After 5 years, Albania loses 9 places in the economic freedom index

After 5 years, Albania loses 9 places in the economic freedom index

IBNA Special Report

Tirana, January 27, 2015/Independent Balkan News Agency

A report issued by Heritage Foundation and Wall Street Journal says that Albania has fallen by 7,5 points in economic freedom and 5 points in investment freedom.

This is the first decrease after five years in the aspect of economic freedom in Albania. Compared to last year, Albania has lost 9 positions in the ranking.

Heritage Foundation identifies a drop by 7,5 points in the freedom to open and do business and a fall in fiscal freedom.

“Albania’s decrease is attributed to the weakening of business freedom, fiscal freedom and investment freedom. But, Albania has performed worse in the domain of corruption and land right”, reads the report.

Albania enters the ranking of countries with moderated economic freedom. Out of 186 countries of the world, it ranks 63rd, while out of 43 European countries, it ranks 29th.

Compared to a year ago, this is a drop, because Albania has been ranked 54th in the world and 25th in Europe. World ranking is made by analyzing 10 economic freedoms which have a maximum rating of 100 points.

The detailed figures of the “2015 Index of Economic Freedom” report

According to the report, Albania’s economic freedom score is 65.7, making its economy the 63rd freest in the 2015 Index. Its overall score has decreased by 1.2 points, with notable declines in business freedom, fiscal freedom, and investment freedom. Albania is ranked 29th among the 43 countries in the Europe region, and its overall score is above the world average.

Over the past five years, Albania has advanced its economic freedom score by 1.7 points. With score increases in six of the 10 economic freedoms, including trade freedom and the management of public spending, it has fluctuated within the category of “moderately free.” However, in the 2015 Index, the upward trend of economic freedom in Albania has reversed.

The Albanian economy is mostly in private hands, but the state continues to control key enterprises, particularly in the energy sector. Although foreign direct investment has increased in recent years, overall levels still remain among the lowest in the region. Deeper structural reforms to diversify the economy and improve labor market flexibility remain critical for more broad-based economic development. Property rights and freedom from corruption are weak, and government interference and regulatory control continue to limit dynamic investment and overall economic efficiency.

Opposition and experts blame the government

The Democratic Party, the largest opposition party, says that the figures that have been published by Heritage Foundation “confirm the difficult economic situation, unemployment and poverty that Albanians have been suffering for more than a year”.

In a public reaction issued today, the opposition accuses the government of intervening through nepotism and corruption on prices by damaging free competition and thus contributing on the economic crisis.

For the opposition, this is the “gloomy picture of our economy with Edi Rama’s government, which is bringing poverty, unemployment and more crises”.

“No parade of imaginary successes of the past can cover the bitter truth that the majority of Albanians are living today and which is also being identified by international prestigious institutions”, reads the DP statement.

Mateo Spahi, prominent economy expert, says that with the publication of this report, another reality comes to light, different to the government’s propaganda.

“The empty government propaganda has been discredited today when Heritage Foundation and Wall Street Journal reported a drop of Albania’s economic freedom, due to the increase of taxes and corruption, something which has deteriorated investment opportunities and has led the Albania economy to a crisis”, says Mr. Spaho.

He says that “investment opportunities have been more and more reduced by the government, which has dropped investment freedom by 5 points”.

“The government has increased tax on personal income up to 23% and tax on profit to 15%, but it has not managed to increase budget revenues and this is proof of informality and corruption”, says Spaho. /ibna/