in  February  2011  has  been  largely  inadequate. 
Preparations for infrastructure projects are heightening the risk of such evictions. Central and 
local governments need to develop intervention plans to address forced evictions and ensure 
alternative housing for families in vulnerable situations.  

Overall, there has been moderate progress in the field of human rights and the protection of 
minorities. 

There  has  been  progress  towards  meeting  the  key  priority  that  calls  for  improving  the 
treatment  of  detainees,  for  strengthening  the  judicial  follow-up  of  cases  of  ill-treatment  and 
application  of  the  Ombudsman’s  recommendations.  Measures  have  been  taken  to  improve 
conditions of detention and strengthen cooperation with the Ombudsman. Some cases of ill-
treatment  are  still  reported  and  police  do  not  systematically  follow  proper  procedures  for 
arrest  and  custody.  Living  standards  in  prisons  still  vary.  There  are  plans  for  establishing  a 
special  medical  institution  for  mentally  ill  detainees,  but  the  need  for  additional  specialised 
care and improving treatment remains. Delays in court proceedings and the as yet insufficient 
resources of the Probation Service continue to lead to over-use of pre-trial detention. 

Progress towards meeting the key priority that calls for reinforcing the protection of human 
rights  notably  for  women,  children  and  Roma  and  effective  implementation  of  anti-
discrimination  policies  has  been  uneven.  Amendments  to  the  Criminal  Code  on  domestic 
violence  are  a  positive  step.  Implementation  of  policies  for  child  protection  needs  to  be 
strengthened. There is a need to adopt legislative measures for persons with disabilities and to 
review legislation in view of addressing potentially discriminatory provisions against LGBT 
persons.  The  Commissioner  for  Protection  from  Discrimination  has  worked  on  raising 
awareness but additional efforts are needed to establish a track record of cases brought to final 
completion.  There  is  still  discrimination  against  certain  vulnerable  groups,  such  as  LGBT 
persons  and  Roma.  Inter-ethnic  relations  remain  good  but  no  measures  have  been  taken  to 
address  weaknesses  in  the  overall  legislative  and  institutional  framework  in  the  field  of 
minorities. Implementation of policy tools for Roma inclusion and access of this community 
to  social  protection  and  services  are  still  insufficient,  leading  to  marginalisation.  Policies  in 

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the field of human rights are largely supported by civil society and donors. It is important for 
Albania to prioritise policies in these areas in order to ensure sustainability.  

Some progress was achieved in the area of property rights, notably through the adoption of a 
new  law  on  the  registration  of  immovable  property  and  through  the  adoption  of  a  cross-
cutting strategy and action plan for reform in the field of property rights, a key priority of the 
Opinion. Efficient coordination and monitoring is necessary to ensure the implementation of 
the strategy and consistency between legislation in force and future initiatives. Consultations 
with stakeholders need to continue in this respect. The first registration of properties has not 
yet been completed. Compensation and restitution claims by former owners are met at a very 
slow rate. 

2.3. 

Regional issues and international obligations  

The  Council  of  Europe  (CoE)  has  continued  to  monitor  the  extent  to  which  Albania  is 
fulfilling  its  membership  obligations  and  has  closely  followed  political  developments  in  the 
country through specialised CoE bodies and through its permanent external office in Tirana, 
headed by a special representative of the Secretary General. In May 2012, Albania took over 
the chairmanship of the Committee of Ministers of the Council of Europe. 

Albania has cooperated fully with EULEX to allow full investigation of allegations raised in 
the  resolution  adopted  by  the  Parliamentary  Assembly  of  the  Council  of  Europe.  In  May 
2012, parliament unanimously adopted a special law allowing EULEX investigators to carry 
out investigations on Albanian territory.  

Albania  maintains  a  2003  bilateral  immunity  agreement  with  the  United  States  granting 
exemptions from the jurisdiction of the International Criminal Court. This does not comply 
with  the  EU  Common  Position  on  the  integrity  of  the  Rome  Statute  or  with  the  related  EU 
guiding  principles  on  bilateral  immunity  agreements.  Albania  needs  to  align  with  the  EU 
position.  

Regional cooperation and good neighbourly relations form an essential part of Albania’s 
process of moving towards the European Union. Albania continued to take an active part in 
regional  initiatives,  including  the  South  East  European  Cooperation  Process  (SEECP),  the 
Regional  Cooperation  Council  (RCC),  the  Energy  Community  Treaty  and  the  European 
Common Aviation Area Agreement. Albania holds the chairmanship of the Central European 
Free Trade Agreement (CEFTA) in 2012 and the chairmanship of the Multinational Advisory 
Group of the RACVIAC-Centre for Security Cooperation. As a result of an initiative launched 
by  Albania  in  the  framework  of  its  MARRI  (the  Migration,  Asylum,  Refugees  Regional 
Initiative) presidency, an agreement entered into force between Albania, Montenegro and the 
former  Yugoslav  Republic  of  Macedonia  to  ease  border  crossing  procedures  between  the 
countries.  Nationals  of  these  countries  are  now  able  to  travel  between  them  with  biometric 
identity cards for a period of up to three months.  

Albania continued to act as a constructive partner in the region, further developing bilateral 
relations with other enlargement countries and neighbouring EU Member States.  

Relations with Bosnia and Herzegovina remained good. A bilateral agreement allowing travel 
for respective citizens with biometric ID cards only is under preparation.  

Relations  with  the  former  Yugoslav  Republic  of  Macedonia  continued  to  develop,  with  the 
entry  into  force  of  agreements  on  travel  by  citizens  between  the  two  countries  and  on 
cooperation  as  part  of  the  EU  accession  process.  An  agreement  was  signed  on  setting  up  a 
joint  centre  for  the  exchange  of  information  between  their  respective  border  and  migration 
police corps. 

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Cooperation intensified with Montenegro in economic and trade relations. The two countries 
initialled an agreement on cooperation in education and signed an agreement on recovery of 
Albania’s debt to Montenegro, an agreement on opening a joint border crossing point and a 
cooperation plan on defence.  

Relations with Serbia remained good. Several high-profile bilateral meetings took place. An 
agreement on veterinary co-operation was signed in April 2012. A readmission agreement and 
an agreement on reciprocal movement of citizens were also signed.  

Albania  continued  its  very  good  relations  with  Kosovo,  with  which  it  signed  protocols  on 
border police cooperation, including joint patrolling.  

Albania continues to have good relations with Croatia and with Turkey. 

Relations  with  neighbouring  EU  Member  States  Greece  and  Italy  remained  very  good. 
Regarding the maritime border agreement with Greece, there are no developments to report. 

Overall,  Albania  continued  to  play  a  constructive  role  in  contributing  to  the  stability  of  the 
region. Albania continued to implement the Stabilisation and Association Process conditions 
in this regard. 

3. 

ECONOMIC CRITERIA 

In examining 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. 

3.1. 

The existence of a functioning market economy 

Economic policy essentials 

Despite a generally polarised political landscape, the main parties agree on the key essentials 
of  a  market  economy.  Nevertheless,  the  political  situation  renders  the  adoption  and 
implementation  of  structural  reforms  more  challenging.  The  government’s  main  economic 
policy objective is still to preserve macroeconomic stability, which was broadly maintained. 
However, the increase in the fiscal deficit in 2011 led to a further rise in the relatively high 
public  debt,  aggravating  Albania’s  macro-financial  vulnerability.  Progress  on  structural 
reform remains insufficient. In particular, the privatisation programme has practically stalled 
and  the  institutional  set-up  to  protect  property  rights  and  enforce  the  rule  of  law  is  weak. 
Albania submitted its sixth Economic and Fiscal Programme, covering the period 2012-2014, 
in  February  2012.  The  programme  presents  an  optimistic  medium-term  macroeconomic 
scenario. The treatment of risks to the budgetary outlook and the structural obstacles is still 
insufficient. Overall, the consensus on the main fundamentals of a market-oriented economy 
was maintained. 

Macroeconomic stability 

According  to  provisional  data,  economic  growth  decelerated  to  3.1%  in  2011  from  3.8%  a 
year  earlier.  Domestic  demand  was  the  main  driver  of  GDP  growth,  spurred  by  gross  fixed 
capital  formation,  which  rose  by  3.6%.  Private  consumption  growth  slowed  down  to  2.6%, 
suppressed by weak lending to households and a further decline in workers’ remittances. The 
contribution  made  by  net  exports  to  GDP  growth  was  negligible.  The  Albanian  economy 
contracted  by  0.2%  year  on  year  in  the  first  quarter  of  2012,  driven  by  strong  declines  in 
industry  and  construction  output,  partly  due  to  adverse  weather  conditions.  As  a  result, 
electricity output declined leading to disruptions in the extractive sector. Agriculture and other 

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services  output  increased.  Consumption  expenditure  and  investment  remain  weak  partly 
reflecting  the  uncertain  global  economic  situation.  Per  capita  GDP  in  terms  of  purchasing 
power  parity  was  estimated  at  31%  of  the  EU-27  average  in  2011,  up  from  28%  in  2010. 
Overall, the Albanian economy continued to grow in 2011, driven by domestic demand, but 
economic activity practically stagnated in the first quarter of 2012.  

The annual inflation rate averaged 3.5% in 2011 and remained within the Bank of Albania’s 
(BoA)  target  range  of  2-4%.  The  main  contributors  to  inflation  were  international  food  and 
fuel  prices.  Lower  prices  for  imported  food  and  the  unwinding  of  base  effects  led  to  a 
deceleration  of  inflation  in  2012,  which  reached  a  low  of  0.6%  in  February.  Inflation 
accelerated  in  the  subsequent months,  reaching  2.8%  in  August.  The  supervisory  council  of 
the BoA cut the key repo rate in five equal steps, starting from September 2011, by a total of 
125 basis points to a multi-year low of 4%.  

Notwithstanding  several  measures  adopted  by  the  monetary  authorities,  the  level  of 
euroisation  in  Albania  remains  high.  Foreign-denominated  loans  stood  at  68%  of  the  total 
credit outstanding in 2011, of which more than half consist of un-hedged loans, while foreign 
currency-denominated  deposits  account  for  50%. Such  high  euroisation  constrains  the  room 
for  manoeuvre  of  monetary  policy  and  could  be  a  potential  source  of  instability  in  the 
financial system, since it could expose banks to currency mismatches or indirect credit risks. 

Albania continued to pursue a free-floating foreign exchange rate system. The lek was more 
stable in 2011, compared with the previous year, depreciating by some 2% against the euro. 
During the first eight months of 2012, the Albanian currency appreciated marginally reaching 
1.8% year on year in August. Overall, monetary policy remained sound, inflation kept within 
the target range and exchange rate stability was broadly preserved. 

Labour  market  conditions  improved  somewhat  during  2011,  but  unemployment  remained 
high at 13.3%, down slightly from 13.7% in 2010. Employment grew on the back of private 
non-agriculture  job  creation.  In  the  first  half  of  2012,  employment  continued  growing 
although at a decelerating rate of some 1%. Unemployment remains persistently high, while 
long-term unemployment accounts for around three quarters of total jobseekers, reflecting its 
structural nature. Labour market statistics continue to be weak and are distorted by the large 
informal  sector.  Overall,  labour  market  outcomes  slightly  improved.  Although  lower, 
unemployment remains persistently high. 

The  current  account  deficit  widened  to  12.2%  of  GDP  in  2011,  from  11.3%  a  year  earlier, 
primarily reflecting a higher trade gap and a lower services account surplus. The large trade 
deficit increased to 23.8% of GDP in 2011, from 23% in 2010, due to a slowdown in exports 
and  an  increase  in  imports.  Unfavourable  weather  conditions  in  the  second  half  of  2011 
dented  Albania’s  hydropower  generation  which  resulted  in  a  switch  from  exporting  to 
importing  electricity  and  disruptions  in  the  extraction  industries  that  lasted  until  the  first 
quarter  of  2012.  The  current  account  imbalance  improved  in  the  first  half  of  2012  as 
electricity output recovered in April and exports of goods turned positive which, together with 
a drop in imports, led to a lower trade gap. In addition, the services account posted a surplus 
in the first half of 2012 helped mainly by strong  inbound  tourism  which  more  than  offset  a 
decline in remittances.  

During  2011,  net  FDI  inflows  declined  by  10%,  reflecting  the  volatile  global  economic 
conditions,  difficulties  in  neighbouring  economies  and  the  repatriation  of  capital  which 
coincided with the fragile political climate in the country in the beginning of the year. As a 
result, FDI inflows covered some 65% of the current account imbalance, down from 78% in 
the previous year. Net FDI increased by some 30% in the first half of 2012, partly reflecting a 
favourable  base  effect  caused  by  depressed  inward  investment  figures  in  the  corresponding 

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period of the previous year. Higher FDI was reported in the oil extraction and banking sectors, 
the latter linked to bank recapitalisations. Although declining since 2010, Albania preserved a 
relatively  comfortable  level  of  international  reserves  at  around  4.4  months  of  imports. 
Overall, the high current account deficit remains a source of vulnerability, especially in view 
of the potential adverse impact of the volatile global and regional economic situation on FDI 
and declining workers’ remittances.  

The  government  deficit  increased  from  3.1%  of  GDP  in  2010  to  3.5%  in  2011,  as  planned, 
although only after a mid-year budget re-balance. Total revenue growth decelerated to 1.8% 
and stood at 25.1% of GDP, reflecting a lower tax yield amid weak consumer expenditure and 
a sharp fall in non-tax receipts. Following a contraction in 2010, total expenditure increased 
by 3.7% to 28.6% of GDP in 2011 as a result of higher capital outlays and social transfers. 
The  2012  budget  envisages  a  fiscal  deficit  of  3%  of  GDP,  based  on  an  assumed  real  GDP 
growth of 4.3%. In the period January-July 2012, total government revenue increased by 4%, 
compared with the same period of the previous year, but was 5.4% lower than planned, partly 
reflecting  optimistic  projections.  Expenditure  was  broadly  in  line  with  plans,  although 
payment arrears are a cause for concern. In July 2012, the government adopted the 2013-15 
medium-term budget programme (MTBP) based on a downward-revised GDP growth rate of 
3%  for  2012.  The  MTBP  aims  at  maintaining  total  public  debt  at  60%  of  GDP  and  net 
borrowing  not  exceeding  3%  of  GDP  in  2012.  Domestic  borrowing  remains  the  primary 
source of deficit financing. Overall, the budgetary framework remains weak at the planning 
stage, reflecting optimistic revenue projections, and also at the execution stage. 

The public debt increased from 58.5% in 2010 to 58.8% in 2011, including 3.7% of GDP in 
government  guaranteed  debt.  In  the  first  half  of  2012,  public  debt  continued  to  increase, 
reaching  59.4%  of  GDP.  Albania’s  relatively  high  and  increasing  public  debt  continues  to 
show  a  short-term  bias  (50%  of  the  debt  has  a  maturity  of  one  year  or  less)  which  requires 
frequent re-financing, although some three fifths of the debt is domestic. However, the bulk of 
the  domestic  debt  is  held  by  banks,  which  poses  a  risk  if  banks  decide  to  reduce  their 
exposure to government debt as a way to adjust their balance sheets. Any increase in interest 
rates would further limit the fiscal space. At such a high level, public debt remains a source of 
macro-financial  vulnerability.  Overall,  the  relatively  high  and  increasing  government  debt 
remains a cause for concern. Further budgetary consolidation is needed to address this source 
of macro-financial vulnerability. 

Some  progress  was  made  on  improving  the  tax  administration.  The  fiscal  amnesty  scheme, 
which aims to regularise undeclared assets and income, was introduced during the second half 
of  2011  and  extended  until  the  end  of  August  2012.  Based  on  the  preliminary  results 
published in February, some € 10.7 million (0.1%  of GDP) were collected as a result of the 
scheme.  For  the  first  time,  the  tax  administration  introduced  an  income  declaration  for 
taxpayers  to  file  with  the  tax  offices  within  2012.  The  Laws  on  Excise  was  further  aligned 
with the acquis while preparations for aligning the Law on VAT are advanced. The reference 
wages  introduced  in  2007  as  a  measure  to  reduce  tax  evasion  will  be  removed  while  the 
frequency  of  profit  tax  payments  by  businesses  has  been  reduced  from  a  monthly  to  a 
quarterly  basis.  Despite  these  efforts,  gaps  remain  in  both  revenue  collection  and 
administrative  capacity.  A  fully-fledged  tax  compliance  system  is  still  lacking  and 
enforcement continues to be weak, as does revenue collection at both central and, especially, 
local  government  levels.  Some  improvement  was  achieved  in  the  VAT  refund  procedure 
during  the  first  half  of  2012;  however,  delays  persist,  putting  an  additional  burden  on 
businesses.  Overall,  some  progress  in  the  tax  administration  was  achieved,  but  structural 
deficiencies remain. 

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Overall,  macroeconomic  stability  has  been  maintained,  as  Albania  was  less  affected  by 
adverse  external  economic  conditions.  Monetary  policy  has  successfully  helped  to  keep 
inflation stable and anchor inflationary expectations. The high level of euroisation continues 
to  limit  the  effectiveness  of  the  monetary  transmission  channels.  The  relatively  high  and 
rising  government  debt  limits  the  fiscal  space  and  remains  a  source  of  macro-financial 
vulnerability. Essential structural reforms are still missing. 

Interplay of market forces 

According  to  official  data,  the  private  sector  continues  to  account  for  80%  of  GDP  and 
employs about 82% of the labour force. No major privatisation took place during 2011. A law 
authorising  the  privatisation  of  Albpetrol  —  a  state-owned  oil  company  -  was  adopted  by 
parliament  in  December,  while  a  bidding  deadline  was  fixed  for  September  2012. 
Preparations  for  the  privatisation  of  the  remaining  state-owned  shares  of  Albtelecom 
(16.75%)  have  started,  although  the  bidding  deadline  was  postponed  to  December. 
Privatisation  of  INSIG,  a  state  insurance  company,  remains  an  objective  for  2012,  together 
with that of three hydropower plants owned by KESH, the state-owned electricity generation 
company.  Regulated  prices  are  estimated  to  account  for  8%  of  the  consumer  price  index 
(CPI). Some progress was achieved in the form of the adoption of a new water fee structure 
that, amongst other things, aims to align the tariff structure to ensure cost recovery. Overall, 
state  involvement  in  the  economy  remains  limited  and  mainly  concentrated  on  energy, 
transport and water supply. 

Market entry and exit 

Business registration and licensing continued to perform well through the established network 
of  one-stop  shops.  Some  improvements  were  made  in  the  business  registration  system  by 
implementing  the  electronic  commercial  register  for  mergers  and  acquisitions  and  for  the 
division and transformation of companies. A further reduction was recorded in the time and 
steps  needed  to  start  a  business.  E-procurement  and  e-tax  filing  are  already  in  place  and 
functioning. However, the procedure for granting building permits remains lengthy, delaying 
the revival of the ailing construction sector. The reform of inspectorates dealing with business 
and economic activities is at an early stage. No progress was made in the field of e-signature 
and no particular development can be reported towards implementation of the amended Law 
on Protection of Foreign Investors regarding property ownership. 

No progress was made on reducing the timing and procedures for market exit, which remain 
slow. During 2011, about 3,900 requests for voluntary business closures were filed with the 
National  Registration  Centre  (NRC).  The  structure  of  the  Bankruptcy  Supervisory  Agency 
was approved in January 2012. The Agency’s performance remains to be assessed. 

Overall, Albania has made good progress on facilitating business entry into the market. The 
procedures for market exit remain slow and ineffective. 

Legal system 

The national strategy and action plan on property rights was adopted in June. Little progress 
was made in the fields of land registration and of restitution of property to former owners. The 
process of initial registration of immovable property has not yet been completed. Overall, the 
lack of secure property rights and the weak institutions remain causes for concern and further 
efforts are required to address these issues. 

Businesses still face delays in court procedures and the perception of widespread corruption in 
the justice system persists. Some improvement was achieved in collateral execution with the 
introduction of a private bailiff’s office. However, weak contract enforcement and execution 
of  collateral  remain  major  obstacles  for  businesses.  Informal  methods  of  contract 

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enforcement, by-passing the legal system, are still widespread. The Law on the Establishment 
of Administrative Courts was adopted in parliament in May 2012. Overall, weaknesses in rule 
of  law,  incomplete  reform  of  property  ownership  and  corruption  are  continuing  to  have  an 
adverse effect on the business environment. 

Financial sector development 

The  financial  system  remains  dominated  by  the  banking  sector,  which  accounts  for  85%  of 
GDP  and  comprises  16  commercial  banks,  which  are  all  privately  owned.  The  share  of 
foreign  ownership  stands  at  some  90%  of  total  assets.  Despite  the  banks’  dominance,  the 
share of bank lending stood at around 43% of GDP, suggesting that there is significant scope 
for  stronger  financial  intermediation.  Credit  growth  increased  by  11.7%  in  2011,  up  from 
8.6%  a  year  earlier.  During  2012,  lending  growth  decelerated  to  7%  year  on  year  by  July. 
Outstanding loans to non-financial corporations, which account for the highest share of total 
bank loans, grew by 15.4% year on year in December 2011 but decelerated in the first half of 
2012, reaching 9.7% in July. Lending to households was weaker during 2011, shrinking at an 
increasing rate in the first seven months of 2012, mainly on account of lower foreign currency 
credit.  The  growth  in  the  stock  of  lek-denominated  credit  outpaced  that  of  foreign  currency 
lending  during  2011.  This  trend  continued  through  July  2012,  reflecting  both  moderate 
demand for credit as well as more conservative lending policies by banks. Still, around 68% 
of the total credit outstanding is in foreign currency, of which more than half consists of un-
hedged  loans,  suggesting  that  the  banking  system  remains  vulnerable  in  the  event  of 
unfavourable exchange rate movements. Deposit growth decelerated to 14.5% in 2011, from 
15.5%  a  year  earlier,  and  slowed  down  further  to  10.6%  year  on  year  by  July  2012.  The 
banking  sector’s  share  of  external  borrowing  in  total  liabilities  followed  an  upward  trend 
during 2011, increasing from 4.9% in December 2010 to 6.8% at the end of 2011, and then 
stabilised at 7% in the first half of 2012.  

In general, the Albanian banking system remained capitalised and liquid. Following a decline 
in the first half of 2011, the capital adequacy ratio was restored to 15.6% by the end of the 
year, well above the minimum required. Nevertheless, non-performing loans continued to rise 
during 2011 and stood at 21.21% of total loans in June 2012. In response, the banking sector 
raised provisions from 10.8% of total loans at the end of 2011 to 12.2% in the second quarter 
of  2012  which,  in  turn,  had  an  adverse  impact  on  profitability.  The  process  of  execution  of 
collateral has been slow, partly reflecting a weak judicial process, delaying the cleaning-up of 
banks’ balance sheets.  

Several precautionary steps to strengthen the stability of the banking sector were adopted in 
2011.  The  Law  on  Banks  was  amended  in  November  2011,  giving  the  BoA  new  powers  to 
ask  branches  of  foreign-owned  banks  to  convert  into  subsidiaries.  In  June  2012,  the  BoA 
adopted regulations on the creation of the ‘bridge bank’ facilitating a resolution in the event 
that a bank runs into difficulties. Furthermore, the regulatory and supervisory framework has 
been  enhanced  by  means  of  more  conservative regulatory limits, differentiated by currency, 
on  banks’  liquidity  indicators  and  guidelines  on  the  obligations  of  the  commercial  banks  to 
meet the minimum reserve requirements. Parliament adopted some amendments to the law on 
deposit  insurance  in  July  2012.  Overall,  the  banking  sector  remains  well-capitalised  and 
liquid. However, the high level of non-performing loans is a cause for concern.  

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3.2. 

The  capacity  to  cope  with  competitive  pressure  and  market  forces  within  the 
Union 

Existence of a functioning market economy 

Macroeconomic  stability  was  maintained,  as  Albania  was  less  affected  by  adverse  regional 
and  global  economic  conditions.  Although  positive,  GDP  growth  decelerated  and  remained 
below  historical  averages.  Despite  slightly  higher  employment,  structural  imbalances  in  the 
labour  market  and  the  current  account  remain  high.  The  government  deficit  worsened  amid 
weak  revenue  and  higher  expenditure  and,  as  a  result,  public  debt  increased.  The  relatively 
high level of public debt combined with its short-term structure remains a source of macro-
fiscal vulnerability. The planned privatisation programme stalled. Some reforms to facilitate 
market  entry  were  introduced,  but  efforts  to  ensure  an  orderly  market  exit  for  businesses 
slowed.  Weaknesses  remain  in  the  rule  of  law,  particularly  in  contract  enforcement  and 
property  rights.  Overall,  although  some  progress  was  made  on  establishing  a  functioning 
market  economy,  Albania  needs  to  consolidate  its  public  finances  and  reduce  the  relatively 
high  public  debt,  further  bolster  governance,  enhance  labour  market  performance,  provide 
protection for property rights and strengthen the rule of law.  

Human and physical capital 

Public expenditure on education is estimated to have reached 3% of GDP in 2011, while the 
budget allocation planned for 2012 is slightly lower at 2.8%. Spending on education will aim 
to  improve  the  overall  quality  of  service  delivery  at  all  levels,  with  particular  focus  on 
achieving  the  OECD  standards  on  the  teacher/student  ratio,  adding  400  teachers  and 
increasing  the  number  of  science  laboratories.  A  campaign  to  modernise  textbooks  and 
syllabuses  to  bring  them  more  into  line  with  labour  market  needs  has  been  started.  No 
developments  can  be  reported  with  regard  to  increasing  public  spending  on  research  and 
development  (R&D).  The  budget  for  R&D  remains  quite  low,  at  0.04%  of  GDP  in  2012, 
similar  to  that  allocated  in  2011.  There  is  a  lack  of  scientific  research  institutions  and 
collaboration between universities and industry on R&D is weak. The ‘brain gain’ system of 
bonuses  given  to  employees  of  the  public  administration  who  graduated  abroad  restarted  in 
2012 after being suspended in 2011. 

According  to  provisional  official  data,  investment  stood  at  33.1%  of  GDP  in  2011,  slightly 
lower than in 2010. Public capital outlays are estimated to have reached 6.2% of GDP in 2011 
and are expected to be slightly lower in 2012 at 5.8%. Health, education, infrastructure and 
agriculture  remain  priority  areas  within  public  investment.  However,  the  main  public 
investments  (about  55%  of  total  public  investment)  are  concentrated  on  road  infrastructure. 
Insufficient road maintenance and illegal construction along roads remain causes for concern. 
Rail transport remains underdeveloped. Further investment in infrastructure is needed in order 
to attract investors and stimulate tourism. Albania’s electricity generation remains vulnerable 
due  to  an  over-reliance  on  hydropower  plants.  Unfavourable  weather  conditions  seriously 
dented electricity output, which fell by 48% in 2011. To avoid load shedding, electricity was 
imported,  which  had  a  negative  impact  on  economic  growth  and  the  trade  balance.  In 
addition, the electricity system needs significant investment to reach the requirements related 
to  security  of  supply.  An  unreliable  supply  of  electricity  is  an  obstacle  for  businesses,  as  it 
disrupts production and pushes up costs. In an effort to improve generation capacity to meet 
demand,  the  government  continued  to  issue  concession  permits  in  2011  for  construction  of 
new hydropower plants. Nevertheless, the number of concessions that are operational remains 
low, reflecting mainly a weak legal framework. Private plant operators generate only 2% of 
the  total  supply.  Overall,  higher  levels  of  investment  are  needed  to  make  the  Albanian 
economy  competitive  on  regional  and  international  markets.  Redirecting  more  expenditure 

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towards  growth-promoting  categories,  such  as  human  capital  and  productive  physical 
infrastructure, including the supply of electricity, would boost long-term growth. 

Sectoral and enterprise structure 

The relative shares of agriculture, industry and services in gross value added (GVA) broadly 
unchanged in 2011 from the previous year. Services remain the main contributor to Albania’s 
gross value added GVA at roughly 60%, with trade, hotels and restaurants accounting for the 
bulk  of  this  sector.  Agriculture’s  share  in  GVA  increased  to  some  21%  at  the  expense  of 
construction  which  fell  to  slightly  less  than  11%.  The  decline  in  manufacturing’s  share  in 
GVA  was  offset  by  higher  gross  value  added  from  the  extractive  industries.  Agriculture 
remains the largest employer with 54% of total employment in the first half of 2012. Inward 
processing performed well during 2011 but energy production contracted. 

Albania’s  manufacturing  base  remains  concentrated  around  three  main  sub-sectors  which 
accounted for some 83% of total exports of goods in 2011 and which are either dominated by 
low  value-added  products  or  vulnerable  to  fluctuations  in  global  commodity  prices:  textiles 
and footwear (32%), minerals, fuel and electricity (30%) and building materials (21%). 

Weak tax and expenditure policies and poor law enforcement, including in the fight against 
corruption, have been fuelling a sizeable informal sector. Some steps were taken during the 
year  to  address  informality,  including  the  extension  of  use  of  fiscal  devices  (cash  registers) 
across the country. However, implementation remains a challenge to the administration. The 
informal economy continues to impede fair competition on the market, and strengthening law 
enforcement  remains  a  government  priority.  SMEs  continued  to  benefit  from  credit  support 
schemes and the European Fund for South-East Europe (EFSE). Overall, the structure of the 
economy  remained  unchanged.  While  some  measures  were  taken  to  combat  the  sizeable 
shadow  economy,  informality  remains  a  challenge.  Albania’s  production  base  lacks 
diversification in terms of both sectors and export markets, leaving the economy vulnerable to 
industry-specific shocks. 

State influence on competitiveness 

Subsidies remained almost unchanged compared with the previous year, at 0.3% of GDP in 
2011. For 2012, the budget projects a decline in subsidies to € 11.4 million or about 0.1% of 
GDP. Subsidies are granted to a limited number of sectors, namely railways, energy and water 
supply  as  well  as  horizontal  State  aid  schemes.  Financial  viability  of  the  electricity  sector 
remains  elusive  as  losses  in  the  electricity  network  and  distribution  deteriorated  further  in 
2011,  bill  collection  rates  continued  to  decline,  while  tariffs  are  still  below  cost-recovery 
putting undue pressure on public finances. The cost of importing electricity to compensate for 
the  fall  in  electricity  output  was  not  transferred  to  end-users,  prompting  the  government  to 
provide  an  additional  € 14.2  million  in  loan  gu arantees  in  January  2012  to  KESH.  KESH’s 
finances  remain  exposed  to  the  outcome  of  a  netting-off  agreement  reached  in  March  2012 
with CEZ, the power distribution company. This agreement is part of the implementation of 
the  protocol  on  partial  financial  settlement  of  outstanding  mutual  debts  signed  by  the 
Albanian authorities, CEZ and the Energy Community Secretariat (ECS) in November 2011. 
It  has  not  yet  been  fully  implemented  and  the  dispute  between  KESH  and  CEZ  over 
outstanding  mutual  debts  remains  unsolved.  Overall,  state  intervention  remains  limited. 
However,  the  impact  on  the  public  finances  of  the  lack  of  diversification  and  full  financial 
viability of the electricity sector and its high reliance on climate conditions remains a concern.  

Economic integration with the EU 

The  openness  of  the  Albanian  economy  continued  to  increase  in  2011.  Trade  in  goods  and 
services stood at almost 90% of GDP in 2011, up from 86% a year earlier. Despite a decline 

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in  2011,  the  EU  remains  Albania’s  main  trading  partner.  Around  80%  of  Albania’s  total 
foreign sales of goods are directed to the EU, with textiles and footwear accounting for more 
than half of total exports. Around 65% of goods imports originate from the EU. Despite the 
uncertain  economic  conditions  in  some  EU  Member  States,  exports  to  the  EU  increased  by 
roughly 8.5% year on year in the January-July period. A significant increase in both exports 
and imports to and from CEFTA countries was recorded in 2011. During 2011, trade in goods 
with CEFTA grew by roughly 33%, accounting for 17.2% of total exports and 13.5% of total 
imports. The EU also remains the main source of inward investment in Albania, although its 
share in total FDI stock has declined in the last four years. 

Following a period of heightened price competitiveness pressures, the real effective exchange 
rate (REER) fell significantly in 2010, mainly due to the depreciation of the lek in nominal 
effective terms. The REER remained generally stable during 2011 and in the early months of 
2012. Cost competitiveness has also improved since 2010, with estimates pointing to a sharp 
deceleration  in  unit  labour  costs  helped  by  higher  productivity  growth.  Overall,  the  EU 
remained  Albania’s  leading  trading  and  investment  partner.  Trade  with  CEFTA  countries 
increased.  

4. 

ABILITY TO TAKE ON THE OBLIGATIONS OF MEMBERSHIP 

This section examines Albania’s ability to take on the obligations of membership – that is, the 
acquis as expressed in the Treaties, the secondary legislation and the policies of the Union. It 
also  analyses  Albania’s  administrative  capacity  to  implement  the  acquis.  The  analysis  is 
structured  according  to  the  list  of  33  acquis  chapters.  In  each  sector,  the  Commission’s 
assessment  covers  the  progress  achieved  during  the  reporting  period,  and  summarises  the 
country’s overall level of preparedness. 

4.1. 

Chapter 1: Free movement of goods  

No progress was made in the area of general principles.  

Albania has made overall progress as regards horizontal measures, particularly in the fields 
of standardisation and conformity assessment.  

(CENELEC) 

There  was  good  progress  on  standardisation.  The  General-Directorate  for  Standardisation 
(GDS) continued to work towards fulfilling the conditions for applying for full membership of 
the  European  Committee  for  Standardization  (CEN)  and  of  the  European  Committee  for 
for 
Electrotechnical  Standardization 
Standardisation  adopted  internal  regulations  in  line  with  CEN  and  CENELEC  membership 
principles.  Progress  towards  adopting  European  standards  (ENs)  continued.  The  GDS  has 
adopted  about  95.5%  of  ENs  as  Albanian  standards,  including  all  harmonised  ENs.  The 
number  of  standards  translated  remains  low,  as  most  ENs  are  adopted  by  the  ‘cover  page’ 
method.  Standards  of  the  European  Telecommunications  Standards  Institute  are  not  yet 
adopted at national level. The code on development, adoption, approval and implementation 
of standards was approved and a working group on adoption of the national standards on oil 
and  petrol  was  established.  However,  no  progress  can  be  reported  on  the  preparation  of  the 
national strategy on standardisation. 

in  2012.  The  Managing  Board 

There  has  been  progress  on  conformity  assessment.  The  December  2011  Law  on  the 
Marketing  and  Market  Surveillance  of  Non-Food  Products  aims  at  further  approximation  to 
the acquis. Yet, its alignment with the acquis still needs to be assessed.  

Some progress can be reported in the field of accreditation. The  total  number  of  accredited 
conformity assessment bodies increased to 21. In November 2011, the General-Directorate for 
Accreditation  (GDA)  became  an  associate  member  of  European  co-operation  for 

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Accreditation.  Preparations  for  applying  for  full  membership  are  underway.  The  GDA 
supported  the  organisation  of  proficiency  testing  in  the  fields  of  construction  materials  and 
water quality. It established four technical committees: on testing and calibration laboratories, 
on  inspection  bodies,  on  accreditation  of  medical  devices,  and  on  certification  bodies  of 
environmental  management  systems  and  environment  auditors.  However,  no  progress  was 
made on aligning the Law on Accreditation with the 2008 horizontal acquis. 

There was some progress on metrology. The General-Directorate for Metrology (GDM) was 
reinforced  with  10  additional  technical  staff.  Its  laboratory  capacity  was  increased  and  its 
areas of measurement were extended. Work on the new premises of the National Metrology 
Centre  in  Tirana  is  nearing  completion.  The  European  Association  of  National  Metrology 
Institutes  gave  a  positive  assessment  to  the  quality  management  system  of  the  GDM.  Yet, 
little  progress  was  made  on  approximating  the  Law  on  Metrology  and  its  implementing 
legislation  to  the  acquis.  Alignment  with  the  Directives  on  non-automatic  weighing 
instruments and on measuring instruments is still pending. The draft communication strategy 
in the field of metrology is awaiting adoption.  

There  was  progress  in  the  area  of  market  surveillance.  The  December  2011  Law  on  the 
Marketing and Market Surveillance of Non-Food Products aims at further approximating the 
Albanian legislation to the acquis. However, the planned market surveillance inspectorate has 
not yet been established.  

There  was  limited  progress  in  the  ‘Old  Approach’  product  legislation.  The  government 
adopted  a  technical  regulation  on  the  labelling  of  detergents  and  some  regulations  on 
pharmaceuticals. 

Some  progress  has  been  made  in  the  ‘New  and  Global  Approach’  product  legislation. 
Technical regulations were adopted in the field of noise emissions from outdoors equipment 
aiming at bringing the legislation closer to the acquis. 

There was no progress in the area of procedural measures. Legislation drafted with the aim 
of alignment with the acquis on the return of cultural objects has not yet been adopted. There 
were no developments in legislative alignment on civil firearms. 

Conclusion 

There  has  been  progress  in  the  area  of  free  movement  of  goods,  notably  as  regards 
standardisation.  Further  efforts  are  needed  on  overall  legislative  approximation  and  on 
establishing  an  adequate  market  surveillance  inspectorate.  Overall,  preparations  are 
moderately advanced.  

4.2. 

Chapter 2: Freedom of movement for workers 

There  has  been  no  progress  in  access  to  the  labour  market.  Amendments  to  the  Law  on 
Foreigners,  aiming  to  grant  EU  citizens  access  to  the  Albanian  labour  market  without  any 
obligation to hold a work permit, are awaiting adoption.  

Some  progress  was  made  in  the  preparations  for  participation  in  the  EURES  (European 
Employment  Services)  network.  The  National  Employment  Service  has  launched  a 
programme to computerise all employment offices, including the creation of job-seekers and 
employers databases, with the aim of making the system compatible with the EURES network 
standards.  

There has been little progress as regards coordination of social security systems. A bilateral 
agreement on social security with Belgium has been signed. Negotiations with Hungary and 
the former Yugoslav Republic of Macedonia have continued and negotiations with the Czech 
Republic and Romania have started.  

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There were no developments as regards the European Health Insurance Card. 

Conclusion 

There  has  been  little  progress  in  the  area  of  freedom  of  movement  for  workers.  Some 
preparations  have  been  made  for  future  participation  in  EURES  and  coordination  of  social 
security systems. However, further efforts are required to align the legislation on access to the 
labour market with the acquis. Overall, preparations in this area are not very advanced. 

4.3. 

Chapter 3: Right of establishment and freedom to provide services  

There  has  been  no  further  progress  in  the  area  of  right  of  establishment.  Preparations  for 
simplification  of  procedures  and  reduction  of  construction  permits  process  are  at  an  early 
stage.  

Progress in the area of freedom to provide cross-border services was limited to preparation 
of an action plan for alignment with the Services Directive. No progress was made towards 
approving the institutional framework and developing adequate administrative capacity within 
the relevant institutions.  

In  the  field  of  postal  services,  no  progress  was  made  with  approval  of  the  national  postal 
strategy  or  with  definition  of  tariffs  and  weights  for  reserved  services  for  the  public  postal 
operator. There is also no separation of regulatory functions from policy-making and exercise 
of  the  ownership  control  in  the  postal  sector.  The  new  organisational  structure  of  the 
Electronic  and  Postal  Communications  Authority  (EPCA)  is  pending  adoption  by  the 
Albanian parliament.  

There  has  been  some  progress  towards  mutual  recognition  of  professional  qualifications. 
Preparations  for  regulating  the  professional  order  of  engineers  and  architects  are  advanced. 
Legislation implementing the Law on Regulated Professions was approved in autumn 2011, 
with  the  aim  of  regulating  the  procedures  for the  state  examinations  for  local  professionals. 
Processing of applications for academic and professional recognition of diplomas awarded by 
a relevant foreign body has been shortened. Preparations to introduce an on-line application 
for such recognition are advanced.  

Conclusion 

There has been some progress in the area of establishment and freedom to provide services, 
particularly towards mutual recognition of professional qualifications. However, preparations 
for  alignment  with  the  Services  Directive  are  still  at  an  early  stage.  Further  efforts  are 
required  for  alignment  of  the  postal  legislation  with  the  acquis.  Overall,  preparations  are 
moderately advanced. 

4.4. 

Chapter 4: Free movement of capital 

In the field of capital movement and payments, no further progress can be reported. Albania 
has relatively liberal rules in place on investment; however, restrictions on acquisition of real 
estate  by  foreigners  remain  in  place.  Further  efforts  are  required  to  strengthen  inter-
institutional coordination to promote and enforce the Law on Foreign Investment in practice. 

There  has  been  little  progress  on  approximation  of  legislation  in  the  area  of  payment 
systems.  The  adoption  of  the  Law  on  Payment  Systems  by  the  parliament  is  still  pending. 
Progress  has  been  made  on  improving  the  banking  legislation.  The  Law  on  Banks  was 
amended in November 2011, with the aim of reflecting developments on the financial market 
and managing the systemic risks. These amendments removed the exclusivity over electronic 
payment from banks, allowing other payment institutions to exercise this activity. They also 

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gave banks the right to open branches and agencies in and outside Albania and to offer cross-
border payments.  

As regards electronic payments, the volume settled through the Albanian Interbank Payment 
System  (AIPS)  decreased  compared  with  2010,  but  the  volume  and  value  of  transactions 
increased, especially in the first seven months of 2012. Both the volume of payments and the 
value  of  transactions  cleared  through  the  Albanian  Electronic  Clearing  House  (AECH) 
increased. However, the Albanian economy is still largely cash-based.  

There  has  been  progress  in  the  fight  against  money-laundering.  Amendments  to  the 
Criminal Code were adopted in March, reflecting the recommendations of the MONEYVAL 
Committee.  The  new  legislation  establishes  the  autonomy  of  money-laundering  crime  from 
the  predicate  offence.  Amendments  to  the  Law  on  Prevention  of  Money  Laundering  and 
Terrorist Financing were adopted in June, with the aim at improving the control of suspicious 
bank transactions inside and outside the country. Albania also adopted a number of guidelines 
and  sublegal  acts  regarding  money-laundering.  Electronic  reporting  was  improved  through 
training organised by the General-Directorate for the Prevention of Money-Laundering. The 
relevant  modules  were  expanded  with  capabilities  to  guarantee  data  integrity,  which  is 
important for accomplishment of the core function of the Financial Intelligence Unit. 

There was a significant increase in reports of suspicious transactions, from 211 in 2010 to 383 
in  2011.  During  the  reporting  period,  there  were  271  reports  of  suspicious  transactions. 
Exchange  offices,  accountants  and  the  Central  Office  for  the  Registration  of  Immovable 
Property submitted reports of suspicious transaction for the first time in 2011. The number of 
assets  investigations  rose,  followed  by  an  increase  in  the  number  of  cases  sent  to  court  for 
sequestration purposes and of seizures upon court order. However, the number of convictions 
for money-laundering remains very low. (See also Chapter 24 - Justice, freedom and security)  

Conclusion 

There  has  been  progress  as  regards  legislative  measures  in  the  area  of  free  movement  of 
capital  with  the  adoption  of  amendments  to  the  Criminal  Code,  the  Law  on  Banks  and  the 
Law on Prevention of Money Laundering and Terrorist Financing. Further efforts are needed 
towards approximation of the Law on Payment Systems with the acquis. Overall, preparations 
are moderately advanced. 

4.5. 

Chapter 5: Public procurement 

No progress can be reported as regards general principles.  

Little progress was made in the area of award of public contracts. The proportion of direct 
contracts  in  relation  to  competitive  negotiations  decreased  in  2011,  but  still  remains  high. 
Further  efforts  are  needed,  particularly  on  improving  the  transparency  of  terms  of  reference 
and selection procedures and ensuring publication of tender notices in real time. Albania has 
an advanced e-procurement system, but there is still room for improvement. 

Provisions related to works and service concessions are not aligned with the acquis. Adoption 
of a new Law on Concessions is still pending  and relevant preparations are lagging behind. 
Albania has no specific legislation on public-private partnerships.  

The  legislation  implementing  the  Public  Procurement  Law  has  not  been  adopted  yet.  The 
administrative capacity of the Public Procurement Agency (PPA) was increased but still is not 
commensurate with its duties and the increasing number of complaints. In March, the Public 
Procurement Commission (PPC) was placed under the Prime Minister. The consequences for 
its operational independence need to be assessed.  

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A  clear  division  of  roles  between  the  PPC,  the  PPA  and  the  Public  Procurement  Advocate 
(PPAd)  has  not  yet  been  established.  This  systemic  problem  has  resulted  in  duplications  of 
functions  and  in  problems  when  it  comes  to  addressing  complaints  and  monitoring 
implementation  of  public  procurement  and  concession  contracts.  The  responsibility  of  the 
PPA for legislative initiatives is not always respected.  

The PPA organised awareness-raising and training activities, mainly on competitive dialogue, 
framework  agreements,  subcontracting,  centralised  procurement,  review  measures  and 
procedures,  concessions  and  public-private  partnership.  A  national  training  plan  and  a 
communication strategy in the field of public procurement were prepared in January 2012. 

Some  progress  was  made  in  the  field  of  remedies.  The  Regulation  on  the  organisation  and 
functioning of the PPC was amended in February in order to avoid conflicts of interest and to 
regulate the procedures for addressing claims on public action in accordance with the public 
procurement regulation.  

Conclusion 

There  has  been  little  progress  in  the  area  of  public  procurement,  particularly  as  regards 
approximating  the  legislative  framework  on  public  procurement  and  concessions  to  the 
acquis.  The  division  of  responsibilities  between  all  public  procurement  institutions  remains 
poorly  defined  and  further  efforts  are  required  to  secure  their  administrative  capacity  and 
independence. Overall, preparations are moderately advanced.  

4.6. 

Chapter 6: Company law 

There was some progress in company law. Legislative alignment with the acquis regulating 
the  minimum  capital  requirements  for  public  limited  liability  companies  advanced,  with  the 
adoption  of  the  amendments  to  the  Law  on  Entrepreneurs  and  Companies  in  October  2011. 
The Corporate Governance Code came into force in January 2012, subject to implementation 
by companies on a voluntary basis. Preparations for bringing the Albanian legislation into line 
with the acquis in the field of cross-border mergers are on track. Further efforts are needed as 
regards reporting and documentation requirements in the case of mergers and divisions.  

No specific developments can be reported as regards the introduction of electronic signature. 
Further efforts are required to put in place the necessary technical infrastructure 

Little progress was made in corporate accounting. In January 2012, amendments made to the 
International Accounting Standards and the International Financing Reporting Standards were 
adopted  as  national  standards  by  the  National  Accounting  Council  of  Albania  (NACA). 
However, no progress can be reported with alignment with the Fourth and Seventh Company 
Law Directives. No progress was made on increasing the capacity of the NACA.  

There was little progress in the field of auditing. Regulations on investigation and discipline 
and on quality control of statutory auditors have been adopted, but the overall legislation has 
not  yet  been  fully  aligned  with  the  acquis.  Further  efforts  are  required  to  strengthen  the 
human  and  financial  resources  of  the  Public  Oversight  Board  (POB)  and  to  guarantee  its 
independence. 

Conclusion  

There has been some progress in company law. Albania approved the Corporate Governance 
Code, further aligning its legislation with the acquis. Further legislative efforts are needed on 
reporting and documentation requirements in case of mergers and divisions and on corporate 
accounting and auditing. Overall, preparations are moderately advanced. 

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4.7. 

Chapter 7: Intellectual property law 

No  progress  was  made  on  alignment  with  the  acquis  in  the  area  of  copyright  and 
neighbouring rights. The new Law on Copyright has not yet been adopted.  

Little progress can be reported in the field of industrial property rights. In September 2011, 
the Patent Regulation was amended with the aim of unifying some national procedures with 
procedures of the European Patent Office and the Patent Law Treaty.  

There  has  been  limited  progress  with  enforcement.  In  March  2012  Albania  amended 
provisions of the Penal Code on infringement of industrial property rights, in compliance with 
the  obligations  set  by  the  TRIPS  Agreement.  However,  the  amended  Penal  Code  does  not 
cover  infringement  of  copyright.  This  falls  under  the  new  Law  on  Copyright  which  is 
awaiting adoption. The number of criminal proceedings brought to court against unauthorised 
users  of  artistic  property  increased.  Yet,  further  efforts  are  required  to  ensure  effective 
implementation  of  the  national  strategy  for  the  enforcement  of  intellectual  and  industrial 
property  rights  (IPR),  including  on  enhancing  inter-institutional  cooperation.  In  2011  there 
was only one inter-ministerial meeting to  monitor implementation of the strategy. A second 
meeting was held in May 2012.  

In  February  2012,  the  Albanian  Competition  Authority  and  the  General-Directorate  for 
Patents and Trademarks (GDPT) signed a Memorandum of Understanding (MoU) aiming at 
strengthening  their  cooperation  in  the  field  of  IPR.  The  GDPT  also  signed  a  MoU  with  the 
Intellectual  Property  Office  of  Kosovo.  The  General-Directorate  for  Customs  approved  a 
manual on statistics on counterfeit products and some related standard notification forms. 

The IT system of the GDPT was improved with new hardware and an upgraded version of the 
Industrial  Property  Administration  System.  Nevertheless,  further  efforts  are  required  to 
improve the online services and increase the s number of staff at GDPT.  

The  restructuring  and  strengthening  of  the  Albanian  Copyright  Office  (ACO)  is  still 
outstanding,  pending  adoption  of  the  Law  on  Copyright. A  market surveillance inspectorate 
covering IPR enforcement has not been established.  

The  ACO  continued  awareness-raising  activities  on  copyright  enforcement  and  provided 
training  for  judges  from  magistrates’  schools  and  district  courts.  However,  the  level  of 
understanding  and  awareness  of  copyright  and  related  rights,  and  especially  of  collective 
management  systems,  remains  low.  The  judiciary  lacks  appropriate  experience  and 
qualifications.  Overall,  major  deficiencies  remain,  such  as  insufficient  administrative 
capacity, low fines, insufficient public awareness and enforcement in general.  

Conclusion 

Progress has been limited in the field of intellectual property law. Substantial efforts are still 
required  to  address  existing  shortcomings  in  effective  enforcement  of  intellectual  and 
industrial property rights which impinge on Albania’s commitments under the SAA. Overall, 
preparations are not very advanced. 

4.8. 

Chapter 8: Competition policy 

Progress  has  been  made  in  the  field  of  anti-trust  and  mergers.  The  adoption  of  the 
Regulation on agreements of minor importance in November brought the legislation closer to 
the  acquis.  The  Albanian  Competition  Authority  (ACA)  adopted  six  decisions  on  anti-
competitive  agreements  (cartels)  and  two  on  abuse  of  dominant  positions. Ten  proposed 
three 
mergers  were  authorised  without 
recommendations to other government institutions. The ACA issued a recommendation to the 
Electronic and Postal Communications Authority (EPCA) concerning a merger between two 

remedies.  Moreover, 

the  ACA 

issued 

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telecommunications  operators  with  EPCA’s  positive  response.  The  ACA’s  recommendation 
to  the  Bank  of  Albania  (BoA)  to  increase  transparency  regarding  citizens’  access  to 
information on banks interest rates was accomplished through their on-line publication. The 
government  has  not  yet  followed  the  ACA’s  recommendation  to  establish  a  Bank 
Ombudsman. 

The ACA concluded investigations into the bread market and security services and imposed 
fines  for  illegal  price-fixing.  After  investigating  the  supply  of  fixed  telephone  services  with 
prepaid  cards,  the  ACA  issued  specific  recommendations.  It  also  initiated  preliminary 
investigations  into  potential  abuses  of  dominant  market  positions  in  a  range  of  sectors: 
compulsory  third-party  motor  insurance;  international  shipping  services;  loading  and 
unloading  of  liquid  petroleum  gas;  the  sugar  and  rice  import  market;  the  vegetable  oil 
production market; and the import, manufacturing and wholesale trading market of cement.  

The ACA continued its advocacy and public-awareness activities. Some progress was made as 
regards  the  administrative  capacity  of  the  ACA.  The  total  number  of  staff  increased  by  one 
legal  expert  and  recruitment  of  an  IT  and  forensic  expert  is  on-going,  while  two 
administrative posts were converted into technical posts, in accordance with the new structure 
of the ACA approved in January. Training helped to strengthen its investigative capacity.  

Some  progress  was  made  in  the  field  of  State  aid.  The  State  Aid  Commission  (SAC) 
authorised four new State aid schemes, mainly related to promoting employment. Moreover, 
the SAC initiated an ex-officio investigation into a potential State aid scheme by the Ministry 
of  Public  Works  and  Transport  on  which  it  gave  a  negative  opinion.  The  number  of 
notifications remains very low, pointing to not all schemes being notified to the SAC before 
adoption, as required under the State Aid Law. 

The regional State aid map has been adopted by SAC, based on the NUTS II division of the 
country  and  is  in  line  with  the  acquis.  Further  efforts  are  required  to  complete  a 
comprehensive review of the overall legal framework for State aid control to bring it into line 
with the acquis.  

No progress was made as regards the administrative capacity of the State Aid Sector (SAS), 
which  also  serves  as  the  SAC  Secretariat.  Its  current  number  of  staff  (four)  is  completely 
inadequate. The operational independence of the SAC and the SAS has yet to be confirmed. 
The  SAS  conducted  several  training  programmes  for  its  staff  and  carried  out  an  awareness-
raising campaign.  

Conclusion 

Some  progress  can  be  reported  in  the  area  of  competition.  Legislative  alignment  with  the 
acquis on anti-trust and merger control advanced and the regional State aid map was adopted. 
Further  efforts  are  required  to  safeguard  the  administrative  capacity  and  the  operational 
independence of the State aid and competition authorities. Overall, preparations are on track.  

4.9. 

Chapter 9: Financial services 

Progress  has  been  made  in  the  area  of  banks  and  financial  conglomerates.  The  Bank  of 
Albania (BoA) adopted regulations aiming at partial alignment with the acquis on procedures 
for  intervention  in  the  domestic  foreign  exchange  market;  credit  risk  management,  capital 
adequacy,  liquidity  risk  management,  and  establishment,  licencing  and  functioning  of  the 
bridge bank In November 2011, the Law on Banks was amended further to approximate the 
legislation to  the acquis (See also Chapter 4  – Free  movement of capital.).  Amendments  to 
the  Law  on  Deposit  Insurance  were  adopted  in  July  2012.  No  progress  was  reported  on 
establishment  of  a  Banks  Ombudsman,  as  recommended  by  the  Albanian  Competition 
Authority in 2011.  

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The Supervisory Department (SD) of the BoA continued revising the regulatory framework in 
accordance  with  the provisions of Basel II and with the aim of approximating  the Albanian 
legislation to the acquis on the supervisory review process and disclosures. The SD is in the 
process of adopting the European Risk Assessment  System  (RAS).  The  new  method  covers 
all types of risks and is currently being tested in all its aspects. Due to restructuring, the staff 
of the SD has decreased from 49 employees last year to 43.  

Little  progress  can  be  reported  in  the  non-banking  area.  Implementing  legislation  on 
collective  investment  undertakings  was  adopted  in  October  2011.  The  Albanian  Financial 
Supervisory Authority (AFSA) renewed the mandates of the seven Board members and a new 
Chair of the Board was appointed. The AFSA lacks adequate administrative and supervision 
capacity and its staff remained unchanged. The non-banking institutions came up to 21, since 
the BoA licenced two institutions in the field of factoring and investment,  

Little  progress  can  be  reported  in  the  area  of  insurance  and  occupational  pensions.  The 
legislation  on  life  insurance  and  re-insurance  is  not  aligned  with  the  acquis.  The  Albanian 
insurance market remained small. It slightly increased by the end of 2011, but during the first 
half  of  2012,  registered  a  shrinking  of  activities.  Voluntary  insurance  increased  particularly 
during the first half of 2012. The AFSA licensed the third operator in the field of voluntary 
pension  funds.  By  the  end  of  2011,  the  number  of  voluntary  pension  contributors  had 
increased by 26% as compared with 2010 and increased by 2.9% in the first quarter of 2012. 
Nevertheless,  the  private  pension  market  remains  small  in  terms  of  both  number  of 
contributors and amount of contributions. Following the liberalisation of the motor insurance 
sector  in  2011,  the  Albanian  Competition  Authority  (ACA)  initiated  in  April  2012  an 
investigation into a potential agreement on a fixed price in this sector as well as an inspection 
in May 2012 on the way  the insurance companies handle claims and use the  Compensation 
Fund. Uninsured driving remains high. There has been progress in upgrading the information 
provided through Information Center of Compulsory Insurance (ICCI), while the bonus-malus 
system is not yet in place. 

There has been no progress in financial market infrastructure, mainly due to the fact that 
the Law on Payment Systems has not yet been approved.  

There has been no progress on aligning with the acquis in the area of securities markets and 
investment services. The securities market continues to be dominated by government T-bills 
and long-term bonds.  

the  establishment,  calculation,  financing  and  administration  of 

In  the  field  of  investment  services,  in  March  2012  the  AFSA  approved  implementing 
legislation  on 
the 
Compensation  Fund.  The  AFSA  also  issued  the  licence  for  the  first  collective  investment 
undertakings  management  company  and  approved  the  first  prospectus  for  issuing  bonds. 
However,  the  securities  stock  market  remains  underdeveloped,  with  no  companies  listed  on 
the  stock  exchange.  There  was  no  progress  towards  adoption  of  regulations  in  line  with  the 
Prospectus,  Market  Abuse  and  Market  in  Financial  Instruments  Directives.  There  were  no 
developments regarding the system for judicial appeal and the legislation governing investor 
compensation schemes.  

Conclusion  

There has been some progress in the area of financial services. The banking legislation was 
further aligned with the acquis and the investment market was further developed. Additional 
efforts  are  needed  in  the  areas  of  insurance  and  occupational  pensions,  financial  market 
infrastructure  and  the  securities  market  and  investment  services.  Administrative  capacity  in 

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the  banking  and  non-banking  sectors  remains  insufficient.  Overall,  preparations  are 
moderately advanced.  

4.10.  Chapter 10: Information society and media 

There  was  some  progress  in  the  area  of  electronic  communications  and  information  and 
communications  technologies  (ICT).  Competitive  conditions  in  telephony  markets  have 
progressed due to the introduction of carrier selection and number portability. The Agency for 
Electronic and Postal Communications (AKEP) approved the first reference unbundling offer 
for local loop access and set mobile termination rates by applying the cost accounting method 
that  it  has  developed  (based  on  a  bottom-up  long-run  incremental  costs  model).  A  working 
group on implementation of the universal service has been set up.  

However, adoption of the amendments to the 2008 Law on Electronic Communications and 
implementing legislation is still pending. The draft Law on Rights-of-Way has been awaiting 
adoption in parliament since 2010. The uncertainties arising from the current arrangements of 
rights-of-way hinder the development of the sector as a whole. The 112 emergency number 
has  not  been  implemented  yet.  No  progress  can  be  reported  on  liberalisation  of  access  to 
spectrum. A third UMTS/3G licence tender failed as the bids did not reach the reserve price. 
In August 2012, AKEP announced a  tender for granting the  two remaining  frequencies at a 
considerably  lower reserve  price. AKEP’s new  organisational  structure is awaiting adoption 
in parliament. Its administrative capacity and resources remain weak.  

During  the  year,  mobile  take-up  in  Albania  showed  the  strongest  growth  among  the 
enlargement countries, with the penetration rate reaching 185% at the end of 2011. The fixed 
telephony and broadband penetration rates also grew, to 12% and 4.9% respectively, but are 
still low by regional and European standards. 

Progress in the field of information society services has been uneven. The GovNet network 
infrastructure  has  been  further  improved  and  extended.  However,  various  parallel  networks 
are under development, which raises doubts about the effectiveness of the current system. The 
National  Institute  of  Statistics  has  started  to  gather  information  on  information  society 
indicators.  The  Albanian  Post  has  started  to  issue  qualified  certificates  for  e-signature. 
Progress  was  made  on  institution-building  with  the  establishment  of  the  National  Cyber 
Security Agency as a new computer emergency response team. The National Agency for the 
Information Society has improved its technical capacity. However, the administrative capacity 
to  develop  and  implement  policies  and  legislation  remains  weak.  The  amended  Law  on  e-
commerce is  still pending.  Regulation  of conditional access  is still awaiting the adoption of 
the draft Law on Audiovisual Media Services. A new national plan with ambitious targets on 
broadband development has been prepared.  

There  has  been  little  progress  in  the  field  of  audiovisual  policy.  Discussions  and 
consultations  were  held  with  various  stakeholders  and  international  partners,  bringing  some 
improvements  to  the  draft  Law  on  Audiovisual  Media  Services,  notably  as  regards  the 
independence  of  the  regulatory  authority.  However,  adoption  of  this  law  in  parliament  has 
been  delayed  and  is  still  pending.  In  May  2012,  the  government  adopted  a  digitalisation 
strategy and an action plan based on a region-by-region approach, but implementation has not 
yet  started.  Several  frequencies  are  used  illegally  by  high-definition  broadcasters  without  a 
licence. According to the strategy, the final deadline for completing the digital switchover is 
June  2015.  This  new  deadline  raises  potential  concerns  about  timely  implementation  of  the 
digitalisation process. 

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The  regulatory  authority  —  the  National  Council  on  Radio  and  Television  (NCRT)  —  still 
lacks sufficient administrative and technical capacity. Concerns remain over its independence. 
The editorial independence of the public service broadcaster has not been strengthened.  

Conclusion 

There  was  little  progress  in  the  field  of  information  society  and  media.  While  a  number  of 
pro-competitive  regulatory  measures  were  taken  for  electronic  communications,  concerns 
remain  about  the  overall  reform  and  liberalisation  of  the  sector,  legal  uncertainties  and  the 
capacity  and  independence  of  the  telecoms  regulator.  Adoption  of  the  Law  on  Audiovisual 
Media  Services  has  been  further  delayed.  In  spite  of  some  progress  as  regards  the 
independence  of  media,  concerns  remain,  particularly  regarding  the  independence  of  the 
regulator.  Effective  implementation  of  the  digital  switchover  strategy  needs  to  be  ensured. 
Overall, preparations in the area of information society and media are not very advanced. 

4.11.  Chapter 11: Agriculture and rural development 

Progress  can  be  reported  on  horizontal  issues.  The  agriculture  budget  in  2012  is  mainly 
allocated  to  direct  support  schemes  linked  to  production.  The  public  advisory  services 
continued  providing  information  and  training  to  farmers  and  food  business  operators  in  the 
country. Various acts on land administration and protection have been adopted. However, the 
pace of setting up a functional land register remains very slow. The policy on land use needs 
to  be  streamlined  and  statistics  on  land  conversion,  degradation  and  fragmentation  to  be 
improved. Preparations for the agricultural census are ongoing. A pilot test was carried out in 
five  districts.  However,  the  census  initially  scheduled  for  mid-2012  has  been  postponed  to 
October 2012. Preparations in the field of horizontal issues are at an early stage. 

No progress can be reported in the common market organisation. Preparations in this area 
are not very advanced.  

In  the  area  of  rural  development,  progress  had  been  made  on  setting  up  and  building  the 
capacity  of  the  Paying  Agency  and  Managing  Authority  to  manage  and  control  rural 
development  funds  under  the  Instrument  for  Pre-accession  (IPARD).  A  draft  accreditation 
package  has  been  submitted  to  the  Commission.  However,  this  progress  has  been  partially 
reversed  by  reorganising  the  Ministry  in  a  way  that  the  coherence  and  functionality  of  the 
Managing  Authority  has  been  undermined.  The  administrative  capacity  of  all  operational 
authorities,  including  the  National  Authorising  Officer,  the  National  Fund  and  the  Auditing 
Authority,  needs  strengthening.  Ownership  of  the  pre-accession  preparations  needs  to  be 
increased and, as an essential part of it, staff retention ensured. Albania needs to prepare for 
the  new  strategic  framework  in  the  field  of  agriculture  and  food  strategy  for  2014-2020. 
Overall, preparations in the field of rural development have not advanced much. 

There  was  little  progress  in  quality  policy.  The  Ministry  of  Agriculture  has  received 
proposals from the regions regarding the identification of agricultural products and food to be 
registered  as  products  of  protected  origin.  Recent  amendments  to  the  Penal  Code  contain 
general provisions regarding the adoption of penal sanctions for the infringement of rights for 
geographical indicators. Preparations in the area of quality policy are at an early stage. 

Progress in the area of organic farming has been limited. Albania continued providing direct 
payments and training on organic production to organic farmers. Preparations in the area of 
organic farming are at an early stage. 

Conclusion 

Progress  was  uneven  in  the  area  of  agriculture  and  rural  development,  in  particular  with 
setting  up  rural  development  institutions.  Efforts  are  needed  regarding  capacity-building  (of 

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both private and public players) in rural development, setting up a land register and defining 
strategic priorities for agriculture and land use. Ownership of the pre-accession preparations 
should be increased and staff retention ensured. Overall, in the area of agriculture and rural 
development, Albania has started to address its priorities. 

4.12.  Chapter 12: Food safety, veterinary and phytosanitary policy 

Some  progress  can  be  reported  in  the  area  of  general  food  safety.  The  National  Food 
Authority  (NFA)  has  been  fully  established  and  staffed.  Powers,  responsibilities  and 
communication  between  the  Ministry  of  Agriculture,  Food  and  Consumer  Protection 
(MoAFCP) and the NFA need to be clearly defined. The number of official controls increased 
in 2011; hence, enforcement of control rules has improved. Although more than 13,000 food 
establishments have been entered in the AKUnet database, this data needs to be updated and 
validated  in  order  to  be  used  with  regard  to  risk  classification  and  official  controls.  Risk 
assessment capacity is still not established and the Scientific Committee and Panels have not 
been  created  yet.  Rules  on  risk  management  activities  have  not  been  adopted  and 
implementing procedures have not been developed. Preparations in the field of general food 
safety are at an early stage.  

There has been little progress in veterinary policy. A new Veterinary Law entered into force 
re-assigning the powers over animal health and welfare to the veterinary service. Staff levels, 
particularly  at  central  level,  remain  inadequate.  A  definition  of  the  tasks,  functions  and 
responsibilities of the veterinary service is still lacking, thus hindering sound management of 
clinical  waste,  fallen  stock  and  animal  by-products,  which  have  become  serious  issues  in 
terms of bio-security. 

An  integrated  animal  database  (including  the  animal  health  database)  has  been  developed 
improving  the  registration  of  small  ruminants  and  their  vaccination  against  brucellosis.  The 
lack  of  clear  instructions  and  systematic  recording,  reporting  and  analysis  of  animal 
movements remains a serious concern in connection with disease transmission and traceability 
of animal products. Reporting of diseases by local veterinarians and submission of samples to 
check the health status of animals remain insufficient. Preparations in the veterinary field are 
not very advanced. 

Progress  was  made  in  the  field  of  placing  on  the  market  food,  feed  and  animal  by-
products. Albania continued the approximation to the EU regulations on the import of food, 
monitoring  of  substances  and  residues  in  animal  products,  hygienic  conditions  and  controls 
for bivalve molluscs and fish and the control of veterinary medicinal products. Food business 
operators’ awareness of the new hygiene rules remains low, and alignment of food and feed 
establishments  with  hygiene  standards  a  challenge.  Preparations  in  this  area  are  at  an  early 
stage. 

No progress can be reported in phytosanitary policy. Preparations in this area are not very 
advanced. 

No  progress  can  be  reported  with  approximation  to  the  acquis  on  genetically  modified 
organisms. Preparations in this area are still to be launched. 

Conclusion 

Progress has been limited in the areas of food safety and veterinary and phytosanitary policy. 
Efforts  are  needed  to  improve  the  definition  of  powers,  responsibilities  and  communication 
relating to risk management, registration of movements of animals, control of animal diseases, 
and  upgrading  of  food  and  feed  establishments.  Overall,  preparations  in  the  areas  of  food 
safety and veterinary and phytosanitary policy are at an early stage. 

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4.13.  Chapter 13: Fisheries 

The  new  Fisheries  Law,  which  lays  down  the  basic  principles  for  management  of  fishing 
activities,  has  been  adopted.  Its  compliance  with  the  acquis  needs  to  be  established. 
Implementing legislation is being prepared. Changes to the legal framework will need to be 
accompanied  by  corresponding  administrative  rearrangements  to  avoid  fragmentation  of 
functions, lack of communication and insufficient enforcement of the law. 

As regards resource and fleet management, Albania has fulfilled task 1 set by the General 
Fisheries  Commission  for  the  Mediterranean  (GFCM)  and  is  currently  following  its 
recommendations on setting up a fishing fleet register. 

In  the  area  of  inspection  and  control,  there  has  been  limited  progress  regarding  technical 
implementation  capacity.  Following  the  installation  of  a  satellite-based  vessel  monitoring 
system (VMS), boat movements are monitored at the Inter-institutional Maritime Operational 
Centre (IMOC) and the Fisheries Directorate of the Ministry of the Environment, Forests and 
Water  Administration.  The  sustainability  of  the  VMS  needs  to  be  ensured  through  the 
provision  of  adequate  financial  resources.  The  restructuring  of  national  inspection  services 
involving  merging  the  fishery  inspection  service  with  the  forestry  and  environment 
inspectorate  has  not  been  accompanied  by  any  clear  division  of  tasks  between  the  Fisheries 
Directorate and the Inspection Directorate.  

Catch  and  landing  data  are  still  not  reliable,  as  inspectors  do  not  verify  catches  on  a  24/7 
basis.  Both  the  reporting  method  and  the  incomplete  record  of  catches  compromise  the 
statistics for the Fisheries Directorate, and therefore the development of reliable management 
plans.  The  number  of  inspectors  is  not  sufficient  to  cover  the  main  sites  along  the  coast. 
Inspections to fight illegal small-scale coastal fishing remain rare and are not coordinated with 
other bodies such as the Coast Guard or the Border Police.  

In  the  areas  of  structural  action,  State  aid  and  market  policy,  no  developments  can  be 
reported. 

As regards international agreements, Albania attends the GFCM and is participating in the 
AdriaMed  project.  However,  the  country  is  not  regularly  represented  at  meetings  of  the 
International  Commission  for  the  Conservation  of  Atlantic  Tunas  (ICCAT)  and  has  not 
submitted its 2012 inspection plan for implementation of the Recovery Plan for Bluefin Tuna. 
There has been little progress in this area. 

Conclusion 

There  has  been  limited  progress  in  the  area  of  fisheries.  There  is  still  a  need  for  increased 
resources  and  technical  capacity  for  monitoring,  control  and  surveillance  of  the  competent 
services, including the IMOC, and for more regular participation in the ICCAT. The division 
of  reporting  and  communication  tasks  within  the  Ministry  of  the  Environment,  Forests  and 
Water Administration is not sufficiently defined. Overall, preparations are not very advanced. 

4.14.  Chapter 14: Transport policy  

In November 2011, the government adopted the revised five-year National Transport Plan as 
the  main  instrument  for  decision-making  and  strategic  planning  in  the  transport  sector  in 
Albania.  

There was very little progress on road transport. The Road Code was amended in December 
2011, introducing new provisions on professional training and initial qualifications of trucks 
and  buses’  drivers.  Implementing  legislation  was  adopted  on  vehicle  registration.  Since 
September  2011,  digital  tachograph  cards  are  being  issued  for  drivers  and  companies.  First 
initiatives on road maintenance concessions have started on the high level network with some 

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remaining road maintenance issues. Further legislative alignment with the acquis is needed in 
the  field  of  admission  to  the  occupation  of  road  transport  operator  and  access  to  the  road 
haulage  market.  There  were  no  developments  on  roadworthiness  tests,  driving  licences  and 
vehicle  inspections.  There  are  no  plans  to  introduce  speed  limiters.  Adoption  of  the  new 
technical  standards  for  road  transport  is  still  pending.  Road  safety  continues  to  constitute  a 
major  problem.  The  road  death  toll  in  the  country  remains  exceptionally  high.  Road  safety 
rules are not enough dissuasive and properly enforced and no effective road safety campaign 
have been carried out. The legislation on dangerous goods has not yet been adopted. 

Little  progress  has  been  made  in  rail  transport.  The  border  crossing  agreement  with 
Montenegro  has  been  finalised  in  August  2012.  The  new  Railway  Law  is  still  awaiting 
adoption.  A  network  statement  has  not  yet  been  published.  Resources  allocated  to 
maintenance of rail infrastructure are insufficient, with the risk of further deterioration of the 
network. 

There was no progress to report as regards inland waterways transport.  

There was no progress on combined transport. 

In the case of air transport, little progress has been made on legislative alignment with the 
acquis.  Amendments  to  the  Air  Code  were  adopted  in  November  2011.  Implementing 
legislation  has  been  adopted  with  a  view  to  further  aligning  air  traffic  management  and 
aviation safety regulations with the acquis. Implementing legislation aiming at alignment on 
slot allocation entered into force in September 2011. Legislative amendments were adopted in 
November  2011  to  increase  the  independence  of  the  Albanian  Civil  Aviation  Authority 
(ACAA).  However,  implementation  of  the  first  phase  of  the  European  Common  Aviation 
Area Agreement remains slow. There were no developments regarding ground handling and 
airport charges, which remain expensive. The reliability of air traffic monitoring is a cause for 
concern. The ACAA still lacks qualified staff and relies heavily on external experts for safety 
oversight duties. The administrative and technical capacity in the air transport sector remains 
weak.  

Some progress can be reported on maritime  transport. The reorganisation of the Maritime 
General-Directorate  has  been  completed.  Ship  Registry  and  Seafarers  Units  have  been 
established along with a new Sector dealing with Flag State Control and Port State Control. 
The Maritime Code was amended in November 2011, expanding the right to provide cabotage 
services  to  EU  flag-carriers  and  abolishing  the  requirement  that  ships’  captains  must  be 
Albanian  nationals.  A  decision  on  reporting  formalities  for  maritime  traffic  from  or  to 
European Union ports was adopted, aiming at alignment with the acquis. The detention rate of 
vessels  flying  the  Albanian  flag  has  improved.  However,  further  efforts  are  required  to 
strengthen the Flag state and Port State Control. Albania has not yet requested membership to 
the Paris Memorandum of Understanding on Port State Control and remains on the black list 
flag of this organisation.  

No progress can be reported in the area of satellite navigation. Albania currently has no plans 
to participate in the Galileo satellite navigation programme.  

Conclusion  

There has been little progress on transport policy, mainly concerning cabotage in the maritime 
sector. Further efforts are required on alignment with the transport acquis and to implement 
legislation  effectively.  Administrative  and  technical  capacity  remains  weak  across  the 
different  modes  of  transport,  particularly  in  the  case  of  aviation  and  road  safety.  Rail 
infrastructure  maintenance  is  a  concern  and  needs  more  resources.  Overall,  preparations  are 
not advanced. 

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4.15.  Chapter 15: Energy  

There  was  little  progress  on  security  of  supply.  Albania  improved  its  interconnection 
capacity through the inauguration of a new substation in Tirana but further efforts are required 
to complete interconnections with neighbouring countries. Electricity generation capacity has 
improved through the construction and the operation of several small hydropower plants but 
the country remains over-dependent on hydrological conditions. No progress was made with 
implementing the acquis on security of electricity supply in line with the Energy Community 
Treaty.  Albania,  which  is  not  connected  to  any  international  oil  or  gas  pipeline,  signed  in 
September  a  Memorandum  of  Understanding  with  Greece  and  Italy  on  the  Trans-Adriatic 
Pipeline (TAP), in the framework of the Southern Gas Corridor. 

There  was  some  progress  towards  enforcement  of  the  legal  obligation  to  hold  a  90-day 
emergency oil stock reserve. Administrative measures were imposed on companies that failed 
to  fulfil  their  obligations.  Further  efforts  are  still  required  to  strengthen  the  technical  and 
enforcement capacity in order to ensure that the legislation is fully implemented.  

There has been little progress with the internal energy market. The restrictions on allocation 
of interconnection capacity were formally removed. Auctions open to third parties have been 
being  held  since  February  2012.  The  government  continued  to  issue  concession  permits  for 
the  construction  of  small  hydropower  plants.  However,  the  number  in  operation  remains 
limited  due  to  legislative  gaps  hindering  enforcement  of  contracts  (See  also  Chapter  5  — 
Public procurement). The establishment of more than one hundred small hydro-powers plants 
is  foreseen  yet,  no  Strategic  Environmental  Assessment  or  socio-economic  study  have  been 
carried out so far to assess their overall impact. 

No  progress  was  made  on  aligning  the  Power  Sector  Law  with  the  acquis.  Albania’s  legal 
framework still substantially fails to comply with the Energy Community obligations. Albania 
has not yet started aligning its legislation with the EU’s third internal energy market package. 
The generation and wholesale supply operations of the state-owned company KESH have not 
yet been unbundled. Distribution and network losses increased and bill collection rates further 
deteriorated. Domestic production of electricity decreased by 47% in 2011, mainly due to bad 
hydrological conditions. Despite some improvements in power generation during the first half 
of 2012, this  has resulted in financial  difficulties for KESH,  which  had  to  request  subsidies 
and  a  state  guarantee  on  loans.  In  addition,  a  dispute  between  KESH  and  the  distribution 
company CEZ over outstanding mutual debt remains unsolved and may endanger the stability 
of  the  electricity  sector.  The  Energy  Regulatory  Entity  (ERE)  approved  a  decision  on 
electricity  tariffs  for  2012  and  developed  a  new  balancing  model  for  the  electricity  market. 
While  the  electricity  wholesale  price  has  increased  significantly  due  to  higher  imports,  the 
regulated  electricity  prices  have  only  increased  slightly.  ERE  has  repeatedly  reduced  the 
regulated  generation  price  to  offset  the  impact  of  higher  imports.  The  monitoring  and 
enforcement  powers  of  the  ERE  remain  weak,  as  does  its  independence.  No  substantial 
progress was made in preparing the implementing legislation in the field of gas, including the 
tariff methodology.  

There  was  no  progress  in  the  field  of  renewable  energy.  The  Law  on  Renewable  Energy 
remains to be adopted. Substantial efforts are required to increase use of Albania’s significant 
potential  for  renewable  energy,  to  adopt  the  national  renewable  energy  action  plan  and  to 
achieve  the  target  in  2020.  Administrative  barriers  remain  as  regards  licensing  and 
authorisation of renewable energy investments and connection of renewable energy producers 
to the grid. 

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There was no progress on energy efficiency. The new Law on Energy Efficiency remains to 
be  adopted.  Substantial  efforts  are  needed  to  prepare  the  implementing  legislation  and  to 
implement the national energy efficiency action plan for 2011-2018. 

Very  little  progress  was  made  with  nuclear  energy,  nuclear  safety  and  radiation 
protection.  Albania  still  lacks  an  adequate  legal  framework  and  administrative  capacity  in 
this field. Albania adopted the basic legislation on protection from non-ionising radiation. A 
regulation was adopted in May 2012 on the protection of the general public against ionising 
radiation. However, further efforts are still needed to align the legislation with the acquis and 
to  ensure  nuclear  safety  and  safe  radioactive  waste  management,  security,  non-proliferation 
and radiation protection.  

Conclusion 

There has been little progress in the energy sector. Lack of diversification hinders security of 
electricity supply. Energy market reforms require significant efforts to ensure the viability of 
the  sector.  The  administrative  capacity  and  independence  of  the  energy  regulatory  Entity 
require further strengthening. Overall, preparations are not very advanced. 

4.16.  Chapter 16: Taxation 

There  was  some  progress  in  the  field  of  indirect  taxation.  Value  Added  Tax  (VAT)  refund 
procedures showed some improvement in the amount reimbursed. Yet, delays in VAT refunds 
persist  and  the  new  VAT  law  drafted  aiming  at  further  approximation  to  the  acquis  is  still 
awaiting adoption. Use of fiscal devices (cash registers) by businesses increased, but further 
efforts are needed to strengthen enforcement of legislation and reduce tax evasion.  

The  new  Excise  Law  that  entered  into  force  on  1  October  brings  the  Albanian  legislation 
closer to the acquis. However, the excise structure and rates are not yet in line with the related 
EU Directives. Responsibilities for excise were transferred from the tax administration to the 
customs administration as of 1 July 2012. Implementing legislation was approved on the use 
of new fiscal stamps as of 1 March 2012.  

There  was  little  progress  in  the  field  of  direct  taxation.  The  threshold  for  personal  income 
declarations was increased to approximately €  14,000. Personal income declarations started to 
be applied for the first time in 2012. Further efforts are required to ensure adequate technical 
and  analytical  capacity  for  managing  the  personal  income  declaration  process.  Draft 
legislation aiming at alignment with the acquis on mergers and savings is awaiting adoption.  

There was limited progress  as  regards administrative cooperation  and mutual assistance. 
An agreement signed with Ireland to avoid double income and capital taxation and prevent tax 
evasion entered into force in January 2012.  

There  was  some  progress  in  the  field  of  operational  capacity  and  computerisation.  The 
Taxpayers  Advocate  continued  actively  to  address  complaints  from  taxpayers  but  its 
administrative  capacity  and  operational  independence  remain  weak.  In  December  2011  the 
government approved the structure of the Tax and Customs Academy but the Academy is not 
yet operational. A training strategy was adopted for staff of the Tax Investigation Directorate. 
Tax officials received training on collection of information and on investigation of tax evasion 
and  made  progress  on  exercising  their  judicial  powers.  The  number  of  cases  of  tax  evasion 
which were identified and reported by regional tax offices to the Tax Investigation Directorate 
increased and more cases of potential criminal offences were referred to Regional Prosecution 
Offices.  

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Consultations  with  businesses  and  civil  society  took  place  through  the  Business  Advisory 
Council and the Taxation Council when drafting the Laws on VAT and Excise. However, the 
level of participation by businesses in drafting policy and legislation remains low. 

Measures  were  taken  to  strengthen  internal  auditing  and  to  fight  corruption  in  the  tax 
administration.  Performance  audit  practices  and  monitoring  indicators  were  established, 
manuals  on  internal  audit  were  prepared  and  staff  received  training  on  the  internal  Code  of 
Ethics. However, corruption in the tax administration remains a cause for concern. 

As  regards  computerisation,  an  electronic  filing  system  for  payrolls  of  social  and  health 
security contributions was introduced and a new program to register revenue collection was 
developed.  However,  the  IT  system  is  not  adequate  for  the  needs  of  the  GDT.  Electronic 
payment  of  taxes  remains  underdeveloped  due  to  limited  facilities  offered  by  commercial 
banks and telephone operators. 

Conclusion 

There was some progress in the field of taxation. Legislation on indirect taxation was further 
aligned  with  the  acquis  and  the  capacity  of  the  Tax  Administration  for  investigation  and 
internal audit were strengthened. Further efforts are required in the fields of direct taxation, 
tax collection, VAT refunds and IT. Overall, preparations are moderately advanced.  

4.17.  Chapter 17: Economic and monetary policy 

There has been no progress on monetary policy with a view to alignment of legislation to the 
acquis. The Law on the National Bank was not adopted and no progress was achieved on the 
procedure for dismissal of the Governor, the personal independence of the Council members 
and the accountability of the National Bank.  

The Bank of Albania continued to monitor the inflation rate and intervened by downgrading 
the  basic  interest  rates  five  times  within  a  short  period,  keeping  inflation  within  the  target 
range. Monetary policy remained sound and exchange rate stability was broadly preserved.  

Albania  has  made  little  progress  in  the  field  of  economic  policy  in  terms  of  legislative 
alignment  with  the  acquis.  The  Economic  and  Fiscal  Programme  (EFP)  for  2012-2014  was 
adopted  in  February.  Its  key  objectives  include  macroeconomic  stability  and  fiscal 
consolidation,  while  maintaining  a  high  level  of  public  investment  and  sustaining  economic 
growth with a view to achieving fast convergence with EU income levels. The programme is 
a  policy  coordination  instrument  based  on  several  medium-term  government  strategies.  It 
broadly  follows  the  European  Commission’s  requirements  on  format  and  content,  although 
there  are  some  gaps  in  the  data.  Public  finance  data  do  not  comply  with  the  ESA95 
methodology. Considerable further efforts are needed towards improving the relevant labour 
and wage statistics and forecasts and addressing the link between the reforms and their fiscal 
and budgetary implications.  

The  EFP  fails  to  present  any  medium-  and  long-term  strategy  or  to  quantify  the  budgetary 
impact of the measures. Capacity for economic policy formulation and coordination remains 
weak. 

Conclusion 

Albania  has  made  no  progress  on  legislative  alignment  with  the  acquis  in  the  field  of 
monetary  and  economic  policy.  Little  progress  has  been  made  with  preparation  of  the 
economic  policy  document.  There  is  insufficient  capacity  for  policy  formulation.  Overall, 
preparations in the field of economic and monetary policy are not yet sufficient.  

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4.18.  Chapter 18: Statistics  

Little progress can be reported in the area of statistical infrastructure. The budget and staff 
of the National Statistics Institute (INSTAT) increased, in advance of the 2011 population and 
housing  census  and  of  the  agricultural  holdings  census,  which  is  expected  in  autumn  2012. 
The infrastructure at INSTAT’s main office in Tirana has improved with the establishment of a 
data processing centre in September 2011. However, INSTAT regional offices still lack basic 
infrastructure and internet access.  

In  March  2012,  the  Law  on  Statistics  was  amended  to  place  INSTAT  under  the  direct 
authority  of  the  Prime  Minister.  Yet,  the  amendment  neither  addressed  the  issue  of  the 
professional independence of INSTAT nor introduced a provision concerning the role of 
INSTAT  as  the  coordinator  of  the  national  statistical  system.  It  also  failed  to  ensure 
broad  representation  in  the  Statistical  Council.  The  2012-2015  official  statistics 
programme, which should plan production of the statistical data necessary for observation of 
the economic, social and environmental situation in Albania, has not yet been adopted.  

Good progress has been made with classifications and registers. The codification of units in 
the business register based on the NACE Rev.2 classification has been completed and covers 
both enterprises and local units. The quality of the business register data was improved using 
information collected in the census of economic enterprises but the quality of the data on local 
units has to be raised. The procedure for assessing the activity status of enterprises and local 
units (active/not active) has been completely reviewed, based on available statistical sources 
and a new method, which is consistent with the EU standards.  

There has been progress in the area of sectoral statistics. Work is under way on improving 
quarterly national accounts and regional GDP calculations. Institutional sectoral accounts are 
being  developed.  Further  efforts  are  needed  to  improve  accuracy  and  the  level  of  detail  in 
order to align with EU standards. 

INSTAT conducted a population and housing census in October 2011, making efforts to meet 
international standards. The first preliminary results were published in December 2011. Data 
processing  is  continuing.  Preparatory  activities  are  in  progress  for  the  2012  census  of 
agricultural holdings. The methodological framework for the agricultural census was finalised 
on the basis of a pilot exercise run in December 2011. Further efforts are still needed to make 
sure that the operation will be conducted successfully. 

In  the  area  of  the  other  sectoral  statistics,  some  progress  has  been  made  in  the  direction  of 
improving data editing processes and estimation criteria for structural business statistics. 

Conclusion 

Some progress has been made in the area of statistics. INSTAT conducted a population and 
housing  census  in  October  2011.  Substantial  efforts  are  needed  to  improve  some  areas  of 
sectoral statistics, including securing the forthcoming agricultural census. The independence 
and  administrative  capacity  of  INSTAT  have  to  be  secured.  Overall,  preparations  are 
moderately advanced.  

4.19.  Chapter 19: Social policy and employment 

There was no progress in labour law. Amendments to the Labour Code, including a roadmap 
for alignment with the acquis in the field of labour law, are pending adoption.  

There has been little progress on health and safety at work. The State Labour Inspectorate 
has been strengthened with the creation of a new Directorate for Standards of Inspection of 
Social  Services  with  five  employees.  However,  no  progress  has  been  made  towards 
establishing the remaining 23 local offices of the State Labour Inspectorate. Several accidents 

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at  work  and  a  deadly  explosion  in  October  2011  hit  a  chrome  mine  due  to  poor  technical 
working  conditions.  Overall,  health  and  safety  at  work  conditions  and  enforcement  of  the 
legislation continue to be insufficient.  

There  was  little  progress  in  the  social  dialogue.  A  Tripartite  Commission  for  Equal 
Opportunities was established within the National Labour Council (NLC). Representativeness 
criteria for NLC membership are being discussed with social partners. However, the current 
system  of  representation  in  the  NLC  does  not  comply  with  the  International  Labour 
Organisation’s (ILO) standards. Trade unions have expressed concern over the unwillingness 
of  a  state  institution  to  sign  collective  agreements.  Bipartite  social  dialogue  and  collective 
bargaining in the private sector remain underdeveloped.  

There  has  been  little  progress  as  regards  employment  policy.  An  action  plan  for  youth 
employment is being implemented but no action plan for employment has been adopted yet. 
As regards the labour market situation, the level of inactivity remains high, especially among 
women,  as  does  the  official  unemployment  rate,  although  it  decreased  slightly  in  2011,  to 
13.3%.  The  actual  level  of  unemployment  is  however  distorted  by  the  importance  of 
subsistence  agriculture.  Unemployment  primarily  affects  youth,  vulnerable  groups  and  also, 
as a new trend, returnee  emigrants. The employment rate showed a  slight increase (by 1.6), 
although at a decelerating rate in 2012. An evaluation of active labour market measures has 
been  initiated.  Measures  were  taken  to  promote  first  employment  of  job-seekers  and 
employment  of  women  from  vulnerable  groups.  However,  the  total  budget  for  employment 
promotion  programmes  in  2012  was  decreased  by  40%  compared  with  2010,  leading  to  a 
reduction  in  the  number  of  participants.  In  2011,  4,880  people  received  public  vocational 
training that is 3.5% of the total number of unemployed officially registered. Currently, there 
are  nine  vocational  centres  in  big  cities,  plus  a  mobile  vocational  training  centre  in  North-
Eastern Albania. Some efforts have been made to fight informal employment which continues 
to make up a substantial share of employment in Albania. 2011 Labour Force Survey data are 
expected in October 2012.  

The National Employment Service (NES) is working on computerisation of all employment 
offices  in  order  to  create  databases  of  job-seekers  and  employers.  However,  the  levels  of 
performance  and  attractiveness  of  the  NES  remain  low.  The  administrative  capacity  of  the 
NES at both national and local levels requires further strengthening.  

No  progress  can  be  reported  with  preparations  for  the  European  Social  Fund.  (See  also 
Chapter 22 – Regional policy and coordination of structural funds.)  

There  has  been  little  progress  in  the  area  of  social  inclusion.  The  mid-term  evaluation  of 
implementation of the Strategy for Social Inclusion for 2007-2013 has not been finalised yet. 
No  recent  data  exist  on  the  level  of  poverty.  Very  little  progress  has  been  made  on 
implementation of policies targeting Roma inclusion, partly due to the lack of financial and 
human  resources  allocated  at  the  level  of  local  government  units.  Roma  unemployment, 
which was already high, has further increased. Child labour is notably affecting Roma. 

No  progress  was  made  regarding  employment  of  people  with  disabilities.  The  Law  on 
Employment  Promotion  has  not  been  properly  implemented  and  the  employment  quota  has 
not been enforced. The framework Law on the Rights of People with Disabilities is awaiting 
adoption.  

Some progress can be reported in the area of social protection. Legislation implementing the 
Law  on  Social  Services  and  Assistance  was  adopted  to  expand  the  categories  eligible  for 
economic  aid  and  to  raise  the  aid  ceiling  for  the  benefit  of  large  families.  The  Law  on 
Collection  of  Compulsory  Contributions  for  Health  and  Social  Insurance  was  amended  in 

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February  2012  to  introduce  electronic  declarations  of  payments  as  from  July  2012.  In 
February 2012, the  government  reviewed the pension scheme with the  aim of  increasing its 
efficiency  and  addressing  the  low  level  of  private  contributions.  However,  the  social 
insurance  and  pension  schemes  have  not  been  functioning  properly.  Disability  and  pension 
payments  have  suffered  from  delays  and  disruption.  Difficulties  with  contributions  and 
contributor/recipient  ratios  remain  a  concern.  The  electronic  database  of  pensions  has  not 
been completed and the difference in treatment between genders has not been revised.  

Moderate progress can be reported in the area of anti-discrimination. The Law on Protection 
from  Discrimination  is  largely  in  line  with  the  acquis,  but  its  implementation  remains 
insufficient.  A  strategic  plan  (2012-2015)  for  implementing  the  Law  on  Protection  from 
Discrimination  and  an  action  plan  of  the  Commissioner  for  Protection  from  Discrimination 
(CPD)  have  been  adopted.  The  CPD  has  focused  on  strengthening  its  capacity  and  raising 
awareness. The CDP has signed cooperation agreements with several ministries. However, the 
number of cases brought to the attention of the Commissioner remains low and, as yet, has not 
generally led to financial sanctions against the perpetrators. General awareness of the law and 
of the possibilities to appeal to the CPD remains low.  

Little progress can be reported in the area of equal opportunities between women and men. 
There is still a gap between the legal framework and the actual level of equality in relation to 
employment, pay, access to entrepreneurship and credits. In July 2012, a Council of Ministers 
decision  on  gender  mainstreaming  in  the  medium-term  budget  programme  for  all  line 
Ministries  was  approved.  Awareness-raising  activities  have  focused  on  women’s  political 
participation  and  gender  quota,  women’s  entrepreneurship  and  combating  violence  against 
women. However, women continue to be under-represented in the labour market, in particular 
in  political  and  economic  decision-making.  Sufficient  financial  and  human  resources  are 
lacking  at  central  and  local  government  levels  leading  to  slow  implementation  of  the  2011-
2015 national strategy on gender equality.  

Conclusion 

There  has  been  little  progress  in  the  fields  of  social  policy  and  employment.  The  labour 
market continues to be shaped by high informality, low participation of women, and relatively 
high  youth  unemployment.  Social  inclusion  of  persons  with  disabilities  and  the  Roma 
minority  remain  insufficient.  Sustainability  of  funding  needs  to  be  addressed  to  ensure 
successful  implementation  of  social  assistance  and  protection  reforms.  Implementation  of 
policies in this area continues to be a challenge. Overall, preparations are not very advanced. 

4.20.  Chapter 20: Enterprise and industrial policy 

Some  progress  has  been  made  as  regards  enterprise  and  industrial  policy  principles. 
Albania  continued  to  implement  the  Small  Business  Act,  notably  in  the  areas  of  company 
registration and business start-up. The National Registration Centre for Business extended the 
coverage  of  electronic  registration.  A  new  one-stop  shop  was  established  in  February  in 
Tirana  to  reduce  the  time  taken  for  issuing  local  government  licences  and  permits.  A  new 
package  of  regulatory  reforms  was  launched  in  March  to  reduce  delays  in  registering 
property, obtaining construction permits and connecting businesses to the electricity grid. Yet, 
weaknesses  persist  as  regards  the  provision  of  support  to  Small  and  Medium  Enterprises 
(SME), innovation policy and environmental standards. There was no progress with approval 
of legislation related to regulatory impact assessment.  

There  was  some  progress  on  implementation  of  the  Business  Innovation  and  Technology 
Strategy.  An  Innovation  Fund  of  approximately  € 285,000  has  been  established  for  2011-

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2014.  The  Albanian  Investment  Development  Agency  has  been  fully  staffed  and  its  board 
adopted the regulation for the implementation of the Innovation Fund. 

There  was  little  progress  in  the  field  of  enterprise  and  industrial  policy  instruments. 
Measures to facilitate access to finance for SMEs continued under the Credit Guarantee Fund 
for SMEs and the European Fund for South-East Europe. Implementation of the credit support 
scheme financed by the Italian government continued, with preparations being finalised for a 
second phase of the scheme covering the period 2012-2014.  

Albania is an associate partner in the Competitiveness and Innovation Programme (CIP-EIP). 
In March 2012, it also became a member of the European Enterprise Network. Preparations 
for alignment with the directive on late payment are at an early state.  

In  the  area  of  sector  policies,  some  progress  has  been  made  on  enforcing  regulations  on 
mining.  The  government  revoked  licences  of  companies  failing  to  fulfil  their  obligations. 
There was some progress on implementation of the tourism strategy, mainly related to product 
diversification and improving access to tourist areas. Preparations for drafting a new tourism 
strategy and revising the Law on Tourism have started.  

Conclusion 

There was some progress in the area of enterprise and industrial policy. Some measures were 
taken to facilitate access to financing for SMEs and to improve the regulatory framework for 
doing business. Overall, preparations are moderately advanced. 

4.21.  Chapter 21: Trans-European networks 

In  the  area  of  transport  networks,  Albania  has  made  some  progress.  It  continued  to 
participate  in  the  Memorandum  of  Understanding  on  the  development  of  the  South-East 
Europe Regional Transport Network which was included in the revision of the trans-European 
transport network (TEN-T) proposed by the Commission in October 2011.  

As regards road infrastructure, construction of the Tirana-Elbasan road and of a new stretch 
on  the  North-South  corridor  near  the  border  with  Montenegro  is  progressing  well.  Some 
infrastructure  projects  have  been  delayed  because  of  expropriation  problems  and  lack  of 
financial resources. Special attention needs to be paid to comprehensive environmental impact 
assessment. A call for tenders for the maintenance concession on the Milot-Morine motorway 
was launched in February 2012. Maintenance and infrastructure management are two issues 
yet to be addressed. Substantial financial resources are still needed to maintain and upgrade 
transport  infrastructure  properly.  As  regards  rail  infrastructure,  no  measure  has  been 
undertaken  to  rehabilitate  the  network.  As  regards  port  infrastructure,  construction  of  the 
passenger terminal in Durres was completed in May 2012. Work is underway at Shengjin port 
and has recently started in Durres and Saranda. Work planned in Vlora has not started yet. 

There  was  some  progress  as  regards  energy  networks.  A  new  electricity  transmission 
substation was inaugurated in Tirana in November 2011. It is one of the largest in Albania and 
it forms part of the interconnection network with Montenegro. Preparations for upgrading the 
400kV transmission line with Kosovo have been delayed. Preparations for construction of the 
interconnection between Vlora and Brindisi are slow. There were no developments towards a 
strategy for the introduction of natural gas. 

Conclusion  

There  was  some  progress  in  the  area  of  trans-European  networks.  Rail  transport  remains 
underdeveloped  and  substantial  investment  is  needed  to  maintain  and  upgrade  transport 
infrastructure. Concerning energy networks, further efforts are required to complete electricity 

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interconnection  lines  with  neighbouring  countries  and  to  start  developing  a  strategy  for  the 
introduction of natural gas. Overall, preparations are not very advanced. 

4.22.  Chapter 22: Regional policy and coordination of structural instruments 

The  acquis  on  regional  policy  and  coordination  of  structural  instruments  does  not  require 
transposition  into  national  legislation.  Nevertheless,  several  areas  of  the  legislative 
framework have an impact on regional policy. No particular developments can be reported in 
the legislative framework. Preparation of a self-standing Law on Regional Development was 
abandoned  as  relevant  policy  measures  are  now  included  in  the  National  Strategy  for 
Development and Integration (NSDI) for 2013-2020. 

There  has  been  some  moderate  progress  in  the  institutional  framework.  An  accreditation 
package for  IPA component  I  was  finalised and submitted to the European Commission  for 
assessment  in  February.  Amendments  to  the  legal  basis  putting  in  place  structures  for 
implementation  of  IPA  components  II,  III  and  IV  (precursor  instruments  of  EU  Cohesion 
Policy)  are  awaiting  adoption.  Implementing  and  operational  agreements  will  have  to  be 
signed  between  the  National  Authorising  Officer,  the  Head  of  Operating  Structures  and  the 
bodies  forming  the  operating  structures  for  components  III  and  IV  once  the  legal  basis  has 
been  adopted.  The  national  roadmap  for  the  transfer  of  management  responsibility  to  the 
national authorities in respect of IPA components II, III and IV has been revised. In order to 
segregate the programming and monitoring functions, the Ministry of Integration has revised 
its internal organisational structure and created a separate Monitoring Section.  

Some  modest  progress  has  been  made  on  strengthening  the  administrative  capacity  of  the 
IPA bodies. A training plan for the staff of the IPA bodies was prepared following completion 
of the needs analysis in June 2011. As a result, training on strategic planning, programming, 
monitoring,  procurement,  irregularities,  risk  management  and  other  relevant  fields  was 
provided through technical assistance and by the Training Institute for Public Administration. 
Additional  staff  have  been  recruited  in  the  Central  Contracts  and  Finance  Unit.  However, 
serious  operational  weaknesses,  especially  lack  of  expertise  and  staffing,  remain  within  the 
line  ministries  that  will  be  in  charge  of  IPA  assistance  once  decentralisation  has  been 
achieved. Adequate administrative capacity remains to be built up at all levels. 

Some  progress  has  been  made  on  programming.  Preparations  for  drafting  the  National 
Strategy  for  Development  and  Integration  (NSDI)  for  2013-2020  started  in  February;  its 
adoption  is  planned  by  March  2013.  The  NSDI  will  be  a  synthesis  of  all  government 
strategies  and  policies,  including  regional  policy,  and  will  guide  the  medium-term  budget 
programme. The revised draft operational programmes for IPA components III and IV were 
submitted  to  the  European  Commission  for  comments  in  September  2011.  Significant 
strengthening of administrative capacity in the areas of programming and project preparation 
is needed. Development of a project pipeline remains a major issue. 

There  has  been  some  moderate  progress  in  the  areas  of  monitoring  and  evaluation.  The 
monitoring  and  evaluation  procedures  are  being  revised  to  reflect  the  new  approach  to  IPA 
programming.  A  designated  monitoring  unit  has  been  established  in  the  Ministry  of 
Integration with a planned staff of two. Training on monitoring and evaluation procedures has 
been provided as part of the technical assistance.  

Some  progress  can  be  reported  in  financial  management,  control  and  audit.  Internal 
manuals on financial management and the internal control framework have been prepared and 
training has been given on financial management. The analytical accounting system necessary 
for the Central Contracts and Finance Unit and the National Fund for managing the financial 
transactions for IPA components I, II, III and IV is fully functional.  

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Conclusion 

There  has  been  some  progress  in  the  areas  of  regional  policy  and  coordination  of  structural 
instruments.  Considerable  efforts  are  needed  to  establish  the  necessary  institutional  and 
administrative  capacity  at  central  and  local  levels  and  to  develop  a  pipeline  of  mature  and 
quality projects. Overall, preparations in this area are still at an early stage. 

4.23.  Chapter 23: Judiciary and fundamental rights (see also Political criteria) 

There  has  been  moderate  progress  in  completing  the  legal  framework  for  judicial  reform. 
Implementation  of  the  judicial  reform  strategy  and  the  relevant  action  plan  started,  albeit 
slowly.  Budget  allocation  and  planning,  the  level  of  human  resources,  and  interinstitutional 
cooperation remain areas of concern. Albania needs to further accelerate the implementation 
of  the  judicial  reform  strategy  in  order  to  ensure  the  independence,  efficiency  and 
accountability of its judicial institutions. 

Working groups were set up within the Ministry of Justice (MoJ) to review key legislation on 
the  functioning  and  organisation  of  the  High  Court,  the  Constitutional  Court,  the  High 
Council  of  Justice  (HCJ),  the  School  of  Magistrates,  the  Judicial  Budget  Administration 
Office, and the Judicial Administration. The results of these working groups still need to be 
finalised.  The  Law  on  Administrative  Courts,  the  Law  on  the  National  Judicial  Conference, 
and  the  Law  on  the  Profession  of  Lawyer  were  adopted,  as  well  as  amendments  to  the 
Criminal Code (see also anti-corruption policy). 

Some  progress  has  been  made  with  regard  to  the  independence  and  impartiality  of  the 
judiciary. A set of rules on transfers of judges has been approved by the HCJ in September. 
The  neutrality,  efficiency  and  independence  of  the  High  Court  and  the  Constitutional  Court 
are still not fully guaranteed under the current legal framework. 

An  audio-recording  system  is  gradually  being  installed  in  the  courts  but  has  not  yet  been 
connected to the case management system. Court decisions are not published systematically 
and the quality of decision-drafting remains low.  

In relation to accountability in the judiciary, constitutional provisions restricting the immunity 
of  judges  were  adopted.  Steps  have  been  taken  to  address  overlapping  inspection  powers 
between  the  inspectorates  of  the  HCJ  and  of  the  Ministry  of  Justice  through  the 
implementation  of  a  Memorandum  of  Understanding  on  inspections;  yet,  the  risk  of 
overlapping persists. Amendments to the Law on the HCJ related to inspections have yet to be 
finalised.  Evaluations  have  not  yet  been  conducted  with  all  judges.  There  has  been  little 
progress in the area of disciplinary responsibility and integrity safeguards. 

The  School  of  Magistrates  is  providing  good  quality  curricula  and  training,  on  ethical  and 
other  issues.  However,  the  School’s  budget  is  largely  insufficient  to  cover  its  planned 
activities.  

Only limited progress was made regarding the efficiency of the judiciary, though some steps 
have been taken to address the problem of unreasonable delays in court cases often caused by 
postponement of court proceedings. The lack of a comprehensive legal framework in line with 
European standards, with clearly organised courts and judicial staff, hampers the efficiency of 
court activities. Hearings often continue to be held in judges’ offices and working conditions 
in  courts  remain  inadequate.  Court  management  remains  poor  due  to  a  lack  of  human  and 
financial  resources.  Court  backlogs,  the  excessive  length  of  proceedings  and  number  of 
sessions undermine the efficiency of the judicial system.  

Regarding enforcement of court decisions, the new private bailiff system is in place.  

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Moderate  progress  was  made  on  anti-corruption  policy.  The  implementation  of  the  anti-
corruption strategy and specific measures in different sectors and areas under the 2011-2013 
action plan has continued, albeit slowly. Reports on the implementation of the action plan by 
line ministries and other relevant institutions are not yet published regularly. 

There  has  been  moderate  progress  in  strengthening  the  legal  framework.  This  includes  the 
implementation  of  recommendations  of  the  Group  of  States  against  Corruption  (GRECO) 
related  to  incrimination  and  political  party  financing.  Amendments  to  the  Law  on  Notaries 
were passed introducing the digitalisation of notaries’ activities. Progress was made through 
the adoption of necessary constitutional changes to abolish the unlimited immunity of high-
level public officials and judges. 

There  was  limited  progress  as  regards  the  institutional  framework  and  the  establishment  of 
specific  mechanisms  to  fight  corruption.  Efforts  were  made  to  improve  interinstitutional 
cooperation,  partly  by  setting  up  two  interinstitutional  working  groups  on  exchanging 
information  and  standardising  statistics  on  corruption  cases.  The  High  Inspectorate  for 
Declaration and Audit of Assets (HIDAA) signed Memoranda of Understanding to promote 
cooperation with several institutions such as the Supreme State Audit, IPRO, ALUIZNI and 
the Ministry of Justice. 

There  was  no  progress  regarding  the  institutional role  played  by  the  Department  of  Internal 
Control and Anti-Corruption (DIACA). It does not have sufficient institutional independence, 
authority and administrative capacity to accomplish its tasks.  

Joint  Investigative  Units,  although  continuing  to  be  good  instruments  for  investigating  and 
prosecuting  corruption  cases,  have  inadequate  human  resources  and  technical  equipment,  as 
do  most  investigation  and  law  enforcement  agencies.  A  lack  of  technical  equipment  for 
special investigative measures hampers the effectiveness of anti-corruption policies. Internal 
control departments across ministries often lack specialist expertise and remain insufficiently 
focused on fighting corruption. The level of cooperation between law enforcement agencies, 
in particular between the police and prosecutors, remains insufficient. 

Proactive  investigations  based  on  effective  use  of  intelligence  and  risk  assessments  are  still 
lacking  in  Albania.  Few  corruption  cases  end  in  convictions.  A  convincing  track  record  of 
investigation,  prosecution  and  convictions  in  corruption  cases  at  all  levels,  including  senior 
officials, has not yet been established. Criminal statistics and statistics on conflict of interest 
cases  need  to  be  strengthened.  Corruption  in  the  judiciary  remains  a  particularly  serious 
problem.  Corruption  also  remains  a  particularly  serious  problem  in  the  tax,  education  and 
health sectors. 

Albania  has  further  enhanced  the  legal  and  institutional  framework  for  the  protection  of 
fundamental rights. Appointment of the new Ombudsman helped improve the functioning of 
the  national  human  rights  institutions.  Most  of  the  complaints  received  by  the  Ombudsman 
relate to allegations of ill-treatment by police, of non-execution of court decisions, of delays 
in  judicial  proceedings  and  of  violations  of  the  right  to  employment  by  the  public 
administration. However, there are still some legal gaps and implementation of legislative and 
policy tools in the field of fundamental rights continues to be slow and to be largely reliant on 
civil society and donor funding.  

Progress  can  be  noted  regarding  prevention  of  torture  and  ill-treatment.  Follow-up  of  the 
Ombudsman’s recommendations has improved and the State Police started cooperating- with 
two non-governmental organisations. A new database, known as ADAM, was introduced for 
compiling data on escorted, arrested and detained persons. Amendments to the handbook on 
the  rules  and  treatment  of  arrested  and  detained  persons  in  police  stations  were  adopted. 

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However,  concerns  remain  over  reported  cases  of  ill-treatment  and  failure  by  police  to 
systematically observe procedures for arrest and custody. Plans have been made for building a 
special  medical  institution  for  treating  mentally  ill  offenders,  but  it  will  take  time  until  its 
establishment and additional specialist care needs to be awarded to this category of detainees. 

Progress  has  been  made  concerning  the  prison  system,  with  continuous  training  and 
improvement of standards. Standards of living in prisons still vary depending on provision of 
food  and  equipment  by  families.  Four  new  regional  offices  of  the  Probation  Service  were 
opened and plans for additional resources have been approved. Continued over-use of pre-trial 
detention is a concern.  

Little progress was made regarding access to justice. The implementation of the Law on Free 
Legal  Aid  has  been  slow  and  neither  the  bylaws  regarding  the  recruitment  of  free  legal  aid 
lawyers  nor  the  procedures  to  request  free  legal  aid  are  implemented  effectively.  The  State 
Commission for Legal Aid has only handled a limited number of cases. Access to justice for 
vulnerable groups is impeded, especially by high judicial administration fees.  

Some  progress  was  made  in  the  field  of  freedom  of  expression  with  the  adoption  of 
amendments  to  the  Criminal  and  Civil  Codes  removing  prison  sentences  for  libel  and 
defamation and repealing special protection of public officials. However, these offences still 
remain punishable by potentially high fines under the Criminal Code. Concerns remain over 
insufficient  transparency  of  ownership,  use  of  the  media  to  promote  political  and  economic 
private interests and lack of progress in strengthening the editorial independence of the public 
service broadcaster.  

Freedom  of  assembly  and  association  has  generally  been  respected.  Civil  society 
development continues to be impeded by difficulties in accessing funding, including from the 
Agency for Support to Civil Society. Consultation of civil society in the legislative process is 
not systematic. Freedom of thought, conscience and religion continued to be respected.  

Some progress was made regarding women’s rights and gender equality. Albania has signed 
the  Council  of  Europe  Convention  on  Preventing  and  Combating  Violence  against  Women 
and Domestic Violence. It has started to implement the 2011-2015 national strategy on gender 
equality  and  domestic  violence  and  gender-based  violence.  Amendments  to  the  Criminal 
Code  were  adopted,  introducing  further  protection  from  domestic  violence  and  one  national 
shelter  for  victims  of  domestic  violence  is  operational.  Coordination  between  national  and 
local  institutions  remains  insufficient.  Women’s  participation  in  decision-making  remains 
limited. 

There  has  been  uneven  progress  in  the  area  of children’s  rights.  The  adoption  of  the  action 
plan of the national strategy for child protection 2012-2015 is a positive step. The process of 
establishing local child protection units continues, albeit with much reliance on civil society 
and  donors  to  provide  services.  Effective  progress  in  implementation  depends  on 
strengthening human and financial resources and coordination between central and local level. 
The  juvenile  justice  strategy  and  action  plan  have  not  been  adopted.  Over-use  of  pre-trial 
detention for juveniles is a serious concern.  

There  has  been  limited  progress  regarding  socially  vulnerable  and/or  persons  with 
disabilities. Work on the draft law is ongoing and differentiated status for certain disabilities 
remain.  Persons  with  disabilities  continue  to  face  difficulties  in  accessing  education, 
employment, health care and social services. 

Moderate  progress  was  made  in  the  area  of  anti-discrimination  policies.  The  Office  of  the 
Commissioner for Protection from Discrimination launched a strategic plan for 2012-15 and 
an  action  plan  for  2012  and  focused  on  awareness  raising  and  capacity  building.  However, 

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general  awareness  of  the  Law  on  Protection  from  Discrimination  remains  low  and  a  track-
record of cases brought to final completion has  to  be  built  up.  A  plan  of  measures  for  non-
discrimination on the basis of sexual orientation and gender identity has been adopted. At the 
same  time,  discrimination  against  lesbian,  gay,  bisexual  and  transgender  persons,  the  Roma 
minority and other vulnerable groups persists. Albania does not publish data collected on hate 
crimes  and  hate-related  incidents.  In  the  reporting  period,  there  were  no  convictions  for 
crimes related to racism and xenophobia.  

Labour  and  trade  union  rights  have  generally  been  respected  and  a  dialogue  has  been 
launched  regarding  the  criteria  for  membership  of  the  National  Labour  Council.  Progress 
remains to be achieved on collective bargaining in the public and private sector.  

Some progress was achieved in the area of property rights, notably through the adoption of a 
new  law  on  registration  of  immovable  property  and  through  the  adoption  of  a  cross-cutting 
strategy  and  action  plan.  Efficient  coordination  and  monitoring  is  necessary  to  ensure  the 
implementation  of  the  strategy  and  consistency  between  the  legislation  in  force  and  future 
initiatives. Consultations with stakeholders need to continue in this respect. The land registry 
has not yet been completed. Former owners still have unresolved claims for compensation for 
and restitution of property confiscated under the communist regime. 

Although inter-ethnic relations remained good overall, very limited progress can be noted in 
enhancing  the  legislative  and  policy  framework  regarding  respect  for  and  protection  of 
minorities  and  cultural  rights.  The  mandate  of  the  State  Committee  for  Protection  of 
Minorities  has  not  been  enhanced  nor  has  work  started  towards  drafting  a  comprehensive 
legislation  on  minorities  which  was  recommended  by  the  Advisory  Committee  of  the 
Framework  Convention  for  the  Protection  of  National  Minorities.  The  full  results  of  the 
October  2011  population  and  housing  census,  which  included  optional  questions  on  ethnic 
origin and religious affiliation, have not been published yet.  

Very limited progress was made regarding Roma inclusion. Implementation of policy tools in 
this  field  continues  to  be  very  slow,  notably  due  to  inadequate  resources  and  insufficient 
coordination between the local and national institutions. Roma continue to face very difficult 
living conditions and discrimination. There is concern over forced evictions of Roma and the 
authorities’  poor  response  to  the  community’s  housing  problems.  Difficulties  arise  from  the 
lack of unified official statistics regarding the Roma population in Albania.  

Some progress was made in the area of protection of personal data, with amendments to the 
Law  on  Personal  Data  Protection  aimed  at  further  approximation  with  the  EU  acquis.  The 
Office of the Commissioner for Personal Data is still not listed among the institutions which 
always  need  to  be  consulted  on  draft  legislative  proposals.  The  Office  adopted  and 
implemented  two  procedural  manuals.  It  performed  more  inspections  and  adopted  several 
sector-related instructions.  

There have been no developments regarding EU citizens’ rights; amendments to the Law on 
Foreigners await adoption.  

Conclusion  

Overall,  there  has  been  some  progress  in  implementing  policies  on  the  judiciary  and 
fundamental rights, notably through efforts to address the relevant key priorities set out in the 
Commission Opinion. Yet, significant gaps in the legislative framework remain, in particular 
as regards judicial reform. Consistent implementation of legislative and policy tools remains a 
challenge in all areas under this chapter. Albania’s alignment with European standards and the 
acquis in the field of the judiciary and fundamental rights is not very advanced.  

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4.24.  Chapter 24: Justice, freedom and security 

Some progress has been achieved in the area of migration policy. Progress was achieved in 
gathering  and  publishing  analytical 
irregular  migration. 
Implementation  of  the  readmission  agreement  has  continued  smoothly.  In  2011  just  15,185 
return cases were recorded, due to a sharp decline in returnees from Greece. The institutions 
in  charge  of  implementing  the  strategy  and  action  plan  for  returned  migrants  should  be 
reinforced. Adoption of the new National Migration Strategy is still pending. Preparations in 
this area are advancing moderately.  

information  on 

legal  and 

In  the  area  of  asylum,  no  significant  progress  has  been  made.  The  institutional  and  legal 
framework  is  partly  in  place.  However,  preparations  in  this  area  need  to  be  stepped  up.  By 
August  2012,  Albania  had  granted  asylum  to  81  individuals,  with  20  more  applications 
pending.  Refugees  and  persons  granted  complementary  protection  have  yet  to  be  provided 
with ID documents. An effective pre-screening process needs to be ensured at the border in 
view of potential new migration trends and the possible rise in illegal transits by third-country 
nationals. Preparations are moderately advanced.  

Some progress was made on visa policy. An amendment to the Law on Foreigners, aiming to 
adapt  the  visa  arrangements  to  the  acquis  is  still  pending.  The  implementation  of  visa 
liberalisation  progressed  smoothly  overall.  Following  an  increase  in  unfounded  asylum 
applications  from  Albanian  nationals,  Albanian  authorities  reacted  promptly  and  cooperated 
with  Member  States.  Efforts  to  ensure  public  awareness  of  the  rights  and  obligations 
stemming from visa liberalisation and to prevent abuse need to continue. Since July 2012, the 
Total Information Management System (TIMS) has been linked to the civil registry database 
at border-crossing points. The Commission has continued monitoring post-visa liberalisation 
and  presented  its  third  monitoring  report  to  the  European  Parliament  and  the  Council  in 
August 2012.  

There has been progress in the area of external borders and Schengen. A protocol for joint 
patrolling  was  signed  with  Kosovo,  an  agreement  on  establishment  of  a  new  joint  border 
control point was signed with Montenegro and an agreement on exchange of information was 
signed  with  the  former  Yugoslav  Republic  of  Macedonia.  Mobile  border  patrols  started 
operating,  covering  the  green  border.  The  ban  on  speed  boats  remains  in  force.  Threat 
assessment  capacity  in  the  Border  and  Migration  Police  (BMP)  needs  to  be  strengthened. 
Cooperation and coordination of institutions involved in managing the blue border needs to be 
tightened  and  the  financial  sustainability  of  surveillance  mechanisms  needs  to  be  ensured. 
Risk  analysis  and  intelligence  in  the  Interinstitutional  Maritime  Operations  Centre  (IMOC) 
need  to  be  reinforced,  including  its  connection  to  the  MEMEX  criminal  intelligence 
information system. Overall, preparations in this area have advanced.  

There has been progress on judicial cooperation in civil and criminal matters. The Third 
Additional Protocol to the European Convention on Extradition entered into force but has not 
been  applied  yet.  Cooperation  agreements  were  signed  with  EULEX,  Europol,  Austria,  the 
Netherlands,  Russia  and  the  former  Yugoslav  Republic  of  Macedonia.  The  smooth 
implementation of the extradition agreement with Italy has to be ensured. Albania adopted a 
law facilitating  cooperation with EULEX in the framework of the investigation into alleged 
trafficking  of  human  organs.  Preparations  for  concluding  a  cooperation  agreement  with 
Eurojust have advanced. Overall, there has been moderate progress in this area.  

In the field of police cooperation and the fight against organised crime — one of the key 
priorities set in the Commission’s Opinion — some progress can be reported. Greater use of 
MEMEX has improved data exchange within the Albanian State Police (ASP). However, the 
operational  capacity  of  the  forensic  laboratory,  especially  DNA  interpretation  and  a  DNA 

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database,  needs  further  support.  A  decision  was  taken  to  restructure  the  witness  protection 
services  with  the  purpose  to  increase  their  effectiveness  and  meet  EU  standards.  An  action 
plan against trafficking of vehicles has been adopted and progress has been made on detecting 
trafficked vehicles at the borders. The implementation of the ‘anti-mafia law’ has resulted in 
an  increase  in  the  seizure  of  criminal  assets.  However,  efforts  in  this  area  need  to  be 
intensified  substantially  through  closer  coordination  between  law  enforcement  and  judicial 
authorities, leading to effective recovery of illicitly-obtained assets.  

Interinstitutional cooperation has progressed in investigations of financial crime and money-
laundering. However, there is an urgent need for key institutions to step up coordination and 
information  exchange  and  thus  maximise  their capacity to investigate serious and organised 
crime.  Continuous  specialised  training  involving  police  officers,  prosecutors  and  judges 
remains  necessary.  Standard  operating  procedures  for  managing  serious  crime  scenes  have 
been introduced. Threat assessment and proactive investigations should be further promoted. 
Preparations  in  order  to  build  a  solid  track  record  of  investigations,  prosecutions  and 
convictions at all levels are moderately advanced.  

Progress was reported in the fight against trafficking in human beings, even though Albania is 
still  a  source  country  for  trafficking  in  human  beings  and  internal  trafficking  remains  a 
concern. Progress was made in the engagement of the Office of the National Anti-Trafficking 
Coordinator  (ONATC).  A  joint  working  group  was  established  in  order  to  improve  the 
investigation  and  trial  proceedings.  Standard  operating  procedures  for  identification  and 
referral  of  victims/potential  victims  are  in  place  and  are  being  implemented  effectively.  A 
new national referral mechanism has been established.  

to 

Progress  can  be  reported  in  the  fight  against  money-laundering.  Taking  into  account 
MONEYVAL  recommendations,  amendments 
the  Criminal  Code  were  adopted 
establishing  the  autonomy  of  money-laundering  crime  from  the  predicate  offence  and  the 
crime  of  self-laundering.  The  penalty  for  this  crime  was  also  enforced.  There  has  been  an 
increase in reports from banks, notaries, the Immovable Property Registration Office and the 
General-Directorate  for  Customs.  The  number  of  asset  investigations,  of  cases  sent  to  court 
for sequestration purposes and of seizures upon court order increased. However, the number 
of convictions for money-laundering remains significantly low compared with the scale of the 
problem.  Money-laundering  and  corruption  crimes  do  not  fall  under  the  competence  of  the 
Serious Crime Court.  

Regarding  the  ASP’s  human  resources,  the  diversity  strategy  continued  being  implemented. 
Some progress was made in recruitment of female police officers. However, there remains a 
need  to  comply  fully  with  best  practice  regarding  transfer,  selection,  appointment  and 
promotion  procedures.  Internal  control  should  be  enforced  in  order  to  address  corruption  in 
law enforcement.  

There has been some progress with international cooperation, notably through the installation 
of  secure  communication  links  with  Europol,  and  information  exchanges  have  continued. 
Operational cooperation with neighbouring countries, EU Member States and Europol needs 
to be further enhanced through the exchange of criminal intelligence and the carrying out of 
joint operations.  

Albania  has  started  implementing  the  national strategy and  action  plan  on  the  fight  against 
terrorism. Effective structures must be developed in order to guarantee timely and relevant 
security intelligence. Preparations in this area are moderately advanced.  

There  has  been  modest  progress  regarding  cooperation  in  the  field  of  drugs.  Seizures  and 
prosecution  overall  increased.  The  new  national  anti-drug  strategy  was  adopted  in  June, 

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pursuing the objectives of increasing strategic coordination among law enforcement agencies, 
and  addressing  supply,  demand  and  harm  reduction.  International  cooperation  is  being 
ensured  and  the  intelligence-led  approach,  as  well  as  an  increased  use  of  risk  assessment, 
should  be  continued  involving  all  relevant  institutions.  Good  cooperation  was  established 
between  the  European  Monitoring  Centre  for  Drugs  and  Drug  Addiction  and  the  National 
Office  of  Drugs  Data  set  up  in  2011.  Police  operations  against cultivation  of  cannabis  have 
been  stepped  up.  Progress  in  seizures  at  entry  points  will  need  to  be  intensified.  Organised 
crime  groups  continue  taking  advantage  of  Albania’s  location  as  a  transit  country.  More 
targeted and proactive investigations and operations remain necessary.  

Some progress took place in the area of customs cooperation. Good border cooperation was 
noted between the customs authorities and the police in the fight against illegal trafficking of 
vehicles.  This  positive  move  should  be  supported  by  further  development  of  intelligence  in 
this area, see Chapter 29 – Customs union. 

For  details  of  measures  against  counterfeiting  of  the  euro,  see  Chapter  32  —  Financial 
control. 

Conclusion 

Albania has made some progress in the area of justice, freedom and security, particularly in 
border  management,  international  cooperation  in  investigations  and  the  fight  against 
organised  crime.  Efforts  need  to  be  stepped  up  on  coordination  between  law  enforcement 
institutions  and  consolidating  a  track  record  of  investigations,  prosecutions  and  convictions. 
Overall, preparations in this field are advancing.  

4.25.  Chapter 25: Science and research 

There  has  been  limited  progress  in  research  and  innovation  policy.  The  Agency  for 
Research,  Technology  and  Innovation  (ARTI)  has  strengthened  its  administrative  capacity 
and continued its efforts to promote cooperation on research and innovation under the Seventh 
EU Framework Programme through its website and awareness-raising activities. No progress 
was  made  towards  integration  into  the  European  Research  Area  and  contribution  to  the 
Innovation Union was limited. The national level of investment in research and technological 
development is still very low and has not increased since 2010, despite the targets set in the 
national strategy for science, technology and innovation for 2009-2015.  

With respect to Albania’s participation in the EU's Seventh Framework Programme (FP7), 
the number of submissions increased, but the number of successful FP7 projects funded is still 
very  low.  ARTI  stepped up  its promotion efforts and training sessions, attended several EU 
networking  events  and  actively  followed  the  work  on  the  WBC.INCO.NET  project  under 
FP7. ARTI has signed bilateral cooperation agreements with Italy, Greece, Montenegro, the 
former Yugoslav Republic of Macedonia, Slovenia and Turkey. 

As  regards  integration  into  the  European  Research  Area  (ERA),  there  has  been  little 
progress  on  implementation  of  the  national  strategy  on  science,  technology  and  innovation. 
Some measures have been taken to strengthen human capital-building, such as increasing the 
Fund  for  Excellence  stimulating  external  mobility,  establishing  the  national  Euraxess  Portal 
(ARTI)  and  starting  to  set  up  a  network.  No  progress  was  made  on  establishing  centres  of 
excellence.  There  was  no  increase  in  the  level  of  investment  in  research  and  no  action  to 
stimulate  investment  in  research  and  innovation  by  the  private  sector  or  to  support  private-
public  partnerships.  In  addition,  the  level  of  investment  in  research  as  a  share  of  GDP  is 
difficult to establish due to the lack of reliable statistics. The national funding for research has 
not increased but the system has improved thanks to a new selection process for projects to be 
funded directly by the departments. However, no international peer review is being applied so 

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far.  The  Albanian  Business  Research  and  Innovation  Centre  (AIDA)  started  to  stimulate 
innovation  by  entrepreneurs  by  granting  technology  audits  to  SMEs  with  innovative  ideas. 
This action is in line with the EU Innovation Union flagship. 

Conclusion 

There  was  little  progress  in  the  area  of  science  and  research.  Further  efforts  are  required  at 
national  level  to  strengthen  the  research  and  innovation  capacity  and  increase  the  country’s 
competitiveness. The level of investment in research remains very low and the human capital-
building requires strengthening. Overall, preparations are not very advanced. 

4.26.  Chapter 26: Education and culture 

There  has  been  good  progress  in  the  areas  of  education,  training  and  youth.  The  Law  on 
Pre-university  Education  was  adopted  in  June  2012.  Further  training  has  been  provided  to 
build  the  capacity  of  teachers  and  to  adapt  training  and  educational  provision  to  the  labour 
market.  The  National  Inspectorate  for  Pre-university  Education  has  continued  to  carry  out 
inspections  applying  new  guidelines  for  the  inspection  and  evaluation  of  kindergartens  and 
schools.  Progress  was  made  in  the  fight  against  corruption  in  education  via  the  progressive 
digitalisation  of  the  State  school-leaving  examinations  (‘matura’)  and  preparation  of  a 
national code of ethics for pre-university and university teachers.  

Further  efforts  have  been  made  to  build  up  the  capacity  of  the  vocational  education  and 
training  (VET)  sector  at  secondary  level.  The  capacity  of  the  Ministry  of  Education  and 
Science has been strengthened. Some curricula have been reformed to reflect the needs of the 
labour market better. Four VET schools were constructed.  

A comprehensive reform of the higher education system, including financial aspects, is being 
prepared.  A  database  has  been  set  up  to  track  student  numbers  and  results.  A  university 
performance and ranking scheme is being examined. The Albanian Qualifications Framework 
(AQF)  is  being  developed  but  further  efforts  are  needed  to  develop  qualifications,  define 
competences  and  turn  them  into  study  programmes.  The  independence  of  the  accreditation 
agency  has  improved  and  efforts  have  been  made  to  evaluate  higher  education  institutions. 
The  licence  of  one  private  university  has  been  partially  suspended  for  non-compliance  with 
the law. However, efforts need to continue as regards evaluation and inspection of all higher 
education institutions  and programmes, especially those in private universities.  Participation 
by  Albanian  universities  in  the  Tempus  programme  improved  substantially  in  the  last  call. 
Awareness  raising  activities  for  the  Youth  in  Action  programme  were  carried  out. 
Participation of young people in the programme continuously increased. A new youth strategy 
is being developed. 

In the area of culture, good progress can be reported. Albania has concluded a Memorandum 
of Understanding on the Culture programme and started to participate in 2012. Network and 
capacity-building for participation in the Europe for Citizens programme were developed, but 
participation  remains  limited.  A  new  strategy  on  cultural  heritage  (2012-2020)  is  being 
prepared.  

Conclusion 

There  was  good  progress  in  the  fields  of  education  and  culture  in  aligning  with  European 
standards,  particularly  in  the  areas  of  higher  education  and  in  the  development  of  VET. 
Further efforts are required to improve transparency in private higher education institutions. 
In  2012,  Albania  started  to  participate  in  the  Culture  programme.  Overall,  preparations  are 
moderately advanced. 

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4.27.  Chapter 27: Environment and climate change 

As  regards  the  environment,  there  has  been  some  progress  in  the  horizontal  legislation. 
Cooperation with civil society and public access to information improved. However, the Laws 
on  Environmental  Impact  Assessment  and  Environmental  Permits  are  still  not  aligned  with 
the acquis and include serious deviations such as the ‘silent consent’ concept. Adoption of the 
Law  on  Strategic  Environmental  Assessment  is  pending.  Lack  of  implementation  and 
enforcement of the legislation remains a concern. Relevant environmental impact assessments 
and public consultations are not systematically carried out and environmental permits are not 
systematically  issued  before  launching  infrastructure  projects.  Sanctions  are  not  dissuasive 
enough and not properly enforced.  

As regards air quality, some progress was made with ratification of certain protocols to the 
Convention  on  Long-Range  Transboundary  Air  Pollution.  Air  quality  monitoring  and 
reporting  improved  slightly.  A  new  Air  Protection  Law,  setting  out  a  comprehensive 
framework  for  air  quality  policy,  is  pending.  Air  management  plans  for  the  main 
municipalities,  including  Tirana,  are  still  pending.  Due  to  the  low  budget  allocated  to  this 
sector, only two air quality stations are fully operational. 

Some  progress  was  made  on  waste  management,  with  adoption  of  the  Law  on  Integrated 
Waste  Management.  Implementation  of  the  law  will  have  to  be  carefully  monitored  to 
guarantee  that  waste  is  managed  and  imported  legally.  Adoption  of  the  regional  waste 
management  plans  is  still  pending.  Medical  and  veterinary  waste  treatment  is  not  properly 
managed.  Municipalities  are  facing  difficulties  in  managing  the  growing  volume  of  waste. 
There is still no procedure for  management  and control of the landfills in place and several 
uncontrolled dumpsites are still in use. 

Little  progress  has  been  achieved  on  water  quality.  The  National  Water  Supply  and  the 
Sewerage  Services  Sector  Strategies  were  adopted  and  the  Water  Supply  and  Sewerage 
Master  Plan  was  developed.  Adoption  of  the  Water  Law  is  pending.  Three  wastewater 
treatment plants are now operational while four more have been completed but are not yet in 
operation. There is little capacity to assess the quality of water or of waste water discharged 
by  industrial  plants.  In  this  respect,  there  was  no  progress  on  identifying  sensitive  areas. 
Development of river basin management plans, including at regional level, is still at an early 
stage. 

Little progress can be reported in the field of nature protection. Proposed candidate sites in 
Albania for the Emerald Network were accepted by the Berne Convention in December 2011. 
Rules  for  establishment  of  special  protection  zones  in  the  NATURA  2000  network  were 
adopted.  One  new  protected  area  was  designated  in  2011,  increasing  the  proportion  of  the 
total  national  territory  protected  from  13.7%  to  15.1%.  Two  new  management  plans  have 
been  developed  for  the  Prespa  and  Shkodra  national  parks.  However,  budget  and  human 
resources  are  insufficient  to  protect  and  manage  these  areas  properly.  Enforcement  of  the 
legislation  remains  weak.  Hunting  permit  control  has  not  improved  and  cases  of  illegal 
hunting  have  been  reported.  Preparatory  work  has  started  for  approximation  with  and 
implementation  of  the  EU  nature  legislation  and  for  establishment  of  the  NATURA  2000 
network. 

There was no progress in the area of industrial pollution control and risk management. 

There is no progress to report in the chemicals, noise and civil protection sectors. 

Regarding climate change, Albania has made no progress on general policy development. A 
comprehensive  climate  strategy  remains  to  be  developed.  Climate  considerations  are  being 

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increasly integrated in the energy policy, but substantial efforts are required in order to fully 
integrate climate change into all relevant sectoral polices and strategies.  

Albania  regularly  associated  itself  with  EU  positions  in  the  international  context.  However, 
while having associated itself to the Copenhagen accord, the country did not put forward yet a 
mitigation  commitment  by  2020.  Albania  should  consider  taking  mitigation  commitments 
consistent with those of the EU and its member states for the purpose the post-2020 climate 
agreement to be reached by 2015. 

As  regards  alignment  with  the  climate  acquis,  no  significant  progress  was  made.  Albania 
remains at a very early stage. Some initial steps were taken to identify stationary installation 
for the purpose of future implementation of an Emissions Trading System. Significant efforts 
are required to strengthen the country’s monitoring, reporting, and verification capacities. The 
limited  administrative  capacity  and  the  weak  inter-institutional  cooperation  are  delaying  the 
preparation and implementation of a climate policy in line with the acquis. The administrative 
structure  on  climate  change  requires  considerable  strengthening  in  order  to  address  the 
significant capacity, cooperation and coordination needs. 

Albania  participated  regularly  in  the  climate  component  of  the  Regional  Environmental 
Network  for  accession  (RENA).  A  successful  high  level  conference  was  organised  in  June 
2012  under  the  RENA  on  EU-Albania  climate  cooperation.  Efforts  need  to  continue  on 
awareness raising at all levels and promoting cooperation between all relevant stakeholders. 

As  regards  administrative  capacity  in  the  environment  sector,  the  number  of  staff  was 
increased  in  the  Ministry  of  Environment,  the  inspectorates  and  the  river  basin  agencies. 
Some progress can be reported on strengthening the judiciary, particularly on training judges 
and  prosecutors  on  environmental  issues.  However,  the  Ministry  of  Environment  still  lacks 
financial and human resources. The cooperation and coordination with the Ministry of Public 
Works  needs  to  be  improved.  Also,  the  capacity  of  the  Ministry  of  Public  Works  to  design 
and  manage  water  and  waste  management  infrastructure  projects  is  weak.  Insufficient 
resources  are  allocated  to  ensure  sustainability  of  such  projects.  The  Environment  Agency 
needs  extensive  investment  in  equipment  and  training  to  manage  issues  such  as  permit 
applications,  permit  monitoring,  environmental  monitoring  and  sampling  and  legislative 
enforcement.  The National Environment  Inspectorate is  understaffed. Local authorities  have 
limited  budgets  and  scarce  administrative  tools  to  develop  the  infrastructure  and  services 
required. Coordination within the central government and between state and local authorities 
is weak. The Environmental Fund has not yet been created. 

Conclusion 

While  there  has  been  some  progress  in  alignment  with  acquis  in  the  field  of  environment, 
there  was  very  little  progress  in  the  field  of  climate  change.  Efforts  are  urgently  needed  to 
align,  implement  and  enforce  legislation.  Public  awareness  and  consultation  on  legislative 
initiatives  or  public  investments  remain  weak.  There  is  a  need  for  greater  political 
commitment and coordinated action in these sectors. Substantial investment is needed while 
current  resources  allocated  remain  limited.  Environment  needs  to  be  better  integrated  into 
other policy areas, such as energy or transport. Concerning climate change, substantial efforts 
are required on awareness-raising, setting a more strategic approach for the country, aligning 
with  and  implementing  the  acquis,  as  well  as  strengthening  administrative  capacities  and 
inter-institutional cooperation. Preparations in the area of the environment are still at an early 
stage, whereas preparations in the area of climate change remain at a very early stage. 

4.28.  Chapter 28: Consumer and health protection 

There has been some progress in consumer protection. 

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With  regard  to  horizontal  aspects,  the  new  consumer  protection  strategy  is  being  finalised. 
Some  progress  was  made  on  strengthening  the  administrative  capacity  of  the  Consumer 
Protection Unit (CPU) which serves as a secretariat for the Consumer Protection Commission 
(CPC). The number of staff was increased and its political independence was strengthened. As 
regards  enforcement  of  legislation,  the  CPC  has  been  assessing  potential  infringements  in 
areas such as telecommunications, public and private higher education and electricity and has 
taken some administrative measures. Both the CPC and the CPU have continued awareness-
raising activities. Since April 2011, consumers can use an online complaint handling system 
managed by the CPC Secretariat.  

Some progress has been made on product safety-related issues. The Law on General Safety of 
Non-Food  Products,  aiming  at  alignment  with  the  acquis,  was  adopted.  However,  a  market 
surveillance system is not yet in place. Some progress can be reported with non-safety-related 
issues.  Implementing  legislation,  aiming  at  alignment  with  the  acquis,  was  adopted  on 
distance marketing of financial services. 

There has been little progress in the area of public health. The Institute for Public Health has 
been reorganised. New infrastructure for primary healthcare services has been established. A 
training  system  has  been  set  up,  but  does  not  include  EU  health  legislation  yet.  In  January 
2011,  the  government  adopted  a  decision  reforming  hospital  services  financing  but 
implementation  remains  slow.  A  feasibility  study  on  e-health  was  completed.  The  national 
electronic health strategy is pending. 

Little progress has been made in the area of tobacco control. The tobacco advertising ban was 
applied and a plan for introducing pictorial warnings on tobacco packets has been prepared. 
The task force for protection of health from tobacco and alcohol use by minors increased its 
number  of  inspections  and  the  level  of  fine  collection  in  Tirana.  The  State  Sanitary 
Inspectorate  continued  to  perform  inspections  in  the  rest  of  the  country.  However,  the  fine 
collection rate remains low and tobacco products continue to be sold on the streets, notably by 
minors.  Overall,  the  Law  on  Health  Protection  from  Tobacco  Products  has  not  been 
sufficiently implemented.  

Some progress has been made in the area of communicable diseases. A gap analysis is being 
conducted  on  communicable  diseases  legislation  in  order  to  compare  Albania’s  legislation 
with  the  acquis.  At  national  level,  immunisation  coverage  for  2011  was  about  95%. 
Preparations  for  implementation  of  a  new  modern  vaccination  system  have  continued. 
Guidelines  on  control  of  hospital  infections  were  adopted  in  April  2012.  HIV/AIDS 
prevention  by  means  of  the  Global  Fund  grant  (2007-2012)  has  mainly  targeted  Roma. 
Awareness-raising  activities  have  taken  place.  Preparations  for  implementation  of  the 
International Health Regulations continued. The regional development centre was established 
within  the  Department  of  Infectious  Diseases  at  the  Institute  of  Public  Health  but  lacks 
sufficient financial and human resources. Adoption of the implementing legislation ensuring 
the right to health for persons and children living with HIV/AIDS and people at risk is still 
pending.  

No  progress  can  be  reported  in  the  areas  of  blood,  tissues,  cells  and  organs  and  patients’ 
rights in cross-border healthcare.  

Some progress can be reported in the area of mental health. The Law on Mental Health was 
adopted in June 2012. Training of general practitioners on mental health actively continued. A 
ten-year mental health strategy and action plan for the development of mental health services 
are  awaiting  adoption.  There  is  an  urgent  need  to  establish  a  sustainable  mental  health 
services  system,  based  on  adequate  funding,  a  well-trained  mental  health  workforce  and 
accessibility  for  all  minorities  and  socially  vulnerable  groups,  including  in  rural  areas.  In 

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addition, there is a significant lack of doctors specialising in treating persons with intellectual 
disabilities.  More  community-based  mental  health  services  of  high  quality  focusing  on 
recovery should be established as an alternative to institutional care. 

Some progress can be reported in drug abuse prevention. The new 2012-2016 national drug 
control  strategy  was  adopted  in  June  2012.  The  National  Information  Centre  for  Drugs  has 
been set up as a unit of the Department of Epidemiology and Health Systems in the Institute 
of  Public  Health.  In  March  2012,  the  Drug  Dependence  Treatment  Centre  at  the  Mother 
Theresa  Hospital  in  Tirana  was  opened  as  the  first  comprehensive  drug  treatment  centre  in 
Albania.  

There has been little progress on reducing health inequalities. In December 2011, a circular 
from  the  Ministry  of  Health  was  issued  to  include  on  birth  certificates  the  ID  number  and 
maiden name of the mother in order to avoid false/wrong declarations at maternity hospitals, 
and prevent non-registration of children, particularly from the Roma community. A number of 
awareness-raising  campaigns  on  healthcare  and  services  were  carried  out  for  Roma,  along 
with  health  screenings  and  vaccination  campaigns.  Further  efforts  are  needed  to  make 
healthcare  services  and  vaccination  accessible  for  Roma  and  other  vulnerable  groups 
(especially  young  people  with  HIV/AIDS  and  young  drug  users)  across  the  whole  country, 
notably in rural areas.  

Progress has been made  towards  reducing alcohol-related harm by assessing use of  alcohol 
and other substances among students and making available tools for screening substance use 
among adults. There has been some progress in the field of cancer screening, in particular for 
breast cancer. The national strategy for cancer control (2011-2020) was approved. However, 
further efforts are needed to implement screening programmes in line with the acquis.  

Conclusion 

There  has  been  some  progress  in  the  areas  of  consumer  and  health  protection.  However, 
implementation and enforcement of the legislation remain very weak. The market surveillance 
system  is  not  yet  in  place.  Low  awareness  in  the  health  protection  system,  both  amongst 
professionals  and  the  public,  is  hampering  transparency  and  enforcement.  The  health  sector 
remains under-financed. Overall, preparations are not very advanced. 

4.29.  Chapter 29: Customs Union 

There has been progress in the customs legislation. Legislation was adopted with a view to 
accession  to  the  Regional  Convention  on  Pan-Euro-Med  preferential  rules  of  origin,  to  the 
International Kyoto Convention on Simplification and Harmonisation of Customs Procedures 
and to the Harmonised System Convention. In August Albania was granted informal observer 
status  at  the  EU/EFTA  Joint  Committees  on  Common  Transit  and  Simplification  of 
Formalities  and  Related  Groups.  Albania  stated  that  it  had  decided  to  join  the  Common 
Transit  Convention.  Yet,  the  ATA  Convention on  Temporary  Importation  has  still  not  been 
implemented. The Directorate for Intellectual Property Rights in the Customs Administration 
approved a manual for lodging actions against counterfeit products, statistics were introduced 
and guidelines with related standard forms were published. Albania updated its customs tariff 
in line with the 2012 version of the EU Combined Nomenclature. Secondary legislation was 
approximated  to  the  acquis  by  abolishing  administrative  fees  for  customs  warehouses  and 
temporary storage. Yet, the new draft Customs Code and its implementing provisions, which 
aim  at  further  approximation  to  the  acquis,  are  still  awaiting  adoption.  The  rate  of  use  of 
transaction value remains low by EU standards.  

Declaration of casual imports by travellers and of goods of a non-commercial nature sent by 
mail was simplified and authorisations for free warehouses for energy products were issued. 

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However,  progress  on  use  of  simplified  procedures  and  trade  facilitation  remains  limited. 
Further  efforts  are  required  in  this  area,  including  on  development  of  the  concept  of 
‘authorised  economic  operator’  and  on  awareness-raising  for  customs  officers  and  the 
business community.  

Some  progress  was  made  in  administrative  and  operational  capacity.  A  Memorandum  of 
Understanding for Albania’s participation in the EU Customs 2013 programme was signed in 
July. Digital video monitoring is operational in most customs houses. A module was added to 
the  IT  system  (Asycuda)  to  cover  movements  of  excise  products  and  to  include  the 
application  for  fiscal  warehouses.  Construction  of  an  IT  server  room  at  the  customs 
headquarters has been completed in accordance with the standards of the Telecommunications 
Industry Association. However, IT interconnectivity and interoperability with the EU systems 
require  further  efforts.  The  customs  laboratory  is  not  yet  operational.  Efforts  are  also  still 
required to improve infrastructure at border crossing points. The number of physical controls 
decreased  slightly  thanks  to  improvements  in  the  targeting  process  with  the  aid  of  risk 
profiles. No progress was made with systematic development of post-clearance controls.  

An  action  plan  on  human  resources  and  training  was  adopted  for  2012  and  the  Business 
Strategy  and  the  Business  Change  Management  Plan  for  the  Customs  administration  were 
approved  in  July.  New  departments  on  IT  and  Excise  were  introduced  in  the  General 
Directorate of Customs (GDC). The organisation and structure of the Training Academy was 
approved but the Academy is still not operational. Some measures have been taken to address 
corruption  in  the  Customs  administration.  An  internal  regulation  for  the  Directorate  for 
Internal Investigations and Anti-corruption of the DGC was adopted. A toll-free number and a 
web link for reporting corruption were introduced and awareness-raising measures on the role 
of citizens in fighting corruption were organised. Cooperation with relevant institutions such 
as  banks,  the  High  Inspectorate  of  Declaration  of  Assets,  the  Immovable  Property 
Registration  Office  and  through  the  Joint  Investigative  Task  Force,  continued.  However, 
further efforts are still necessary, as the perception of corruption in the customs administration 
remains high. Customs officials have not yet been granted civil servant status. 

Conclusion 

There  was  progress  in  legislative  approximation  in  the  field  of  the  Customs  Union. 
Shortcomings  remain  in  the  overall  administrative  and  operational  capacity,  including  the 
compatibility  of  IT  systems  with  EU  requirements.  Further  efforts  are  required  on  customs 
valuation and trade facilitation. Overall, preparations are moderately advanced. 

4.30.  Chapter 30: External relations 

In the area of the common commercial policy, moderate progress has been made.  

Albania  has  generally  continued  to  coordinate  with  the  European  Commission  and  to  align 
with the policies and positions of the European Union towards third countries in international 
organisations, in particular the World Trade Organisation. 

There  has  been  limited  progress  as  regards  administrative  capacity  for  trade  policy.  The 
Directorate  for  Trade  and  Integration  Policies  organised  training  activities  for  its  staff  and 
staff  of  line  ministries  on  various  aspects  of  trade  and  services.  There  was  no  progress  on 
adoption  and  implementation  of  the  overall  training  plan  on  trade  policies  and  on  the  EU 
common commercial policy.  

There  was  some  progress  in  the  field  of  dual-use  goods.  In  December  2011  the  General-
Directorate  for  Customs  (GDC)  and  the  State  Export  Control  Agency  (SECA)  concluded  a 
Memorandum  of  Understanding  on  cooperation  in  the  field  of  military  and  dual-use  goods 
and  technology  controls.  Continuous  contacts  at  expert  and  managerial  levels  are  in  place 

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between the GDC and the SECA. The specific military and  dual-use goods  risk profile  was 
updated in December 2011. Training on controls for dual-use goods, risk analyses and post-
clearance were organised for field customs officers.  

Regarding  conclusion  and  implementation  of  bilateral  agreements  with  third  countries, 
Albania  has  started  to  implement  the  Additional  Protocol  for  the  liberalisation  of  trade  in 
agriculture  in  the  CEFTA  framework.  Bilateral  investment  treaties  were  signed  with 
Azerbaijan and Qatar. 

Little progress can be reported in development policy and humanitarian aid. The Ministry 
of Foreign Affairs assigned one person to follow issues related to EU development policy and 
humanitarian aid.  

Conclusion 

Albania has continued its good cooperation within the WTO and CEFTA. However, limited 
progress was made with strengthening the administrative capacity of the institutions involved 
in trade policy. Overall, preparations in the area of external relations are moderate. 

4.31.  Chapter 31: Foreign, security and defence policy 

The regular political dialogue between the EU and Albania on foreign security policy issues 
continued.  (Concerning  relations  with  other  enlargement  countries  and  Member  States,  see 
Political criteria 2.3 – Regional issues and international obligations.) 

As  regards  the  common  foreign  and  security  policy  (CFSP),  during  the  reporting  period 
Albania aligned itself, when invited, with all 70 EU declarations and Council decisions (100% 
alignment). (As regards the International Criminal Court, see Political criteria 2.3 – Regional 
issues and international obligations.) 

Albania implemented the EU’s restrictive measures applied to third countries, introduced by 
Council Decisions. 

No additional developments can be reported concerning conflict prevention. 

In the field of non-proliferation, Albania has continued implementing the action plan for the 
destruction  of  surplus  weaponry  and  has  aligned  its  positions  with  the  EU  and  other 
international  organisations.  As  regards  small  arms  and  light  weapons,  no  progress  can  be 
reported  on  finalisation  of  the  online  register  of  weapons  and  ammunition  under  the 
management of the State Police.  

The  country  has  engaged  actively  in  cooperation  with  international  organisations  (UN, 
OSCE,  Council  of  Europe,  etc.).  Since  23  May,  Albania  holds  the  rotating  chairmanship  of 
the Committee of Ministers of the Council of Europe. 

On  security  measures,  the  security  agreement  with  the  EU  on  exchanges  and  mutual 
protection of classified information is still pending.  

Albania  has  demonstrated  a  growing  commitment  to  participate  in  civil  and  military  crisis 
management  operations  under  the  common  security  and  defence  policy  (CSDP).  Albania 
signed,  in  June,  the  Framework  Agreement  on  participation  in  EU  crisis  management 
operations  and  has  continued  to  take  part  in  the  EUFOR  Althea  mission  in  Bosnia  and 
Herzegovina  (one  general  staff  member  and  a  five-person  explosive  and  ordinance  disposal 
team).  During  the  reporting  period,  Albania  deployed  a  contingent  of  five  police  officers  to 
Afghanistan  to  work  as  trainers  as  part  of  the  EUPOL  mission  supporting  the  rule  of  law. 
Albania  has  contributed  two  naval  officers  to  the  EU  NAVFOR  Atalanta  operation  in 
Somalia. Albania has also cooperated with NATO in the Libya operation.  

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Conclusion 

Albania continued to align with the acquis in the field of foreign, security and defence policy 
and  has  shown  continued  political  commitment  to  participate  in  civil  and  military  crisis 
management  operations.  Further  efforts  are  required  to  complete  the  online  register  of 
weapons and ammunition under the management of the State Police. Overall, preparations in 
this field remain on track. 

4.32.  Chapter 32: Financial control  

Some progress can be reported in the area of public internal financial control (PIFC). The 
Public Financial Inspection Directorate (PFID) has been set up within the Ministry of Finance 
but still needs to be fully staffed. Recruitment of budget inspectors across administration has 
been completed. Training is on-going. This should contribute to separating internal audit and 
inspection  and  clarifying  the  role  of  internal  audit  as  support  for  management.  However, 
while the primary legal framework for centralised budget inspection is in place, implementing 
legislation on procedures to conduct financial inspections is still being prepared.  

With regard to financial management and control (FMC), there is a need to rethink the FMC 
arrangements within line ministries to avoid the present conflicts between the Organic Budget 
Law,  the  FMC  Law  and  the  Government  Decision  on  Standards  and  Procedures  for  the 
Internal  Organisation  of  Public  Administration  Institutions.  Further  training  on  the  full 
implications  of  introduction  of  the  FMC  Law  is  necessary.  With  regard  to  internal  audit,  a 
decision  by  the  Council  of  Ministers  on  the  criteria  for  establishing  internal  audit  units  in 
public entities was adopted in April 2012. The Central Harmonisation Unit for Internal Audit 
has  started  to  review  the  training  programme  for  internal  auditors.  Overall,  the  quality  of 
internal audits still needs to be improved.  

There has been progress in the area of external audit. A new Chairman of the Supreme State 
Audit Institution (SAI) was appointed by Parliament in December 2011. After some years of 
standstill,  the  draft  amendments  to  the  Law  on  the  SAI  to  bring  it  fully  in  line  with  the 
standards  of  the  International  Organisation  of  Supreme  Audit  Institutions  (INTOSAI)  have 
been prepared and have been submitted to the adoption procedure. The SAI conducts all the 
main  types  of  audits  but  inspection-type  regularity/compliance  audits  still  make  up  the  vast 
majority of its audits (around 90% in 2011). Training of SAI auditors during 2011 has been 
limited.  Whereas  there  is  evidence  of  greater  acceptance  of  SAI’s  recommendations  by 
auditees,  the  efficiency  of  the  parliamentary  follow-up  to  SAI’s  audit  reports  has  to  be 
improved.  

There has been little progress on protection of the EU’s financial interests. Recruitment of 
staff  for  the  PFID,  which  serves  as  a  contact  point  for  the  European  Commission  and  its 
European  Anti-Fraud  Office  (OLAF),  is  on-going.  However,  administrative  capacity  in  this 
area needs to be built up.  

Little progress can be reported with protection of the euro against counterfeiting. Albania 
continues  to  participate  actively  in  the  Pericles  programme.  Following  the  decision  by  the 
Supervisory  Council  of  the  Bank  of  Albania  to  establish  the  National  Analysis  Centre,  an 
expert in examining and investigating counterfeit banknotes was recruited in February 2012.  

Conclusion 

There was limited progress in the area of financial control. Substantial efforts are still required 
to address existing shortcomings in implementation of the PIFC legal framework, introduction 
of  the  managerial  accountability  principle  and  alignment  of  external  audit  to  INTOSAI 
standards. Overall, preparations are still not very advanced. 

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4.33.  Chapter 33: Financial and budgetary provisions 

There  have  been  no  major  developments  as  regards  traditional  own  resources,  VAT 
resources and GNI resources. For progress on the underlying policy areas, see Chapters 16 – 
Taxation, 18 – Statistics, 29 – Customs Union and 32 – Financial control.  

Albania  already  has  in  place  the  main  administrative  infrastructure  for  the  underlying 
policy areas indirectly affecting the own resources system. The institutions and coordinating 
bodies in charge of preparing the administrative conditions to apply the own resources rules 
will need to be designated in due course.  

In addition, effective tools to fight against tax evasion and fraud and to decrease the informal 
economy are to be further developed. 

Conclusion 

There has been no particular progress in the rules on administration of own resources system 
itself, including GNI, VAT and traditional own resources. Overall, preparations for financial 
and budgetary provisions are at an early stage.  

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Statistical Annex 

STATISTICAL DATA 
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) 
GDP per capita in PPS (EU-27 = 100) 
Real GDP growth rate (growth rate of GDP volume, national 
currency, % change on previous year) 
Employment growth (national accounts, % change on previous 
year) 
Labour productivity growth: GDP growth per person employed (% 
change on previous year) 
Real unit labour cost growth (national accounts, % change on 
previous year) 
Labour productivity per person employed (GDP in PPS per person 
employed, EU-27 = 100)  
Gross value added by main sectors (%) 

Agriculture and fisheries 
Industry 
Construction 
Services 

Final consumption expenditure, 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 (2005=100) 

Inflation rate 
Annual average inflation rate (CPI, % 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: net services (million euro) 
Balance of payments current account: net income (million euro) 
Balance of payments current account: net current transfers (million 
euro) 

of which government transfers (million euro) 
Net foreign direct investment (FDI) (million euro) 
Foreign direct investment (FDI) abroad (million euro) 

of which FDI of the reporting economy in EU-27 countries 

(million euro) 
Foreign direct investment (FDI) in the reporting economy (million 
euro) 

of which FDI of EU-27 countries in the reporting economy 

(million euro) 

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

Note
8) 

2001 
3 063 
28 750 

2007 
3 153 
28 750 

2008 
3 170 
28 750 

2009 
3 185 
28 750 

2010 
: 
28 750 

2011 
2 832p 
28 750 

Note

2001 
583 369 

2007 

2008 

2009 

2010 

967 670  1 089 293  1 148 082  1 222 462 

4 541 
1 482 
: 
: 
7.9 

7 828 
2 483 
5 800 
23 
5.9 

8 870 
2 798 
6 500 
26 
7.5 

8 693p 
2 737p 
6 500 
28 
3.3e 

: 

: 

: 

: 

30.3 

-9.4 

19.0 

4.4 

: 

: 

23.6 
7.3 
10.4 
58.6 
80.9 
38.4 
1.3 
18.4 
39.0 

2001 
: 

2001 
3.5 

: 

: 

19.0 
9.4 
14.8 
56.8 
90.4 
38.7 
-2.4 
28.1 
54.8 

2007 
90.8 

2007 
3.1 

2001 
-316 
-1 149 
100 
150 
583 

2007 
-831 
-2 104 
13 
217 
1 043 

31 
231 
0 
: 

231 

: 

2001 
-6.9 
58.5 

2001 
17.2 
93.1 

60 
492 
-11 
: 

481 

: 

2007 
-3.5 
54.8 

2007 
16.6 
95.0 

1) 
1) 
1) 
1) 

Note

Note

Note

Note

Note

2) 

: 

: 

: 

: 

18.7 
9.8 
14.9 
56.6 
89.5ep 
40.9ep 
-3.8ep 
29.4e 
56.0e 

2008 
117.9 

2008 
2.2 

2008 
-1 370 
-2 431 
69 
55 
937 

31 
731 
-55 
: 

675 

: 

2008 
-5.5 
53.8 

2008 
17.1 
118.0 

18.7 
10.1 
14.2 
57.0 
: 
39.2ep 
: 
29.0p 
53.5p 

2009 
116.5 

2009 
2.3 

2009 
-1 346 
-2 304 
121 
-101 
938 

27 
732 
-26 
: 

706 

: 

2009 
-7.0 
59.5 

2009 
: 
134.0 

p 
8 872p 
3 080pb 
7 339pb 
30pb 
3.7ep 

: 

: 

: 

: 

19.3 
11.7 
11.0 
58.0 
: 
37.0ep 
: 
32.9p 
53.7p 

2010 
139.6 

2010 
3.6 

2010 
-1 056 
-2 083 
182 
-77 
922 

45 
837 
-10 
: 

827 

: 

2010 
-2.9 
58.5 

2010 
: 
128.0 

1 113 

1 963 

2 303 

2 154 

1 999 

2 376 

4 094 

4 520 

4 378 

4 387 

3 069 

6 129 

6 643 

6 599 

7 114 

2011 
1 279 773 
p 
: 
: 
: 
: 
3.0p 

: 

: 

: 

: 

: 
: 
: 
: 
: 
: 
: 
34.6p 
57.7p 

2011 
121.1 

2011 
3.4 

2011 
: 
: 
: 
: 
: 

: 
: 
: 
: 

: 

: 

2011 
-3.5 
58.9 

2011 
: 
: 

: 

: 

: 

EN 

68 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 (2005=100) 
Value of reserve assets (including gold) (million euro) 

217 

2 377 

3 227 

3 335 

3 506 

3) 
4) 

: 
11.9 
7.8 
128.470 

: 
11.7 
5.7 
123.620 

: 
11.8 
6.9 
122.800 

: 
12.5 
6.8 
132.060 

: 
11.3 
6.4 
137.790 

: 
834 

: 
1 477 

: 
1 694 

: 
1 650 

: 
1 904 

: 

: 
: 
: 
: 

: 
: 

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

Note

2001 
1480.2 
343.2 
-1136.9 
101.5 
91.1 
81.0 

2007 
3043.6 
786.2 
-2257.5 
98.1 
83.1 
59.7 

2008 
3582.1 
916.7 
-2665.4 
96.0 
79.7 
60.7 

2009 
3247.4 
791.4 
-2455.9 
97.6 
77.4 
64.3 

2010 
3467.4 
1172.4 
-2294.9 
98.4 
70.1 
64.5 

2011 
3876.3 
1403.0 
-2473.3 
108.3 
72.7 
63.9 

Demography 
Natural growth rate: natural change (births minus deaths) (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 (20-64): share of population aged 20-64 that 
is economically active (%) 
* Employment rate (20-64): share of population aged 20-64 in 
employment (%) 

Employment rate male (20-64) (%) 
Employment rate female (20-64) (%) 

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

Agriculture 
Industry 
Construction 
Services 

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 (%) 
Long-term unemployment rate: share of labour force that is 
unemployed for 12 months and more (%) 

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/HICP) (2000=100) 
* Early school leavers - Share of population aged 18-24 with at 
most lower secondary education and not in further 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 (km) 

Innovation and research 
Spending on human resources (public expenditure on education in 
% of GDP) 
* Gross domestic expenditure on R&D in % of GDP 
Percentage of households who have Internet access at home (%) 

Note

2001 
12.5 

2007 
5.9 

2008 
6.3 

2009 
: 

2010 
: 

2011 
4.6p 

10.8 

6.2 

6.0 

: 
: 

Note

2001 
: 

: 

: 
: 
: 

1) 5) 
1) 
1) 
1) 5) 
6) 
6) 
6) 
6) 

57.7 
7.7 
6.1 
28.5b 
16.4 
14.2 
19.9 
: 

: 
: 

2007 
72.2 

62.7 

71.4 
54.2 
46.6 

47.9 
10.4 
8.2 
33.5 
13.5b 
14.4b 
12.2b 
20.1b 

: 
: 

2008 
69.3 

60.8 

72.1 
51.0 
44.0 

44.6 
9.3 
8.5 
37.6 
13.0 
12.5 
13.5 
27.2 

6) 

: 

9.4b 

8.5 

: 

: 
: 

2009 
69.6 

60.4 

73.2 
48.9 
48.9 

44.1 
10.0 
9.9 
36.0 
13.8 
12.2 
15.9 
27.2 

9.1 

: 

: 
: 

: 

: 
: 

2010 
: 

2011 
: 

: 

: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 

: 

: 

: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 

: 

Note

2001 
17 218 
11.6 

2007 
33 750.0 
83.1 

2008 
36 537.0 
91.7 

2009 
40 874.0 
109.8 

2010 
44 375.0 
116.1 

2011 
46 665.0 
123.5 

: 

42.0 

39.0 

35.0 

: 

: 

Note

Note

Note

2001 
43.6 
120.8 

2007 
75.2 
736.5 

2008 
83.3 
935.3 

2009 
88.2 
1 314.1 

2001 
14.3 
: 

2001 
3.3 

: 
: 

2007 
13.9 
: 

2007 
3.2 

: 
: 

2008 
13.9 
: 

2008 
3.5 

: 
3.4 

2009 
13.9 
: 

2009 
3.4 

: 
: 

2010 
: 
: 

2010 
13.9 
: 

2010 
: 

: 
: 

2011 
106.3p 
: 

2011 
13.9 
: 

2011 
: 

: 
: 

EN 

69 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Environment 
* Greenhouse gas emissions, CO2 equivalent (tons, 1990=100) 
Energy intensity of the economy (kg of oil equivalent per 1000 euro 
GDP) 
Electricity generated from renewable sources in % of gross 
electricity consumption 
Road share of inland freight transport (% of tonne-km)  

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) 
Electricity generation (thousand GWh) 

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

Note

7) 

Note

2001 
: 
386.5 

2007 
: 
306.6 

2008 
: 
: 

2009 
: 
: 

2010 
: 
: 

2011 
: 
: 

: 

: 

2001 
933 
335 
15 
8 
1 001 
1 934 
3.7 

2001 
: 

1 139 
708 
106 
2 933 
984 

503 

39 

677 

: 

: 

2007 
1 080 
564 
15 
16 
1 020 
2 130 
3.0 

2007 
100.4 

1 121 
577 
147 
2 729 
1 016 

: 

: 

2008 
1 159 
578 
20 
8 
1 033 
2 119 
3.9 

2008 
107.4 

1 146 
541 
161 
2 620 
1 040 

: 

: 

2009 
1 263 
577 
3 
8 
1 299 
2 104 
5.2 

2009 
102.0 

1 164 
494 
160 
2 540 
1 045 

: 

: 

2010 
1 643 
744 
3 
13 
1 306 
2 106 
7.7 

2010 
107.3 

1 201 
493 
164 
2 581 
1 070 

: 

: 

2011 
1 494 
895 
2 
15 
1 456 
2 162 
4.1 

2011 
: 

1201 
492 
163 
2 517 
1 101 

494 

608 

630 

662 

701 

- 

- 

- 

- 

- 

672 

715 

730 

860 

890 

: = not available 
- = not applicable 
p = provisional 
e = estimated value 
b = break in series 
* = Europe 2020 indicator 
The  balance  of  payments  sign  conventions  are  used  for  FDI.  For  FDI  abroad  a  minus  sign  means  investment  abroad  by  the  reporting 
economy exceeded its disinvestment in the period, while an entry without sign means disinvestment exceeded investment. For FDI in the 
reporting  economy  an  entry  without  sign  means  that  investment  into  the  reporting  economy  exceeded  disinvestment,  while  a  minus  sign 
indicates that disinvestment exceeded investment. 
Footnotes: 
1) 
2) 

Data according to NACE Rev 1.1. 
2000 - 2003, Debt Outstanding Disbursed (DOD) cumulative stock covering external public debt and external publicly guaranteed 
debt, but excluding IMF credit. Total exports are calculated according national accounts concepts; data on GED from 2003 are 
disseminated by Bank of Albania. 
Average weighted rate applied on new 12-month loans over the respective month, on 12-month maturity. 
Deposit interest rate represents the average weighted rate for newly accepted deposits over the respective month, on 12-month 
maturity. 
Break in series due to the change of data source: 2001 - 2006, administrative data (information only for the male population aged 
15-59 and for the female population aged 15-54), from 2007 onwards, Labour Force Survey data. 
2000 - 2006, administrative data; from 2007 onwards, Labour Force Survey data. 
Including melons. 
The  2011  population  data  are  provisional  figures  from  the  2011  census  of  population  and  housing.  The  estimates  for  previous 
years have not been adjusted to be in line with the new census results. 

3) 
4) 

5) 

6) 
7) 
8) 

EN 

70 

   EN