ECONOMY

Albania’s prospects for growth

TIRANA (Reuters) – Albania must upgrade its tax, customs and telecommunications systems if it wants keep on growing and eventually attract foreign investment, the International Monetary Fund (IMF) said. Jan-Peter Olters, the IMF representative in Albania, said the country’s GDP had grown faster on average than its neighbors, thanks to its lower base, market liberalization and higher productivity. «But these factors that motivated and drove growth in the previous years become less important every year,» Olters told Reuters in an interview over the Christmas weekend. Albania’s GDP grew by 6 percent in 2004, but Olters said the factors behind the boom were likely a one-off. Good weather boosted agricultural production and reduced the need for electricity imports, which in turn improved the trade balance and reduced demand for foreign exchange. Increased public investment and remittances sent back home from Albanians working in Olympic construction projects in neighboring Greece also supported growth. But for the future, revamping tax and customs systems would be crucial to sustained growth. «One major element that is required to have this second phase of growth is having a modern customs and tax administration in the country,» he said. Olters also said a lot of investment was needed to bring Albania’s telecoms up to international standards. Fixed-line monopoly Albtelecom has been up for sale for several years with no success and its prices are among the highest in Europe. But the money would be worth it as telecommunications were likely to attract foreign direct investment. «The technology and know-how introduced by foreign companies will support a secondary growth phase,» Olters said, adding that Albania’s growth track record and macroeconomic stability in recent years would help to attract investors. Foreign direct investment in Albania in 2003 was $178 million, up from $135 million in 2002. Around $211 million had been invested through mid-2004.