Albania Country Report - November, 2014

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Albania Country Report - November, 2014

This report covers the key macroeconomic and financial releases as well as the political events from Albania for the period of November 8, 2014 - December 5, 2014.

After visiting the country in mid-November, the IMF said that Albania’s economic program is on track and the authorities’ policies and reforms, especially in the electricity sector, could restore economic growth.

Albania’s rank on Transparency International's Corruption Perceptions Index improved by 6 spots but its corruption problem was much bigger than what is observed in Montenegro, Serbia and Bosnia and Herzegovina.

The business sector believes that the government’s proposed tax reform that raises rates on certain corporate taxes as of next year would have a negative effect on the business environment. Regarding future growth, the Business Monitor International said it expects Albania's GDP to grow by 2.5% in 2015.

Key points:
• Central bank cuts key rate to new record-low of 2.25%
• Albania readies to tap foreign debt market in 2015
• Banking sector generates €60mn profit in Jan-Oct
• TAP to start building roads for pipeline in Albania next spring
• Albanian, Serbian PMs clash at historic Belgrade meeting


Table of Contents

EXECUTIVE SUMMARY 5
MACROECONOMIC OVERVIEW 7
IMF mission says Albania’s economic program on track 7
Albania climbs in Paying Taxes 2015 ranking 7
Albania's ranking on global corruption perceptions index improves 8
EBRD calls for improvement of business environment in Albania 8
Kuwait to support Albanian reforms through €5mn fund 8
Business sector says government’s plan for tax hike risks deterring investments 9
REAL SECTOR 9
1. GDP 9
BMI cuts Albania's 2015 economic growth forecast to 2.5% 9
2. Inflation 9
CPI inflation eases to 1.4% y/y in October 10
Broad producer price index up 0.3% y/y in Q3 10
Q2 domestic producer prices fall 0.6% y/y 11
Higher wages push up Albania's Q3 construction costs by 0.5% y/y 11
FISCAL SECTOR 11
General budget deficit narrows 31.1% y/y in Jan-Oct 11
Albania readies to tap foreign debt market in 2015 12
FINANCIAL SECTOR 12
Banking sector generates €60mn profit in Jan-Oct 12
Bank lending up 3.3% y/y at end-October 13
Oct new bank loans up 57% y/y to €180mn 13
Bank deposits up 1.1% y/y to €6.84bn at end-October 14
Average lending interest rate down 2pps y/y to 8% in October 15
M3 up 1.6% y/y to €8.3bn at end-October 16
Central bank cuts key rate to new record-low of 2.25% 16
Insurers' gross premiums up 42.3% in Jan-Oct 17
EXTERNAL SECTOR 18
Ten-month foreign trade deficit widens 11.8% y/y to €1.7bn 18
PRIVATISATION AND INDUSTRY NEWS 19
Albania announces 80% discount on household energy debt 19
Albania plans to grant maintenance concession of key motorway in 2015 19
TAP to start building roads for pipeline in Albania next spring 19
Albania to revoke 30 mining permits 19
POLITICS 21
Albanian, Serbian PMs clash at historic Belgrade meeting 21

Number of pages: 22
Release Date: Mon, 08 Dec 2014