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COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 05.11.2008
SEC(2008) 2692 final

COMMISSION STAFF WORKING DOCUMENT

ALBANIA 2008 PROGRESS REPORT

accompanying the
COMMUNICATION FROM THE COMMISSION
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL
Enlargement Strategy and Main Challenges 2008-2009

{COM(2008)674}

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TABLE OF CONTENTS
1.

Introduction .................................................................................................................. 4

1.1.

Preface.......................................................................................................................... 4

1.2.

Context ......................................................................................................................... 4

1.3.

Relations between the EU and Albania........................................................................ 4

2.

Political criteria ............................................................................................................ 6

2.1.

Democracy and the rule of law .................................................................................... 6

2.2.

Human rights and the protection of minorities .......................................................... 11

2.3.

Regional issues and international obligations ............................................................ 17

3.

Economic criteria ....................................................................................................... 18

3.1.

The existence of a functioning market economy ....................................................... 18

3.2.

The capacity to cope with competitive pressure and market forces within the Union
.................................................................................................................................... 23

4.

European standards .................................................................................................... 24

4.1.

Internal market ........................................................................................................... 25

4.1.1.

Free movement of goods............................................................................................ 25

4.1.2.

Movement of persons, services and right of establishment ....................................... 26

4.1.3.

Free movement of capital........................................................................................... 28

4.1.4.

Customs and taxation ................................................................................................. 28

4.1.5.

Competition................................................................................................................ 30

4.1.6.

Public procurement .................................................................................................... 31

4.1.7.

Intellectual property law ............................................................................................ 31

4.1.8.

Employment and social policies................................................................................. 32

4.1.9.

Education and research .............................................................................................. 33

4.1.10. WTO issues ................................................................................................................ 35

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4.2.

Sectoral policies ......................................................................................................... 35

4.2.1.

Industry and SMEs..................................................................................................... 35

4.2.2.

Agriculture and fisheries ............................................................................................ 36

4.2.3.

Environment............................................................................................................... 37

4.2.4.

Transport policy ......................................................................................................... 38

4.2.5.

Energy ........................................................................................................................ 40

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4.2.6.

Information society and media................................................................................... 41

4.2.7.

Financial control......................................................................................................... 42

4.2.8.

Statistics ..................................................................................................................... 43

4.3.

Justice, freedom and security ..................................................................................... 43

4.3.1.

Visa, border, control, asylum and migration.............................................................. 43

4.3.2.

Money laundering ...................................................................................................... 46

4.3.3.

Drugs .......................................................................................................................... 47

4.3.4.

Police.......................................................................................................................... 47

4.3.5.

Fighting organised crime and terrorism ..................................................................... 48

4.3.6.

Protection of personal data......................................................................................... 50

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COMMISSION STAFF WORKING DOCUMENT
ALBANIA 2008 Progress Report

1.

INTRODUCTION

1.1.

Preface

Since March 2002, the Commission has reported regularly to the Council and Parliament on
the progress made by the countries of the Western Balkans region. This progress report
largely follows the same structure as in the previous years. The report:
– briefly describes the relations between Albania and the Union;
– analyses the situation in Albania in terms of the political criteria for membership;
– analyses the situation in Albania on the basis of the economic criteria for membership;
– reviews Albania's capacity to implement European standards, that is, to gradually
approximate its legislation and policies to the acquis, in line with the Stabilisation and
Association Agreement and the European Partnership priorities.
The period covered by this report is 1 October 2007 to early October 2008. Progress is
measured on the basis of decisions taken, legislation adopted and the measures implemented.
As a rule, legislation or measures which are under preparation or awaiting parliamentary
approval have not been taken into account. This approach ensures equal treatment across all
reports and permits an objective assessment.
The report is based on information gathered and analysed by the Commission. In addition,
many sources have been used, including contributions from the government of Albania, the
Member States, European Parliament reports1 and information from various international and
non-governmental organisations.
The Commission draws detailed conclusions regarding Albania in its separate communication
on enlargement2, based on the technical analysis contained in this report.
1.2.

Context

Albania is a potential candidate for EU membership.
The Stabilisation and Association Agreement (SAA) between Albania and the EU was signed
in June 2006. An Interim Agreement has been in force since December 2006.
1.3.

Relations between the EU and Albania

Albania is participating in the Stabilisation and Association Process (SAP).
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The rapporteur for Albaniais Mr Libor Rouček.
Enlargement Strategy and Main Challenges 2008-2009.

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Albania signed a Stabilisation and Association Agreement (SAA) with the EU in June 2006.
The SAA provides a framework of mutual commitments on a wide range of political, trade
and economic issues. Trade-related parts of the SAA are being implemented under an Interim
Agreement while ratification of the SAA is being completed. The Interim Agreement entered
into force in December 2006. Cooperation provisions of the 1992 Trade, Commercial and
Economic Cooperation Agreement (TCECA) will remain in force until the SAA is ratified.
Albania also benefits from the EU's autonomous trade measures.
The EU provides guidance to the Albanian authorities on reform priorities through the
European Partnership. Progress on these reform priorities is encouraged and monitored by
political and economic dialogue with Albania. This dialogue is conducted via Ministerial
Troika, joint committee and consultative task force (CTF) meetings at ministerial level and
working party meetings at deputy minister level.
A Ministerial Troika meeting with Albania in March 2008 focused on key political priorities,
including regional issues. The annual joint committee met in December 2007 to oversee the
proper functioning of the Interim Agreement and the TCECA. Two CTF and six working
party meetings took place between October 2007 and October 2008. CTF meetings focused
on political accession criteria and rule of law issues. Each CTF meeting resulted in
jointlyagreed recommendations for action by the Albanian authorities. Working party
meetings focused on economic, internal market and sectoral issues and reported to the joint
committee.
In July 2008, Albania signed an agreement to contribute 62 soldiers to the military operations
of the European Union mission in Chad and in Central Africa (EUFOR).
Following the entry into force of the EC/Albania agreement on visa facilitation in January
2008, the first meeting of the joint committee was held in April 2008. The visa facilitation
agreement simplifies procedures for issuing visas to certain categories of citizens of Albania,
including students, scholars, businesspeople, journalists and tourists. Under the terms of this
agreement, citizens of Albania either pay a reduced visa fee or receive a visa free of charge.
Implementation of the readmission agreement that entered into force in 2006 is proceeding
smoothly. This agreement sets out clear obligations and procedures for the authorities of both
Albania and EU Member States on when and how to take back people who are illegally
residing on their territories.
Since 2007, pre-accession financial assistance to Albania is provided under the Instrument
for Pre-Accession Assistance (IPA). The EC allocated a total of € 70.7 million in 2008. The
Multi-Annual Indicative Planning Document (MIPD) for 2008 -2010 for Albania under IPA
was adopted in September 2008 . Main focus areas continue to be justice and home affairs,
administrative capacity-building, economic and social development and democratic
stabilisation. Ongoing CARDS and IPA assistance is implemented by the EC Delegation in
Tirana. The management of aid on a decentralised basis is a medium-term objective for
Albania. The IPA Framework Agreement was signed on 18 October 2007. The Financing
Agreement for the National Programme for 2007 under the Transition Assistance and
Institution Building Component was signed on 22 January 2008 and the implementation of
the programme has started. The Financing Agreements for the cross-border cooperation
programmes were signed in April 2008.
As regards support for civil society, € 4 million has been earmarked for projects to enhance
the role of civil society and the media in the European integration process over the period

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2008-2010. Albania received support from EU member states through the EU Monitoring and
Information Centre for Civil Protection (MIC) to help deal with the immediate aftermath of
the Gerdec explosion in March 2008.
As regards Community programmes, Albania is participating in the 7th Research Framework
programme for which a memorandum of understanding was signed in December 2007. The
country is also participating in the Entrepreneurship and Innovation Framework Programme,
following the signature of the memorandum of understanding in June 2008.
2.

POLITICAL CRITERIA

This section examines progress made by Albania towards meeting the Copenhagen political
criteria, which require stability of institutions guaranteeing democracy, the rule of law, human
rights and respect for and protection of minorities. It also monitors regional cooperation, good
neighbourly relations with enlargement countries and Member States, and respect for
international obligations.
2.1.

Democracy and the rule of law

Constitution
In April 2008, parliament adopted a package of constitutional amendments based on
consensus between the two largest parties, relating to the electoral system, election of the
President and the mandate of the Prosecutor General.
As part of the constitutional amendments, the Albanian electoral system changed from a
mixed to a regional proportional system (140 proportional representation seats filled from
party lists in regions corresponding to existing administrative boundaries). Smaller parties,
including those representing national minorities, contested this change, claiming that it would
effectively bar them from parliament. They also argued that changes to the method for
electing the President and to the mandate of the Prosecutor general, had not been sufficiently
discussed.
Parliament
Parliament has further consolidated its role as a focus for political debate. A considerable
number of laws have been passed to approximate the Albanian legislation to the EU acquis.
Political forces have started to cooperate on major issues. This consensus between the ruling
majority and the largest opposition party has resulted in progress in judicial and electoral
reforms. However, more remains to be done to enhance the constructive dialogue between
political parties and with stakeholders on implementation of reforms, which are key European
Partnership priorities.
In July 2008, parliament established an ad-hoc committee to draft the Electoral Code.
Completion of the electoral reform will require timely adoption of an all-inclusive and
transparent Electoral Code to allow free and fair general elections in 2009, a key European
Partnership priority.
The parliamentary committee on European integration contributed to improving awareness
about the EU integration process. However, no progress has been made on enhancing the role

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of parliament in monitoring implementation of SAA obligations. The low level of expertise
available to parliament had an adverse effect on the quality of EU-related legislation.
Relations between parliament and the President became difficult at times. Parliament rejected
the presidential appointments of judges to the High Court in June and eventually approved a
second set of nominees in July. This process raised concerns about the independence of State
institutions from the executive.
Preparations for the electronic civil registry and address system were completed in September
2008 to provide the basis for ID cards, voters' lists, and biometric passports. Civil registry
offices have started issuing printed certificates. A sound civil registry and address system is
the cornerstone of reliable voters' lists and of reliable documents. Sufficient human and
financial resources must still be allocated to ensure coordination and sustainability of this key
European Partnership priority. Preparations for voters' lists ahead of the elections must be
handled with transparency and efficiency.
Overall, a more constructive dialogue between the major political parties has allowed for
progress in addressing key European Partnership priorities. Amendments to the Electoral
Code remain to be adopted well ahead of the next parliamentary elections.
Government
The Ministry of European Integration (MoEI) enhanced its role of coordinating European
integration. However, the role of the MoEI as the central coordinator of the EU integration
process needs further consolidation. Not all draft legislation is systematically checked for
alignment with the SAA and the acquis . Moreover, the functions of the European integration
units across the 13 line ministries have not been standardised, and several of the units remain
understaffed. Specialised training programmes for public administration on EU-related issues
are needed. The inter-ministerial committee on European integration chaired by the Prime
Minister met only twice.
The staffing situation at the MoEI has improved. The total number of staff increased from 67
to 77 in 2008. Senior positions have been filled and additional staff have been recruited.
In March 2008, guidelines for inter-institutional coordination on European integration were
adopted by the government. In June, the MoEI prepared gap assessment reports on
approximation to the acquis in key sectors. These are used to update the National Plan for the
Implementation of the SAA. Efforts have been stepped up to improve coordination with the
Department of Strategy and Donor Coordination (DSDC), which is responsible for all
external assistance.
The National Strategy for Development and Integration (NSDI) was adopted in March 2008
after limited consultations with civil society. It foresees 36 sectoral strategies, of which 17
have been adopted so far. The sectoral strategies are an important part of the government's
Integrated Planning System (IPS) to match government policies with the budget process under
the Medium Term Budget Programme. However, cost estimates and performance indicators
for each of the sectoral strategies under the NSDI remain insufficient and uneven.
The government adopted its first regional development strategy in November 2007 as part of
its longer-term decentralisation reform. During 2008, the MoEI strengthened coordination on
regional development with several line ministries, with a view to eventual preparations for
Structural Funds.

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With regard to policy formulation, coordination with civil society remains weak. The interministerial consultation arrangements on draft laws work poorly in practice. The existing
requirements for public consultation on EU-related policy work, under the government rules
of procedure, are not fully applied. The weaknesses in implementation of legislation and in
enforcement of judicial decisions need to be addressed. The current arrangements for coordinating European affairs, particularly within the MoEI, need to be reinforced.
Overall, Albania has continued to make some progress in strengthening its government
structures with a view to addressing its SAA commitments, a key European Partnership
priority. However, further strengthening of capacity, coordination, and strategic planning for
EU integration remains necessary.
Public administration
In December 2007, the government adopted amendments to the Law on evaluation of the
performance of civil servants. In January 2008, a new reward system for civil servants entered
into force. However, turnover of staff due to political pressures has continued. The Civil
Service Law regulating public administration is in place, but it is not applied systematically.
The Department of Public Administration (DoPA) is currently drafting a strategy on public
administration reform including sectoral training plans and covering local government bodies.
However, the role of the DoPA in ensuring implementation of the Civil Service Law and the
capacity of the Training Institute of Public Administration (TIPA) remain weak. The capacity
of the Department of Public Administration to steer the civil service towards an independent,
merit- based and professional body needs further strengthening.
The absence of sound accountability mechanisms in public administration increases the
opportunities for bypassing established procedures. Appointments have continued along
political party lines in contravention of the Civil Service Law. The authority of the DoPA
requires strengthening in order to implement the official recruitment, job classification and
promotion criteria consistently. Full enforcement of the Civil Service Law and adoption of the
Strategy for public administration reform will be key to progress in this regard.
Public sector salaries were increased in July 2008. The government continues to encourage
Albanian graduates of foreign universities to join the civil service. The training plan for civil
servants has been revised to reflect real needs better. However, frequent replacements of civil
servants are undermining the independence of the civil service and increase the opportunities
for bribery of public officials.
Overall, the public administration is continuing to stabilise, but the lack of transparency and
accountability in appointments is endangering its independence. What is now needed is to
further strengthen public sector governance by enhancing the impartiality of public
administration, a key European Partnership priority. Further progress is needed to establish an
independent, merit-based, professional civil service.
Judicial system
Judicial procedures have remained slow and lack transparency.
In March 2008, a cross-party National Pact on Justice was endorsed by the main political
parties. However, a clear reform strategy and vision for the judiciary, going beyond adoption
of individual pieces of legislation, is still missing. What is needed now is to adopt a

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comprehensive strategy on judicial reform, to complete the legal framework and to provide
sufficient human and financial resources for implementation.
Some progress can be reported with the adoption, in February 2008, of the Law on the
organisation of the judiciary which sets salary scales and merit-based criteria for judicial
appointments. The recruitment of judges is restricted to graduates of the magistrates' school.
However, the law fails to clarify the separate competences of the inspectorates of the Ministry
of Justice and of the High Council of Justice. This raises serious concerns about the
independence of the judiciary.
A law has been prepared on privatisation of the bailiff system for the enforcement of civil
court rulings. However, enforcement of judgments by bailiffs remains slow.
A computerised civil case management system is now installed in all courts and has been
expanded to cover criminal cases. The system registers cases electronically and assigns them
to judges randomly. However, further training on its use is needed. The court system
continues to be problematic, with procedures remaining slow and non-transparent.
The serious crimes court building in Tirana is nearing completion. Courts lack adequate space
for archives and equipment for court transcripts, which remain mostly handwritten. Due to
overcrowding, many courts cannot allow public access to hearings. This hinders the
transparency and efficiency of the courts. The State budget allocated to the judiciary remains
insufficient for the normal operation of most courts. Overall, judicial infrastructure requires
considerable strengthening.
The magistrates' school remains an important institution for training judges and prosecutors,
including on SAA-related issues. Adequate support for the school from the State budget is
needed to ensure sustainability. More continuous specialised training for judges is needed.
Constitutional court rulings have been issued on the role of parliamentary investigative
commissions, including the case of the dismissal of the former General Prosecutor Sollaku, on
the role of the executive in relation to independent State bodies and on standards for issuing
government decrees.
The High Council of Justice (HCJ) has undertaken a number of initiatives, including public
hearings on new court chairpersons. There has been some limited improvement in the internal
functioning of the HCJ. The new system for the professional evaluation of judges by the HCJ
is proceeding slowly. The situation of the judges affected by the abolition of eight small
district courts in September 2007 remains unsettled.
In April 2008, a cooperation agreement was signed between the Prosecutor General and the
State police, including measures to improve timely completion of investigations. However,
the investigative capacity of the prosecution service remains weak. (see also Justice, freedom
and security section) The lack of consultation over the initial drafting of the Prosecutor
General Law, which remains to be adopted, raised concerns about the independence of the
general prosecutor's office from the executive. On several occasions, the government
attempted to interfere with ongoing investigations, in breach of the constitutional principle of
accountability to law. Overall, the independence, transparency and efficiency of the judiciary
remain key European Partnership priorities to be addressed.
Some progress can be reported on witness protection. The 2007 Law on State police upgraded
the witness protection unit into a directorate. At present there are 60 persons in the witness

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protection programme. The 2008 budget allocated to the programme marks an increase.
However, further amendments to the Law on witness protection have not yet been adopted.
The lack of reliable witness protection continues to be problematic.
No developments can be reported on establishing a strategy and a national coordination body
dealing with blood-feuds. Albania still lacks reliable data on the number of families affected
by this phenomenon.
Overall, there has been limited progress in judicial reform, mainly on the legal framework.
However, the justice system continues to function poorly due to shortcomings in
independence, accountability and transparency.
Anti-corruption policy
Further efforts have been undertaken in the fight against corruption. Perception of corruption
has improved; nonetheless corruption remains a particularly serious problem in Albania.
In April 2008, the Law on Commercial enterprises was aligned with the Council of Europe
Civil Law Convention on corruption. Albania had ratified the Council of Europe Civil Law
and Criminal Law conventions on corruption in 2000 and 2001 respectively. Alignment of the
national legislation is ongoing. The additional protocol to the Council of Europe Criminal
Law Convention on corruption was ratified in 2005.
The 2007-2013 National Strategy for Development and Integration (NSDI) contains anticorruption elements but lacks a strategic framework for implementation with objectives and
funding that can be monitored. A cross-cutting anti-corruption strategy for 2007-2013, with
an action plan, was adopted in October 2008. However, implementation needs to start and
monitoring mechanisms remain to be assessed. Much work is still needed on changing
behaviour and procedures in the public administration.
In December 2007, the Council of Europe Group of States against Corruption (GRECO)
adopted its report on Albania. Eleven of GRECO's thirteen recommendations have been
adopted, including the criminalisation and seizure of assets stemming from corruption.
Recommendations regarding the rules on financing of political parties have yet to be
addressed.
The Law on conflict of interest was adopted in 2007. The High Inspectorate for Declaration
and Auditing of Assets (HIDAA) is an independent body which collects revenue declarations
from public officials. In its 2007 annual report to parliament, the HIDAA identified 110 cases
of conflicts of interest. However, Albania lacks strong and independent supervisory or
auditing authorities. The HIDAA plays only a limited role in this regard.
The scope of the immunity from criminal investigation and prosecution of a number of State
officials and members of parliament and the procedures established to lift their immunity still
need to be addressed. The Law on financing of political parties remains to be adopted.
Judicial accountability and transparency in funding of political parties remain to be improved.
Efforts have been made to reduce opportunites for corruption in areas such as tax
administration, business services, property restitution and public procurement, by introducing
electronic systems.. Since December 2007, electronic procedures have been introduced for
taxation, public procurement, licensing and business registration. However, the results and
impact of these procedures remain to be assessed.

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The institutional set-up and inter-agency coordination in the fight against corruption remain
weak. A Department of Internal Administrative Control and Anti-Corruption within the
Council of Ministers reports directly to the Prime Minister. However, there is no effective
institutional framework to coordinate, monitor, and implement anti-corruption policies across
public administration.
Other law enforcement and judicial entities have significant powers for the prevention and
repression of corruption, but their activities remain largely uncoordinated. The investigative
capacity of the law enforcement bodies in corruption cases remains very limited. (See also
Justice, Freedom and Security, section on money laundering)
The government has had some success in the fight against petty corruption and bribery. A
number of low to middle-level officials were dismissed for bribery. In addition, the Office of
internal control (OIC) in the Interior Ministry, the unit investigating corruption by police
officers, has taken disciplinary measures against 100 policemen on bribery charges. The
government has stepped up its efforts to prosecute some corruption cases. In 2007, 224
officials were identified as involved in corruption and conflict of interest, 53 of them were
arrested and prosecuted. Regarding high level corruption, one former deputy minister has
served a one-year jail sentence. However, a more systematic approach is needed to tackle
corruption overall, particularly widespread bribery in the judiciary, police, health and customs
sectors.
The explosion of an ammunition depot at Gerdec in March 2008 is currently under
investigation for alleged lack of enforcement of health and safety regulations. Limited
progress can be reported in the management and disposal of small arms and light weapons and
of explosives and remnants of war, which remain a serious problem in Albania. Other
allegations concerning the accident relate to arms smuggling and corruption. The then
Minister of Defence was dismissed and his immunity lifted. To ensure credibility on the fight
against corruption, the allegations around this case need to be tackled with resolve as part of
the ongoing investigation.
Overall, Albania has continued to address corruption, a key European Partnership priority.
However, the declared commitment of the authorities to fight corruption needs to be backed
up by rigorous implementation, as corruption remains widespread.
2.2.

Human rights and the protection of minorities

Observance of international human rights law
As regards ratification of human rights instruments, in December 2007 Albania ratified the
Optional Protocols to the UN Convention on the sale of children, child prostitution and child
pornography, and on children in armed conflicts. The European Charter for Regional and
Minority Languages has yet to be ratified.
The European Court of Human Rights (ECtHR) delivered five judgments finding that
Albania had violated the European Convention on Human Rights (ECHR) and related
protocols. Measures have yet to be taken to enforce these judgments. A total of 79 new
applications to the ECtHR were made during the reporting period. The total number of
pending cases before the Court regarding Albania is 146.
Albania has an extensive legal framework on promotion and enforcement of human rights
and the government's record is marked by the political will to guarantee human rights to all its

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citizens. The strong role played by the Human Rights Ombudsman has contributed to
reducing human rights violations. Nevertheless, effective implementation of legislation
continues to raise concern in key areas, such as prevention of torture and trafficking.
Civil and political rights
With regard to prevention of torture and ill-treatment and the fight against impunity,
there have been reports of use of excessive force and ill-treatment by police officers, most of
them during pre-trial detention. However, some efforts have been made by law enforcement
agencies to prosecute and indict cases of ill-treatment, torture and arbitrary behaviour. The
General Prosecutor brought charges against four former senior officials of the State
Intelligence Service. Criminal charges have been brought and disciplinary measures taken
against police officers for abuse of office. In compliance with the amendments made to the
Criminal Code on torture, the People’s Advocate launched in March 2008 a national
campaign on torture prevention, in cooperation with the Centre for Rehabilitation of Torture
Victims .
Overall, further steps have been taken to prevent torture and ill-treatment of detainees, but
considerably better enforcement of human rights rules and proper prosecution of abusers are
still required.
As regards access to justice, Albanian legislation provides for free legal aid for first and
second instance courts, but the system does not work effectively, particularly for minorities,
such as the Roma.
With regard to the prison system, overcrowding of prisons and pre-trial detention centres
continued in 2008. There were 4,932 detainees at the beginning of May 2008, almost 1,500
above capacity. Construction of two new prisons (Fushë-Kruja and Korça) and of the Vlora
pre-trial detention centre is complete. A new detention centre for juveniles in Kavaja and a
new pre-trial detention centre together with a psychiatric facility in Durrës are under
construction. These new establishments, designed in accordance with European standards,
should help reduce the overcrowding.
However, general prison conditions remain below standards. Due to lack of space, prisoners
were reportedly being held in large groups in small cells or returned to police stations.
Prisoners with mental illnesses were being kept in cells with other prisoners or minors in cells
with adults. Progress on developing rehabilitation schemes, such as education, work and
social programmes for detainees, has been limited. An effective monitoring and inspection
system for prisons is still missing.
Several prisons have been refurbished to improve living conditions. Planning of six new
detention-centres has started, in line with the 2004 Master Plan for the Pre-Trial Detention
System. However, the government still needs to develop a long-term investment strategy and
to allocate corresponding State funds.
In April 2008, amendments to the Law on the rights and treatment of prisoners entered into
force, including during pre-trial detention. Amendments to expand and facilitate application
of alternative sentences have been drafted, but are progressing slowly.
Overall, further progress has been made in improving the prison and pre-trial detention
system, but overcrowding continues and detention standards remain very poor.

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Freedom of expression, including in the media, are guaranteed by the Albanian constitution.
However, the intermingling of business, political and media interests continues to affect the
development of independent media.
A new broadcasting law is under preparation. It will have a major impact on the media
landscape in Albania. Implementation of the EU/Council of Europe joint action plan on the
reform of media legislation is key in this respect. Preparation of the strategy for the transition
to digital broadcasting is advancing. In April 2008, the Regulation on the licensing of digital
broadcasting was adopted. (See also Information Society and media section.)
Selective pressure was put on opposition-oriented media, including accusations of alleged
funding from organised crime groups. The lack of transparency about ownership and funding
leaves the media open to accusations of criminal influence. The National Council on Radio
and Television (NCRT) continued to face accusations of political bias in favour of media
linked to the government. There is no effective legislation to ensure transparency of media
ownership and funding.
Adoption of the laws to amend both the Criminal and Civil Codes by decriminalising libel
and defamation is still pending. The NCRT monitoring capacity is restricted to news bulletins
and advertisements. The technical capacity of the NCRT for wider monitoring needs
reinforcing.
Some progress can be reported on adoption of key bylaws on media policy. The NCRT and
parliament have jointly prepared the action plan on media reform and drafted the strategy on
digitalisation.
Regarding the printed media, few newspapers reach a significant readership, due mainly to a
malfunctioning distribution system and poor infrastructure.
Overall, Albania has continued to make progress on freedom of expression, a key European
Partnership priority. It now needs to improve implementation of the existing legislation and to
advance on key issues regarding decriminalisation of defamation, adoption of legislation on
access to public information and transparency of media ownership.
No restrictions on freedom of assembly and association are to be reported.
The legal framework for civil society organisations remains open and non-restrictive. Civil
society organisations are actively monitoring respect of human rights and fulfilment of
Albania's obligations under the SAA. However, civic engagement remains low. Albania has
only a limited number of influential NGOs and policy institutes. Funding of civil society
depends largely on foreign donor financing. Coordination mechanisms to enhance civil
society participation in policy making remain weak.
Civil society should increase its capacity for advocacy and public relations, networking, and
development of partnerships with the government and the private sector. Financial and
management capacity have to be strengthened, aiming at future sustainability of the sector.
As regards freedom of religion, the inter-faith climate continues to be positive and mutually
tolerant. However, the full restitution of property and other belongings to religious
communities remains an issue to be addressed as part of the overall property restitution
efforts.

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Economic and social rights
The People's Advocate (human rights ombudsman) continued to play an active role in
monitoring and protecting human rights. In 2007, the institution received 4,233 complaints
from citizens and reviewed 2,567 of them. Most of the complaints were appeals against
decisions by the Ministry of Economy, Trade and Energy, the Immovable Property Registry
Offices, the Ministry of Interior, the Ministry of Defence, the Ministry of Justice and the
courts.
With regard to women's rights, some progress can be reported. The Law on gender equality
was adopted in July 2008. The national strategy on gender equality and eradication of
domestic violence, together with a three-year action plan, were adopted in December 2007
including provisions on vulnerable women such as trafficking victims. According to police
sources trafficking decreased sharply in 2007, although NGOs claim that many cases went
unreported. Several trafficking networks were dismantled. In May 2008 the Domestic
Violence Law was amended. A new unit on domestic violence was established within the
Ministry of Labour. The responsible authorities organised, with assistance by UN agencies,
capacity building activities for social and health workers, police and local authorities.
However, the strategy on the prevention of domestic violence has not been enforced due to
lack of implementation mechanisms. The proportion of women having suffered from
domestic violence is significant and increasing. Witness protection remains weak with the
result that victims of trafficking are reluctant to report their traffickers to the police. Political
representation and the employment rate among women remain low. Albania is advancing
moderately on mainstreaming gender in employment and other policies. What is needed now
is to allocate sufficient human and financial resources to ensure full implementation of the
existing legislation.
Overall, there has been some further progress on strengthening women's rights. However,
Albania continues to be a source and transit country for the trafficking of women, often
minors, for sexual exploitation. Trafficking of women and domestic violence remain issues of
serious concern.
With regard to children's rights, some progress can be reported with the entry into force of
the Optional Protocol to the Convention on the Rights of the Child in March 2008. Parliament
adopted amendments to the Criminal Code in April 2008 regarding the exploitation of
children, which is now recognised as a criminal offence.
The streamlining of the birth registration procedures has somewhat improved school
attendance, access to health and other social services for Roma children. Despite the
implementation of the second chance project, school enrolment of Roma children remains
low. Procedures such as requiring vaccination certificates often lead as to de facto exclusion
from school.
Regarding juvenile justice, community service sentences started in late 2007 at the Tirana
Court. Up to April 2008, 38% of all sentences imposed community service. In March 2008,
special sections for minors were established in six district courts. Amendments to the Penal
Code have been drafted, including introduction of a probation system. However, in cases
involving minors, judges do not sufficiently apply alternatives such as probation. Probation
and parole are available as alternatives to detention, but there are no qualified social workers
or probation officers to supervise them.

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Children's rights to education have improved. The net primary school enrolment rate for 2008
is 92%. However, in the areas populated by Roma communities, access can go down to 13%.
Progress has been made in the area of protection of children at risk. The strategy on foster
care was approved in 2008 as part of the new sectoral strategy for social protection. A
bilateral agreement on protection and assistance to child victims of trafficking was signed
between Albania and Greece in 2007.
Child labour remains widespread. The number of children working in the formal sector is
increasing (737,000 in 2007 compared with 533,000 in 2006). Most of these children are girls
primarily employed in the fish processing, footwear and clothing industries.
Overall, further progress has been made on children's rights but more is needed on ensuring
appropriate resources for implementation and on child labour issues.
With regard to socially vulnerable and/or persons with disabilities, 103,000 families
benefit from social assistance at present. In January 2008, the government adopted the Social
Protection and Social Inclusion Strategy for 2008-2013. This includes new economic
assistance schemes for poor families and social services for children, minorities, the disabled,
the elderly and victims of trafficking.
Implementation of the National Strategy for persons with disabilities has been slow and the
procedural framework has not yet been completed. The Ministry of Labour has drafted
standards for delivery of social services to people with disabilities. (See also Employment and
social policies section). Albania has not signed the UN Convention on the rights of people
with disabilities. In the field of mental health, one community centre has been reconstructed
and two new centres opened. However, implementation of the Regulation on mental health
approved in 2007 has been slow. There is still no law on free legal assistance for people with
disabilities. Access to employment remains a major problem for people with disabilities.
Overall, there has been further progress regarding socially vulnerable people, but measures to
support them remain limited and better coordination of government agencies could improve
the results.
As regards labour and trade-union rights, the absence of a revised labour law is hampering
the transformation of the National Labour Council into a National Social and Economic
Council. It also delays the revision of the Law denying the right to strike to some State
employees, which is not in line with the European Social Charter. The National Strategy for
Development and Integration 2007-2013 (NSDI) foresees the strengthening of social
dialogue. However, the position of both trade unions and employers' organisations continue to
be very weak and the social dialogue remains at an early stage.
As regards anti-discrimination policies, there has been little progress on establishing a
proper legal definition of discrimination or specific anti-discrimination legislation.
Appropriate institutional support for victims of all violence needs to be ensured. There is
continuing serious hostility in public and the media towards the lesbian, gay, bisexual and
transgender (LGBT) community. The government has taken no action to combat
discrimination on the grounds of sexual orientation and gender identity. Arbitrary arrests and
mistreatment of LGBT persons persist. This has already led to the emigration of leading
activists. What is needed now, in addition to increasing legislative efforts, is to develop an
action programme to counter discrimination, including on grounds of sexual orientation and
gender identity.

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With regard to property rights, the main issues remain first registration of real estate,
property restitution, compensation and legalisation of informal constructions. The Immovable
Property Registration Office (IPRO) has continued first registration in different parts of the
country. Several decisions by the European Court of Human Rights found violations in the
form of improper proceedings and lack of enforcement in the context of restitution and
compensation procedures. Unresolved property issues have undermined efforts to develop a
functional land market and kept foreign investment below potential. A clear strategy and
action plan to solve the numerous problems in the property sector are needed. Legal
amendments are necessary along with closer cooperation between the relevant agencies and
ministries.
The Property Registration and Compensation Agency (PRCA) has started to register
restitution and compensation claims in an electronic database. So far, the PRCA has
completed the property valuation mapping for six regions. Valuation mapping, however, does
not yet include industrial and tourist zones for lack of data. A complete valuation map
covering every regions would facilitate assessment of property restitution and compensation
issues.
Cash compensation totalling €4 million had been paid, by the end of 2007, to some of the
former owners. However, an inventory of land earmarked for compensation is still not
available. In 2008, 100,000 illegally built or informal constructions have been regularised,
mainly around major urban centres.
Overall, there has been progress on consolidating property rights, a key European Partnership
priority. What is needed now is to step up the pace of restitution and compensation.
Preparations in this field are advancing moderately. Uncertainties about property rights
persist.
Minority rights, cultural rights and protection of minorities
With regard to cultural rights, the constitution provides for protection of the civil, economic,
social and political rights of minority groups and the law forbids discriminatory treatment.
Persons belonging to minorities have the right to be taught in their mother tongue. There are
three recognised national minorities (Greek, Macedonian and Serbian-Montenegrin) and two
ethno-linguistic minorities (Aromanian and Roma) in Albania. The Egyptian community is
seeking the status of an ethno-cultural minority. The government has made efforts to include
it in various activities for minorities and socially vulnerable groups. Development of minority
policies requires up-to-date statistics on all minorities. Albania has no accurate data on
minorities.
Albania is continuing to make efforts to fulfil its commitments under the Council of Europe
Framework Convention for the Protection of National Minorities particularly regarding use of
minority language and education. However, more efforts are needed on defusing recent intraethnic tensions in areas with a heavy concentration of minorities. Albania has not signed the
European Charter for Regional and Minority Languages, due to budgetary constraints.
Schools specifically for members of the Greek and Macedonian minorities have a
significantly higher teacher-pupil ratio than the national average. The pupil/teacher ratio is
approximately 6.9/1 for the Greek minority and 12.6/1 for the Macedonian minority
compared with the national ratio of 18/1. However, in some areas with a high concentration of
minorities, public schools that provide ethnic minorities with minority education are not

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sufficient. Three privately run Albanian-Greek schools have been established in Tirana, Korça
and Himara. The Civil Service Law allows participation by minorities in public
administration, the armed forces and the police. However, minority representation remains
limited.
Overall, there has been further progress on cultural rights but further improvements are
needed, particularly regarding collection of sound data on all minorities, a key European
Partnership priority.
Albania joined the Decade of Roma Inclusion 2005-2015 in April 2008. A corresponding
Action Plan is under preparation. In December 2007, the first Progress Report on
implementation of the National Strategy for the integration of Roma was issued, showing
insufficient human and financial resources for proper implementation. The unit in charge of
monitoring implementation of the Roma Strategy within the Ministry of Labour and Social
Affairs (MLSA) has been up-graded to a technical secretariat. This will improve its capacity
to monitor and coordinate measures with other institutions. One of the staff is a member of
the Roma community. However, with only two people, the Secretariat is understaffed to
perform its tasks. Efforts must be stepped up to coordinate the Roma Decade Action Plan with
other existing strategies and provide sufficient human and financial resources to implement it.
The level of school enrolment amongst Roma children remains low, despite efforts by the
government to facilitate registration and implementation of the second chance project. More
needs to be done to tackle specific gender issues in the Roma community and to prepare more
Roma to qualify as teachers. Registration of Roma with the authorities remains a problem.
Roma continue to face very difficult living conditions and discrimination, with poor access to
education, social protection, healthcare, housing and employment.
Overall, there has been some limited progress in terms of measures taken by the government
to improve the situation of the Roma, which remains a serious concern. What is needed now
is to ensure that appropriate human and financial resources are allocated to implement these
measures effectively.
2.3.

Regional issues and international obligations

As regards the International Criminal Court (ICC), Albania still maintains a June 2003
bilateral immunity agreement with the United States, granting exemptions from ICC
jurisdiction. This does not comply with the EU Common Position on the integrity of the
Rome Statute nor with related EU guiding principles on bilateral immunity agreements.
Albania needs to align with the EU position.
Albania is still being monitored by the Parliamentary Assembly of the Council of Europe, to
verify fulfilment of obligations and commitments relating to its membership of the Council of
Europe.
Regional cooperation and good neighbourly relations form an essential part of the process of
moving towards the European Union.
Albania has continued to participate in a number of regional political and economic fora and
initiatives, including in a transition from the Stability Pact to a more regionally owned
framework with the South East European Cooperation Process (SEECP) and the Regional
Cooperation Council (RCC).

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Albania has been satisfactorily implementing the Central European Free Trade Agreement
(CEFTA) and is progressing on the first transitional phase of the European Common Aviation
Area (ECAA) agreement. Albania is party to the Energy Community Treaty and is making
headway towards meeting its obligations under the Treaty.
Albania became a full member of the Barcelona process in November 2007 and participated
in the launch of the Barcelona Process: Union for the Mediterranean in July 2008.
Albania's bilateral relations with other enlargement countries and neighbouring Member
Sstates have remained intensive, with frequent bilateral contacts and visits.
Relations with the former Yugoslav Republic of Macedonia have remained goodwith
reciprocal high-level visits and the conclusion of agreements on a visa free regime, local
border traffic and cooperation in border control.
Relations with Montenegro have developed further. Work started on construction of the joint
border crossing point at Muriqan/Sokobine. Relations with Bosnia and Herzegovina have
intensified. The country has decided to open an embassy in Tirana. Albania continues to have
good relations with Croatia. Relations have remained stable with Serbia. Relations with
Turkey have remained good. The Free Trade Agreement with Turkey has entered into force.
Albania has continued to maintain a constructive position regarding Kosovo3. Albania
welcomed the decision on the establishment of the EU mission in Kosovo. Albania has
recognised Kosovo's declaration of independence and established diplomatic relations.
Italy remains Albania's main political and economic partner and its largest EU trade partner,
followed by Greece, which is also considered an important strategic partner. A bilateral
agreement with Italy in line with the European Convention for judicial assistance in criminal
cases has been signed.
Albania has received an invitation to join the North Atlantic Treaty Organisation (NATO),
and the Protocol of Accession to the Washington Treaty has been signed.
Overall, Albania has continued to foster positive relations with its regional partners, both
multilaterally and bilaterally. Albania's continued constructive stance on the Kosovo issue and
on maintaining good neighbourly relations with other enlargement countries has contributed
to regional stability.
3.

ECONOMIC CRITERIA

In examining the economic developments in Albania, the Commission's approach was guided
by the conclusions of the European Council in Copenhagen in June 1993, which stated that
membership of the Union requires the existence of a functioning market economy and the
capacity to cope with competitive pressure and market forces within the Union.
3.1.

The existence of a functioning market economy

Economic policy essentials

3

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under UNSCR 1244/1999

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The government submitted the Economic and Fiscal Programme for 2007–2010 in December
2007, setting out a coherent framework for the government's economic policies. The policies
continued to support the establishment of a functioning market economy, but suffered in some
cases from the lack of detailed action plans. The economic strategies were broadly consistent
with the current International Monetary Fund three-year 2006–2009 PRGF/EFF4 programme
in the country. In 2008, the government supplemented the longer-term strategy framework,
adopting the National Strategy for Development and Integration (NSDI) for 2007–2013,
prepared in consultation with domestic and international stakeholders. In line with the
Integrated Planning System (IPS) the government also adopted the Fiscal and Macroeconomic
Framework 2009–2011 and the Medium-Term Budget Programme 2008–2010. Overall,
political consensus on the fundamentals of market-oriented economic policies was
strengthened, but planning at too general a level sometimes presented a risk for the
implementation of economic reforms.
Macroeconomic stability
The economy experienced strong growth despite a severe drought in the summer of 2007 and
continuous electricity shortages. Extensive investments and high consumption led to a 6%
growth in real terms in 2007 – the highest since 2002. Economic activity was fuelled by a
robust, though slowing credit growth and continuing large-scale remittances inflows (12% of
GDP). Unreliable electricity supply continued to pose a heightened risk to sustainable
economic growth. The average per capita income in 2007 was around 22% of the EU27
average5, up from 21% in 2006. Overall, economic growth remained strong and speeded up,
while the general income level remained low.
External balances deteriorated, resulting in a current account deficit of 10.6% of GDP in 2007
- up from 6.5%6 in 2006. The deficit widened, mainly due to an increase in the merchandise
trade deficit (26.8% of GDP in 2007), in spite of strong growth in exports. Higher energy
imports (30% of the total increase in imports in 2007), resulting from a severe domestic
drought, and demand for machinery contributed strongly to the increase in imports.
Merchandise exports remained more than 3.5 times lower than imports, despite a strong
increase in mineral exports. The trade deficit continued to deepen in the first half of 2008 due
to high imports. The surplus in services trade remained limited and surpluses of income flows
and other transfers (including remittances) were lower (relative to GDP) than in the previous
year. Overall, external imbalances remained high and continued to widen.
Net capital inflows increased, covering the current account deficit in 2007. Net foreign direct
investment reached 5.9% of GDP in 2007 (up from 3.5% in 2006), with strong inflows from a
large-scale privatisation in the telecommunication sector. Other capital inflows (mainly
foreign borrowing by the private sector and non-residents' deposits) rose, reaching 3.2% of
GDP in 2007. However, from the fourth quarter of 2007 onwards the current account deficit
exceeded net capital inflows, leading to a decrease in reserve assets. The stock of reserve
assets stayed at the level of 3.3 months of imports of goods and services at end-June 2008.
The external debt to GDP ratio fell to 24.8% at end-2007 (down from 25.1% in 2006), with
the public external debt ratio falling to 15.4% of GDP. The financial sector external debt
increased strongly (by 50%) due to short-term loans and non-residents' deposits. Corporate
4
5
6

EN

The Poverty Reduction and Growth Facility (PRGF) and the Extended Fund Facility (EFF)
In purchasing power standards (PPS)
The data for 2006 is updated (compared to the Progress Report 2007) throughout the report according to
the recent revision of statistics

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sector foreign borrowing remained limited (with stock falling below 5% of GDP). In total, net
capital inflows increased, but remained relatively low.
The recent turmoil in the global financial markets increased risks to the Albanian economy.
The risks to the financial sector are mitigated by the overall low level of financial
intermediation and a limited integration to the international capital markets, while the banking
sector is well capitalised and mainly financed by households' deposits. However, the
continuous widening of the current account deficit requires increasing capital inflows that
might be inhibited by the expected global economic slow-down.
Labour market conditions improved in 2007. The number of registered unemployed
decreased, resulting in a drop in the unemployment rate (13.4% in 2007 and 13% in March
2008 - down from 13.9% in 2006). The number of employed persons increased as a result of
higher employment in the non-agricultural private sector. In total, the labour force (the sum of
employed and unemployed) decreased by around 0.4%, indicating some movement of
unemployed persons to inactivity. Wages in the public sector increased by 17.1% on average
in 2007, significantly more than in 2006 (7.5%), but did not add significantly to domestic
demand pressures on inflation. Overall, the labour market performance slightly improved, but
rigidities remained relatively high. However, due to the significant informal economy, labour
market data may not correctly reflect the actual dynamics of the labour market.
The central bank continued to implement a policy of implicit inflation targeting and an
independent float. The objective of maintaining consumer price inflation at 3% with a
fluctuation band of ±1 percentage point was met, with inflation averaging 2.9% in 2007.
Potential demand pressures and pressures due to price increases in the global commodities
markets were addressed by raising the key monetary policy interest rate. In the second half of
2007, the central bank raised the policy rate three times (cumulatively by 0.75 percentage
points to 6.25%). In the first three quarters of 2008, inflation remained within the target range
(measured as a 12-month average annual inflation), although in some months it exceeded 4%
(year-on-year). The main contributors to annual inflation were food and energy prices, with
the increase in food prices accounting for up to two thirds of annual inflation. The impact of
domestic demand pressures was limited, despite a strong (though decelerating) credit growth
and extensive remittances inflows. The increase in money supply (M37) remained relatively
high (14% year-on-year in July 2008). Exchange rate fluctuations against the euro remained
limited, with some temporary small-scale depreciation in March 2008. Overall, monetary
policy remained sound, maintaining price stability.
The fiscal stance loosened somewhat in 2007, despite a strengthening of economic growth.
Fiscal balances deteriorated, with the general government deficit increasing to 3.5% of GDP
in 2007 – up from 3.3% in 2006. Fiscal policy remained expansionary, with the budget plans
projecting even higher deficits, mainly due to plans for high public investment. However,
strong economic growth made it possible to reduce the public sector indebtedness (as a ratio
of GDP), despite a delayed fiscal consolidation. The public debt ratio fell to 53% at end-2007
from 56% in 2006, with domestic public debt falling to 37.6% of GDP. The management of
public finances improved, especially in 2008, supported by large-scale tax administration
measures that also contributed to the extension of the tax base. The introduction of a 10% flat
personal income tax was accompanied by an increase in income tax revenues. The
management of local government finances remained poor, resulting in low revenue collection

7

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Monetary aggregate M3 includes currency outside banks, as well as demand and time deposits.

20

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and limited spending. Public spending followed the strategic priorities of higher public
investments, keeping the increase in current expenditures constrained. Personnel expenditures
were maintained at 6% of GDP, and interest expenditures were reduced to 2.6% of GDP in
2007, partly as a result of more efficient debt management. Government investments
increased to 5.8% of GDP, but weak implementation kept capital expenditures significantly
below projections. Regarding fiscal strategies, the 2008 budget projected a sharp deterioration
of fiscal balances with a fiscal deficit of 7.9% of GDP, due to extensive capital expenditures
amounting to 9.8% of GDP. A mid-2008 budget revision reduced the deficit projection to
5.2% by increasing revenue projections and cutting public investments. On the revenue side,
the reduction of corporate profit tax from 20% to 10% in January 2008 brought about a
change in the public revenue structure. Corporate tax revenues decreased, compensated by an
increase in excise duties. Overall, the administration of public finances improved, but the
fiscal stance loosened owing to ambitious public investment plans.
The macroeconomic policy mix was broadly adequate, with an increased emphasis on
structural reforms. Monetary policy remained sound, while fiscal strategies prioritised higher
public investments over further fiscal consolidation. Widening fiscal imbalances may lead to
instabilities and prevent fiscal policies from playing their role. Vulnerabilities of external
balances increased, requiring swift measures to ensure electricity supply, the broadening of
the export base and a more attractive investment environment.
Interplay of market forces
State participation in the economy remained limited, with the private sector accounting for
around 80% of GDP. The share of the employed in the private sector increased slightly to
82.1% in 2007 (up from 81.9% in 2006). Public enterprises continued to be mainly in the
services and agricultural sectors. The privatisation of large-scale enterprises advanced
significantly. The contract to sell an 85% stake in the ARMO oil refinery was approved and
the privatisation of 76% of the shares of the distribution arm of the loss-making power
corporation (KESH) is in progress. The government also concluded tenders on consultancy
for the privatisation of its 12.6% share of the mobile telephone operator AMC, and of a
majority of the insurance company INSIG. Privatisation of Albpetrol – the company involved
in oil prospecting, research and development, and production – was delayed. Overall, the
reduction of state ownership in the economy progressed, while the remaining inefficient largescale state corporations continued to contribute to market distortions.
Market entry and exit
The government simplified business registration procedures significantly. The introduction of
the National Registration Centre (NRC) reduced the time required to register a business to one
day and provided for simultaneous registration for the purposes of tax administration, social
and health insurance, and the Labour Inspectorate. Registration fees were reduced to less than
one euro. The infrastructure for business registration services was improved by increasing the
number of electronic services and registration centres across the country. The improved
services framework, together with more rigorous inspections by the authorities, addressed
ways for reducing the widespread informality of business. The simplified procedures allowed
for a significant increase in the number of initial registration of businesses. The government
also continued with the regulatory reform of licences by simplifying licensing procedures and
reducing the number of licences. However, there is still scope for further simplification.
Significant problems remained regarding the issuance of construction permits, which showed
a sharp 40% drop in 2007. Regarding market exit procedures, the new law on bankruptcy

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procedures was approved in May; this provided a more efficient framework for business exit,
as no bankruptcy proceedings had been concluded in the courts in recent years. Overall,
administrative procedures for the establishment of businesses were simplified considerably.
However, there remains room for further improvements.
Legal system
The government took a number of steps to strengthen the judicial system and the fight against
corruption. A number of electronic public services (including the electronic public
procurement system) were introduced in order to increase transparency. The general judiciary
reform continued, with the adoption of a law on the organisation and functioning of the
judiciary. Inspections of courts and public agencies were stepped up and legal procedures
were initiated against officials responsible for violations. Legal certainty was increased by
establishing a legal basis for a new type of administrative courts to rule on commercial cases
and disputes between companies and public institutions. Preparations for defining property
rights made progress. Offices in several cadastral areas were prepared for the initial
registration of land, and preparatory work on the digitisation of maps of the territory was
completed. However, further efforts are required to effectively fight against corruption that
affects the business climate and has an adverse impact on the quality of public services.
Overall, the legal framework for contract enforcement was strengthened, but the judiciary
remained weak and uncertainty about real estate property rights persists.
Financial sector development
Financial intermediation expanded significantly, but its level remained low. Bank lending to
the private sector rose to 31.4% of GDP in June 2008 (up from 21.4% at end-2006), while
money supply (M3) remained above 70% of GDP. The share of other financial intermediaries
remained low; no domestic companies were listed on the Tirana Stock Exchange and no
progress was made regarding private pension funds. The adoption of the law on securities in
March 2008 provides some basis for the development of the capital market. Insurance
companies continued to be the other main intermediaries in the financial sector, with total
assets of close to 2% of GDP. The banking sector is wholly owned by the private sector, and
foreign capital participation recently increased to almost 99%. Following a merger, the
number of banks was reduced to 16. Competition in the banking sector increased, while the
concentration of assets declined. Profit rates of banks remained relatively strong (return on
assets was 1.3% in June 2008, comparable to that of at end-2006). Banks continued to widen
their range of lending products and increased the number of regional offices. Overall,
financial intermediation, dominated by the well-functioning banking sector, continued to
increase at a rapid pace, while the role of the non-bank financial sector remained limited.
The stability of the financial sector remained satisfactory, supported by a favourable
economic environment and strengthened financial supervision. Capital adequacy remained on
average far above the minimum requirement (with ratios of 17.3% and 12%, respectively, in
June 2008), albeit somewhat lower than at end-2006. The quality of credit remained relatively
high and the share of non-performing loans in total loans remained low, although it increased
to close to 4% in March 2008 (up from 3.1% at end-2006). Strong - albeit slowing - credit
growth and the fact that a large share of credit is denominated in foreign currencies are factors
which demand careful handling of credit risks. The establishment of the credit registry
brought additional transparency to the banking system. Overall, the financial system remained
sound, addressing the growing risks of a possible deterioration of credit quality.

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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 broadly maintained, providing economic agents with a
supportive environment for decision-making. The functioning of market mechanisms still
remained seriously distorted by unreliable energy supply, weak judiciary, uncertainty about
real estate property rights and the inefficiencies still present in the regulatory framework for
businesses.
Human and physical capital
The reforms to improve the quality of labour force continued, with a strong emphasis on
vocational training. The government adopted a strategy on employment and vocational
training, aimed at bringing unemployment down to the average level of the EU countries by
2013. In parallel, the National Council of Pre-University Education was established, and new
guidelines for secondary schools and standards for post-graduate programmes were
introduced. In total, public spending on education rose to 3.3% of GDP in 2007 (from 2.9% in
2006). To promote employment, the government introduced a partial compensation of training
costs and a temporary compensation of social insurance contributions for companies that hire
unemployed job-seekers. Proper assessments of the impact of the measures on the labour
market continue to be constrained by limited and partly inconsistent labour market statistics.
Overall, opportunities were created for increasing the relatively low quality of human capital,
but their effects on the labour market remained unclear.
Physical capital accumulation continued at a rate comparable to 2006, although slower than in
earlier years. The ratio of total investments to GDP was 29.2% in 2007. Public investments
focused on the energy sector and on road construction. Net foreign direct investment (FDI)
inflows increased significantly (to 5.9% of GDP in 2007), mainly owing to strong inflows
from large-scale privatisation in the telecommunication sector. FDI inflows were also
significant in the financial sector. The total stock of FDI remained relatively low, reaching
19.1% of GDP in 2007. Infrastructure remained poor despite significant investment in the
road network. Preparations for reconstruction of railways and ports progressed. The hydropower based electricity sector continues to lack the capacity to meet domestic demand. The
number of concession agreements for building small-scale hydro-power plants has increased
and the construction of a thermal power plant has begun. However, these measures will
provide only a partial solution to the electricity shortages. Overall, capital accumulation
continued, but capital stock remained limited.
Sector and enterprise structure
Enterprise restructuring continued in the remaining sectors under state ownership, largely as
part of the preparations for privatisation. In the oil production sector, the restructuring of the
ARMO oil refinery and the oil producer Albpetrol made progress and an investment plan for
the oil refinery was submitted to the government as an obligatory document for the tender
procedures. In the electricity sector, preparations for the restructuring and privatisation of the
loss-making power corporation (KESH) made progress. However, electricity tariffs remained
below cost-recovery levels, thus contributing to financial losses. Electricity supply remained
unreliable. Overall, restructuring of enterprises progressed, but major additional changes are

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needed in order to increase the competitiveness of the current or former large-scale state
monopolies.
The sectoral structure of the economy remained broadly unchanged, with the largest
production being in the services sector. The mining sector contributed significantly to the
increase in total production and exports, although its share of total production stayed
relatively low. The agricultural sector remained the biggest employer, with 58% of total
employed, but contributing only 20.7% of the GDP (for details see statistical annex). The
informal sector remains large. Overall, the economy broadly maintained its structure, with
considerable scope for further expansion of the services and industrial sectors, at the expense
of inefficient agriculture.
State influence on competitiveness
The government kept the transfer of subsidies from the central budget at a relatively low level
(0.4% of GDP in 2007). Electricity tariffs, set by a regulatory State authority, remained below
cost-recovery levels, creating indirect subsidies to consumers. The recent sharp increase in
global fuel prices triggered an exemption from the excise duty on fuels for producers in the
agricultural and industrial sectors, as well as for certain energy producers. Overall, distortions
of competition arising from state interventions were kept within bounds, while the energy
sector issues remained unsolved.
Economic integration with the EU
The openness of the economy increased considerably, with total foreign trade in goods and
services reaching 81% of GDP in 2007 (compared to 72% in 2006). Trade increased mainly
due to an increase in imports, while competitiveness in exports remained weak (with exports
of goods accounting for 10% and exports of services for 18% of GDP in 2007). The EU
continued to be the main trading partner, while the share of the trade in goods with the EU
declined slightly to 64% (down from 69%). The decline was partly the result of increased
trade with CEFTA8 countries, but mainly due to a strong increase in exports of mining
products to Asia. The country's weak competitiveness in trade with the EU continues to be
reflected in a very high concentration of export partners (more than two thirds of total exports
of goods are destined for one country, namely Italy). Imports (also in terms of trading
partners) continued to show a considerably more mixed picture, with two main trade partners
accounting for less than 50% of total imports. Overall, the EU continued to be the main
partner in international economic relations, while overall international integration remained
limited.
4.

EUROPEAN STANDARDS

This section examines Albania’s capacity gradually to approximate its legislation and policies
to the acquis related to the internal market, sectoral policies and justice, freedom and security,
in line with the Stabilisation and Association Agreement and the European Partnership
priorities. It also analyses Albania’s administrative capacity. In each sector, the Commission’s
assessment covers progress achieved during the reporting period and summarises the
country’s overall level of preparations.

8

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CEFTA or Central European Free trade Agreement

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4.1.

Internal market

4.1.1.

Free movement of goods

Good progress has been made on standardisation. By the end of September 2008, Albania
had adopted 14,424 European standards (ENs), or 84.3% of all the ENs adopted by the
European Committee for Standardisation (CEN) and the European Committee for
Electrotechnical Standardisation (CENELEC). This exceeds the target of 80% that had been
set for 2008. The Directorate-General for Standardisation (DGS) has used numerous
promotional tools to raise the private sector’s awareness of the benefits of standardisation.
This has led to increased use of standards (117% more standards were sold during 2007 than
in 2006 and the sales of standards continued to grow in the first half of 2008). DGS has
continued to participate in the activities of CEN and CENELEC as an affiliate member.
The new Law on standardisation was adopted in February 2008 and the relevant
implementing legislation has been drafted. This includes the establishment of a supervisory
board made up of representatives of all stakeholder groups which will monitor DGS activities.
In accordance with the new law, DGS will be the enquiry point for the agreement on technical
barriers to trade under the World Trade Organisation (TBT/WTO). Preparations in the field of
standardisation are on track.
Limited progress can be reported on conformity assessment. The number of accredited
conformity assessment bodies increased slightly.
Further progress can be reported on accreditation. A new Law on accreditation was approved
in November 2007 and implementing legislation is being drafted. The national strategy on
accreditation, which is part of the newly adopted mid-term strategy on quality infrastructure
development, has been approved. The quality management system of the Directorate for
Accreditation (DA) has been updated to bring it into line with EN ISO/IEC 17011. Two
technical committees were established to develop accreditation schemes in new areas. The
Advisory Board for Accreditation is now in operation. The DA has 14 staff and is a member
of the International Accreditation Forum (IAF) and an associate member of International
Laboratory Accreditation Cooperation (ILAC). It continues to participate in European
Cooperation for Accreditation (EA) activities. The DA has signed memoranda of
understanding with all the accreditation bodies of neighbouring countries and with some
Albanian institutions and associations and continues to promote accreditation. Preparations in
this area are advancing.
Good progress can be reported in the field of metrology. The Directorate for Metrological
Supervision and the four regional centres of the Directorate-General for Metrology (DGM)
are now in operation. Further training was provided to DGM staff. The quality management
system in accordance with EN ISO/IEC 17025 is already being implemented in DGM.
Applications for accreditation of two laboratories were submitted to the DA in December
2007. Some of DGM’s seven laboratories took part in laboratory inter-comparisons and
proficiency testing at bilateral and regional levels. The national medium-term strategy on the
development of the metrology system was adopted in December 2007.
A new Law on metrology transposing provisions of the old approach directives was adopted
in February 2008. It sets up a decentralised metrology system and deregulates some
metrological activities, such as calibration and verification of measuring instruments in use.
The government approved a regulation concerning national measurement standards.

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Regulations on relations between DGM and other designated laboratories and on supervision
have also been drafted. To facilitate involvement of the private sector, DGM has identified the
requirements for legal persons performing particular legal metrology tasks. It has also signed
a mutual recognition arrangement with the International Committee for Weights and
Measures (CIPM MRA).
Progress has been made on market surveillance and consumer protection. The new strategy
on consumer protection and market surveillance for 2007-2013 was approved in November
2007. It is based on three sectoral strategies, one on consumer protection and market
surveillance for industrial products, one on food products and the other on pharmaceutical
products. The respective implementing institutions are the Ministry of Economy, Trade and
Energy (METE), the Ministry of Agriculture, Food and Consumer Protection (MAFCP) and
the Ministry of Health (MoH).
The capacity of the Market Surveillance Directorate (MSD) in the METE is being
strengthened with three more staff and appropriate training on horizontal legislation. Actual
market surveillance is carried out by the Central Technical Inspectorate (CTI), which is an
independent Directorate-General of the METE. The MSD, the CTI and the customs
authorities have provided information to consumers on dangerous products (e.g. toys and
electrical equipment) and have taken measures to withdraw such products from the market.
Albania has made some progress in approximating its horizontal legislation and its productspecific technical regulations to the acquis. Legislation has been amended to transpose the
directives on toys, simple pressure vessels, pressure equipment, low-voltage equipment and
electromagnetic compatibility. However, in the case of the old approach directives, the only
progress which can be reported is in the field of metrology.
A Law on consumer protection which broadly takes into account the relevant EU standards
was adopted. The new law provides the legal basis for settlement of disputes, with a
Consumer Protection Commission and a Consumer Protection Council as the decision-making
and consultative bodies respectively. However, these bodies have not yet been established.
(See the paragraph on market surveillance above for further details.)
Overall, preparations in this area are on track. However, most of the sectoral acquis has yet to
be transposed and implemented. Horizontal administrative infrastructure exists, but the
capacity of the various authorities and institutions will have to be improved, as it is still
insufficient to ensure proper enforcement.
4.1.2.

Movement of persons, services and right of establishement

There has been some progress on movement of persons.The Law on foreigners was adopted
in July. Its compatibility with the relevant EU standards has yet to be established. No
developments can be reported on recognition of professional qualifications or on coordination
of social security.
There has been some progress on the right of establishment. The national registration centre
for businesses has made registration simpler. Registration fees have been reduced and
licensing simplified. (See Section 4.2.1 for further details.) However, uncertainties about
property rights are still discouraging establishment. Preparations in this field are advancing
moderately.

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There has been progress in the area of company law. A new Company Law was approved in
April 2008. Implementing legislation has been drafted, laying down models for the four
different types of commercial companies (general partnerships, limited partnerships, limited
liability companies and joint-stock companies). However, the new Company Law falls short
of addressing the issues of cross-border mergers and takeover bids. Preparations in this area
are advancing.
No progress can be reported on auditing. The issue of statutory audits of annual accounts has
not yet been addressed and an independent public oversight system still needs to be
established.
Some progress can be reported in the case of accounting. Translation of the international
accounting standards (IAS) was completed, and they entered into force in January 2008.
Companies with annual revenue of over €10 million over the last two years and with 100 or
more employees need to apply IAS. The National Accounting Council is responsible for
supervising and monitoring implementation of the accounting standards. Further efforts are
needed to build a credible and properly functioning financial reporting framework, especially
for small and medium-sized enterprises. Enforcement of financial reporting needs to be
tightened up.
There has been little progress as regards freedom to provide services. No clear distinction
has yet been made between providing services on a temporary basis and providing them via a
permanent establishment. The government issued decisions on licensing and assets. As
regards postal services, a draft text establishes weight limits in the reserved area and tariffs for
the universal service provider, and the government plans to liberalise Albania’s postal market
by 2009. The regulatory authority for postal services was established following the adoption
of the Law on electronic communications in May 2008. However, separation of regulatory
functions from policy-making has not yet been achieved.
Some progress can be reported concerning financial services. The Bank of Albania has
adopted several of the implementing regulations provided for by the Law on banks of June
2007. Regulations were adopted on risk management for the activities of branches of foreign
banks and on the internal audit system in banks and branches of foreign banks. Foreign banks
operating under an Albanian licence can now offer services through branches whilst enjoying
the same rights and treatment as Albanian banks. Further efforts are needed to approximate
the banking legislation to the acquis, particularly to the Capital Requirements Directive.
The Supervision Department of the Bank of Albania was reinforced by adding staff and
providing training on the Basel II principles, credit risk, market risk, risk management,
operational risk and crisis management. However, further administrative capacity would be
necessary in order to take into account developments in the banking sector. A credit registry
was brought into operation, thus strengthening supervision and improving risk management
for banks. Cooperation between supervisors of domestic and foreign competent authorities
needs to be strengthened.
No substantial progress can be reported in the insurance field. The insurance market continues
to be dominated by obligatory insurance schemes, which account for two thirds of all non-life
insurance. The recent entry of three foreign insurance companies has not resulted in any
diversification of the Albanian market. Motor third-party liability (MTPL) has not yet been
liberalised and the mandatory green card tariffs are still set by the Ministry of Finance. The
Ministry also sets minimum and maximum tariffs for MTPL. This limits competition.

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New legislation on securities has entered into force, aiming to approximate Albania’s
legislation to a number of directives, such as the Markets in Financial Instruments Directive
and those on prospectuses, transparency, insider dealing and credit institutions. Three more
decrees were approved relating to insurance brokerage, reserve funds and insurance damage
assessors.
The Financial Surveillance Authority (FSA) launched a computerised system for MTPL known as the national data centre – as provided for under the Fourth and Fifth Motor
Insurance Directives. The system aims to make it easier to track down uninsured vehicles.
The FSA organised seminars and training sessions on insurance and pension fund issues.
However, further measures are needed to strengthen its capacity to cope with the growth in
the market and to secure the authority’s independence. The FSA employs 45 staff, although
its approved organisation chart has provision for 58. At present, 90% of the FSA’s overall
budget is financed from its own resources; the remaining 10% comes from the State budget.
4.1.3.

Free movement of capital

No progress can be reported on free movement of capital. The legislative framework on
foreign exchange is being revised, but the process has not yet been completed. Significant
restrictions still remain to the full liberalisation of capital movements required under the SAA.
There was some progress in the field of payment systems. The Bank of Albania launched an
electronic data transmission project to accelerate primary market auctions of government
securities. The number and value of transactions and of payments processed by the Albanian
inter-bank payment system and the Albanian electronic clearing house has increased. The
number of credit and debit cards in use has also increased and the network of terminals using
them has been expanded. However, Albania continues to be a predominantly cash-based
economy. The degree of financial intermediation continues to be relatively low.
Preparations in the field of free movement of capital and payment systems remain at an early
stage.
4.1.4.

Customs and taxation

There has been some progress in the area of customs. Albania took measures to ensure timely
implementation of the tariff reductions provided for in the Interim Agreement. The upward
trend in revenue collection has continued, despite a reduction of the average level of customs
tariffs. Collection of customs duties during the period from October 2007 to May 2008
exceeded the projected amount by 6%.
Computerisation of customs houses has been completed and all customs declarations are
processed using the ASYCUDA++ computerised system. Migration to the ASYCUDA Word
system is in progress. However, efforts are required to define an IT strategy in the long term.
Use of computerised risk analysis modules has been extended, but the physical inspection rate
(20-25%) is still high by European standards. Risk assessment and controls need to be revised
and strengthened, including for assessing the declared transaction value. Albania has
implemented the TIR convention and procedures. Steps have been taken towards establishing
Albania’s first free zone in the port of Duress. 38 customs warehouses were authorised in
2008.

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The Combined Nomenclature 2008 for the classification of goods in trade with the EU was
adopted. The concept of binding origin information was introduced in May 2008. New
provisions were also introduced on the role of customs in protecting intellectual property
rights providing for approximation to European standards. Control of dual-use goods has been
implemented in the risk management system. However, no progress can be reported on
effective control of intellectual property rights by customs authorities.
Further progress is needed on approximation to EU practices, in particular on simplified
procedures, rules of origin, valuation methods (greater use of transaction value) and transit
(ATA Convention). A study of the economic impact of the ATA carnet procedure was
performed. An agreement needs to be signed between the customs DG and a guarantor
national association. The compliance with the Interim Agreement of Albania’s tax regime for
imported cars needs to be determined.
As regards administrative and operational capacity, legislation was approved in July 2008
increasing the staff of the customs administration by 27 posts. The procedure to establish a
qualified pool of trainers has started and training activities were organised on customs and
tariff issues, free trade agreements and TIR procedures. However, a training strategy has not
yet been established. A new performance indicators system has been defined to facilitate
career development. However, the system only allows individual assessments. Customs
officials still do not have civil servant status.
As regards infrastructure development, work has started on a project to improve the
infrastructure of most first, second and third category border crossing points (BCP). A joint
border crossing point with Montenegro is being established and procedures have been
launched for construction of 10 other smaller BCPs. The infrastructure of Tirana customs
house is being improved.
Overall, preparations in the field of customs are advancing, but further efforts are needed on
legislative alignment and implementation.
There has been progress in the field of taxation. A Law on procedures for the tax
administration was approved with the aim of reducing the informal economy and improving
the business environment. The provision requiring payment of the full tax assessed plus a
15% fine before lodging a court appeal against decisions of the tax administration was
abolished. The taxation system is becoming simpler, as approximately 95% of taxpayers are
subject to the 10% flat tax on income. The tax reforms have shown a positive path towards
increased tax collection, particularly as regards income tax and corporate tax revenue. Albania
has started an assessment of the compliance of its tax legislation with the Code of Conduct on
business taxation.
Computerisation of tax offices is progressing and 90% of all taxpayers are now registered in
the integrated tax system. E-tax procedures are being implemented and are already being used
by taxpayers to file their returns and pay their taxes. The Directorate for Registration and
Taxpayer Services came into operation to provide assistance on tax matters. A manual for the
Internal Audit Directorate in the tax administration has been drafted and training on tax
control and audit issues was provided to staff of the tax administration. Disciplinary measures
have been taken against staff failing to perform as required by their duties.
However, the overall tax collection rates remain low, especially from local governments.
There is a need to increase the capacity of local government tax offices, especially in the

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framework of fiscal decentralisation. A comprehensive tax collection and control strategy has
not yet been developed and the informal economy is still high. Consultation with the business
community needs to be enhanced to dispel insecurity about the legislative environment and
facilitate implementation of tax reforms. The conformity of some changes to the VAT rates
for imported printed materials with Albania’s obligations under the Interim Agreement needs
to be assessed. Compliance with European standards needs to be established in the case of
amendments to the excise legislation concerning the definition of small wine producers and
certain cases of reimbursements of excise on fuel.
Overall, preparations in the field of taxation are advancing moderately. Efforts are needed to
approximate Albanian legislation to the acquis, ensure its compliance with the Interim
Agreement and reinforce the administrative capacity to curb the informal economy and reduce
tax evasion.
4.1.5.

Competition

Progress continued in the anti-trust field. The Albanian Competition Authority (ACA)
recruited additional staff and filled all its 35 posts. ACA staff participated in training seminars
in Albania and abroad. The code of ethics of the Competition Authority was approved and
parliament approved the authority’s structure and organisation chart in May 2008.
The ACA contributed to the promotion of a competition culture by organising workshops,
producing competition policy documents and signing memoranda of understanding with
various regulatory authorities. These included the Bank of Albania, the Ministry of Economy,
Trade and Energy, the Regulatory Entity of Telecommunications, the Association for the
Protection of Consumers, the Directorate-General of Customs and the Agency for Public
Procurement. Competition culture in Albania is slowly evolving. Businesses have started to
submit complaints about anti-competitive practices. This points to growing public awareness
of the benefits of competition enforcement.
The ACA imposed fines of 2% of total turnover on two mobile telephony companies for
abuse of their dominant position on the market. A court decision has not yet been taken on the
appeals filed by the two companies. The ACA also decided to impose fines on bread
producers and cement-makers for violation of competition rules. The ACA issued
recommendations on the telecommunications market. It continued its investigation into the
insurance market, concluded a sectoral investigation on the energy market and started
analysing the banking sector. It also assessed several merger notifications. The Law on
competition is to a large extent in line with the acquis. However, further efforts are needed on
adopting implementing legislation in the field of competition.
There has been progress in the area of State aid. The legal and institutional framework has
been strengthened by the approval of implementing rules on horizontal aid and of guidelines
on aid in the form of compensation for public services. The staff of the State Aid Department
(SAD) continued to receive training, including on aid in the utilities sector. The SAD
provided advice on several legislative drafts and continued to raise awareness among State aid
providers. A report on the inventory of existing aid schemes was approved in January 2008,
and the annual report on State aid for 2007 was approved in July 2008. The State Aid
Commission took eight decisions on cases notified by aid providers. Albania has started
preparations for implementing the State aid provisions in the iron and steel protocol to the
Interim Agreement. However, no decision on granting State aid to the iron and steel sector has
yet been taken. Further efforts are needed as regards implementation.

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Overall, preparations in the area of competition are well on track.
4.1.6.

Public procurement

There has been limited progress in the area of public procurement. The legislative
framework of the public procurement system has not changed substantially. The Public
Procurement Law was amended twice. The first amendment partially revised provisions on
use of negotiated procedures in cases of extreme urgency. The second concerns purchases of
electricity. It exempts domestically produced energy from the law and introduces new
provisions allowing use of negotiated procedures without prior publication of a contract
notice. It also allows use of framework agreements for purchasing electricity. This
amendment is not fully in line with the relevant provisions of the EC procurement directives.
The capacity of the Public Procurement Agency (PPA) was strengthened by recruiting 10
additional staff. The PPA continued to organise training seminars on public procurement.
However, contracting authorities still require more in-depth practical training to strengthen
their operational capacity and professionalism. The role of the PPA as the central coordinating
and advisory authority for legal and procedural reforms needs further strengthening to ensure
consistent development in all areas of public procurement. Legislative activities in certain
areas of public procurement are still split between various stakeholders.
The Public Procurement Advocate was established as an independent institution reporting to
parliament. However, it has no particular executive powers and its functions duplicate the
monitoring tasks of the PPA. The institutional framework for remedies is not in line with the
acquis. Decisions on appeals are taken by the same unit of the PPA that is responsible for
interpreting the law and giving advice to contracting authorities. Current procedures for
handling complaints still do not meet recognised international standards.
Albania introduced electronic procurement at the end of 2007. It is now used by all ministries
and also by the Power Corporation and the Directorate-General for Roads. However, its
application is hampered by technical problems and the insufficient IT capacity of many
contracting authorities.
Overall, preparations in the area of public procurement are advancing. However, there is no
coherent, comprehensive strategy for further development of the procurement system in either
the medium or long term. Further approximation is required in all areas of public
procurement, particularly for concessions and utilities.
4.1.7.

Intellectual property law

There has been limited progress on intellectual property rights. The Albanian Copyright
Office (ACO) signed memoranda of understanding with the Competition Authority, the
National Council of Radio and Television, the National Cinematography Centre and the tax
and customs administrations, with the aim of fighting piracy and enforcing the copyright law.
Joint inspections were carried out with the tax administration in several cities, and
administrative fines were imposed for infringements of copyright. However, the number of
cases of violation of copyright law brought to court is low. Amendments to the provisions
implementing the Customs Code relating to intellectual property rights and brand controls
were adopted in order to allow products to be classified as “fake”, “pirated” or “liable to
infringe the rights of patent or certificate owners”. The draft national strategy on culture
partially addresses issues regarding protection of copyright. However, a national strategy on
intellectual property rights has not yet been prepared.

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Several public information campaigns on intellectual property rights were organised and ACO
staff received specific training on copyright and law enforcement issues. However, the
capacity of the ACO needs to be strengthened by further training and additional human
resources. Currently, a single copyright inspector is supposed to cover the entire country.
There are plans for regional copyright offices, but these have not yet been established.
There has been some progress as regards industrial property rights. A new Law on
industrial property rights was adopted in July 2008. Its implementing legislation is still being
drafted. A Board of Appeal was established in the Directorate for Patents and Trademarks
(DPT) and the Directorate completed the reorganisation of its computer system. The DPT
organised training seminars and activities to promote the values of industrial property rights,
and the European Patent Office (EPO) provided assistance to both the DPT and ACO. A
bulletin of industrial property rights containing records of registrations and changes of
intellectual property rights titles is published and an on-line version is available on the DPT
website. The Administrative Council of the EPO approved Albania’s request for accession to
the European Patent Convention. Preparations for its ratification are underway.
The capacity of both the ACO and the DPT require further strengthening. Piracy and
counterfeiting remain widespread. Enforcement is hampered by insufficient inspection
capacity and the low level of fines under the current legislation, plus the lack of appropriate
awareness, experience and qualifications in this field on the part of the courts. The number of
infringement cases regarding intellectual property rights that are brought to court is still too
low. Further efforts are needed to improve inter-institutional cooperation and the ability of
customs authorities to detect counterfeit products. The general level of awareness on
intellectual property rights and their benefits is still low.
Overall, preparations in the areas of intellectual and industrial property rights are not very
advanced.
4.1.8.

Employment and social policies

There has been some progress in the area of employment policy. The Employment and
Vocational Training Strategy for 2008-2013 was adopted. Its main objective is to reduce the
level of unemployment to a level comparable to that in EU countries by 2013. New
employment promotion programmes have been adopted, providing subsidies to employers for
training and/or hiring jobless persons. One of the programmes specifically targets jobless
women. Measures to promote employment of young graduates have been stepped up.
However, monitoring and assessment of the impact of such programmes are still lacking.
Minimum wages and pensions continued to increase and legislation increasing the base level
of unemployment benefit was approved. A computer-based information system is being
developed in the head office of the national employment service and in two regional offices.
Databases on vacancies, jobseekers and training activities have been established. However,
the system is not yet extended to all offices. In general, the link between the vocational
training offered and labour market demand is not sufficient, and the capacity of the labour
offices to carry out labour market surveys is not strong enough. Also the capacity of regional
labour offices remains limited.
In the field of social policies, preparations for amendment of the labour law are underway.
Regarding health and safety at work, some progress has been made in the legislative area. In
March 2008 the Council of Ministers adopted a decision on the determination of dangerous

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substances. A working group has been set up to draft the national strategy for health and
safety at work. The staff of the State Labour Inspectorate was increased from 130 to 167 and
12 regional directorates have now been established, although they lack adequate physical
resources. The Directorate for Health and Safety at Work was reorganised and strengthened,
but it does not have adequate capacity to assess rights at work and its technical resources are
poor. The Gerdec incident in March 2008 illustrates Albania’s shortcomings on occupational
health and safety at work and the need for enhanced cooperation between the labour
inspectorate and the tax administration.
Social dialogue is still at a developing stage, and the position of trade unions and employers’
organisations alike remains weak. (See also political section – human rights and the
protection of minorities.)
The social protection and social inclusion strategy for 2008-2013 was adopted. It aims at
reforming the economic assistance scheme for poor families and cash payments for groups in
need, setting up community social services, protecting children and ensuring social inclusion
of minorities, the disabled and the elderly. The 2008 budget provides for 1.3% of the GDP to
support the poor and vulnerable. Improvements in the method of determination of the number
of poor families have already resulted in an increase in the economic assistance provided. The
strategy also provides for decentralisation of services to local government. 43 communitybased services and 29 residential services for the disabled and elderly came into operation
during 2007. The Inspectorate of Social Services has been set up to supervise, at central and
local levels, the implementation of standards applicable to social care services. However,
analyses of poverty and social exclusion are not sufficiently developed, including enhanced
poverty monitoring. (See also political criteria - economic and social rights.)
Efforts have been made to improve the financial sustainability of the social insurance scheme.
Procedures for pensions and social insurance have been improved. Work has started on a
centralised digital social security archive which will allow electronic registration of individual
accounts and contributors and payment of benefits.
Overall, preparations in the areas of employment and social policies are advancing
moderately. (See also human rights and the protection of minorities section on social
inclusion, anti-discrimination and equal opportunities.)
There has been some progress in the area of public health policy. The national strategy for
development and integration includes a number of public health-related activities. Albania has
approximated some of its legislative framework to the EU standards by approving legislation
on blood transfusions A training plan for school teachers has been prepared and structures
have been established for tobacco control. However, implementation of the new legislation on
blood transfusions is still outstanding and the implementation of the Law on health protection
against tobacco products is generally poor. The Law on health care has not yet been adopted.
Overall, administrative capacity in the field of public health remains weak and inequalities
persist in rural areas. Preparations in this area are not very advanced. (See also political
section on mental health.)
4.1.9.

Education and research

Some progress can be reported in the area of education. The education budget for 2008 was
increased by 12% in comparison with the previous year. According to the plans, this trend

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will continue over the period 2009-2011. Salaries for pre-university teachers were raised and
further increases of teachers’ salaries are planned in the years ahead.
The National Council of Pre-University Education was set up, including independent experts
and representatives from the national and local administrations. It aims at providing advice on
national programmes and strategies, curriculum reform, budgets and evaluation standards.
Implementation of the scheme on final and entry exams for universities (“State matura”) is
continuing and participation by disabled students in the scheme is being facilitated. A new
digital central system for university admissions has been established and career counselling
for higher education applicants has been introduced. Programmes to develop teachers’
professional qualifications have continued. Legislation to liberalise the textbook market has
been approved. A scheme for subsidising purchases of textbooks was introduced for students
from vulnerable groups and families receiving social assistance.
Work on development of the Albanian qualifications framework has continued. Parliament
approved an extension of the duration of compulsory education from eight to nine years. A
master plan has been prepared for implementation of an e-school programme to enhance use
of information technologies in schools. The government is taking measures to increase
enrolment in secondary education. Efforts are also being made to make vocational education
and training (VET) more attractive and to involve potential employers in the preparation of
programmes. An excellence fund provided funding for 25 students in 2007.
However, enrolment in secondary education in rural areas is still lagging behind. Continued
efforts are required on vocational training. Poor VET infrastructure is hampering development
of this sector. Efforts are needed to consolidate and expand the network of vocational
education centres and to foster closer links between education and the labour market.
The National Tempus Office (NTO) has improved its monitoring capacity and its cooperation
with the Ministry of Education and Science. However, further efforts by the NTO are required
to increase participation in the programme by improving the quality of the projects submitted
by Albanian universities. Preparations in the field of education are advancing moderately.
There has been some progress in the area of research. Since January 2008, Albania
participates in the Seventh EC Framework Programme on research and technological
development (FP7) as an associated country and has taken measures to increase its
participation in FP7. However, successful participation by Albania in FP7 will imply
enhancing both administrative capacity and national research capacity, including investment
in research infrastructure and incentives to attract students to science. Efforts are also required
to increase cooperation with other international partners.
A mid-term budgetary plan for scientific research for the period 2009-2011 has been
approved, marking an annual increase of 35% in the national budget for research. The budget
for research and development doubled in 2008. However, its share of the total budget (0.16%)
is still very low.
Albania has started to redesign its research policy. Improvement of the links between research
institutes and universities is being addressed. The Fundex and Brain Gain programmes were
launched with the aim of encouraging young Albanian researchers working abroad to return.
Establishment of a centre for promotion and implementation of international and national
research cooperation programmes is being considered. Albania’s national Euraxess mobility
portal and network need to be integrated with the European Euraxess service.

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Overall, preparations in the area of research are advancing moderately.
4.1.10. WTO issues
Albania is continuing to implement its relevant WTO obligations. The Directorate for Trade
Policy in the Ministry of Economy, Trade and Energy acts as the secretariat for WTO issues
via its section on WTO relations and economic cooperation. Albania is working on
identification of training needs to enhance its trade policy-making capacity. The WTO
concluded successfully the assessment of the EC-Albania Interim Agreement. Albania
participated actively in this process.
4.2.

Sectoral Policies

4.2.1.

Industry and SMEs

There has been progress in the field of industry and SMEs. As from June 2008, Albania is
taking part in the entrepreneurship and innovation pillar of the Competitiveness and
Innovation Programme. Progress has been made in implementing the European Charter for
Small Enterprises. The National Registration Centre for Business (NRC) can register a new
business in a single day. The number of steps required for registering a business has been
reduced and registration costs are now approximately 1 Euro. The NRC increased its staff and
has 19 operational windows in different municipalities. There are plans to open 12 additional
windows and to enhance co-operation between the NRC and the chambers of commerce and
industry. However, further efforts are required to strengthen the capacity in the NRC branches
of the municipalities.
Licensing procedures are being reviewed and simplified. Licensing requirements have been
reduced. 64 of the 151 licences identified in 18 sectors of the economy were removed and
another 21 licences were changed into self-declaration. Work is in progress to identify other
licences that could be removed. However, licensing and post-registration processes require
further simplification and the removal of licences needs to be accompanied by a strengthening
of the supervision capacities of public agencies in order to guarantee the standards that
safeguard consumer rights.
An online commercial register was established, the law on e-signature was approved and a
start was made on implementing e-procurement. The fiscal burden on enterprises was reduced
in January 2008 by the lowering of the profit tax from 20% to 10%. Businesses can file their
tax returns and social contributions declarations electronically in 12 cities including Tirana.
Electronic payment of taxes is also possible through certain banks. A new law on companies
was adopted in April 2008 following the approval of the new SME strategy in 2007. The
Bankruptcy law was adopted, providing a more efficient framework for market exit. The Law
on Chambers of Commerce and Industry was amended to remove the mandatory requirement
for companies to register with the Chamber. The Business Advisory Council has been active
in representing business interests. However, participation by business and corporate
associations in legislative processes could be enhanced.
The government approved the establishment of six industrial parks. In addition, the
competitiveness fund and the export credit guarantee fund are being implemented. The law on
leasing has been amended. In June 2008 the government approved the regulatory framework
for the implementation of a € 30 million credit facility agreed between Albania and Italy. Its
Project Management Office has been established. However, further efforts are required in
order to improve the competitiveness of the SME sector.

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Overall, Albania has taken steps to significantly improve the business environment. The
regulatory framework is now more conducive to operating a business. However, further
efforts are needed on contract enforcement and property rights, as well as on the effectiveness
and transparency of conflict resolution mechanisms. Preparations in the field of industry and
SME are advancing.
4.2.2.

Agriculture and fisheries

Some progress has been made in the area of agriculture and rural development. The Law
on Agriculture and Rural Development was adopted, thereby providing the legal basis for
agricultural and rural development policy. The government approved the Agriculture and
Food Sector Strategy and the cross-cutting Rural Development Strategy for the period 20072013. A new law on food was approved which provides support for geographical indications
and for origin labelling of products. However, this law has yet to be implemented. Direct
support to farmers continued and was further extended with the aim of encouraging the
production and consolidation of commercial farms. It is directed at new plantations of fruit
trees, olive trees and vineyards, livestock farms, greenhouse production, and drop irrigation.
The budget for 2008 is about € 7 million.
The extension services were reinforced. The Agricultural Information Centres received
equipment and increased their publication activities and media presence. Cooperation with the
Agricultural Technology Transfer Centres has resulted in 25 on-farm research projects
involving a large number of farms, and in a wide range of training activities. Organic farming
was an important part of the extension programmes.
In the field of rural development, the managing authority responsible for programming rural
development support measures and for leading the monitoring and reporting process was
established. A study on the setting up and functioning of the payment agency provided for in
the Law on agriculture and rural development was completed. The Agency is due to be
operational in 2009.
However, structural weaknesses such as land fragmentation, poor marketing systems and the
low level of technical education of farm operators still affect the competitiveness of the sector
and its capacity for meeting the demand for food products. Agricultural output continued to
grow at a slower rate than the economy as a whole, and the trade deficit in agricultural and
processed agricultural products continued to increase. Albania is not self-sufficient, even in
traditional products such as milk and dairy products, vegetables and meat.
There has been limited progress in the area of food safety, veterinary and phytosanitary
policy. The new law on food adopted in January 2008 establishes the general principles for
food and feed hygiene. The adoption of its implementing legislation has started. The
government approved a number of regulations on the control of animal diseases; however,
these are not in full compliance with EU legislation. The State budget supported prophylactic
measures against brucellosis, tuberculosis, anthrax, and classical swine fever. The government
has taken measures to promote registration of small ruminants. Funds have been allocated for
the registration of all bovines by the end of 2008. However, implementation of registration
has been delayed and only 40-45% of this target had been reached by the end of September
2008.
No progress can be reported as regards the upgrading of agri-food establishments.

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The system of controls of live bivalve molluscs still cannot be considered to be equivalent to
the Community system. Specific guarantees concerning histamine are still requested for each
consignment of fish and fishery products intended for the EU market. Albania is developing
its own capacity for histamine testing. However, further progress in upgrading and
accreditation of laboratories is still necessary.
There has been limited progress in the phytosanitary sector. Amendments have been adopted
to the Law on the Plant Protection Service and to the regulations on the registration and
placing on the market of plant protection products. The capacity of Border Inspection Posts in
the veterinary and phytosanitary sectors has been strengthened by the drafting of legislation
and by the provision of equipment and training.
Overall, there has been some progress in improving the legal framework on agriculture and
rural development, food safety, veterinary and phytosanitary policy, but further efforts are still
required in order to enhance the capacity of all actors involved. Preparations in these areas are
advancing moderately.
There has been some progress in the field of fisheries regarding inspection, control and
international cooperation. Albania became a member of the International Commission for the
Conservation of Atlantic Tuna. Regarding inspection and control, the fines imposed for illegal
fisheries increased substantially. However, collection rates are poor but confiscation of
equipment and withdrawal of licences are used as deterrents. Law enforcement and
implementation require further attention. The directorate of Fisheries Policies in the Ministry
of Environment, Forestry and Water Administration does not have inspection vessels. It has to
rely on the Border Police, which does not have appropriate training for fisheries inspection.
Albania is making progress towards the establishment of an EU-compliant log book and
fishing fleet register. However, a landing data system is still at an early preparatory stage.
Preparations in the field of fisheries are advancing moderately.
4.2.3.

Environment

Some progress can be reported in the area of horizontal legislation. The second part of the
National Methodology for Environmental Impact Assessment (EIA) was approved. A sector
strategy for the environment was also approved. The National Environmental Law was
amended and the government approved a Decision on public involvement in environmental
decision making. However, implementation of the EIA legislation needs to be improved. With
regard to climate change, some efforts can be noted, in particular concerning the development
of the Clean Development Mechanism (CDM). Some activities have been carried out in the
field of civil protection.
Limited progress can be reported on air quality in urban areas. Additional monitoring
equipment was provided and contracts were signed for air quality monitoring. Emissions from
the vehicle fleet and from large industries have been slightly reduced. However, there is no
clear long-term policy on how to abate the air pollution and reduce emissions from these two
sources. Enforcement of existing legislation on vehicle emissions and fuel quality is weak.
Albania is only at an early stage in terms of the monitoring of air quality.
There has been little progress in the area of waste management. The government adopted
some implementing regulations. Apart from the rehabilitation of the Sharra landfill there have
been no developments as regards municipal waste management. Uncontrolled dumping and
burning of waste still represent environmental and health hazards. Work is in progress on the

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rehabilitation of toxic hotspots, in particular for the Copper Smelter in Rubik, the Nitrate
Fertilizer Plant in Fier, the Chemical Plant in Durres and the Ballshi oil refinery. A project for
the identification and assessment of environmental hot spots has started. However, Albania
lacks a modern system of waste collection, disposal and recycling, and has not set up a clear
strategy for the safe disposal of hazardous waste. Preparations in the field of waste
management are not advanced.
There has been some progress in the field of water quality. The number of drinking water
monitoring stations has increased substantially and the level of access to water supply systems
has improved slightly. However, surface waters are severely affected by urban and industrial
pollution. Water supply and sanitation systems remain outdated. There is only one waste
water treatment plant in the country, but it is not yet operational. Four others are in the final
stages of construction. Pollution of bathing waters remains a serious problem in some places
due to direct discharges from sewerage systems or from industry. A National Strategy for
Water supply and Sewerage has not yet been approved. Preparations in this field are
moderately advanced.
There has been some progress in the area of nature protection. The Habitats Directive has
been further transposed and a law for implementation of the CITES Convention has been
adopted. Protected areas now account for 11.4% of the national territory. However, additional
training and adequate resources need to be provided to the staff operating in these areas.
Approximation to the Wild Birds and Habitats directives needs to continue. Efforts are still
required to meet Albania's commitments on environment under the Energy Community
Treaty. Preparations in this field are moderately advanced.
Some progress can be reported on industrial pollution and risk management. The law on
environmental protection has been amended to ensure transposition of some provisions in
these areas.
There are no developments to report on chemicals and genetically modified organisms.
Legislation has been adopted on evaluation and management of environmental noise and on
maximum levels of noise in certain environments. Preparations in this field are still at an early
stage.
Further efforts are required to strengthen the administrative capacity of all institutions
involved in environmental policy making and enforcement. Inter-institutional cooperation and
coordination still needs improving. The National Environmental Strategy has not yet been
approved. Further efforts are needed towards ratification and implementation of international
conventions.
Overall approximation of legislation to the acquis is making slow progress, but
implementation and enforcement are still lagging behind. Preparations in the field of the
environment are advancing slowly.
4.2.4.

Transport policy

There has been some progress in the area of trans-European transport networks. Albania
continued to participate actively in the implementation of the Memorandum of Understanding
signed in 2004 for the development of the Core Regional Transport Network, and in the South
East Europe Transport Observatory (SEETO) by up-dating and implementing the multi-

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annual plan 2008-2012. Work has continued on corridor VIII projects as well as on the northsouth axis roads. The Durres-Kukes-Morine road remains one of Albania's priorities.
The government has set up the Institute of Transport as a service unit to the Ministry of Public
Works, Transport and Telecommunications. The Institute will be responsible for maintaining
and updating the Albanian National Transport Plan (ANTP) and establishing and maintaining
a central Transport Data Base for all modes of transport in Albania. The National Transport
Strategy was adopted in August 2008.
There has been some progress as regards road transport. The admission to the occupation of
road passenger and goods transport operator and the recognition of documents required for the
activity was regulated by new legislation. Albania is granting unrestricted access through its
territory to Community transit traffic in line with the Interim Agreement. However, further
simplification of freight transport traffic by road is still required, for both international and
transit traffic.
The reorganisation of the General Roads Directorate (GRD) into an agency contracting out
road construction and maintenance to private firms is underway. The Reform Implementation
Team was established in May 2008 and the Management Unit was established in July 2008.
Work is in progress on the review of necessary legislation, and on the financial and
organisational requirements. The GRD has started work on the establishment of the Road
Asset Management System and has introduced performance-based maintenance contracts in a
number of Regional Roads Directorates. The budget for road signalling was increased.
However, sustained efforts are still needed in order to improve the quality of road
maintenance. Poor condition of roads, together with defective signalling, illegal constructions
along new roads and limited level of education of drivers, continue to pose a serious problem
to road safety. Preparations in the field of road transport are advancing slowly.
Progress has been very limited in the rail transport sector. In December 2007, Albania
signed the "Addendum to the Memorandum of Understanding on the Development of the
South East Europe Core Regional Transport Network for a South East European Railway
Transport Area", aimed at the gradual market opening of the rail transport market. From
January 2008 the reorganization of Albanian railways became effective. The aim of the
reorganisation is to separate passenger, freight, infrastructure and services branches into
individual business units. However, the business plan for the Albanian railways has not yet
been adopted. Preparations in the rail transport sector are lagging behind.
Progress in the area of maritime transport has been limited. The parliament adopted
legislation on the accession to the International Convention for the control and management
of ballast water of vessels. Legislation aimed towards membership to the Paris Memorandum
of Understanding on Port State Control was also approved.
The updating of the Master Plan for the Port of Durres was finalised in July. Work has begun
on the establishment of a new Maritime Administration. However, substantial efforts are still
required in order to improve maritime safety. Albania's very high rate of detention for vessels
that are considered substandard, pursuant to the Paris Memorandum of Understanding,
remains critical. The June 2008 black list of the Paris MoU still rates the Albanian flag as
very high risk and the performance of the Albanian Register of shipping is assessed as low.
Preparations in the field of maritime transport are at a very early stage.
No progress can be reported on combined transport.

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There has been further progress in the field of air transport. The draft new Air Code was
completed. Its alignment with the acquis, in line with Albania's commitments under the
European Common Aviation Agreement (ECAA), has not yet been confirmed. Work is in
progress on the implementation of the first transitional phase of the ECAA. However, there
have been delays in implementing the corrective action plan approved in August 2007 to
address the deficiencies identified within Albania's Civil Aviation Authority (CAA) as
regards safety oversight of the country's airlines. Efforts are still required to strengthen the
administrative capacity of the CAA, as its new organisational structure has not yet been
finalised. Preparations in the field of air transport are advancing moderately.
4.2.5.

Energy

Some progress has been made as regards oil stocks. The government amended the Decision
"On the maintenance and managing of the emergency oil stocks". These stocks are now based
on 60 days' average consumption instead of on 30 days. However, mechanisms need to be put
in place to properly monitor their establishment.
Activities to improve the security of energy supply have continued. Construction of the Vlora
thermal power plant is in progress. Albania has signed 25 concession agreements for
construction of small hydro-power plants, and a further 87 proposals are under evaluation.
Preparations are underway for the signature of a concession agreement for the rehabilitation
of the thermal power plant in Fier. Work started on the interconnection line Elbasan–
Podgorica and on the National Dispatch centre. However, Albania has continued to be unable
to ensure security of electricity supply. The country is overly dependent on hydro-electric
plants, and its own generation resources are not sufficient to meet domestic demand. Limited
interconnection capacity continues to hinder Albania's capacity to import electricity.
There has been some progress in the field of the internal energy market. A law on the gas
sector was adopted in June 2008. The government approved the electricity market model and
the Energy Regulatory Authority (ERE) revised and approved the market rules, in order to
ensure the necessary framework for the opening and the functioning of the wholesale and
retail market. As from January 2008 all non-domestic consumers became eligible consumers
and were granted the right to choose their own suppliers in line with the requirements of the
Energy Community Treaty. However, all customers except one have chosen to remain as
tariff customers in 2008. A monitoring structure was established within the ERE to allow the
implementation of its market monitoring responsibilities. Most licensing and authorisation
review procedures are now in place. However, ERE needs to increase its decision making
capacities and ensure transparency of the decision making process. The process of
restructuring the electricity company KESH continued. The Transmission System Operator is
unbundled and has drawn up its financial statements. Legislation establishing the Distribution
System Operator as an independent entity was approved and the process for its privatisation is
ongoing.
Electricity tariffs were increased by an average of 15 % in March in an effort to bring them
closer to cost recovery levels. Technical losses were reduced and bill collection increased.
However, further efforts are still necessary in these areas. Large power imports continued to
impair the financial situation of KESH. The revised National Energy Strategy has not yet been
adopted.

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There has been no progress on the implementation of the energy efficiency law of 2005.
There has been some progress in the hydroelectric sector, but the development and use of
other renewable energy sources remains at an early stage.
There has been limited progress in the field of nuclear safety and radiation protection. The
regulatory framework includes the Radiation Protection Commission and the Radiation
Protection Office as regulatory and executive bodies respectively. The government approved
legislation on the import of radiological instruments and radioactive sources.
However, the independence and capacities of the regulatory bodies require strengthening.
Efforts need to continue to ensure compliance with Euratom Treaty requirements and
procedures, in particular as regards the environmental monitoring and radiation protection in
the context of medical and industrial applications. Albania has not yet signed the Convention
on Nuclear Safety and the Joint Convention on the Safety of Spent Fuel Management and on
the Safety of Radioactive Waste Management. Proper attention should be given to the
prevention of illicit trafficking of nuclear and other radioactive materials.
Overall, preparations are advancing as regards the reform of the internal energy market.
However, weaknesses in the electricity sector continue to hinder economic growth and the
social development of the country. Efforts need to continue on restructuring the electricity
company KESH and stabilising its financial situation, as well as on the security of electricity
supply, which are key European partnership priorities.
4.2.6.

Information society and media

There has been some progress in the area of electronic communications and information
technologies. The new primary legislation on electronic communications, aimed at
transposing the 2002/2003 EU regulatory framework, entered into force in June 2008. In
December 2007 a regulation on access and interconnection was approved and the incumbent
land line operator amended the interconnection agreements with the rural operators. Based on
the new primary law, a tariff methodology addressing the tariffs of the three largest operators
(fixed and mobile) at both wholesale and retail level was approved in June 2008. It started to
be applied on 1 September, leading to overall tariff reductions. A third mobile telephony
operator became operational in March 2008 and the telecommunications regulatory entity
carried out a public call for expressions of interest for a fourth operator.
However, an electronic communications strategy and related policy documents, and
secondary legislation for the implementation of the new law on electronic communications
have not yet been adopted. Market liberalisation and competition are still at an early stage.
Overall, there is lack of competition safeguards such as tariff rebalancing, good reference
interconnection offers, carrier selection and pre-selection, number portability and local loop
unbundling. The legislative amendment of 2006 allowing operators to apply for urban and
regional licences in addition to the rural and national licences did not have the expected
impact in 2007.
There is insufficient administrative capacity in the Ministry of Transport, Public Works and
Telecommunications and in the Agency for Electronic and Postal Communications AEPC
(the former Telecommunications Regulatory Entity or TRE). The agency needs to develop the
necessary expertise for implementing and enforcing the new legislation. Overall, preparations
in the area of electronic communications are advancing moderately.

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There has been some progress as regards information society services. The National Agency
on Information Society (NAIS) became operational in September 2007. Its main objective is
the co-ordination of all activities in the field of information and communications technology,
and currently it has a staff of 20. The law on e-signature was adopted in February 2008.
However, the implementing legislation for the law on e-signature, and for data protection, as
well as legislation on e-commerce and e-documents, has not yet been finalised. The national
strategy for information society is still in preparation and there has been no progress as
regards legislation on conditional access. Preparations in the area of information society
services are at an early stage.
There has been progress as regards audiovisual policy. The strategy for the transition to
digital broadcasting is being drafted in cooperation with international bodies and the relevant
actors. The National Council of Radio and Television (NCRT) adopted regulations on the
licensing of digital broadcasting and on the criteria for granting licences for terrestrial and
analogue television broadcasting at national level. The Final Acts of the Regional Radio
Communication Conference for the planning of the digital terrestrial broadcasting service in
parts of regions 1 and 3 in the frequency bands 174-230MHz and 470-862 MHz (RRC-06)
were ratified, as were the Final Acts of the Regional Radio Communication Conference for
the revision of the 1961 Stockholm Agreement.
The NCRT enhanced its administrative capacity and increased its staff. It transformed its
Complaints Council into an Ethics Council. The Ethics Council has played a positive role in
self-regulation, encouraging the drafting of a code of ethics by each radio and TV operator,
with the aim of unifying these codes into a single code. However, the NCRT's monitoring
capacity is limited by its insufficient technical resources. Overall, preparations in the field of
audiovisual policy are advancing, but work on the Action Plan on media reform agreed with
the European Commission and the Council of Europe needs to be stepped up. (See also
political section).
4.2.7.

Financial control

There has been modest progress in the area of Public Internal Financial Control (PIFC). A
new draft Organic Budget Law was adopted by Parliament in June 2008. It introduces
framework provisions on PIFC and its components – namely financial management and
control (FMC), internal audit and a central harmonisation function. It also includes an
undertaking to issue a separate law on FMC and an Inspection Law in the coming period.
Hence, the Internal Audit Law adopted in 2007 will need to be amended in order to make it
consistent with the overall PIFC legal framework. A Central Harmonisation Unit for FMC
was established in July 2008 as a Directorate within the Treasury. Its director and one of its
three other staff members have been appointed.
The 2005 PIFC Policy Paper and its Action Plan have not yet been updated. Managerial
accountability and subsequent development of Financial Management and Control systems
are still at an embryonic stage. Decentralised internal audit units have been established in all
ministries and in some government agencies, but they continue to perform mainly inspection
and control tasks and their lines of reporting are not clear. Managers' awareness of PIFC
continues to be limited.
As regards external audit, the operational independence of the Supreme Audit Institution
(SAI) has been enhanced, with the Budget Committee of the Parliament having the sole right
to approve its budget. However, the SAI law is still not fully in line with the INTOSAI

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standards and will need amending, especially as regards the criteria for dismissal of the
Chairman and the remit and scope of audit. There has been limited progress in moving away
from inspection activities towards financial and systems-based audits. The Development
Strategy for 2009-2013 still needs to be formulated so as to strengthen the institution and its
audit performance.
Overall, preparations in the area of financial control are advancing slowly.
4.2.8.

Statistics

There has been progress in statistical infrastructure. The budget of the Albanian statistical
office (INSTAT) was increased, its salary scales were upgraded and additional staff have been
recruited. Working conditions at INSTAT headquarters improved. Offices were renovated and
the IT infrastructure was upgraded. A new organisational structure for INSTAT has been
prepared and provides for a reduction in the number of regional offices by merging district
offices at the level of prefectures. The multi-annual statistical programme 2007 – 2011 was
adopted by the Parliament. The Bank of Albania and INSTAT signed a cooperation
agreement with the view to improving monetary and financial statistics. However,
cooperation agreements should also be signed with other producers of statistics.
Some progress has been made in classifications and registers. Most major statistical
classifications are in place and comply with EU standards. However, a classification of
statistical regions comparable to the NUTS level 2 classification is not yet established. The
quality of the statistical business register still needs to be improved.
Noticeable progress has been made in some key sectoral statistics. Concerning demographic
and social statistics, the results of the household budget survey and the labour force survey
2007 have become available. The population census is scheduled for 2011 and INSTAT has
initiated preparatory activities. However, measures are still required in order to ensure
comprehensive registration of all demographic events.
Efforts are needed to improve statistics on regional level in order to satisfy new demands
generated by the on-going decentralisation process. In the field of regional statistics, data are
collected mainly from administrative sources and only at county level. As regards macroeconomic statistics, quarterly national accounts have been prepared from 2005, but further
work is needed to fully align the national accounts with ESA 95.
The coverage of business statistics has been improved since the beginning of 2008.
Concerning agricultural statistics, the preparation of a census on agriculture has started.
However, efforts are required to ensure that agriculture statistics comply with EU standards,
and cooperation between INSTAT and the Ministry of Agriculture needs to be enhanced.
Overall, there has been progress in the field of statistics. Preparations are advancing, but
further improvements are still necessary in key areas, such as macro-economic, regional,
business and agricultural statistics.
4.3.

Justice, freedom and security

4.3.1.

Visa, border, control, asylum and migration

There has been some progress with management of visas. Preparations for a reliable civil
registry and a uniform address system are making headway. Computerisation of the civil

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registry data has been completed. In September, civil registry offices started issuing printed
certificates. In July 2008, a company was awarded the contract for production and distribution
of ID cards and biometric passports. Completion of the civil registry and address system is
vital as a source of data for ID cards and to ensure adequate document security.
The EC-Albania visa facilitation agreement entered into force in January 2008. The dialogue
on visa liberalisation between the EU and Albania was launched and a roadmap, specifying
the measures to be taken, was presented to Albania in June 2008. Albania delivered a first
report on implementation of the roadmap in September 2008.
Albania operates a visa-free regime for all EU Member States. It signed a visa-free agreement
with the former Yugoslav Republic of Macedonia in February 2008. Currently, the positive
and negative lists are not fully harmonised with the EU visa list, but preparations are
underway.
The Law on Foreigners, adopted in July 2008, includes amended rules for issuing visas at the
border. For residence permits of over three months, a visa will also be required when the law
enters into force in December 2008. For now, visas issued at the border are limited either to
humanitarian reasons or to tourist visas mainly for Latin American countries which are on the
EU positive list. Initial steps have been taken to set up a national visa centre. Overall, Albania
has continued to make moderate progress on visa management.
Albania has made progress in the field of border control. The new Law on State Border
Control was approved in January 2008. The Albanian State Police (ASP) has prepared a
progress report on implementation of the National Integrated Border Management (IBM)
Strategy and the associated Action Plan. Implementation of the IBM objectives for 2008 is
ongoing and advancing moderately, particularly as regards IT aspects of border crossing
points and infrastructure. However, despite improvements, further investments are required to
improve the infrastructure at border crossing points (BCP). 15 of the 26 border crossing
points have been linked electronically via the Total Information Management System (TIMS)
and equipped with the relevant facilities. Several cross-border meetings were held between
the border police of Albania and the former Yugoslav Republic of Macedonia, Greece and
Montenegro. Local border police officers cooperate with their counterparts across the border.
Staffing levels in the border police force remain low. The existing bilateral agreements on
police cooperation provide a sound legal basis for cross-border cooperation. However, crossborder cooperation needs further improvement and institutionalisation. Negotiations to set up
a working arrangement with FRONTEX have started.
Construction of the Murriqan joint border crossing point (JBCP) with Montenegro was
launched in May 2008. Construction of a joint BCP with the former Yugoslav Republic of
Macedonia has started at Xhepisht Trebishtit.
Specialised training has been given to 446 mid-ranking and senior border guards. A broader
longer-term training policy, aiming at building capacity to detect falsified documents, illegal
migrants or victims of trafficking, has yet to be implemented.
The Law on the Coast Guard, adopted in 2007, includes separation of tasks between the
border police and the coast guard and is being implemented, albeit slowly. Civilian command
of the coast guard, in line with Ohrid commitments, is still pending. A joint operations centre
to coordinate sea operations has not yet been established. The administrative and operational
capacity of the coast guard remains weak. Equipment to patrol the blue border needs

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upgrading. Specialised training and closer coordination between the border police and
customs authorities are needed.
Overall, Albania continues partially to meet its objectives in the field of border control, but
the human resources remain insufficient to carry out these tasks efficiently.
There is limited progress to report on asylum issues. An efficient asylum system is not in
place. The review of the legal framework for approximation to EU Standards has not been
completed. Since January 2008, eight persons have requested asylum in Albania. One of them
has been granted temporary asylum on humanitarian grounds.
Financial and human resources at the Department for Citizenship and Refugees are not
sufficient to fulfil the obligations under the 1951 Convention relating to the status of refugees,
particularly for implementation of the pre-screening system. Coordination with the border
police is weak. Asylum procedures at reception centres are not applied in a standardised
manner. The infrastructure needs upgrading.
A more effective data management system for asylum and migration is required; more
resources need to be provided to establish a migrant registry and for mapping Albanian
migrants abroad. The Total Information Management System (TIMS) introduced at 15 border
crossing points needs to be turned into an effective tool for data collection and management.
Overall, Albania continues partially to meet its targets in the field of asylum.
Some progress can be reported in the area of migration. In May 2008, the Ministry of Labour
and Social Affairs (MLSA) established a Coordination and Monitoring Plan for
implementation of the National Strategy on Migration, including the associated Action Plan.
The Ministry is actively coordinating implementation of the strategy, but the inter-ministerial
coordination mechanism has not been established yet. Preparations for implementation of the
migration strategy are proceeding, albeit slowly.
Seasonal peaks of illegal migration remain problematic, especially on the border between
Albania and Greece, owing to the high demand for seasonal agricultural work. This border is
the most critical entrance point for illegal immigrants to the EU from Albania. In the first
eight months of 2008, a total of 9,382 persons were apprehended at the border, up from 5,955
for the whole of 2007. Although no cases of illegal migrants across blue borders have been
reported, there is still a need to strengthen border surveillance by providing adequate
infrastructure.
Detection of illegal migration has improved due to the enhanced detection capability of the
border police. Figures for the first half of 2008 show higher refusal rates for entry into
Albania. Detection of falsified foreign passports in the first half of 2008 already equals the
total figure reported in 2007.
The Department for Border Police and Migration is upgrading reception and processing
facilities for illegal migrants at several of the main border crossing points. However, facilities
overall are poor. Cooperation with neighbouring countries on illegal migration needs to be
enhanced.
In January 2008, new regional directorates were established within the border and migration
police. The border police consists of eight regional directorates and 34 border police stations,
12 of which serve as readmission points. A Return and Readmission Unit was established

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within the Department for Border Police and Migration. However, human resource allocations
remain inadequate, especially during peak seasonal inflows.
Albania signed protocols implementing the EC-Albania readmission agreement with Austria
and the Benelux countries and draft protocols with Greece and the Czech Republic.
Negotiations are underway for renewing the readmission protocol with Italy and for signing
protocols with France, Slovenia and Slovakia. Border and migration police staff cuts could
limit Albania's capacity to meet its obligations under the readmission agreement.
Albania has signed readmission agreements with Croatia and the former Yugoslav Republic
of Macedonia. The provisions in the EC-Albania readmission agreement concerning
readmission of third-country nationals entered into force in May 2008. The other parts of the
agreement had entered into force on 1 May 2006. A closed reception centre is under
construction, but accommodation of third-country nationals remains inadequate.
Overall, illegal migration remains a significant problem, especially at the Albanian–Greek
green border. Albania continues partially to meet its targets in the field of migration.
4.3.2.

Money laundering

Limited progress has been made in the fight against money laundering, which continues to
be a major problem. Albania's economy, particularly the private sector, remains largely cashbased. In terms of mechanisms to control cash transactions, there is no strategy in place.
The Law on money laundering and financing of terrorism was adopted in May 2008, but bylaws to implement it are pending. In 2008, several regulations were adopted on the handling
of confiscated assets. Training courses were organised for banks and notaries. Thresholds for
reporting of transactions were lowered and are now in line with international standards.
Although the law incorporates international instruments, such as the MoneyVal
recommendations, it is still not fully aligned with the acquis. Better definition of concepts and
implementation guidelines are needed.
A national strategy to prevent and fight against money laundering and financing of terrorism
has not yet been adopted.
The General-Directorate for the Prevention of Money Laundering, (Financial Intelligence
Unit - FIU), under the Ministry of Finance, is responsible for collection, analysis and
dissemination of financial intelligence. Premises and equipment levels have improved.
However, the FIU's capacity remains limited. Staff turnover remains a concern. Coordination
and cooperation with the Prosecutor's Office remains problematic.
A new office to combat money laundering, within the State police, became operational in
January 2008. However, the link between criminal intelligence and investigations remains
weak. The lack of coordination between the judiciary and the police also results in
unprocessed intelligence, which is subsequently lost. The investigative and enforcement
capacity of the police and the Prosecutor General remain weak.
Under the Prosecutor General, a task force has been established. The Joint Investigation Unit
for the Fight against Economic Crime and Corruption (JIU) is now operational. However, the
administrative capacity of the JIU requires further strengthening.

EN

46

EN

Progress can be reported as regards unregistered currency exchanges. The Bank of Albania
approved new regulations on licensing and supervision of foreign exchange offices. The
number of officially licensed foreign exchange offices increased significantly. Controls at
border crossing points have also been tightened up.
Overall, preparations in the fight against money laundering are at an early stage.
4.3.3.

Drugs

There has been limited progress in the fight against drugs, but drug trafficking remains a
serious concern.
A National Strategy against Drugs for the period 2004–2010 is in place, but implementation is
hampered by the scant human and financial resources allocated. The administrative capacity
to implement the strategy needs to be further developed.
Some progress can be reported in the form of the signature, in November 2007, of Joint
Orders on the prevention of drug use in schools and universities and on the handling of
narcotics. The Ministry of the Interior's order against the cultivation of narcotics entered into
force in early 2008. The authorities initiated some 2,000 drug-related prosecutions in 2007.
To date, there has been no coherent and valid strategy for drug demand reduction and the
availability of the services provided - including treatment and prevention - remains limited.
Drug-related prosecutions have increased. Large amounts of cocaine and cannabis have been
confiscated. By contrast, seizures of heroin at border crossing points have fallen by roughly
50%.
The government continues to make use of joint counter-narcotic task forces, which include
representatives of the Ministry of the Interior, the border police, the tax police, the road police
and the customs authorities. Inter-agency cooperation has improved and international
cooperation in the field of counter-narcotics continued. Additional emphasis should be placed
on the training of counter-narcotics personnel.
In 2008, a new central storage facility for seized drugs and a new centre for the destruction of
drugs were built. However, the procedures for storing, analysing and destroying seized drugs
lack transparency.
On the production side, an action plan to fight cultivation of narcotic plants was approved in
March 2008. Over the reporting period, cultivation of cannabis has been further reduced.
However, Albania remains a source country for cannabis. There is no government cropsubstitution programme.
Overall, Albania is making moderate progress in the fight against drugs.
4.3.4.

Police

There has been continued progress in management of the State police, with the entry into
force in 2008 of the new State Police Law. Other areas in which progress has been made
include border and port security, training reforms and establishment of border control
information systems, such as databases and passport and fingerprint control IT systems.
However, unclear lines of responsibility and poor accountability among the relevant bodies
remain causes for concern.

EN

47

EN

The Albanian State Police Law is having a positive effect on the behaviour of police
managers, on recruitment and on career structures for officers. The internal control structures
are being developed. However, staffing levels at the Albanian State Police (ASP) are not yet
stabilised. The transfer of police officers on the basis of experience and qualifications,
completed in June 2008, highlighted skills gaps, particularly in specialist departments. In
addition, the practice of removing previously trained and competent staff from their posts is
adversely affecting the police. Another problem is that staff who have failed basic
competence tests are retained within the State police training programme for up to three years.
The overall management of police human resources is still unsatisfactory.
In April 2008, a cooperation agreement was signed between the State police and the General
Prosecutor (GP) to define responsibilities with the aim of reducing any potential overlap
during investigations. Despite a pilot scheme of standardised case reporting forms, there has
been little progress in establishing police case reporting systems. Investigative capacity, both
in the police force and at the General Prosecutor's office, remains weak. It is hampered by
lack of cooperation and parallel investigative structures inside the GP's office.
More efforts are needed to develop reliable crime statistics. Many crimes go unreported and
the low level of recorded offences remains unexplained.
Albania has started implementing the strategic agreement with Europol which entered into
force in May 2007. This provides for closer cooperation and better exchange of information.
Europol and Albania are also working on conclusion of an operational agreement for
exchanges of personal data. Albania ratified the South-East Europe Police Cooperation
Convention, which entered into force in 2007. Implementation of the community policing
strategy has started.
Overall, preparations concerning policing are continuing to advance, but structural
improvements need to be followed by operational results.
4.3.5.

Fighting organised crime and terrorism

Limited progress can be reported in the fight against organised crime, which is a key
European Partnership priority. The national strategy for fighting organised crime was adopted
in July 2008, but remains to be implemented. Organised crime continues to be a serious
problem in Albania.
Difficulties in cooperation between police and prosecutors continued to hamper the fight
against organised crime. Although cooperation between organisations has improved at high
levels, at operational level it is still problematic. The standardisation of case reporting will be
the key to progress here.
At present, there is a lack of capacity to engage in longer-term operations aimed at the higher
echelons of organised crime. This problem is exacerbated by the lack of capacity for
intelligence-led policing, which hampers such operations. There are no manuals for
prosecutors giving guidance on investigations. Since May 2008, police officers working
within the judicial police units of the Prosecutor's Office have returned to the ASP. This
should help to improve cooperation and reduce any overlaps. However, investigative capacity
within the police and the General Prosecutor's Office remains weak.
Cooperation between Interpol Tirana and other countries has continued, particularly at
borders with Greece. The number of wanted Albanians that have been traced and returned to

EN

48

EN

Albania has increased. In the first half of 2008, 62 extraditions to Albania took place. As a
result of international cooperation, several criminal organisations operating abroad have been
dismantled and gang leaders arrested.
The national action plan against the trafficking of stolen vehicles was adopted in April 2008.
Implementation is underway. However, coordination between the various law enforcement
bodies remains an issue.
Regarding police use of criminal intelligence databases, the MEMEX information servers are
still located at the Ministry of the Interior (MoI) and not at police headquarters. Improvements
in the way in which the State police gathers and uses intelligence are critical in order to reap
the full benefits of the MEMEX technology.
There has been some progress in the fight against trafficking in human beings. However,
much remains to be done, particularly in the area of victim protection and identification.
Albania continues to be a source country for human trafficking, particularly of women and
girls for sexual exploitation. Children are also trafficked for begging and other forms of child
labour. Approximately half of all Albanian trafficking victims are under the age of 18.
Internal sex trafficking of women and children is on the rise, particularly from the Roma
minority.
The Criminal Code was amended in February 2008 to strengthen the legal framework for
criminal prosecution of trafficking in human beings. A database on victims of trafficking has
been installed at the Department for Border Police and Migration, but is not yet operational.
The Office of the National Anti-Trafficking Coordinator (ONAC) coordinated the
consultation process leading to the adoption, in July 2008, of the National Strategy to Combat
Human Trafficking and the National Action Plan for 2008-2010. The strategy for protection
of child victims of trafficking was also adopted. However, much remains to be done,
particularly in terms of victim protection. More political will and better coordination are
needed for the implementation of the anti- trafficking strategy, particularly regarding victim
protection.
The ONAC held meetings with neighbouring countries to enhance regional cooperation. An
additional protocol was signed with the former Yugoslav Republic of Macedonia in 2008
which includes referral and assisted return of victims. Agreements have been signed with
Montenegro, the former Yugoslav Republic of Macedonia and Kosovo on exchanges of
information regarding cross-border criminal activities.
However, the lack of reliable statistics and of a proper capacity for identifying victims is
hampering progress. Coordination between NGOs and law enforcement bodies needs to be
improved. Coordination and cooperation among the recently established structures at central
and local levels (responsible authority and regional anti-trafficking committees) is still weak.
The national referral mechanisms are not yet operational; there is no nationwide coverage
(especially in remote areas) and no alternative protection and assistance for victims of
trafficking. Training for law enforcement officials within the anti-trafficking sector should be
enhanced.
Albania is only partially meeting its objectives in the fight against trafficking in human
beings.

EN

49

EN

In the fight against terrorism, Albania has continued to make headway. The Council of
Europe Convention on the prevention of terrorism was ratified in 2005. Strategies, action
plans and operational responses to the threat of terrorism in Albania are under preparation. A
National Counter-Terrorism Strategy is being drafted, including the police, intelligence and
security services together with a number of other stakeholders. The capacity and integration
of the various institutions involved has continued to improve.
Overall, in the fight against organised crime, Albania is continuing to make moderate
progress. Albania is only partially meeting its objectives in the fight against trafficking in
human beings. Preparations for a more efficient counter-terrorism framework are still at the
early stages.
4.3.6.

Protection of personal data

There has been progress in the area of protection of personal data. The new Law on protection
of personal data entered into force in April 2008. In September 2008, the Commissioner for
Data Protection was appointed by parliament and the structure for the independent data
protection supervisory authority was agreed. Overall, preparations in the field of protection of
personal data are advancing.

EN

50

EN

STATISTICAL ANNEX
STATISTICAL DATA (as of 29 September 2008)
Albania
Basic data
Population (thousand)
Total area of the country (km²)

Note
1)

1998
3 354
28 750

1999
3 373
28 750

2000
3 058
28 750

2001
3 063
28 750

2002
3 084
28 750

2003
3 103
28 750

2004
3 120
28 750

2005
3 135
28 750

2006
3 149
28 750

2007
3 153
28 750

National accounts
Gross domestic product (GDP) (million national currency)
GDP (million euro)
GDP (euro per capita)
GDP (in Purchasing Power Standards (PPS) per capita)
SI: GDP (in PPS per capita, EU-25=100)
SI: Growth rate of GDP (national currency, at constant prices, % change on previous year)
SI: Employment growth (national accounts, % change on previous year)
Labour productivity growth: GDP growth per person employed (% change on previous year)
SI: Unit labour cost growth (national accounts, % change on previous year)
SI: Labour productivity (GDP in PPS per person employed, EU-25=100)
Gross value added by main sectors (%)
Agriculture
Industry
Construction
Services
Final consumption expenditure, as a share of GDP (%)
Households and NPISH, as a share of GDP (%)
General government, as a share of GDP (%)
Gross fixed capital formation, as a share of GDP (%)
Changes in inventories, as a share of GDP (%)
Exports of goods and services, relative to GDP (%)
Imports of goods and services, relative to GDP (%)

Note

1998
1999
2000
2001
2002
2003
2004
2005
2006
409 209 471 578 523 043 583 369 622 711 694 098 750 785 814 797 891 000
2 419
3 209
3 945
4 541
4 705
5 048
5 881
6 561
7 239
721
951
1 290
1 482
1 525
1 627
1 885
2 093
2 299
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
9.0
13.5
6.7
7.9
4.2
5.8
5.7
5.8p
5.5p
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:

2007
:
:
:
:
:
:
:
:
:
:

Industry
Industrial production volume index (2000=100)

28.8
7.4
5.0
58.8
102.4
92.2
10.3
21.0
0.3
10.8
34.6

25.8
7.3
6.0
60.9
92.7
82.7
10.0
23.0
0.7
15.8
32.2

25.5
7.8
8.3
58.5
86.0
76.6
9.5
31.7
2.4
17.9
38.1

23.6
7.3
10.4
58.6
80.9
70.5
10.4
38.4
1.3
18.4
39.0

23.4
6.9
12.0
57.6
86.0
74.8
11.2
37.9
0.8
19.6
44.3

23.5
8.7
13.7
54.0
86.1
75.2
10.9
40.5
-1.8
20.4
45.1

22.3
10.0
13.9
53.8
89.2
78.2
11.0
37.2
-4.0
22.0
44.4

20.7p
9.7p
14.3p
55.3p
87.0p
76.2p
10.8p
36.3p
1.2p
22.8p
47.3p

:
:
:
:
:
:
:
:
:
:
:

:
:
:
:
:
:
:
:
:
:
:

Note

1998
:

1999
:

2000
:

2001
:

2002
:

2003
:

2004
:

2005
:

2006
:

2007
:

Inflation rate
SI: Consumer price index (CPI), (total, % change on previous year)

Note

1998
8.7

1999
-1.0

2000
4.2

2001
3.5

2002
1.7

2003
3.3

2004
2.2

2005
2.0

2006
2.5

2007
3.1

Balance of payments
Balance of payments: current account total (million euro)
Balance of payments current account: trade balance (million euro)
Balance of payments current account: exports of goods (million euro)
Balance of payments current account: imports of goods (million euro)
Balance of payments current account: net services (million euro)
Balance of payments current account: net income (million euro)

Note

1998
-61
-537
185
722
-38
69

1999
-129
-626
258
884
96
71

2000
-185
-897
277
1 174
12
115

2001
-316
-1 149
340
1 489
100
150

2002
-444
-1 218
348
1 567
-8
116

2003
-350
-1 177
395
1 572
-72
132

2004
-340
-1 277
486
1 762
-41
138

2005
-589
-1 477
530
2 007
-140
131

2006
-471
-1 658
631
2 290
-32
209

2007
-832p
-2 104p
786p
2 890p
13p
217p

EN

51

EN

Balance of payments current account: net current transfers (million euro)
of which government transfers (million euro)
Foreign Direct Investment (FDI) in the reporting economy (million euro)

445
73
40

330
156
39

586
105
157

583
31
231

667
41
141

767
53
157

839
61
267

897
61
209

1 011
43
250

1 043p
60p
466p

1999
-9.0
53.7

2000
-7.6
60.2

2001
-6.9
58.5

2002
-6.1
63.9

2003
-4.9
61.5

2004
-5.1f
58.3

2005
-3.4
55.3

2006
-3.3
59.7

2007
:
:

Public finance
General government deficit/surplus, relative to GDP (%)
SI: General government debt, relative to GDP (%)

Note

1998
-11.8
53.5

Financial indicators
Gross foreign debt of the whole economy, relative to GDP (%)
Gross foreign debt of the whole economy, relative to total exports (%)
Money supply: M1 (banknotes, coins, overnight deposits, million euro)
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro)
Money supply: M3 (M2 plus marketable instruments, million euro)
Total credit by monetary financial institutions to residents (consolidated) (million euro)
Interest rates: day-to-day money rate, per annum (%)
Lending interest rate (one year), per annum (%)
Deposit interest rate (one year), per annum (%)
euro exchange rates: average of period - 1 euro = … national currency
Effective exchange rate index (2000=100)
Value of reserve assets (including gold) (million euro)

Note

1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
17.0
16.1
17.0
17.2
22.1
21.1
19.0
16.6
16.9
:
156.3
101.6
94.9
93.1
112.5
103.5
86.5
73.0
:
:
496
701
936
1 113
1 154
1 053
1 354
1 833
2 011
1 994
1 180
1 631
1 995
2 376
2 453
2 542
3 066
3 431
3 882
4 068
1 418
1 993
2 475
3 069
3 148
3 261
3 973
4 654
5 478
6 157
105
135
175
217
292
369
548
982
1 554
2 326
:
:
:
:
:
:
:
:
:
:
25.0
25.8
24.0
11.9
16.0
10.5
13.7
12.2
11.2
13.6
16.5
9.1
8.0
7.8
9.3
7.6
6.0
5.6
5.5
6.3
169.164 146.960 132.580 128.470 132.360 137.510 127.670 124.190 123.080 123.630
:
:
:
:
:
:
:
:
:
:
573
488
697
853
902
908
1 103
1 144
1 429
1 564

External trade
Trade balance: all goods, all partners (million euro)
Value of exports: all goods, all partners (million euro)
Value of imports: all goods, all partners (million euro)
Terms of trade (export price index / import price index, %change to the previous year)
Share of exports to EU-27 countries in value of total exports (%)
Share of imports from EU-27 countries in value of total imports (%)

Note

1998
-565
185
750
5.4
94.2
88.0

1999
-754
329
1 083
11.0
95.6
82.8

2000
-896
283
1 179
-6.1
93.2
80.7

2001
-1 145
340
1 486
1.3
91.3
80.3

2002
-1 259
331
1 590
-1.5
92.6
77.0

2003
-1 252
395
1 648
-1.7
93.8
74.3

2004
-1 344
479
1 823
0.8
90.9
70.5

2005
-1 212
906
2 118
-18.9
93.2
67.2

2006
:
:
:
25.3
:
:

2007
:
:
:
-2.5
:
:

Demography
Natural growth rate: natural change (births minus deaths) (per 1000 inhabitants)
Net migration rate: immigrants minus emigrants (per 1000 inhabitants)
Infant mortality rate: deaths of children under one year of age per 1000 live births
Life expectancy at birth: male (years)
Life expectancy at birth: female (years)

Note
1)

1998
12.5
-6.8
15.0
:
:

1999
12.8
-110.8
12.2
71.7
76.4

2000
11.4
-9.8
13.8
72.1
78.6u

2001
12.5
-5.7
10.8
72.1
77.5

2002
9.5
-3.4
10.2
72.1
77.9

2003
9.3
-3.9
8.4
72.1
78.6

2004
8.1
-3.1
7.8
72.1
78.6

2005
7.2
-2.6
7.6
72.1
78.6

2006
5.5
-4.4
7.4
73.9
78.0

2007
5.9
-0.4
5.6
:
:

Labour market
Economic activity rate (15-64): share of population aged 15-64 that is economically active (%)
SI: Employment rate (15-64): share of population aged 15-64 that is in employment (%)
Share of male population aged 15-64 that is in employment (%)
Share of female population aged 15-64 that is in employment (%)
SI: Employment rate of older workers (55-64): share of population aged 55-64 that is in
employment (%)
Employment by main sectors (%)

Note
5)
5)
5)
5)

1998
:
:
:
:

1999
68.3
55.7
69.0
42.3

2000
66.2
55.0
66.0
44.1

2001
62.3b
52.1b
64.0b
39.6b

2002
61.8
52.1
63.9
39.7

2003
60.1
51.1
62.6
39.1

2004
58.8
50.3
61.2
38.9

2005
57.8
49.7
60.0
38.8

2006
53.7
48.7
58.8
38.1

2007
:
:
:
:

:

:

:

:

:

:

:

:

:

:

EN

2)

3)
4)

52

EN

Agriculture
Industry
Construction
Services
SI: Unemployment rate: share of labour force that is unemployed (%)
Share of male labour force that is unemployed (%)
Share of female labour force that is unemployed (%)
Unemployment rate of persons < 25 years: share of labour force aged <25 that is unemployed
(%)
SI: Long-term unemployment rate: share of labour force that is long-term unemployed (%)

5)
5)
5)

70.8
7.7
1.0
20.5
:
:
:

72.1
7.7
1.0
19.2
18.4
16.4
21.4

71.8
5.4
1.2
21.5
16.8
14.9
19.3

57.7b
6.0b
6.1b
28.5b
16.4
14.2
19.9

57.7
7.6
6.1
28.6
15.8
13.6
19.1

58.2
7.2
6.0
28.5
15.0
12.9
18.2

58.5
8.1
5.5
27.9
14.4
12.4
17.5

58.5
7.9
5.5
28.1
14.1
12.1
17.2

58.0
8.0
5.7
28.3
13.8
11.8
16.8

:
:
:
:
:
:
:

:

:

:

:

26.8

:

:

:

:

:

:

:

:

:

:

:

:

:

:

:

1998
:

1999
:

2000
:

2001
:

2002
:

2003
:

2004
:

2005
:

2006
:

2007
:

:

:

:

:

:

:

:

:

:

:

:

:

:

:

:

:

:

:

:

:

Social cohesion
Average nominal monthly wages and salaries (national currency)
Index of real wages and salaries (index of nominal wages and salaries divided by the CPI)
(2000=100)
SI: Early school-leavers: share of population aged 18-24 having not completed upper
secondary education and not currently in education or training (%)

Note

Standard of living
Number of passenger cars per 1000 population
Number of subscriptions to cellular mobile telephone services per 1000 population

Note

1998
27.1
:

1999
27.3
:

2000
37.4
:

2001
43.6
120.8

2002
48.2
259.4

2003
56.4
370.6

2004
60.9
403.6

2005
62.2
488.0

2006
71.4
561.7

2007
:
:

Infrastructure
Density of railway network (lines in operation, per 1000 km²)
Length of motorways (thousand km)

Note

1998
:
:

1999
:
:

2000
13.9
:

2001
14.3
:

2002
15.0
:

2003
15.0
0.0

2004
15.1
0.0

2005
15.0
0.0

2006
15.5
0.0

2007
:
:

Innovation and research
SI: Spending on human resources (public expenditure on education) relative to GDP (%)
SI: Gross domestic expenditure on research & development, relative to GDP (%)
SI: Percentage of households who have Internet access at home (%)

Note

1998
3.2
:
:

1999
3.3
:
:

2000
3.1
:
:

2001
3.3
:
:

2002
3.0
:
:

2003
3.1
:
:

2004
3.2
:
:

2005
3.2
:
:

2006
3.1
:
:

2007
3.2
:
:

Environment
SI: Total greenhouse gases emissions, CO2 equivalent (tons, 1990=100)
SI: Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP 2004)
SI: Share of renewable energy in electricity consumption (%)
SI: Road freight transport as a share of total inland freight transport (modal split of freight
transport) (%)

Note

1998
:
510.2
:

1999
:
427.4
:

2000
:
394.4
:

2001
:
383.1
:

2002
:
353.9
:

2003
:
369.2
:

2004
:
383.9
:

2005
:
:
:

2006
:
:
:

2007
:
:
:

:

:

:

:

:

:

:

:

:

:

Energy
Primary production of all energy products (thousand TOE)
Primary production of crude oil (thousand TOE)
Primary production of hard coal and lignite (thousand TOE)
Primary production of natural gas (thousand TOE)
Net imports of all energy products (thousand TOE)
Gross inland energy consumption (thousand TOE)

Note

1998
1 345
365
49
17
626
1 971

1999
1 113
323
33
14
761
1 874

2000
987
314
20
12
858
1 845

2001
933
335
15
8
1 001
1 934

2002
896
308
5
8
965
1 861

2003
1 012
359
19
12
1 043
2 055

2004
1 178
443
19
9
1 080
2 258

2005
:
:
0
11
:
:

2006
:
:
0
11
:
:

2007
:
281
:
10
:
:

EN

53

EN

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

5.1

5.4

4.7

3.7

3.2

4.9

5.5

5.5

5.6

3.0

1998

1999

2000

2001

2002

2003

:

:

:

:

:

102.9

2004

2005

2006

2007

105.1

101.2

:

:

1 144
705
83
2 923
861
603
56
605

1 144
720
99
3 061
907
498
40
610

1 144
728
103
3 045
948
566
42
620

1 139
708
106
2 933
984
503
39
677

1 140
690
114
2 773
1 010
519
39
669

1 121
684
132
2 919
1 060
489
50
675

1 122
654
143
2 739
1 064
499
40e
678

1 077
655
147
2 701
1 076
511
40e
685

1 120
634e
152e
2 770e
1 102e
508
:
688

:
:
:
:
:
:
:
:

SI: Structural Indicator
e : estimate
f : forecast
p : provisional
b : break in serie
1.

Source: Eurostat. Break in series in 2000.

2.

Debt Outstanding Disbursed (DOD) cumulative stock covering external public debt and external publicly guaranteed debt, but excluding IMF credits. Total exports are calculated according to the
national accounts concepts.

3.

Average weighted rate applied on new 12-month loans over the respective months, on 12-month maturity.

4.

Deposit interest rate represents the average weighted rate for newly accepted deposits over the respective months, on 12-month maturity.

5.

Administrative data; unemployment refers to registered unemployment.

EN

54

EN