Dear, Sir Suma Chakrabarti, President of the European Bank of Reconstruction and Development, thank you for welcoming us in London, in this landmark Summit for the future of Western Balkans.
Dear colleagues and distinguished guests,
Today, this forum offers a unique opportunity to learn more about the countries and our region, getting in touch with key decision-makers and business representatives.
Thus, I sincerely hope that this conference, besides facilitating much needed foreign investment, will send a very strong political message about the maturity and stability of the region.
The Berlin process, started 2 years ago, is demonstrating as a very valuable game change. It has helped the six Western Balkan countries to achieve a substantial progress in different areas.
The political momentum of Berlin process continued last year with the Vienna Summit, where we identified common ways for common projects.
Regional integration through road corridors, gas pipelines, and expansion in the manufacturing sector remains in top of our common agenda.
Projects like the Blue Corridor, TAP and IAP pipeline, to mention a few, have a great geo-strategic importance, but more importantly, they bring our countries closer.
It’s very pleasing to see that during 2015, the trade between the Western Balkans countries grew significantly. For instance, Albania’s exports to the region grew with 216% in the first nine months of 2015. And this is a clear evidence of the fact that in our region we are having the best moment ever.
We believe that enhancing economic cooperation among us is the foundation for sustainable growth in each of our countries. Our economies are too small to compete with each other, or alone in a global landscape.
Emerging markets including us do not have any more the luxury of relying on high commodity prices and easy fiscal and credit expansion of the last decade.
For achieving economic growth that leads to sustainable employment and welfare the only option for us is to adapt to a more competitive model.
We truly believe in the words you said in Vienna Summit, Sir Suma Chakrabarti. I quote: “In the current challenging times it is all the more important that the countries continue on their path of reforms which bring them closer to Europe and, at the same time, that Europe extends its solidarity and active support”.
And by the way, we are very much looking forward to have your support in developing the idea of the Regional Development Bank, we have already presented in Vienna with my dear colleague Alexander Vucic.
Ladies and Gentlemen
Albania is in a process of transforming its economic model, moving from a growth model led by consumption, to a new one driven by investment and export. In the past, consumption growth was mainly financed by remittances, and sectorial growth was driven by the development of the construction sector.
Developments in the world’s economy and internal economy of Albania have forced the implementation of a new economic model. The Albanian government is pursuing strong structural reforms with the aim of boosting growth potential, while maintaining macroeconomic stability.
Just to note that when we got in government at the end of 2013, we started with zero point something percent of growth, and then we got to 2.2 in 2014, 2.7 in 2015, and we aim a 3.4 this year.
In this regard, we have compiled a concrete strategy, with specific packages of sectorial support, legal initiatives and of course, direct commitment to remove and wipe out the unnecessary procedural barriers.
I like to mention two good initiatives supported by EBRD: the Investment Council which is now working on, and the Business Ombudsman that the Minister of Economy and the ERBD are planning to establish. We very much believe in this new authority that will cut a lot of time-spending for business, and will create a very important bridge between government and business to make quick solution on misunderstandings or problems that arise.
We have been focused on the fiscal consolidation with an adjustment strategy based on broadening the tax base and improving the tax compliance and administration. In addition, with the aim of reducing public debt, we have been strengthening public financial management. And, by the way, we have a long list of structural reforms that we have passed or are in the way, and basically I would mention the new territorial and administrative design of the country after the territorial reform that brought down the number the administrative units from three hundred sixty-something to only 61.
The pension reform that was longing for many years and now has passed, the property reform which is another big piece of politics and also of drama in our transition has already past, and then education reform, the welfare reform and the public service reform.
We have paid over 600 million dollars of arrears we inherited from the previous government in all sectors, for unpaid public works or services.
Our international partners, including EDBR, World Bank or IMF have praised the reforming of the energy sector, which for the first time in more than 20 years is now a contributory and not a heavy burden in our state budget.
The implementation of these reforms and additional measures aimed at improving corporate governance and the business environment, are very necessary to promote strong and broad-based growth.
Based on the work done in the past 2 years, the international evaluation of the Albanian economy has improved, as confirmed by the upgrading of the Albanian Sovereign Credit Ranking, from B to B+ earlier in February.
“Economy’s solid growth performance and its strong long-term potential, a legal framework that explicitly prioritizes debt-service payments and long-term prospects for further EU integration” – were cited by “Standard and Poor’s” as the main reasons behind this rating upgrade.
World Bank Economic Report for Albania, in October 2015, stated that “Albanian economy continued to grow supported mainly by private investment and net exports”.
Indeed, the trade deficit narrowed as a result of a 5% yearly increase in exports. The Foreign Direct Investment also increased with more than 100 million euros in the first nine months of 2015, compared with 2014.
But we are very much convinced that there is large room for improvement in that aspect. And for sure, in this economic model we are pursuing, the foreign investments are crucial to Albania’s continued development, as we intend to cut the deb-driven growth of the past governments.
The new EDBR strategy for Albania is responding to financing challenges, underlining three main priorities over the next few years, such as:
· The support to private sector competitiveness and Small-Medium Enterprises.
· Expanding the markets by strengthening regional linkages to improve cross-border transport and energy infrastructure.
· Promoting the sustainability of public utilities through commercialization and private sector participation.
We are very happy to start working this year with the innovative tool of the “Agribusiness Support Facility” we have created together with EBRD and thanks to its assistance. And this is dedicated credit lines to Albanian banks and microfinance institutions, to finance agriculture through large scale, innovative projects.
In addition, the creation of the Albanian Guaranty Fund for Credit and Export will help to secure new credit lines for the exporting enterprises.
Together with the EBRD we are continuing our efforts to improve the linkage in the region.
So, overall I would not like to say too much about how much EBRD has helped us, because I don’t want EBRD to think that now we don’t need more help, so I’m here with my friends and colleagues exactly because we need more help and because we see EBRD as a unique helper in this environment that is becoming more and more difficult and more and more hostile in terms of the solidarity that our dear friend Suma was mentioning last year in Vienna.
So, for sure we are all good in this panel to present our countries as success stories, and they are in this period success stories, but for sure we are very conscious that there is still a lot to do, and for sure we in Albania have still have a lot to do, but I’m sure of one fact that those who wait till everything is ok, will regret tomorrow they didn’t invested today. So, in this not yet perfect environment there are some more opportunities than you’ll find in a perfect environment.
Thank you
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The Summit on Investments in the Western Balkans, initiated by the European Bank for Reconstruction and Development (EBRD) to promote economic potential and prospects of the region, was held in London for the second year this Monday.
Gathered at the headquarters of the EBRD, the prime ministers of Albania, Montenegro, Serbia, Kosovo, Bosnia-Herzegovina, Croatia, Macedonia, discussed with over 300 participants, decision-makers of governments, European financial institutions, representatives of leading enterprises, and investors on the opportunities that the region has for the expansion of investments and the development of interregional projects. The main areas of mutual interest were energy and transport.
EBRD committed to keep with its support for improving the investment climate in the region, and for developing joint projects, particularly in the construction of interconnections to improve transport and energy infrastructure, thus ensuring a better regional integration.
