Albania Improves in Economic Freedom Index

Our country has the largest economic freedom in the region, leaving behind northern Macedonia (53), Serbia (59), Bosnia and Herzegovina (68). Kosovo (86) and Montenegro (103) are at worst.

The Index of Economic Freedom is based on four main categories:

-Doing the rules ( Property Rights; Judicial efficiency; Government Integrity)

- The size of the government. Government spending; Fiscal Health

-Efficiency of regulatory institutions (Free Business; Labour Freedom; Monetary Freedom)

-Open markets (Free Trade; Investment Freedom; Financial Freedom).

Higher estimates (positive) are for tax burdens (89.1 points), trade freedom (82.6) and monetary freedom (82). The lower assessment is for the integrity of the government (35.6 points) and the effectiveness of the judiciary (49.8).

According to the report, over the past five years, Albania's economy grew from 2017 to 2018, slowed to 2019, returned to negative in 2020 and recovered to 2021. Albania has registered a total increase of 2.2 points of economic freedom since 2017, led by increased results in property rights and judicial efficiency, but still remains in the medium range of “-Messatarily Lira” countries. Government size and open market indicators are positive, but rule of law remains problematic.

Applying Laws

The report estimates that protection of property is weak, due to the uncertainty of titles, in part because manipulation of courts makes it possible to take illegal and sometimes overset titles. The registration system is insufficient. Independent judiciary is subject to political pressure, intimidation and limited resources. Economic growth is hampered by ongoing corruption, uneven implementation of legislation, heavy bureaucracy, distorting competition and lack of transparency.

Government Size

The highest rate of individual income tax is 23 percent, and the highest corporate tax rate is 15 percent. The total tax burden equals 18.3 percent of total domestic income. Government expenditures have reached 30.5 percent of total production (PBB) over the past three years, and budget deficits have reached 3.3 percent of GDP on average. Public debt equals 76.0 percent of GDP.

Efficiency of regulatory institutions

Doing business in Albania can be difficult. Informal business practices and irregular government procurement processes contribute to business uncertainty. Work laws do not apply equally. The weight of informal employment has been the highest in the region. The energy sector is currently completely dependent on an unstable system of state subsidies.

Open Markets

Albania has five preferential trade agreements in place. The estimated average trading tariff rate is 3.7 percent and 196 non-tariff measures are in force. Despite some advances in modernising the investment regime, there are restrictions on foreign ownership. The financial system remains relatively stable. The banking sector's good to travel. /Monitor