Arben Malaj
Minister of Finance
After civil turmoil at the beginning of last year in Albania, the new Government took office in July 1997.
It is currently going through consolidation and initialisation of long-term growth of the national economy.
The Government is conscious that country development not only needs the accomplishment of important conditions, such as security restoration and the eradication of pyramidal schemes, but also control over the macroeconomic situation - a six month Post-Emergency Programme in collaboration with the International Monetary Fund (IMF) proved to be successful.
Decline in the Gross Domestic Product (GDP) stooped to minus seven per cent, while the inflation rate was placed under control at 42.1 per cent, compared to planned figures of 50-54 per cent. The budget deficit was reduced at 11.6 per cent of GDP, compared to the 14.5 per cent that was planned as part of a six month programme. Furthermore, the objectives for 1998 are ambitious. GDP is expected to rise by ten per cent, while the annual inflation rate is 21.5 per cent. More importantly, the domestic financed deficit is thought to be 6.3 per cent of GDP.
We are conscious that the passing crisis impacts and the stooping economic recession not only requires the financial support given by donors at the Brussels Conference of October 1997, but also the creation of an attractive environment for foreign and native investments.
It is clear that political risk, as an element of decision-making by investors, is high in Albania. But we are aiming to take concrete steps to reduce it. An important moment is the initialisation of operations of the Albanian Guarantee Agency. This Agency will cover political risks, such as war, civil disturbance and civil commotion risks, as well as Government performance risks. So, it will play an important role in restoring investor confidence and foreign investments in Albania. The first point to be addressed will be the import/export of goods and services, with further scope for providing guarantees and creating an incentive environment for equity investments.
Positive effects are also expected in terms of the privatisation strategy, which has been submitted to Parliament and which has had a broadly legal basis. It involves most important sectors of the economy and represents good opportunities for potential investors. The new law of the Bank of Albania - setting free payments in foreign exchange and free transfers of capital accounts - represents a step forward in attracting investment capitals. Reform of the banking system, limiting the market share of state banks, and promoting the opening of private banks will contribute to the updated completion of a banking infrastructure as a necessary element for increasing investments. At the same time, the Government is looking towards the possibility of creating an administrative structure that will aim to create a hospitable environment for foreign investments at all stages, beginning with simplifying the bureaucratic steps of initialising a new investment. More significantly, the new Government is conscious of the importance of foreign investments in success of its policies and is ready to do its best to assure this.
