AGP Executive Report

Trade & Investment: Albania and Israel signed a cooperation deal spanning trade, technology, energy, water, healthcare, agriculture and tourism, with officials saying it could open new opportunities for businesses. Consumer Prices: A new government-backed platform lets shoppers compare prices on 238 products across 13 categories; participating sellers agreed to keep selected prices unchanged until Jan. 12. Currency: The lek has gained more against the euro over the past decade than any of 39 currencies compared. That helps importers but reduces lek earnings for exporters and families receiving euro remittances. EU Accession: Albania is set to provisionally close Chapter 20 on enterprise and industrial policy, its fourth completed area of talks since July. Manufacturing: Eco Buildings says its automated wall-panel production line in Durrës remains on schedule and within budget, targeting readiness by year-end. Regional Cooperation: Albania and Greece highlighted opportunities in business, education and other fields; the two countries are implementing 20 joint projects worth €25 million.

Currency and Banking: The lek has recorded the biggest rise against the euro among 40 currencies over the past decade: one euro bought less than 93 lek in August, down from more than 136 in 2016. The stronger currency helps importers but reduces the lek value of export earnings and remittances. The Bank of Albania bought €663.6 million in foreign currency in the first half of 2026. Prices and Savings: Annual inflation eased to 2.9% in September, but transport costs rose 12.4% and food prices 2.8%. A draft law would gradually raise insured bank deposits from 2.5 million to six million lek. Business Costs: Tirana’s Chamber of Commerce is seeking lower VAT for agro-processing, duty-free manufacturing inputs and faster tax depreciation for machinery, arguing the measures would ease rising production costs and support investment. The government has not said which proposals it will adopt. EU Integration: EU governments have agreed to close another chapter in Albania’s accession talks, covering business and industrial policy, including support for smaller firms and investment.

Prices: Albania’s annual inflation eased to 2.9% in September from 3.2% in August, but transport costs jumped 12.4% and food prices rose 2.8%, squeezing household budgets. Business Costs: The Tirana Chamber of Commerce is urging the government to cut VAT on agro-processing to 5–7%, exempt manufacturing inputs and machinery from duties, and offer cheaper finance; no measures have yet been approved. Banking: A draft law would more than double deposit protection, from 2.5 million to 6 million lekë, and extend cover to additional groups and certain one-off payments. Meanwhile, the Bank of Albania bought €663.6 million in foreign currency in the first half as the euro neared a record low against the lek. EU Integration: The EU has agreed to close a fourth negotiating chapter for Albania, covering business and industrial policy, with formal approval expected at upcoming talks. Manufacturing: The sector is under pressure, with reports of 25,000 jobs lost and 150 garment factories shut.

Prices and Currency: Albania’s annual inflation eased to 2.9% in September from 3.2% in August, but transport costs jumped 12.4% and food prices rose 2.8%. The central bank bought €663.6 million in foreign currency in the first half of 2026 as the euro weakened close to a record low against the lek. Banking Protection: A draft law would gradually lift insured deposits from 2.5 million to six million lekë, extend coverage to some excluded groups and add protection for certain large payments. Business Costs: Tirana’s Chamber of Commerce is pressing for lower VAT on agro-processing, duty-free manufacturing inputs and faster tax depreciation on machinery, arguing the measures would ease rising production costs and boost investment. The government has yet to respond. EU Integration: EU governments agreed to close another chapter in Albania’s membership talks, covering business and industrial policy. The chapter is expected to be formally closed at talks in Luxembourg. Investment Delivery: A World Bank-backed bridge project has disbursed only about 21% of its revised $58 million funding, despite a 2029 completion deadline.

Prices & Currency: Albanian inflation eased to 2.9% in September, but transport costs jumped 12.4% year on year and food prices rose 2.8%. The lek remains strong: the euro traded at 91.65 lek after falling 5.3% this year, while the Bank of Albania bought €663.6 million in foreign currency in the first half. Banking: A draft law would more than double deposit protection, from 2.5 million to 6 million lek, with broader coverage for some depositors and payments. Business Costs: Tirana’s Chamber of Commerce is seeking lower VAT for agro-processing, duty-free manufacturing inputs and machinery tax breaks in the 2027 fiscal package; the proposals have yet to be accepted. EU Integration: Albania is set to close another EU negotiating chapter covering business and industrial policy, while former Italian prime minister Enrico Letta urged earlier access to the bloc’s single market. Industry & Investment: Manufacturing continues to face pressure, with reports of 25,000 jobs lost and 150 garment factories closed. Separately, the government has spent only about a third of its investment budget.

EU Accession: EU governments agreed to close another chapter in Albania’s membership talks, covering business and industrial policy, including support for smaller firms and investment. Formal closure is expected at talks in Luxembourg. Investment: Jared Kushner says his proposed Zvërnec tourism development could attract €4 billion and create jobs; he says the land was bought privately for €230 million. The project still needs approval and faces environmental concerns. Prices and Public Spending: Inflation eased to 2.9% in September, from 3.2% in August, while the central bank held its key rate at 2.5%. Separately, the government has spent only about a third of its investment budget. Industry: Albania’s manufacturing sector is reported to have lost 25,000 jobs, with 150 garment factories closed. Infrastructure: An €80 million French grant will support water, sewage and wastewater upgrades in Durrës, as part of a project valued at €118 million. Tourism: Albania recorded the biggest improvement in the World Economic Forum’s 2026 tourism competitiveness index, with its score up 7% from 2024.

EU Accession: EU governments agreed to close Albania’s fourth membership chapter, covering business and industrial policy, support for smaller firms and investment; formal closure is expected Tuesday. Tourism Investment: Jared Kushner says partners paid €230 million for land near Zvërnec and the proposed resort could attract €4 billion, but it still needs approval amid environmental concerns. Infrastructure: An €80 million French grant will help fund a €118 million upgrade to Durrës’ water, sewage and wastewater systems. Industry and Jobs: Nearly 150 garment factories have closed and sector employment has fallen from 65,000 to 40,000. Exports dropped from €1.4 billion in 2023 to €960 million last year, with businesses citing costs, labour shortages and the weak euro. Prices and Project Delivery: September inflation eased to 2.9% from 3.2%, driven mainly by food and transport costs. A World Bank-funded bridge project has disbursed just 21% of its revised funding, with only one bridge completed against a target of 30.

Zvërnec Investment: Jared Kushner says investors paid €230 million for the coastal land and that the resort could eventually draw €4 billion in investment, jobs and tourism. The project still needs approval and faces environmental opposition. Durrës Infrastructure: An €80 million French-backed grant will support a €118 million upgrade to water, sewerage and wastewater systems, including expansion of the treatment plant. Manufacturing: Albania’s garment sector has lost about 25,000 jobs and nearly 150 factories, with falling exports, high costs and euro weakness squeezing producers. Public Investment: The government had spent only about a third of its investment budget by the end of August, leaving roughly €1.1 billion unspent. Tourism: Albania recorded the biggest improvement in the World Economic Forum’s tourism competitiveness index, with its score rising 7% from 2024 to 2026.

Corridor VIII: Albania says the route linking the Adriatic and Black seas is an economic priority, with better connections expected to cut trade costs, attract investment and support jobs. The Tirana–Durrës–airport railway is one project taking shape. Energy and Prices: Diesel rose seven lek to 217 lek a litre, renewing inflation concerns. TAP has also opened 0.16 billion cubic metres of annual gas capacity from Greece into Albania, though the country still lacks a network to deliver gas to customers. Public Investment: The government had spent just over a third of its public investment budget by the end of August, leaving about €1.1 billion unspent; railway projects had used less than a tenth of their allocations. Business Climate: Albania ranked 44th in the latest UN development assessment and met targets for clean energy and poverty reduction, but growth, jobs and environmental protection remain weak spots. EU Integration: Brussels proposes giving candidate countries, including Albania, access to parts of the EU market and programmes before membership. Albania is also preparing EU-aligned licensing and supervision rules for crypto exchanges and digital wallets.

Public Investment: Albania had spent just over a third of this year’s public-project budget by the end of August, leaving about €1.1 billion unused. Railway projects used less than a tenth of their allocations, while more than 1,300 projects recorded no spending. EU Integration: Brussels is proposing earlier access to parts of the EU market and funding for candidate countries, including Albania, alongside tougher post-accession checks. Albania is still seeking approval to close Chapter 20 on business and industrial policy. Finance and Digital Economy: The central bank held its key rate at 2.5%, warning that high oil prices could lift inflation and slow growth. A proposed bill would require crypto exchanges and wallet providers to obtain licences and face financial supervision. Public Finance: The government plans a record €10 billion budget for 2027, while also preparing AI tools to track public contracts and flag problems.

Crypto Regulation: Albania’s government has approved a bill requiring crypto exchanges and digital-wallet providers to be licensed and supervised, with stronger customer-protection and anti-money-laundering rules. Parliament must still approve it. Monetary Policy: The central bank held its key rate at 2.5%, warning that higher oil prices could push inflation above target and slow growth. Public Spending: The government plans a record €10 billion budget for 2027, alongside tax and customs changes and fewer exemptions. It also plans to use AI to track public contracts from tender to payment, with initial steps expected this autumn. EU Accession: Albania remains among the bloc’s leading candidates, but EU countries have yet to agree to close Chapter 20 on business and industrial policy. Business Trends: About 26% of Albanian businesses sell online, ranking second in the Balkans after Serbia. Insurers reported premiums of ALL 18.3 billion and claims of ALL 6 billion in the first eight months.

Albanian Public Finance: Prime Minister Edi Rama says Albania is preparing a record ~€10bn state budget for 2027, paired with a new tax package that would tweak taxes and customs rules and reduce exemptions, pending parliamentary approval. EU Enlargement Watch: The European Commission unveiled pre-enlargement reforms, including earlier access for candidates to selected EU policies and a proposed 15-year “probation” with stronger safeguards (potentially including voting-right and funding restrictions) to prevent democratic backsliding; Brussels also plans roadmaps for frontrunners—Montenegro, Albania, Moldova and Ukraine—with Moldova’s roadmap due Oct. 28. Legal & Governance: The European Court of Human Rights ruled that Albania’s dismissal of former prosecutor Adnand Kosova was disproportionate; meanwhile, a lawyer boycott continues to disrupt court hearings in Albania, with fines rising in the Veliaj case. Business & Economy: The World Bank expects slower growth for Albania in 2026 (3.4% vs 3.7% prior), citing higher energy prices and uncertainty across the Western Balkans. Regional Trade: JYSK will bring its Kosovo, Albania and North Macedonia operations in-house from 1 Jan 2027 after taking over from its franchise partner.

EU Enlargement Overhaul: The European Commission unveiled “Preparing for a Larger Union,” proposing faster decision-making (more qualified majority voting for interim steps), earlier gradual integration for candidates, and stronger “safeguards” to prevent democratic backsliding—potentially including a 15-year probation with voting-right limits and tighter rule-of-law enforcement; Albania’s EU Track: Brussels also signals Albania as a frontrunner for roadmaps and provisional progress, with Chapter 20 (“Enterprise and Industrial Policy”) under review for possible provisional closure; Energy & Cost of Living: The World Bank expects slower Albanian growth (3.4% vs 3.7%); OECD data show 38% of households can’t keep homes warm, pushing more support and solar use; Renewables Push: Albania is preparing a new solar auction before year-end/early 2027, adding battery storage for the first time; Transport & Infrastructure: Work is advancing on the Tirana–Durrës–Airport rail corridor, with a public service contract being prepared; Business & Finance: JYSK will bring its Kosovo, Albania and North Macedonia franchise stores in-house from Jan 1, 2027; SME Funding: BSTDB signed a EUR 25m SME facility for Georgia via Basisbank (regional private-sector boost); Justice & Courts: A lawyer boycott continues to disrupt GJKKO hearings, with fines rising in the Veliaj case; Security/Trade: Opposition says it will notify NATO and partners over alleged arms-trafficking links involving state defense firm KAYO and Ron Yeffet; Workplace Safety: An Albanian-origin worker died in Italy after a scaffolding fall in Rimini; Cyber Fraud: Albania faces a spike in cyber scams, including Temu-related customs-fee phishing.

Energy & Infrastructure: Albania is preparing a new solar auction before year-end or early 2027, this time allowing battery storage, with the EBRD involved in cooperation; solar already covers about 11% of annual electricity and cumulative capacity reached 631 MW by end-2025. Energy Poverty: OECD data show 38% of Albanian households can’t keep homes warm, with 27% struggling to pay utility bills; the government’s social protection plan targets support and more solar in rural areas. Transport Finance: The EBRD is considering financing a new 40-km motorway linking Lezhë to the Montenegro border at Murriqan as part of the Adriatic-Ionian corridor. Digital Commerce: Online selling is rising fast: 26% of Albanian businesses sold online in 2025 (up from 19%), placing Albania second in the Western Balkans after Serbia. Cyber Fraud: Albania is battling a spike in cyber scams, with victims reporting bank transfers after clicking messages tied to “Albania Post.” Banking & Finance: Raiffeisen Bank Albania says a technical issue caused some card transactions to post twice, now corrected with no system compromise found. Insurance: Albania’s insurance market keeps growing: premiums hit ALL 18.3bn in eight months and claims reached ALL 6bn, up 9%. Governance & Justice: SPAK arrested ECO-ELB administrator Leli Kaja in an Elbasan corruption case; prosecutors also extended the Vlora airport concession investigation. EU & Jobs: Germany plans to cut Western Balkans work-visa quotas in half from 2027, a move that could hit construction staffing.

SPAK Crackdown: Albania’s anti-corruption prosecutors arrested ECO-ELB waste manager Leli Kaja on suspicion of passive corruption, alleging he received 400,000 lek to skip duties; the probe is ongoing. Energy Poverty: OECD data show 38% of Albanian households can’t keep homes warm, with 27% still struggling to pay utility bills despite earlier electricity price cuts. Digital Commerce: Online selling is rising fast: 26% of Albanian businesses now sell online (about 36,000 firms), placing Albania second in the Western Balkans after Serbia. Banking Update: Raiffeisen Bank Albania says a technical issue led to some card transactions being posted twice, with corrections completed and no cybersecurity breach found. EU Enlargement Watch: Brussels is preparing pre-enlargement reforms, including more majority voting and safeguards that could limit new members’ veto rights—key for Albania’s accession path. Infrastructure & Transport: TAP says it will complete a gas metering/pressure reduction facility in Albania by Q4 2027, while prosecutors extended the Vlora airport concession investigation to Nov. 23. Business & Finance: Albania’s insurance market grew to ALL 18.3bn in premiums (first eight months) and claims hit ALL 6bn, up 9%. Jobs & Mobility: Germany plans to cut Western Balkans work-visa quotas in half from 2027, a move industry warns could hurt construction staffing.

Insurance Watch: Albania’s insurance market kept growing in the first eight months, with premiums reaching ALL 18.3bn (+2.4%) and claims rising to about ALL 6bn (+9%), led by compulsory motor insurance (ALL 11.5bn premiums; road-accident claims up 9%). Tourism & Housing: Tirana rents stayed elevated after summer, with city-centre apartments reportedly priced at €700–€1,500 per month as short-term listings on Airbnb/Booking squeeze long-term supply. EU Accession Process: Albania may provisionally close talks on business and industrial policy at an EU-Albania meeting planned for Oct. 13, as the government targets remaining chapters by 2027 and full membership by 2030. Energy Transition: The next solar auction is expected by early 2027 and, for the first time, will include battery storage to help balance midday generation with evening demand. Governance & Oversight: SPAK extended its Vlora airport concession probe by three months to Nov. 23, investigating alleged irregularities in the tender and the concession-awarding commission. Defense Sector Risk: Albania’s special prosecutors opened new searches tied to alleged international arms trafficking involving state-linked defense companies and individuals, following earlier allegations surfaced by former deputy PM Arben Ahmetaj.