General Information about Albania
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Location and Geography
Located in southeastern Europe, Albania occupies a strategic position on the western edge of the Balkan Peninsula. The Adriatic and Ionian Seas lap at its shores, offering a coastline of approximately 476 kilometers. The country encompasses an area of roughly 28,748 square kilometers, boasting diverse landscapes from rugged mountains to fertile plains.
Governance and Administration
Tirana, the capital city, serves as Albania’s economic and financial heart. The country is further divided into 12 districts and 61 municipalities. Other major urban centers include Shkodër, Durrës, Vlorë, Fier, and Elbasan. Timekeeping follows Central European Time (GMT+1) from March to October, switching to GMT+2 from October to March.
Currency and Banking
The Lek (ALL) is Albania’s official currency. However, the Euro (EUR) and the United States Dollar (USD) are widely accepted in commercial transactions. As of April 2024, the exchange rate stood at approximately 100.37 ALL/€1. Albania boasts a well-developed financial system, with numerous commercial banks authorized by the Bank of Albania (BoA) to facilitate international payments. The BoA plays a pivotal role in managing monetary policy, foreign currency reserves, and international transactions. Interestingly, both residents and foreigners can hold unlimited current accounts in any currency at any bank in the country.
List of licensed banks:
- American Bank of Investment S.A.
- Credins Bank S.A.
- First Investment Bank, Albania S.A.
- Intesa Sanpaolo Bank Albania S.A.
- National Commercial Bank S.A.
- OTP Bank Albania S.A
- Procredit Bank S.A.
- Raiffeisen Bank S.A.
- Tirana Bank S.A.
- Union Bank S.A.
- United Bank of Albania S.A
EU Integration Journey
While pursuing EU integration, Albania has actively secured trade agreements to diversify its economic partnerships. This includes a free trade agreement established with the EU itself, which complements the existing SAA by further deepening economic ties. Additionally, Albania actively participates in the Central European Free Trade Agreement (CEFTA 2006) and a separate free trade agreement with countries belonging to the European Free Trade Association (EFTA). These comprehensive trade agreements allow Albania to access wider markets, promote trade diversification, and solidify its position within the global trading system.
Trade and Visa Relations with the EU
Albania enjoys a free trade agreement with the EU within the framework of the SAA. This agreement allows for the gradual elimination of customs duties on industrial and agricultural products, with Albania having already abolished duties on most goods. Albania has completely abolished customs duties on industrial products as well as on a very limited number of highly consumed sensitive products. For these latter products, customs duties have been reduced by 20% of the MFN (most favored nation) tariff, and starting from December 1, 2010, duties have been set at zero.
- complete abolition of customs duties on some agricultural products, processed agricultural products as well as fish products;
- reduction of the MFN tariff divided into two periods for a group of products such as imports within the established quotas, without customs duties.
Macroeconomic Situation:
Despite global economic headwinds, Albania maintains impressive macroeconomic stability characterized by low and predictable inflation (3.6% in 2023), a consolidated exchange rate minimizing currency fluctuations, and sustained GDP growth reaching 3.34% in 2023. Additionally, Albania demonstrates responsible fiscal management with a moderate public debt at 59.2% of GDP. The financial sector is experiencing rapid growth, with credit generally provided based on market principles. Currently, Albanian banks control around 30% of total assets according to the Association of Albanian Banks.
Foreign Direct Investments:
- 15% for taxpayers with annual income exceeding ALL 14,000,000 (equivalent to 138792.77 EUR based on the current exchange rate).
- Dividend Tax: The dividend tax rate in Albania is 8%.
Conclusion:
Albania presents a compelling case for investment and development. Its strategic location, youthful population, and commitment to EU integration position it for a bright future. The confluence of a stable macroeconomic environment, a favorable legal framework for foreign investment, and a skilled workforce creates fertile ground for businesses seeking expansion and growth. As Albania progresses on its path towards EU membership, the nation is poised to become a key player in the European market, attracting further investment and solidifying its place within the global economic landscape.
- Kullat Binjake, Bulevardi "Dëshmorët e Kombit", Kulla 1, Kati 13, 1001, Tirane, Shqiperi
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