World Bank gives loan to help Albania


Date: Wednesday, June 07 @ 06:46:16 PDT
Topic: Albanian Economy


    REUTERS


    TIRANA -- The World Bank has approved a 15 million dollars loan to help Albania improve its education system.
    World Bank

    The 20-year loan, with a ten-year grace period, will help the country "develop a system and institutions which prepare school graduates to function effectively in labor markets, become active citizens and contribute to strengthening Albania's competitiveness."

    The loan is part of a 75 million dollars project to be funded by the European Investment Bank and the Council of Europe Investment Bank each providing 15 million dollars and Albania's government, which is contributing 30 million dollars.


    "Given Albania's aspirations to maintain its growth, narrow regional disparities and join the EU, the main challenge in the education sector is to develop a system and institutions which prepare school graduates to function effectively in labor markets, become active citizens and contribute to strengthening Albania's competitiveness," the bank said in a statement.

    Albania wants to join the European Union and is expecting to sign later this month a Stabilisation and Association Agreement considered a first step toward possible membership.

    More than one-third of Albanian graduates are believed to have left the country since the 1990 end of communism in search of work opportunities abroad, according to Tirana University sources.

    Albania, one of Europe's poorest countries, has limited funds to invest in education.

    The project aims at improving the governance, infrastructure and conditions for teaching and learning.

    "The performance of the education sector will be a key determinant of Albania's future competitiveness and economic growth," World Bank official Keiko Miwa said. "This is a high-risk, but potentially high-reward project."

    Since Albania joined the World Bank in 1991, the bank's commitments to the country have totaled approximately 840 million dollars for 59 operations.

    Albania plans to become regional powerhouse


    Independently of the Fier project, government officials say they have found funding and started work on new power lines linking Elbasan and Tirana in central Albania to Podgorica in Montenegro.

    The government is also working to find funding to link Vau i Dejės, a large hydroelectric plant in northern Albania, with Pristina in Kosovo, as well to connect Elbasan with Skopje in Macedonia. While the Fier project will run on LNG brought in by tanker, Albania has also made it a priority to link into international natural gas pipelines. In doing so, it has increasingly focused on Russia's energy giant Gazprom.

    Foreign minister Besnik Mustafaj met Gazprom president Alexei Miller during a mid-April visit to Moscow. Mustafaj said he pointed up the divergence between energy supply and demand in Albania, and added that the country wants to diversify its energy sources.

    "Connecting Albania to the regional natural gas pipeline network is one of the government's priorities and Gazprom is seen by the Albanian side as a real potential investor," Mustafaj said during the meeting, adding that Albania wants work to start as soon as possible.

    The foreign ministry said Gazprom expressed willingness to send experts to Albania to assess the viability of laying an export pipeline not only to Albania but across the Adriatic to Italy. Gazprom is the main source of natural gas in the region, and officials says Albania too needs to tap into the supply.

    If Albania does become an exporter of energy, it will not be the first time – it exported electricity and other energy resources to its neighbours before the fall of communism. In the early Nineties, the country fell victim to a series of energy crises caused by inefficient distribution and transmission networks, and more recently, by rising domestic demand. Albania's power stations are no longer capable of meeting this growing demand. The Albanian Energy Corporation, KESH, says total generating capacity has fallen by 14 per cent over the last decade.

    And as domestic supply has fallen, demand has constantly increased. According to KESH, domestic production met 97 per cent of domestic demand in 1990 but only covers 47 per cent today. The rest has to be imported, causing crises such as last November's, when there was a shortfall in imports from neighbouring countries, which have had their own difficulties with electricity supplies.

    Shaken by the last crisis, which reportedly cut Albania's annual economic growth rate from 6 to 5.5 per cent in the space of two months, the government says it wants to satisfy the growing demand for electricity as quickly as it can. The energy and economy minister, Genc Ruli, has said the goal is to meet all domestic needs by 2008.

    The planned changes cannot come soon enough for businesses, which list power cuts as one of their main problems. At a recent business forum in the northern city of Shkodra, businessmen said that even now that the immediate crisis was over, they are still operating for much of the time on generators, owing to continuing power cuts. This raises production costs and lowers their competitive edge, they said. The government is trying to provide some interim solutions, for example scrapping tax on fuel used for electricity production.

    But ultimately, officials agree that it will take at least two years before Albania can generate the amount of electricity that it needs for the home market, before eventually catering for the region as well.

    Source: Reuters & Institute for War & Peace Reporting - By Andi Balla in Tirana (Balkan Insight, 18 May 06)


    Albania sells 60% of BKT to turkish consortium


    10:18 - 06 June 2006 - Albania's central bank has approved the sale of 60 pct in local privately held National Commercial Bank (BKT) to Turkish consortium Calik-Seker Konsorsiyum Yatirim. The central bank's approval was one of the conditions for the finalisation of the deal. In mid-April, 2006 BKT requested Albania's central bank to rule the sale of the stake.

    The Calik-Seker consortium, based in Istanbul, was formed by Calik group and Turkish Sekerbank and its main business is investing in bank units and providing consultancy services on bank organisation, management and business. BKT, which is currently the second-largest bank in Albania in terms of assets, was established in July 1997 by the state-run Albanian Commercial Bank (BTSH) and the Commercial Bank of Albania (BKSH) and started operations in 1998.


    Albania, Serbia: Fitch Affirms ProCredit Banks Albania, Bosnia & Herzegovina and Serbia


    10:28 - 05 June 2006 - Fitch Ratings affirmed the following ratings on the ProCredit banks in Albania, Bosnia & Herzegovina and Serbia.

    ProCredit Bank Sh.a. (Albania) ("ProCredit Albania"): foreign currency Issuer Default rating ("IDR") 'B+'; Short-term foreign currency 'B'; local currency IDR 'BB- (BB minus); Short-term local currency 'B'; Individual 'D/E'; and Support '4'. The Outlook is Stable.

    ProCredit Bank d.d. (Bosnia & Herzegovina) ("ProCredit BiH"): foreign currency IDR 'B'; Short-term foreign currency 'B'; local currency IDR 'B+'; Short-term local currency 'B'; Individual 'D/E'; and Support '4'. The Outlook is Stable.
    ProCredit Bank A.D. (Serbia) ("ProCredit Serbia"): foreign currency IDR 'BB-' (BB minus); Short-term foreign currency 'B'; local currency IDR 'BB'; Short-term local currency 'B'; Individual 'D/E'; and Support '3'. The Outlook is Stable.

    The IDRs, Short-term and Support ratings of the above ProCredit banks are based on Fitch's view of the potential support they are likely to receive from their owners (in particular, ProCredit Holding AG ("ProCredit Holding"; formerly Internationale Micro Investitionen), rated 'BBB-' (BBB minus)) in case of need.

    The ratings take into account the centralised control and risk management by ProCredit Holding and the banks' high degree of integration within the ProCredit group.

    However, the potential support and hence the ratings are constrained by the potential country risk of Albania and Bosnia & Herzegovina and the 'BB-' (BB minus) Country Ceiling of Serbia, respectively.

    ProCredit Holding is the largest shareholder in ProCredit Albania, ProCredit Bosnia & Herzegovina and ProCredit Serbia, with stakes of some 33%, 57% and 53%, respectively.

    The ProCredit banks' other shareholders consist of private and public investors (including several major international financial institutions).

    The Individual ratings of the above ProCredit banks reflect their still small size in absolute terms, large amount of shareholder funding (with the exception of ProCredit Albania, which has successfully developed its customer funding base), and difficult local operating environments.

    In addition, the banks face rising credit and potentially operational risk.

    The banks' capital ratios are also set to remain under pressure in the medium term, due to planned balance sheet growth.

    However, the Individual ratings also take into account their good asset quality and effective risk management to date. Fitch notes that upward movement in the banks' Individual ratings could result from an improvement in their respective operating environments, as well as an increase in their critical mass, which, in turn, should boost internal capital generation.

    In the case of ProCredit BiH and ProCredit Serbia, further development of their funding franchises would also be a positive rating factor. A sharp deterioration in capitalisation could result in a downgrade of the banks' Individual ratings. ProCredit Holding was set up in 1998 by a Frankfurt-based consulting firm (Internationale Projekt Consult GmbH) to invest in a global network of ProCredit banks.

    These banks were established by private and public investors to provide financing to micro- and SME customers. The ProCredit network consists of 19 banks in Eastern Europe, Latin America and Africa. At end-March 2006, the group's total assets were EUR2.4 billion. ProCredit Holding's responsibilities include all major group functions, including strategic decisions, risk management controls and group supervision.

    ProCredit Holding is not regulated as a banking group. However, the ProCredit banks are regulated in their respective countries.


    ACL - 07 June 2006





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