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Economic Aspects | Natural Resource Aspects | Institutional Aspects | Social Aspects | Albania

ECONOMIC ASPECTS OF SUSTAINABLE DEVELOPMENT IN ALBANIA

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INTERNATIONAL COOPERATION

Decision-Making: Coordinating Bodies   

 

The Ministry of Foreign Affairs, Ministry of Finance, the Department for Economic Development and Foreign Co-ordination (DEDAC), and other line ministries are responsible for international cooperation in Albania.

Decision Making: Legislation and Regulations 

No information is available.

Decision-Making: Strategies, Policies and Plans  

Economic development and environmental protection are matters of international common concern. In the course of its development, Albania has become increasingly aware of the fact that its future would not be outside of this international community. In 1993, the government of Albania prepared a National Environmental Action Plan (NEAP) which includes an action programme for short, medium and long term actions as well as a series of priority projects related to sewage treatment, urban waste, deforestation, and others. The NEAP was approved by the Government in January 1994. On the basis of NEAP, several environmental projects and programmes are now being undertaken with the assistance of international donors, including the Environment Programme for Albania- PHARE, National Water Strategy- PHARE, and Water treatment systems in different regions, among others. 

Decision-Making: Major Groups involvement

No information is available.

Programmes and Projects   

No information is available.

Status   

No information is available.

Challenges  

No information is available.

Capacity-building, Education, Training and Awareness-raising   

No information is available.

Information   

No information is available.

Research and Technologies   

No information is available.

Financing   

The latest Public Investment Programme (PIP) (1995-1997) assumes rapid increases in the level of public investment linked to the increasing utilization of external financing. The sectors which have had the most success in securing external financing commitments for their projects have been transport, agriculture and social safety net, where total commitments secured during the years 1994-1995 represented more than 50% of the sectoral resource allocation for the 1995-1997 PIP period. By contrast, relatively little success was achieved in securing financing for the environment, housing, and urban and rural infrastructure. 

 

Cooperation  

International co-operation for sustainable development is an important component of the reform policy, with the most significant sources of multilateral aid financing for public investment being the World Bank's International Development Association (IDA) and the European Union's PHARE programme. Annual commitments of IDA funding have been falling from US$50 million in 1995/96 to US$35 million in 1996/97. Presumably the annual commitments from the EU/PHARE national programme are at a current level of 30-35 million ECU. Funding from other multilateral agencies such as IFAD, the OPEC Fund and the Islamic Development Bank is expected to continue at an existing level of US$15-20 million per year. The major bilateral donors are Italy, Germany, Japan, Switzerland, Austria, the Netherlands and the Kuwait Fund. There is also financing from non-concessional external borrowing, from IBRD, EBRD, and EIB, as well as financing from non-governmental organizations.

 

 

 

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This information was provided by the Government of Albania to the fifth session of the United Nations Commission on Sustainable Development. Last update: 1 April 1997.

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TRADE

Decision-Making: Coordinating Bodies   

The Ministry of Foreign Affairs, Ministry of Finance, the Department for Economic Development and Foreign Co-ordination (DEDAC), and other line ministries are responsible for trade in Albania.

Decision Making: Legislation and Regulations 

No information is available.

Decision-Making: Strategies, Policies and Plans  

The primary focus of international trade in Albania at the present includes sustaining the market-determined exchange rate, maintaining a liberal trade and exchange system, normalization of external financial relations following the agreement on debt restructuring with foreign commercial banks, and strengthening of institutional capacities in the financial services sector for handling foreign transactions. International trade will also be facilitated by Albania's accession to membership of the WTO. 

Decision-Making: Major Groups involvement

No information is available.

Programmes and Projects   

No information is available.

Status   

A number of radical changes immediately followed the collapse of the communist regime, including removal of the state monopoly, opening of the economy to international markets and competition, and emerging of the domestic private trade sector. The subsequent stage (from 1993 onwards) was characterized by the total removal of restrictions to export-import, as long as international standards were respected, removal of export taxes and the setting up of a system with import differentiated tariffs, stimulation of raw material imports, especially to produce for export, as well as the import of basic food stuffs. As a result, the private trade sector grew, accounting for 75% of total trade in 1995. The free trade policy brought about a new geographical distribution, with Italy, Greece, Germany and Turkey becoming the most important trading partners.

 

Although Albania has sustained a large trade deficit, equivalent to nearly 20% of GDP in 1995, this has been more than offset by inflows of external assistance and by remittances from abroad.

Challenges  

No information is available.

Capacity-building, Education, Training and Awareness-raising   

No information is available.

Information   

No information is available.

Research and Technologies   

No information is available.

Financing   

No information is available.

Cooperation  

Albania participates in the Central European Initiative, South East European Initiative, and Black Sea Initiative, among others. As far as concerns the trade agreement with the EU, a special intermediate status (before being associated) is already signed and being elaborated. Albania also won the status of observer in GATT and is currently working to meet the requirements for the full membership in WTO.

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This information was provided by the Government of Albania to the fifth session of the United Nations Commission on Sustainable Development. Last update: 1 April 1997.

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CHANGING CONSUMPTION PATTERNS

Decision-Making: Coordinating Bodies      

The organizations responsible for this issue in Albania include the Ministry of Agriculture and Food, Ministry of Energy and Mineral Resources, and Ministry of Labor and Social Affairs, as well as the Albanian Institute of Statistics and the Department for Economic Development and Foreign Co-ordination (DEDAC). 

Decision Making: Legislation and Regulations 

No information is available.

Decision-Making: Strategies, Policies and Plans  

The Government seeks to promote rational consumption by formulating appropriate policies to control spending by government agencies and enterprises; increasing the transparency of personal incomes and profits so that excessively high profits and incomes can be adjusted through taxation; and developing productive forces to establish an efficient system of production involving low energy consumption and less pollution, so that the quantity, quality, and diversity of resources for sustaining life can be improved. 

Decision-Making: Major Groups involvement

No information is available.

Programmes and Projects   

No information is available.

Status   

At the present, agriculture remains the most important activity; industrial activities are in decline; but tertiary activities, such as trade, transport, small-size business, and tourism, seem to offer more prospects for future economic development.

 

In the past, government policy emphasized the exploitation of natural resources to meet physical production targets, with the state directly involved through the state and collective farms and through state-owned enterprises in the mining and minerals processing sectors. With the transition to a market-based economy, the government's role has changed to one of ensuring the conservation and sustainable management of the natural resources base. This new role has focused on developing and enforcing a legal and regulatory framework to manage and promote private sector activity, determining the stock of natural resources, assessing and monitoring the use of natural resources, providing agricultural technical and advisory services, granting licenses for mineral extraction, and monitoring and enforcing environmental standards.

 

The establishment of a market economic system has provided new development opportunities, which include opportunities for optimizing the use of productive elements in poverty striken areas, for the development of natural resources, for industrial restructuring, and for increasing employment opportunities. For the first time (1995) since the transition, Albanians as a whole did not consume as much as they produced. In 1992 consumption and investment were nearly twice (1.9) as high as GDP, with investment accounting for only 4-5% and mainly from the state sector. By 1995, consumption and investment were only 1.2 times as high as GDP, with investment 20-21% of GDP. Indeed, total savings for 1995 were estimated at 24-25% of GDP, compared to 22% for the European Union.

 

While increased individual savings add to a sense of security in case of emergency and promise for future consumption, current consumption has remained high, allowing people to fulfill needs long pent-up as well as wants never dreamed before.

 

With the state accounting for 40% of GDP, government policy has played a crucial role in assuring basic health, education and other social services, in encouraging relatively stable prices and other legal and economic aspects favoring, especially, small and medium enterprises, and in investing in public infrastructure. Government expenses, revenue collection, and deficit spending have increased steadily in real terms, with the deficit remaining a fairly constant 32%- 34% of total government spending, except for the election year of 1996 for which a budget deficit of 37% was expected.

 

From a hidden tax system of forced reduced consumption under the previous regime, Albanians face now an open system of taxation. The income tax for 1996 is planned to increase by 4% with those earnings less than 10,000 lek per month (approximately US$100) exempted. Revenue from taxes decreased as a percentage of total state revenue from 64% in 1994 to 61% in 1995. 

Challenges  

No information is available.

Capacity-building, Education, Training and Awareness-raising   

No information is available.

Information   

No information is available.

Research and Technologies   

No information is available.

Financing 

Current expenditures on salaries, social security, and economic assistance continued to dominate the state budget (nearly 70% of the proposed 1996 budget). Investment expenditure accounted for little more than a quarter of state expenditures, with public investment limited to social sectors and public services.

 

Cooperation  

 

No information is available.

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This information was provided by the Government of Albania to the fifth session of the United Nations Commission on Sustainable Development. Last update: 1 April 1997.

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FINANCING

Decision-Making: Coordinating Bodies   

No information is available.

Decision Making: Legislation and Regulations 

Among the new economic instruments that have been adopted are both the following:

 

(1)   external sector polices: Sustaining the market-determined exchange rate, maintaining liberal trade and exchange systems, normalizing external financial relations following the agreement on debt restructuring with foreign commercial banks, and strengthening institutional capacities in the services sector for handling foreign transactions.  

(2)   International trade will also be facilitated by Albania's accession to membership of the WTO; and  

(3)     private sector development: This will require further refinements to the legal framework for the market economy and more rapid progress in the creation of the modern commercial banking system. This will be backed up by the completion of the enterprise privatization programme and the seeking of strategic investors in the mining and petroleum sectors and in some public utility operations.

 

Decision-Making: Strategies, Policies and Plans  

Key changes in the national budget to address sustainable development include:

(1) credit policy: The strict limits on credit expansion. The domestic budget deficit will be covered by non-inflationary financing through the issuing of treasury bills; and

(2) fiscal management: A strong fiscal policy stance will be maintained aimed at reducing the budget deficit to sustainable levels.  

 

This involves measures to broaden the tax system, improvements in tax administration, elimination of the remaining price subsidies, rationalization of social services, public administration reform and utilization of external support. This in turn will require strengthening of institutional capacities for budgetary planning, accounting, reporting and expenditure control. 

Decision-Making: Major Groups involvement

No information is available.

Programmes and Projects   

The reform programme aims to maintain high rates of economic growth while holding inflation to below a certain reasonable level (under 10%), maintaining an adequate level of foreign reserves and making progress towards balance of payments viability. The strategy for achieving these objectives involves the following: removing barriers to private sector development; increased public saving and investment; control of credit expansion; control of public expenditure, and especially the public sector wage bill; strengthening market-oriented structural reforms; and continuing mobilization of external support as far as possible on concessional terms.

 

The economic reform programme, which has been supported by substantial external financial assistance, achieved considerable success. Targets for economic growth, inflation and external adjustment were met. The key macro-economic measures which have contributed to this success were the implementation of a strong monetary policy based on reductions in the domestic financing requirements of the budget and strict limitations on credit to state enterprises. This has been backed up by policies to strengthen revenue performance and fiscal management, the implementation of an incomes policy and further liberalization of the trading system including the simplifying of tariff structures. Recently, these considerable successes have been interrupted by the sudden collapse of the "pyramid-scheme" based companies. 

Status   

Public sector investment has increased from about 7.1% of the GDP of 1993, to about 8.6% of 1995 GDP. This increase was accompanied by an increase of public investment. The foreign public investment finance reached over 50% of the total public investment in 1995.

 

In the private sector, it is expected that more will be done in light manufacturing and other productive sectors. According to approximate calculations, foreign investments to the end of 1995 were estimated to have reached US$210 million, excluding investment in oil exploration. estimated at about US$200 million.  

Foreign investors accounted for a growing percentage of private investment, with the major share coming from Italian investors (53%) and Greek investors (27%). Most private investments are concentrated in light industry and food processing as well as the fuel and other mineral industries.

Challenges  

No information is available.

Capacity-building, Education, Training and Awareness-raising   

No information is available.

Information   

No information is available.

Research and Technologies   

No information is available.

Financing   

No information is available.

Cooperation

No information is available.

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This information was provided by the Government of Albania to the fifth session of the United Nations Commission on Sustainable Development. Last update: 1 April 1997.

For information on participating States in the Global Environment Fund, click here:
For information about issues and projects in Eastern Europe and Central Asia from the World Bank, click here:

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TECHNOLOGY

BIOTECHNOLOGY

Decision-Making: Coordinating Bodies   

The Ministry of Agriculture and Food and Ministry of Health and Environment are the Governmental authorities responsible for biotechnology. Also involved, particularly in implementation, are the Institute of Public Health (former Institute of Hygiene and Epidemiology), Institute of Veterinary Research, Institute of Animal Breeding Research, Antibiotic Enterprise, Institute of Potatoes and Vegetables Research, Biomass Station, and Faculty of Natural Sciences, among others.

Decision Making: Legislation and Regulations 

No information is available.

Decision-Making: Strategies, Policies and Plans  

No information is available.

Decision-Making: Major Groups involvement

No information is available.

Programmes and Projects   

No information is available.

Status   

During the Communist regime in the country the totalitarian state pursued a policy of producing everything relying on "own efforts". Within the framework of this policy, particular attention was given to the production of bioproducts, which were considered by the former regime as "strategic goods". Therefore, many research institutions were involved in bio-research and developed production lines for bioproducts, including vaccines, antigens, serums and antibiotics. The technology adopted for this purpose was Chinese, and most of bio-production lines were installed and began to function during the years of Albanian-Chinese friendship.

 

There was little interest shown by the state to improve the biotechnological lines, especially in view of their possible impacts on the environment. In many cases the by-products of the bio-lines underwent no special treatment and were discharged into the municipal sewage or dump sites.

 

Generally, the control of the bioproducts for their harmlessness, sterility and other safety parameters was performed by units within the production units themselves, and no objective evaluation of the final product was allowed. Therefore, in some cases, the bioproduct turned out to be a contaminant at the final destination.

 

Considering that there was no proper market request for bioproducts, their production and distribution were performed in a centralized way and in many cases the delivered aliquots were not used at all, and, after expiring, were not always returned to the delivery center for proper waste treatment.

 

Following the fall of the Communist regime and the onset of the free market society, most of the state-controlled biotechnology lines underwent a deep crisis. Due to their obsolete technologies, final products were of low quality and safety and very costly, and thus unable to compete with imported bioproducts. Therefore, some of the biotechnology lines were forced to close down their activities.  

In some cases, the State was unable to properly manage the biotechnology production lines, and so initiated their privatization, such as the case of the Antibiotic Enterprise in Tirana. In some other cases the state-owned biotechnology lines (especially vaccine production lines) reduced their own production activities and became distributors of imported bioproducts by keeping a certain commission for the performed activity.

Challenges

No information is available.

Capacity-building, Education, Training and Awareness-raising   

No information is available.

Information   

No information is available.

Research and Technologies   

No information is available.

Financing   

No information is available.

Cooperation  

No information is available.

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This information was provided by the Government of Albania to the fifth session of the United Nations Commission on Sustainable Development. Last update: 1 April 1997.

Click here to link to the Biosafety Information Network and Advisory Service (BINAS), a service of the United Nations Industrial Development Organization (UNIDO), which monitors global developments in regulatory issues in biotechnology.
Click here to go to the Web Site of UNEP's International Register on Biosafety.
Click here for the International Centre for Genetic Engineering and Biotechnology Biosafety WebPages

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INDUSTRY

No information is available.

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TRANSPORT

Decision-Making: Coordinating Bodies   

No information is available.

Decision Making: Legislation and Regulations 

No information is available.

Decision-Making: Strategies, Policies and Plans  

No information is available.

Decision-Making: Major Groups involvement

No information is available.

Programmes and Projects   

No information is available.

Status   

During the period of transition to a market economy, major industrial activities have been shut down because they could not operate on a cost-efficient basis. Consequently, their contribution to air pollution has notably decreased. At the same time, the contribution of the transport sector to air pollution has rapidly increased, mainly in the big cities, due to the high number of old vehicles imported from Western Europe. Since these vehicles are old and have been much used, they do not include any emission control devices. Moreover, leaded gasoline is the fuel of choice because of its relatively low price.

Challenges  

No information is available.

Capacity-building, Education, Training and Awareness-raising   

No information is available.

Information   

No information is available.

Research and Technologies   

No information is available.

Financing   

No information is available.

Cooperation  

No information is available.

* * *

This information was provided by the Government of Albania to the fifth session of the United Nations Commission on Sustainable Development. Last update: 1 April 1997.

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SUSTAINABLE TOURISM

Decision-Making: Coordinating Bodies   

No information is available.

Decision Making: Legislation and Regulations 

No information is available.

Decision-Making: Strategies, Policies and Plans  

No information is available.

Decision-Making: Major Groups involvement

No information is available.

Programmes and Projects   

No information is available.

Status   

No information is available.

Challenges  

Domestic resources have been particularly limited for natural resource management. Consequently, foreign cooperation is considered important in financing the public programmes in order to facilitate the utilization of the country's natural resources on a sustainable basis and to develop them in such a way as to ensure their lasting contribution to overall development, including, and especially, eco-tourism.

Capacity-building, Education, Training and Awareness-raising   

No information is available.

Information   

No information is available.

Research and Technologies   

No information is available.

Financing   

No information is available.

Cooperation  

No information is available.

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This information was provided by the Government of Albania to the fifth session of the United Nations Commission on Sustainable Development. Last update: 1 April 1997.



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