Albania Monthly Report - May, 2016

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Albania Monthly Report - May, 2016

This report covers the key macroeconomic and financial releases as well as the political events from Albania for the period of May 10, 2016 – June 13, 2016.
EBRD keeps 2016 GDP projection for Albania at 3.3%
Works on TAP gas project launched in Thessaloniki
Wizz Air adds capacity in Southeast Europe
Intesa Sanpaolo to provide €1bn loan to local SMEs involved in China’s Belt and Road Initiative in SEE
Albanian recovery "gaining strength", IMF says
Bankers Petroleum’s shareholders approve proposed acquisition by China’s Geo Jade
Albanian police director suspended over wiretapping device scandal



Key points:
• Albania's inflation rises to 0.7% y/y in May
• Albania's producer prices down 4.1% y/y in Q1
• Albania turns to cons budget surplus of €118mn in January-April
• Albanian insurance market returns to growth in January-April
• Loan portfolio of Albania's commercial banks continue to fall in April
• Albania’s trade gap widens as exports fall
• Growth of Albania’s gross external debt slows to 6.9% y/y at end Q1


Table of Contents

EXECUTIVE SUMMARY 4
MACROECONOMIC OVERVIEW 5
Albanian recovery "gaining strength", IMF says 5
EBRD keeps 2016 GDP projection for Albania at 3.3% 6
REAL SECTOR 6
1. Inflation 6
Albania's inflation rises to 0.7% y/y in May 6
Albania's producer prices down 4.1% y/y in Q1 7
2. Construction 8
Albania's construction cost index down 0.2% y/y in Q1 8
FISCAL SECTOR 9
Albania sells out €73mn in one-year, six-month T-bills, yields down 9
Albania raises €14.5mn in seven-year T-bonds 10
Albania sells out €73.9mn in one-year T-bills, yields down 10
Albania sells out €29mn in two-year T-bonds 10
Albania turns to cons budget surplus of €118mn in January-April 10
Albania sells out €101.8mn in one-year, six-month T-bills, yields fall 11
FINANCIAL INTERMEDIATION 12
Mitigating risk, ensuring fiscal sustainability in Albania – World Bank 12
Intesa Sanpaolo Bank Albania supports female entrepreneurs 13
Albania's M3 money supply up 0.8% y/y at end-April 13
Albania's avg interest rate on lek deposits down 0.55pp y/y to 0.89% in April 14
Albania's avg interest rate on new lek loans drops 2.87pp y/y to 6% in April 14
Loan portfolio of Albania's commercial banks continue to fall in April 15
Growth of Albania's commercial bank deposits slows to 0.2% y/y at end-April 15
Albanian banking sector to invest €16mn in 2016 on IT services 16
Albania’s insurance market returns to growth in January-April 16
Vienna Insurance Group Q1 GWP in Albania falls 11.5% y/y 17
Albanian voluntary pension funds’ net assets up 9.8% q/q at end-March 17
Net assets of Albanian investment funds up 3.7% q/q at end-March 18
EXTERNAL SECTOR 18
Albania's Q1 current account gap widens 7.5% y/y 18
Growth of Albania’s gross external debt slows to 6.9% y/y at end Q1 19
Albania’s trade gap widens as exports fall 20
STRUCTURAL REFORMS AND CORPORATE NEWS 20
Albania signs concession deal for mn yacht port in Shengjin 20
Oil company Bankers Petroleum resumes operations in Albania 21
Works start on construction of new stadium in Tirana 21
Business climate in Albania deteriorates in 2015 - American Chamber business index 22
Bankers Petroleum starts temporarily shutting-in production in Albania due to closure of Petrolifera oil terminal 22
Albania’s oil exports blocked due to closure of Petrolifera terminal 23
Bankers Petroleum’s shareholders approve proposed acquisition by China’s Geo Jade 24
Tirana plans to offer zero-taxes for young entrepreneurs 24
Albanian power producer KESH to invest €11.5mn this year to upgrade HPP Vau I Dejes 25
Two-third of preparation works for TAP project completed in Albania 25
Albanian transmission system operator inaugurates SCADA/EMS system 26
Albania registers record number of foreign-owned firms in January-April 26
Oil leak pollutes Albanian beach in Vlore 27
Albania’s Kukes airport needs investments of €2.5mn 27
Albanian authorities to rent beaches ahead of summer season 28
Some 500 Albanian asylum-seekers sent back home from the Netherlands since beginning of 2016 28
Wizz Air adds capacity in Southeast Europe 29
TAP pipeline works begin just as its prospects dim 30
Intesa Sanpaolo to provide €1bn loan to local SMEs involved in China’s Belt and Road Initiative in SEE 32
ISS and Glass Lewis recommend Bankers Petroleum’s shareholders vote for proposed acquisition by Geo-Jade 34
Trans Adriatic Pipeline breaks ground in Greece, as financing remains undecided 34
Works on TAP gas project launched in Thessaloniki 35
Drug factory project in Albania obtains .4mn funding agreement from Capital Corp Merchant Banking 36
USAID launches mn project for justice system in Albania 36
Tirana airport operator posts 31% higher profit in 2015 37
France to support Albania certify agricultural products 37
Transaction for privatisation of Albanian insurer Insig near completion 38
Albania inaugurates €5.7mn bypass road in Rrogozhine 38
Albania starts implementing €35mn Albanian Alps and Coastal Areas Development project 38
Bankers Petroleum receives approval for proposed acquisition from authorities in Albania and China 39
Tirana court launches bankruptcy proceeding against former air carrier Albanian Airlines 39
POLITICS 40
No date set for judicial reforms in Albanian parliament’s three-week agenda – report 40
Albanian police director suspended over wiretapping device scandal 40
Albanian political leaders fail to reach compromise on key judicial reforms 41
Albanian army sends fourth contingent in Nato-led peacekeeping mission in Afghanistan 41
Albania and Kosovo sign seven agreements to strengthen cooperation 42
US urge Albanian opposition Democratic Party to approve key judicial reforms 42
Albania and China mull ways to deepen cooperation 43
EU enlargement commissioner urges Albanian political parties to adopt judicial reforms 43
Mayor of Albanian city Kavaja resigns in line with decriminalization law 44
Albania hosts Nato PA for first time 44
Albanian interior minister denies police used wiretapping devices for illegal purposes 45
Albanian opposition DP accuses interior minister of protecting drug trafficking leader 46
Albanian authorities seize bank accounts of oil tycoon Rezart Taci 46
Nato to set up centre of excellence in Tirana to address issue of foreign fighters 47
Albanian President Nishani files defamation suit against Tirana mayor 47
Albania starts implementation of decriminalization law 47
Albania’s constitutional court revokes mandate of ruling party’s MP 48

Number of pages: 49
Release Date: Mon, 13 Jun 2016