EU-Albania 16th Subcommittee on Economic and Financial Issues and Statistics

The 16th Subcommittee meeting under the Stabilisation and Association Agreement between the EU and Albania on Economic and Financial Issues and Statistics, took place on 25 September 2024 in Tirana. Representatives from the European Commission (EC) discussed with relevant Albanian authorities the most recent developments in these areas. This sub-committee is a platform to regularly exchange views on recent developments in economic, monetary and financial affairs and current challenges. The discussion also followed up on alignment to EU legislation (acquis) under several topics.

Albania’s economy continued to expand, following robust growth in 2023. In the first quarter of 2024, GDP registered 3.6% growth driven by services and construction. Household consumption picked-up and investment increased. Nevertheless, exports of goods declined as well as overall activity in industry and agriculture. The authorities reported that the economy is in a positive phase of the business cycle and expect external demand for tourism services to remain solid going forward. Inflation slowed further this year (2.4% in August), and it is anticipated to return to the target in the first half of 2025. Labour markets statistics are to be published with delay due to reconciliation needs of data with the preliminary results of the Population and Housing Census published in June, which showed that Albania's population fell from 2.8 million in 2011 to 2.4 million in 2023. Nevertheless, employment indicators are expected to show improvements in 2024, with service sector attracting more labour. After falling to a historic low, the current account deficit is expected to widen to 2-3% of GDP reflecting a deterioration in the trade balance on the back of increasing imports and falling goods exports. On fiscal side, Albania targets a deficit of 2.4% of GDP and a slightly positive primary balance in 2024. The Commission welcomed the positive developments, including the launch of the public consultation of the Medium-Term Revenue Strategy and the commitment to reducing the public debt ratio. At the same time, the Commission emphasised the need to address infrastructure gaps, improve SOEs governance and oversight and step-up fiscal risk monitoring. The Commission encouraged Albania to continue with the preparatory work towards setting up an independent fiscal council to further strengthen the fiscal framework.

Actions to improve the business environment and developments in the fields of payment systems were also discussed. The Commission welcomed that Albania joined the EU Single Market Programme in December 2023, and the establishment of a European Institute of Innovation and Technology (EIT) on raw materials in Elbasan. The Commission also noted that many reforms pertinent to improving the business environment are foreseen in Albania’s Reform Agena, including on taxation, investments, state-owned enterprises, cross-border transport, aligning with the EU acquis on public/private partnership addressing the lack of clarity and predictability of property rights, addressing education and skills, enabling exports, and further enhancing the efficiency of the judiciary and further tackling corruption and organised crime, as well as other areas, and stressed the importance of its timely implementation. In regard to the free movement of capital, the Commission signalled that it has received the European Payments Council’s formal request for the Commission opinion on Albania’s application to join SEPA and that it is now performing a thorough review of Albania’s laws in regard to the EU acquis to inform the Commission formal opinion. This process can take several months. Albania indicated that in 2025 it plans to adopt a law that addresses its SAA obligations on the ownership of agricultural land. The Commission took note of the state of play on the adoption of the National Anti-Fraud Strategy and encourages Albania to ensure a timely process for the drafting process that will not negatively affect the planned timing for adoption of the strategy. The Commission encouraged Albanian Supreme Audit Institution (ALSAI) to continue its efforts to strengthen the implementation of ALSAI’s recommendations by the audited bodies. The Commission took note of the record of irregularity reporting and encouraged Albania to further develop a sound track-record of reporting of irregularities, and of the importance of developing a solid track-record of cooperation with OLAF on investigations.

On statistics, the Commission welcomed the progress made by INSTAT and encouraged it to increase the production and transmission of timely and high-quality data to Eurostat. The Commission noted with interest the publication of the main results of the Population and Housing Census in June 2024, only 7 months after its enumeration. The Commission looks forward to the publication of detailed results later in 2024 and continuing into 2025. The post-enumeration survey showed that the quality of the census is acceptable. Household surveys will need to be re-weighted based on the new census results and a new frame for drawing the samples will be used from 2025. The Commission urged INSTAT to make further efforts to reduce staff turnover, modernise its statistical production and make improvements to achieve full compliance on national accounts. Albania committed to enhance its efforts to make national account data, excessive deficit procedures and government finance statistics public. The publication of the revised GDP after the benchmark revision of National Accounts is foreseen by the end of September 2024. Albania indicated that law on agriculture holdings census is not yet approved, and it is unlikely to be carried out before autumn 2025. The census law and methodological documents will have to be adjusted due to the delay. Albania’s 2025 annual statistical activities plan should reflect the new agriculture census timetable and in the budget.