This year, Albania will benefit from the first funds of the Growth Plan for the Western Balkans that the European Commission (EC) approved on 8 November 2023. The total value is six billion euros, two of which will be disbursed in the form of grants, while the remaining four in the form of loans.
The total allocation foreseen for Albania amounts to almost one billion euros, divided as follows: 76.7 million euros in 2024; 279.7 million in 2025; 314.3 million in 2026 and 251.2 million in 2027.
The plan aims to promote economic growth and reduce the development gap of the Western Balkan countries compared to EU Member States by supporting economic development and encouraging investment, to create jobs and improve living standards.
The priorities of the plan are structured into four pillars: increasing economic integration with the European Union’s single market, integration into the common regional market, accelerating key reforms and financial instruments to facilitate reforms and growth.
In its Annual Report on the Candidate Countries for EU membership, the European Commission highlighted the progress made in developing a functioning market economy and the level of preparation sufficient to deal with competitive pressure within the EU.
Albania’s economic growth appears to be robust, supported by a strong tourism sector and growing investments. The progressive decline in inflation, the increase in employment and activity rates, the significant improvement in fiscal performance and the growth in banks’ profitability were positively assessed by the EC.
However, there remain some critical issues that Albania must address with more decisive interventions: unemployment remains relatively high, especially among young people; the transport network is still characterised by infrastructural gaps, despite some improvements; exports of goods remain below their potential.
The country must improve its vocational education and training system to increase the number of graduates and postgraduates with skills corresponding to the needs of the labor market. Further reforms are also needed to foster digital transformation and ensure cybersecurity.
According the European Commission, the area that most needs radical reforms is the fight against informality and corruption, which hinder the business environment. The recommendations that the EC addressed to Albania last year have been only partially implemented. Limited progress has also been made in aligning public procurement procedures with the EU legal framework. Increasing transparency and accountability of state-owned enterprises must be another of the essential priorities for the Albanian government.
