Albania seeks quick euro adoption to spur economy

Adam Tanner and Benet Koleka - 18.09.2009
Albania should quickly adopt the euro to bolster its economy and scrap its lek currency, Prime Minister Sali Berisha urged.

After addressing a conference of Balkan central bankers and financial experts, Berisha said Albania should follow its non-European Union neighbours Montenegro and Kosovo in adopting Europe's single currency.

"I think it is vital that negotiations start with the European Central Bank," he noted, just before beginning his second term with the government's swearing-in ceremony. "We are a small country. It is very difficult to resist to the euro. It is an enormous pressure and influences very much our economy."

The prime minister declined to say how long it might take for Albania to scrap its lek currency. "It will be a matter of negotiations," he said.

"Some negotiations, some regulations are necessary; the economy is entirely getting euro-ised. Adopting the euro, it will be better sooner," Berisha told Reuters in an interview. "It is a process that does not depend on me."

Berisha said the worst of the economic crisis had already passed for Albania, and that he expected growth of 4-6% this year and about 8% next year, even though most of the Balkans suffered through recession this year.

The veteran political leader also said the Adriatic country did not now need loans from the International Monetary Fund.

"The real economy has shown its strenth. It was overestimated, the financial component of the economy," he said. "It was much stronger than foreseen, the real economy."

Albania never fell into recession despite the world crisis, Berisha said, and government revenues are up 10% compared to the year prior, which was a record.

RISING EURO HURTS BORROWERS

Berisha reported that the euro currency was becoming a major problem for Albania's economy, not just because it is influencing the exchange rate. The euro has appreciated to 133 leks in September from 125 in January, and a similar devaluation risk exists in other Balkan countries.

"Everything stands and depends here on the stand of the European Central Bank because the euro is so powerful to our currency," the premier said.

Albania, Europe's poorest and most isolated country during its communist years, applied for EU membership earlier this year before Berisha's re-election. It is still considered a way away from ultimately joining the group.

Around 70% of loans in Albania are in euros and the appreciation of the euro is creating problems for borrowers, who end up owing more in lek terms when the euro appreciates.

In his speech to the conference at which many bankers were present, the prime minister called on them to make as many loans as possible to boost the economy.

Analysts say that even an EU-member Bulgaria was likely to meet resistance in recession-hit western Europe where the mood is against allowing more countries to join the eurozone in times of crisis.

Source: Reuters, Balkans.com Business News