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Albania Country Report - October, 2015

Albania Country Report - October, 2015

This report covers the key macroeconomic and financial releases as well as the political events from Albania for the period of October 9 - November 9, 2015.
S&P affirmed its ‘B/B’ sovereign credit ratings on Albania.
The Tirana court acquitted the former c-bank governor, Ardian Fullani, of charges of abuse of office in connection to a multi-million euro theft from bank reserves.
Albania plunged to 97th position in the World Bank’s Doing Business 2016 ranking among 189 countries, from 68th place a year ago.
The European Commission and the EBRD cut their forecast for Albanian economic growth in 2015.
Albania places €450mn 5-year Eurobond
Leyton Orient owner, Francesco Becchetti, could face extradition to Albania

Key points:
The CPI inflation decelerates slightly to 2.1% y/y in Oct
Albania's foreign trade gap widened by 0.7% y/y to €1.48bn in the first nine months
The combined net profit of Albanian commercial banks up by 33.3% y/y to €83.5mn in Jan-Sept
Albania's commercial banks' loan portfolio fell 1.8% y/y at end-Sept
The bad loan ratio at Albanian commercial banks stood at 20.2% at end- Sept
Albania’s insurance market grew by 17.3% y/y in the first nine months of 2015


EXECUTIVE SUMMARY 4
MACROECONOMIC OVERVIEW 5
EC, EBRD cut forecast for Albania’s GDP growth in 2015 5
Gains for most EU aspirants on World Bank "2016 Doing Business" ranking but Albania plummets 6
Albania plunges to 97th position in the World Bank’s Doing Business 2016 ranking 8
IMF mission arrives in Tirana 9
S&P affirms Albania’s ‘B/B’ rating 9
REAL SECTOR 11
1. Inflation 11
Albania's CPI inflation slows to 2.1% y/y in Oct 11
FISCAL SECTOR 12
Albania in tough negotiations with IMF on 2016 draft budget - report 12
Albania places €450mn 5-year Eurobond 13
Albania starts marketing new 5-year Eurobond with interest rates around 6% 14
Albania raises €27.4mn in five-year T-bonds, meets target 14
Albanian c-bank cuts key rate to 1.75% 15
Albania sells €92mn in three-month, one-year T-bills, yields slightly down 16
Albania’s 9-mo budget gap narrows by 39.6%, revenues below planned amount 16
Albania sells out €25.1mn in ten-year T-bonds 17
Albania raises €17mn in two-year T-bonds 17
FINANCIAL INTERMEDIATION 17
ProCredit Bank Albania's 9-mo net profits almost double 17
Albania's NPL ratio at 20.2% at end-September 18
Albanian banks' net profits jumps 33.3% y/y at end-Sept 18
Intesa Sanpaolo's 9-mo net profit in Albania rises y/y to €15mn 19
Albania's M3 money supply up 2.8% y/y at end-Sept 19
Albania's avg interest rate on lek deposits down 0.31pp y/y to 1.36% in Sept 20
Albania's avg interest rate on new lek loans falls by 0.28pp y/y to 8.18% in Sept 20
Albania's commercial bank loan portfolio falls 1.8% y/y in Sept 21
Growth of Albania's commercial bank deposits speeds slightly to 1.4% y/y at end-Sept 22
Albanian central bank assets up 19% y/y to €3.8bn at end-Sept 22
Albania’s insurance market up 17.3% y/y in 9-mo 2015 23
Albania’s c-bank says NPLs remain one of the main problems for banking system 24
Albanian banks’ lending standards mixed for business and households in Q3 24
Albania gets €2.2mn Swiss grant for financial reporting project 25
Albanian banks' 8-mo combined net profit jumps 55% y/y 25
EXTERNAL SECTOR 26
Albania’s 9-mo trade gap widens 0.7% y/y 26
Flow of FDI into Albania drops 8% y/y in 2014 26
STRUCTURAL REFORMS AND CORPORATE NEWS 27
Albanian PM says no plans for tax hikes in 2016 27
Albania’s authorities launch probe into Durres beach pollution 28
Bankers Petroleum says 9-mo operating income for Albania plunges 66% 28
Albanian unit of Greece’s OTE posts 49.1% y/y lower pro forma EBITDA 29
JYSK to open first stores in Albania on November 4 30
Albania’s telecom regulator to reduce interconnection tariffs in fixed telephony 30
Two final bids filed for maintenance of Dures-Kukes motorway in Albania 30
TAP awards line pipe contract to Salzgitter Mannesmann 31
Chinese, Italians interested in Spitalla free zone in Albania 32
Albania to increase transport sector controls as part of campaign against the grey economy 32
Albanian bankrupt brick factory Volalba put up for sale again at lower price 33
Tirana to turn old railway station into car park 33
Albania could become part of main migrant route in winter - PM 34
Albanian parliament panel approves new law on energy efficiency 35
Albanian govt to set up a network of informants to track fiscal evaders 35
Albanian fish processing co Nettuno eyes €3.6mn investments in new technology 36
Kuwait fund allocates €41mn for first stage of Vlora River road project in Albania 36
OSHEE expected to end 2015 with profit, following years of losses 37
Albania deputy PM calls for farmers to get tax identification numbers 37
Real estate sales in Albania decline in 2015 due to higher taxes 38
Albania’s OSHEE reports 43% y/y hike in payments for electricity in Jan-Sept 38
Albania seeks legal assistance in evaluating China's offer for Arber highway project 39
Two Italian companies receive three contracts in TAP tender 39
Albania’s OST to pay €6.8mn compensation to Croatia’s Dalekovod 40
Local consortium wins ROT concession for two Albanian railway lines 40
Economic cooperation between Albania and the Czech Republic gets new impetus 41
Crown Agents to replace Georgia’s Reformatics as Albania's customs advisor 41
Albania’s OSHEE won’t ask for electricity price hikes for 2016 42
Albania gears up to launch €100mn financial mechanism for agriculture 43
Albania postpones final stage of maintenance tender for Dures-Kukes motorway until Nov 43
Completion of Tirana ring road delayed until Oct 2016 44
Albania to award contracts for four World Bank co-financed road maintenance projects 44
Bankers Albania fully transposed Third Energy Package into national legal framework - Energy Community 45
POLITICS 46
Albanian PM appoints new justice minister to step up judiciary reforms 46
Leyton Orient owner could face extradition to Albania 47
Albanian PM expects Tirana to start EU accession talks in 2016 48
Albanian police discover drug laboratory in Durres, detain seven people 48
Albanian police seize 3.2 tonnes of marijuana 48
Albania’s energy minister claims charges are politically motivated 49
Albanian President Nishani says judicial reform is not transparent 51
Albanian ex-energy minister, his deputy charged over irregularities in HPP privatisations 52
Albanian court acquits former c-bank governor Ardian Fullani 53

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