AGP Executive Report

Ministerial Reset: Albania’s government is holding a special retreat to review each ministry’s performance, tackle challenges, and set priorities for the coming months, with a dedicated session on diplomacy and a focus on procurement for Jan–Aug 2026. Workforce & Skills: A new employment bill would extend public job services to Albanians living abroad and allow legally working foreigners to access career support, while creating a Labour Market and Skills Observatory to track shortages and retraining needs. Regulatory Transparency: Albania’s financial regulator is still not publishing some board decisions, including enforcement-related actions, despite a parliamentary push for greater transparency. AI Fraud in Tirana: Police arrested two suspects after an AI-generated video-call scam allegedly tricked a 70-year-old exchange owner out of €100,000; a third suspect is wanted. Cross-border Crime Probe: Ecuadorian authorities arrested an alleged financier tied to an Albanian-linked cocaine network, with the case pointing to Ecuador as a key departure point to Europe. Migration & Labor Demand: More foreign workers are moving to Albania, with work the main driver of residence permits and growing recruitment from Asia amid labor shortages in services. Tourism & Protest Backdrop: Tirana’s ongoing protests are framed by participants as a push for accountability over corruption, inflation, and development that benefits outsiders more than locals.

AI Fraud in Tirana: Police arrested two men after an AI video-call scam allegedly tricked a 70-year-old exchange owner out of €100,000, with a third suspect still wanted. Cross-border Crime: Ecuador arrested a man suspected of handling finances for an Albanian-linked cocaine network, highlighting continued trafficking links into Europe. Regulatory Transparency: Albania’s financial regulator still isn’t publishing some board decisions, including enforcement-related actions, despite a parliamentary push for greater openness. Labour Market Policy: A new employment bill would expand job services to Albanians abroad and allow legal foreign workers to access career support, while creating a Labour Market and Skills Observatory. Foreign Workers: Residence permits rose to over 32,000 in 2025, with work the main driver, and more arrivals from Asia as employers struggle to fill service-sector roles. Gaza Security Talks: Uganda and Burundi discussed troop contributions with Israel for a proposed international Gaza force under the US “Board of Peace,” with Uganda reportedly cleared for about 1,200 personnel. Tourism & Mobility: Over 41,000 Kosovars entered Albania over the weekend via Morina, feeding late-summer beach demand. Government Planning: Ministers held a retreat to review performance, tackle challenges, and set priorities for the months ahead.

US Immigration Ruling: A federal judge in Manhattan struck down Trump’s immigrant visa suspension covering 75 countries, including Albania, saying the State Department exceeded its legal authority and that nationality-based blanket refusals are unlawful—meaning affected applicants can return to normal case-by-case processing. Cyber & Energy Security: Iran-linked hackers reportedly shut down a UK power plant for four days, prompting new guidance to energy firms and highlighting how critical infrastructure can be disrupted even without broad grid impact. Banking & Credit: Albania’s bank lending rose 14% year-on-year in Q2 as both businesses and households borrowed more; business loan rates in lek eased to 6.3%, and loans in local currency now near 60% of total lending. Labor Market: Albania is turning to Asian recruitment as shortages bite, with new agreements signed with Vietnam and Indonesia and talks ongoing with the Philippines. Tourism Flows: Over the weekend, more than 41,000 Kosovars entered Albania via Morina, with heavy traffic heading toward the coast as the summer season winds down. Protests & Investment Risk: Mass protests in Albania have targeted major tourism projects tied to protected areas, with demonstrators arguing the rules are being bent to speed up approvals.

Banking & Credit: Albania’s bank lending rose 14% in Q2 year-on-year as both businesses and households borrowed more, with business loan rates averaging 6.3% in lek and currency loans now close to 60% of total lending. Labor Markets: Albania is turning to Asia to plug shortages, signing recruitment agreements with Vietnam and Indonesia and in talks with the Philippines, as demand grows in tourism, construction, manufacturing, agriculture and transport. Tourism & Mobility: Over the weekend, 41,626 people (13,484 vehicles) entered Albania from Kosovo via Morina, with 24,408 arrivals Saturday and 17,218 early Sunday, reflecting late-summer travel demand. Energy & Cybersecurity: Iran-linked hackers reportedly shut down a UK power plant for four days, while the incident coincided with attacks on US water infrastructure—raising concerns for critical infrastructure resilience. US Immigration Policy: A US judge overturned Trump’s immigrant visa suspension covering 75 countries including Albania, ruling the nationality-based ban was “patently unlawful” and exceeded the State Department’s authority. Environment & Protests: Albania’s mass protests have continued over development plans tied to protected areas, with demonstrators challenging the government’s protected-area relaxations and strategic investment approvals.

US Immigration Policy: A federal judge in New York struck down Trump’s immigrant visa suspension covering 75 countries, calling it “patently unlawful” and ruling the State Department exceeded its authority; Albania is among the affected nations, meaning applicants could return to normal case-by-case processing. EU Funding for Energy: Albania is set to receive another €61m from the EU after energy-sector reforms bring electricity market rules closer to EU standards and support renewables, building on earlier €212m disbursements. Banking & Credit: Albania’s bank lending rose 14% year-on-year in Q2 as both businesses and households borrowed more, with lek-denominated business loan rates averaging 6.3% and currency loans nearing 60% of total lending. Labour Migration: Albania is recruiting abroad as shortages bite, signing new labour agreements with Vietnam and Indonesia and discussing deals with the Philippines to fill gaps in tourism, construction, manufacturing, agriculture and transport. Cybersecurity Risk: Iran-linked hackers reportedly shut down a UK power plant for four days, prompting UK guidance to energy firms—another reminder that critical infrastructure is a growing target.

Banking & Credit: Albania’s bank lending rose 14% in Q2 year-on-year, driven by higher business borrowing for investment and equipment, plus more household loans for homes and consumption; average new business loan rates in lek eased to 6.3%, and lek-denominated loans now near 60% of total lending. EU Funding Unlock: Albania is set to receive another €61m from the EU after energy-sector reforms bring electricity market rules closer to EU standards and support renewables, with payments tied to completing agreed reforms under the Western Balkans Growth Plan. Sovereign/Bank Ratings: S&P Global upgraded Banka Kombëtare Tregtare (BKT) to ‘BB’ from ‘BB-’, citing reduced economic risks, improving conditions, and strong internal risk management—lifting the bank to the top achievable commercial rating level for Albania. Labour Market Shift: With shortages hitting tourism, construction and other sectors, Albania is recruiting from Asia—having signed agreements with Vietnam and Indonesia and discussing further steps with the Philippines. IP & Media Piracy: Small World IFT and Catalyst secured an Albania licensing-agency deal for TV/OTT rights, as Albania tightens IP rules and launches a task force against digital and audiovisual piracy. Infrastructure Corridor: Montenegro’s Monteput announced a €4m tender for conceptual design of the Adriatic-Ionian highway segment Gradac–Grahovo, linking Montenegro/BiH/Croatia with Albania. US Court Impact (Albania-linked): A New York federal judge struck down a Trump-era suspension of US immigrant visas for nationals of 75 countries, including Albania, calling it “patently unlawful” and beyond the State Department’s authority.

EU Energy Support: Albania will receive an additional €61m from the EU’s Growth Plan for the Western Balkans after energy-sector reforms bring electricity market rules closer to EU standards and add support for renewables. Banking & Credit: S&P Global upgraded BKT to ‘BB’ (stable outlook), citing reduced risks and stronger operating conditions, lifting the bank to the top rating level allowed for Albania’s sovereign cap. Inflation Watch: INSTAT/Eurostat-style data puts Albania’s July inflation at 3.4%, slightly above the EU average, driven mainly by food, transport, and tourism services. FX & Currency: Bank of Albania data shows €4.5bn traded on the domestic FX market in Q2, while the lek keeps strengthening against the euro. Transport & Consumer Tech: Electric, hybrid and plug-in vehicles now make up 71.2% of new 0-km registrations (Jan–Jul 2026), up 21% year-on-year. IP & Media Licensing: Small World IFT and Catalyst secured a sales agency deal for Albania, Kosovo, North Macedonia and Montenegro as Albania tightens rules against digital and audiovisual piracy. Tourism & Safety: Authorities continue investigating a fatal Ksamil beach bar incident as Principote Mykonos denies any link to the venue using its name.

EU Funding Watch: Albania will receive another €61m from the EU Growth Plan for the Western Balkans after completing energy-sector reforms, including electricity market rule updates aligned with EU standards and support measures for renewables. Banking & Credit: S&P Global upgraded Banka Kombëtare Tregtare (BKT) to ‘BB’ (stable), lifting it to the top rating level for a commercial bank in Albania and citing improved operating conditions and risk management. Inflation & Consumer Mood: INSTAT data put Albania’s July inflation at 3.4% (above the EU average), with the biggest pressure from food, transport and tourism services; Bank of Albania surveys show consumers’ one-year inflation expectations rising to 11.5%. FX & Currency: Foreign exchange trading hit a record €4.5bn in Q2, while the lek strengthened as the euro and dollar weakened. Transport & Market Signals: Electric, hybrid and plug-in vehicles made up 71.2% of new 0km registrations in Jan–Jul 2026, up 21% year-on-year. IP & Media Licensing: Small World IFT and Catalyst secured an Albania licensing agency deal as Albania tightens rules against digital and audiovisual piracy ahead of EU accession. Tourism & Safety: Authorities continue investigating the fatal Ksamil beach bar incident as Principote Mykonos denies any link to the venue using its name. Regional Risk: Albania recorded 25 wildfires in 24 hours to Aug 19, underscoring worsening climate pressure across Southeast Europe.

FX & Currency: Albania saw record domestic foreign-exchange trading of about €4.5bn in Q2, while the lek kept strengthening as the euro and dollar eased. Inflation Watch: July inflation hit 3.4% (above the EU average), driven mainly by food, transport and tourism-linked services. Consumer Sentiment: Bank of Albania surveys show inflation expectations jumped for consumers, while businesses and financial agents stayed closer to target. Tax & Digital Economy: The tax administration launched a sectoral plan targeting online trade and services to curb informality and improve VAT, invoicing and payroll compliance. Transport & Mobility: Electric, hybrid and plug-in vehicles made up 71.2% of new 0-km registrations in Jan–Jul 2026, up 21% y/y. Energy & Climate: Renewable electricity covered 105.2% of consumption in 2025, but wildfire risk is rising fast, with climate-change damage projected up to 7% of GDP by 2050. Infrastructure: Government has started the process to cancel the Vlora International Airport contract after repeated delays. Tourism Demand: Foreign arrivals reached 5m in H1 2026, up 6.2% y/y, led by Kosovo and Italy.

Vehicle Market Shift: Electric, hybrid and plug-in cars surged in Albania, reaching 71.2% of new 0-km registrations in Jan–Jul 2026, up 21% year-on-year. FX & Currency Watch: Albania saw record domestic FX trading of about €4.5bn in Q2, while the lek strengthened as the euro and dollar eased. Inflation Update: July inflation hit 3.4%, slightly above the EU average, with the biggest pressure from food, transport and tourism services. Consumer Sentiment: Bank of Albania surveys show inflation expectations jumped for consumers, while businesses and financial agents stayed closer to target. Tourism Numbers: Foreign arrivals topped 5 million in H1 2026 (+6.2%), led by Kosovo and Italy, with Malaysia and several other markets rising fast. Policy & Enforcement: Albania’s tax office launched a plan targeting online trade and services to curb informality and improve VAT, payroll and e-invoicing compliance. Governance & Justice: Parliament urged SPAK to use alternatives to pre-trial detention more often and review detention cases every four months. Infrastructure Risk: The government has started cancelling the Vlora International Airport contract after repeated delays. Climate Risk: Wildfires are flagged as a top climate threat, with potential damage up to 7% of GDP by 2050 if not addressed.

EU Enlargement Watch: EU diplomats are watching Iceland’s Aug 29 referendum on restarting accession talks, hoping a “yes” vote boosts enlargement optics for candidates including Albania. Tourism & Risk: Albania’s renewable power edge is real, but hydropower reliance keeps risks in focus as wildfires threaten forests, farming and tourism; a separate report flags safety licensing gaps after the Ksamil killing. Aviation & Infrastructure: The government has started the process to cancel the Vlora International Airport contract after repeated delays and no firm opening deadline. Tax & Digital Economy: Albania’s tax office launches a sectoral plan targeting online trade and services to curb informality, improve VAT and e-invoicing compliance, and level the playing field. Finance & Prices: Bank of Albania survey data shows consumers’ inflation expectations jumping to 11.5% while businesses and financial agents stay near the 3% target; inflation is cited at 3.4% in July. Productivity & Jobs: Albania ranks last in the Western Balkans for labor productivity (GDP per hour worked), underlining the need for investment in skills, tech and automation. Governance & Justice: Parliament urges SPAK to use alternatives to pre-trial detention more often and review detention cases every four months, alongside stronger asset seizures in corruption cases. Foreign Demand: Albania recorded 5 million foreign arrivals in H1 2026, up 6.2%, led by Kosovo and Italy. Energy: Eurostat data shows renewables covered 105.2% of Albania’s electricity consumption in 2025, ahead of all EU states.

Inflation Watch: Bank of Albania survey data shows consumers’ 1-year inflation expectations jumped to 11.5% in Q2 2026, while businesses and financial agents stayed near the 3% target—fuelled by Middle East geopolitics and higher crude prices. Productivity Gap: Albania remains the lowest in the Western Balkans for labor productivity, with ILO estimating GDP per hour worked at $18.7, down 4.1% vs 2024. Tourism & Travel Flows: Albania logged 5 million foreign arrivals in H1 2026 (+6.2%), led by Kosovo and Italy, while day trips surged as summer approached. Energy & Climate: Renewables covered 105.2% of Albania’s electricity consumption in 2025, but hydropower reliance keeps risks in focus as wildfire threats rise; the adaptation plan flags climate damage up to 7% of GDP by 2050. Tax Crackdown on Digital Trade: The tax administration launched a sectoral plan to formalize online trade and services, targeting VAT, e-invoicing, and employee declarations to curb informality. Anti-Corruption Courts: Parliament urged SPAK to use alternatives to pre-trial detention more often and review detention cases every four months, alongside stronger asset-focused investigations. Infrastructure Contract: Government has started the process to cancel the Vlora International Airport contract after repeated delays and no firm opening deadline.

Online Economy Crackdown: Albania’s tax authority is shifting enforcement toward online trade and services, targeting firms that don’t register, underreport sales, dodge VAT, hide workers or wages, or miss electronic invoicing rules, using risk analysis and data sharing to pull more activity into the formal economy. Exports & Trade: Albania’s goods exports rose 10.6% y/y in July to 33.7bn lek, led by construction materials, metals, energy and fuels, while textiles and footwear fell 13.8% as the sector’s decline continues. EU Alignment on Belarus Sanctions: Albania is among eight non-EU countries agreeing to align with the EU’s latest Belarus sanctions, expanding restrictions on military and tech-related goods and crypto-asset involvement. Sports Betting Return: Albania has completed the legal framework to restart online sports betting after seven years, but licensing hasn’t opened yet, raising fears of market concentration. Tourism Safety: A Ksamil killing highlights gaps in safety licensing for tourist nightlife venues, where some operate outside normal legal and safety standards. Macroeconomic Pulse: Albania’s economy grew 3.71% in Q1 2026, among the fastest in the Western Balkans, supported by tourism, investment, jobs and spending.

Albanian Growth Watch: Albania’s economy expanded 3.71% in Q1 2026, among the fastest in the Western Balkans, with Finance Minister Petrit Malaj pointing to tourism, investment, jobs and consumer spending. Trade & Industry: Exports rose 10.6% y/y in July to Lek 33.6bn, led by construction materials, metals, energy and fuels, while textiles and footwear kept sliding. EU Market Pull: The EU took 68.4% of Albania’s July exports, with Greece up 19% y/y and Germany also rising, while Italy and Kosovo dipped. Tax Crackdown on Digital: Albania’s tax administration is shifting enforcement to online trade and services, targeting non-registration, underreported sales, VAT gaps, undeclared workers and electronic invoicing breaches. Online Sports Betting Return: After a seven-year ban, Albania has a framework ready to license up to 10 online operators, but the licensing process is still not open—raising fears of concentration. Currency Signals: The lek’s gains versus the dollar have slowed sharply as the dollar strengthened, though the central bank says markets remain stable. Cash Demand: Cash in circulation rose about 9% in the first seven months of 2026, reaching 546bn lek. EU Sanctions Alignment: Albania agreed to align with the EU’s latest Belarus sanctions, including tighter controls on goods, tech and crypto-related activities. Wildfire Risk: A new national plan flags forest fires as a major climate threat, with potential damage up to 7% of GDP by 2050.

Online Tax Crackdown: Albania’s tax authority is shifting enforcement to online trade and services, targeting businesses that fail to register, underreport sales, dodge VAT, hide workers or wages, or breach e-invoicing rules, using risk analysis and shared data to pull more activity into the formal economy. Sports Betting Re-legalisation: After a seven-year ban, Albania is preparing to license up to 10 online sports betting operators, aiming to move profits out of the “black economy,” though key details like timing and appetite remain unclear. Corruption & AI Governance: Albania’s anti-corruption AI “Diella” faces fresh scrutiny as prosecutors investigate AKSHI, alleging rigged tenders and kickbacks tied to a criminal group, raising questions about whether the tool can credibly fight corruption when its creators are accused of misconduct. Cash & Trade Signals: Cash in circulation rose about 9% in the first seven months of 2026 to 546bn lek, while exports grew 10.6% year-on-year in July to 33.7bn lek, led by construction materials, metals, energy and fuels, even as textiles and footwear fell 13.8%. Business Environment: A draft law proposes replacing current chambers of commerce with a single National Economic Chamber plus sector chambers, with an estimated 15.4m lek cost in year one. Housing Finance: A new housing bill would let public bodies build mixed projects, using proceeds from market-rate homes to fund social housing and partially guarantee subsidised loans. Climate Risk: Albania’s climate plan warns forest fires are a major damage driver, projecting total climate-change economic losses up to 7% of GDP by 2050.

Tax Enforcement: Albania’s tax authority is stepping up enforcement against online trade and services, targeting firms that don’t register, underreport sales, dodge VAT, hide workers or wages, or breach electronic invoicing rules, using risk analysis and data sharing to pull more internet activity into the formal economy. Cash & Payments: Cash in circulation in Albania rose about 9% in the first seven months of 2026, reaching 546 billion lek by end-July, with July the biggest jump, even as electronic payments keep expanding. Trade Performance: Exports grew 10.6% year-on-year in July to 33.7 billion lek, led by construction materials, metals, energy and fuels, while textiles and footwear fell 13.8%. Banking Credit: The private sector loan portfolio expanded about 14% in Q2 versus a year earlier, with demand strongest for investment, liquidity and expansion, and more lending in lek. Housing Policy: A new Albanian housing bill would let public bodies build mixed projects, using proceeds from market-price homes to fund social housing and partially guarantee subsidised home loans. Anti-Corruption Tech: Albania’s AI anti-corruption avatar “Diella” faces fresh scrutiny as prosecutors investigate the agency behind it over alleged rigged tenders and kickbacks. Public Health: Albania’s hormone-treatment guideline for trans people in public healthcare reportedly does not include public financing, meaning medications aren’t free.