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Albania Country Report - March, 2016

Albania Country Report - March, 2016

This report covers the key macroeconomic and financial releases as well as the political events from Albania for the period of March 10, 2016 – April 11, 2016.
INTERVIEW: Albanian president says politics needs to change to enable reforms
China’s Geo-Jade Petroleum buys Albania-focused Bankers Petroleum
Tirana court to rule on bankruptcy of top Balkan steel producer Kurum
EBRD to provide €218mn loan to Albanian power producer KESH
Albanian govt okays sale of state-owned insurer Insig to local peer Eurosig
Petromanas closes sale of Albanian assets to Shell
Albanian c-bank cuts key rate to record low of 1.5%
World Bank cuts Albania’s GDP growth projections to 3.2% in 2016
IMF reaches staff-level agreement for completion of seventh review of Albania’s EFF arrangement
Albanian police extends presence along Greek border for possible influx of migrants

Key points:
Albania’s CPI inflation edges up to 0.3% y/y in March
Jan-Feb state budget revenues 1% above plan
Albania’s insurance market down 4.7% y/y in Jan-Feb
Albania’s net power generation up 24.1% y/y in 2015
Commercial bank loan portfolio down 2.2% y/y at end-February
Growth of Albania’s gross external debt accelerates to 10.1% y/y at end Q4
Albania’s 2-month trade gap widens 11.8% y/y


MACROECONOMIC OVERVIEW 5
World Bank cuts Albania’s GDP growth projections to 3.2% in 2016 5
Albanian c-bank cuts key rate to record low of 1.5% 5
IMF reaches staff-level agreement for completion of seventh review of Albania’s EFF arrangement 6
REAL SECTOR 7
1. Inflation 7
Albania's CPI inflation edges up to 0.3% y/y in March 7
2. Turnover index 8
Total turnover index of Albanian economy grows 2.1% y/y in Q4 8
Albania's retail sales growth slows to 6.8% y/y in Q4 2015 9
3. Jobless 10
Albania's jobless rate falls 0.3pp y/y to 17.7% in Q4 - labour force survey 10
4. Energy 11
Albania’s net power generation rises 24.1% y/y in 2015 11
FISCAL SECTOR 11
Albania expected to present 2017 state budget in July 12
Albania raises €82.1mn in one-year, six-month T-bills, yields mixed 12
Albania sells out €36.6mn in one-yearT-bills, yields slightly down 12
Albanian Jan-Feb state budget revenues 1% above plan 13
Albania sells out €95.7mn in one-year, two-year government papers, yields down 13
Albania raises €21.7mn in seven-year T-bonds 14
FINANCIAL INTERMEDIATION 14
Albania's commercial bank loan portfolio down 2.2% y/y at end-February 14
Albania's M3 money supply up 1.2% y/y at end-February 14
Growth of Albania's commercial bank deposits slows to 0.8% y/y at end-February 15
Albania’s insurance market down 4.7% y/y in Jan-Feb 16
EXTERNAL SECTOR 17
Growth of Albania’s gross external debt accelerates to 10.1% y/y at end Q4 17
Albania's Q4 current account gap widens 8.3% y/y 18
Albania’s 2-month trade gap widens 11.8% y/y 18
Albania’s end-Feb net foreign assets up 15.1% y/y 19
STRUCTURAL REFORMS AND CORPORATE NEWS 19
New SEE energy exchanges boost regional integration 20
Albanian oil trader ISC Petroleum sold to Austria’s Tamm Oil Trading 22
Tirana presents Skanderbeg Square project, to be finished in June 2017 22
Albania to open second airport by end of 2016 22
Albanian launches second stage of campaign against informal economy 23
TAP gas pipeline inauguration ceremony to be held on May 17 24
Petromanas closes sale of Albanian assets to Shell 24
Albania and Kosovo works on creating joint electricity market 25
Albania to shortlist companies for EU capacity building project 26
Albanian govt okays sale of state-owned insurer Insig to local peer Eurosig 26
Canada’s Pennine announces €1.0mn non-brokered financing to advance Albanian oil block Velca 27
EBRD to provide €218mn loan to Albanian power producer KESH 27
Takeover of Bankers Petroleum by Chinese company will not affect concession contract with Albanian govt 28
Albanian parliamentary body agrees UNEP grant for Kune-Vain lagoon 28
China’s Geo-Jade Petroleum buys Albania-focused Bankers Petroleum 29
Albanian power utilities transfer security guard services to private firms 29
Tirana court to rule on bankruptcy of top Balkan steel producer Kurum 30
Saranda International Airport registered as new company in Albania 31
Albania launches reforms in water supply sector to improve infrastructure 31
Albanian farm ministry will provide €23mn in subsidies to farmers in 2016 32
Albania’s OSHEE says upgrade of power distribution network in Tirana’s suburb near completion 32
Albania to finish soon construction of new €6mn building for police’ rapid reaction force 32
Albania’s National Business Centre to launch operations in April 33
Albanian insurer Eurosig places highest bid of €15.7mn for local state-owned peer Insig 33
Oil co Bankers Petroleum Albania turns to net loss in 2015 34
POLITICS 34
Albanian Socialist Party members confirm PM Rama as leader 34
Mandates of two Socialist Party MPs likely to go Constitutional Court to unlock talks on judicial reform 35
Albania army helicopter crashes near Shkodra, two died, one injured 35
Albanian prosecution office asks jail terms for nine imams for recruiting Islamic fighters 36
Sacked Albanian central bank governor demands compensation 36
Tirana to host next NATO parliamentary assembly on May 27-30 37
COMMENT: China and the Balkans – ‘New Engine, New Power, New Platform’... and new graft 37
EU commissioner urges Albania to adopt judicial reforms to progress further on EU path 39
INTERVIEW: Albanian president says politics needs to change to enable reforms 39
Albania’s Socialist Party MP seeks launch of criminal proceeding against opposition MP 42
EU enlargement commissioner Hahn visits Albania 43
Albanian opposition leader sets condition to continue talks on judicial reforms 43
Foreign affairs MEPs say Albania needs to intensify reforms in aim to start EU accession talks 44
Avramopoulos says EU will provide support to Albania to cope with possible influx of refugees 44
Albania’s governing Socialist Party to hold referendum for party’s leadership on April 9 45
INTERVIEW: Former supreme commander says closer Nato ties will help Balkans attract investors 45
BALKAN BLOG: Disillusion grows as Europe fractures over migrant crisis 47
Macedonia, Albania want to increase trade exchange 50
Albania govt sets up national committee for refugees amid growing migrant crisis at neighbours 51
Albania prosecution office sets up special body for implementation of decriminalisation law 51
Venice Commission’s draft on Albanian judicial reforms disregards some opposition demands 52
Albanian governing Socialist Party to hold congress on March 19 52
Albanian police extends presence along Greek border for possible influx of migrants

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