2022 Report on Albania

The number of Albanian citizens lodging asylum requests in EU Member States remains lower than the peak of 2015 but increased significantly in the summer of 2021, and thus still requires continuous and sustained efforts. Dialogue and cooperation with the countries most affected have continued, in addition to thorough border checks and awareness-raising on rights and obligations under the visa-free regime. Albania should keep addressing the phenomenon of unaccompanied minors. The Commission is monitoring the trend very closely in the framework of the post-visa liberalisation monitoring mechanism. On the economic criteria, Albania made good progress and is moderately prepared for developing a functioning market economy. The impact of the COVID-19 pandemic on the economy, the budget deficit and the public debt ratio were lower than expected, but Russia's war against Ukraine caused price increases and lower trade. Fiscal space remains limited. Revenue-related reforms progressed, but investment expenditure remains weak. Frequent budget revisions weaken fiscal credibility. Inflation increased above target. Increased public service digitalisation, financial inclusion, and labour inspections benefitted the business environment and the formalisation of the economy, but the informal economy remains significant. Public consultation remains weak. Albania made some progress and is at some level of preparation to cope with competitive pressure and market forces within the EU. Energy and transport infrastructure, digitalisation and education improved, but entrepreneurial and technological know-how remain low, with unmet investment needs in human and physical capital, skills and education gaps, and low R&D spending. Low export diversification increases vulnerability to external shocks. Regional integration and exports increased but remained below potential. On public procurement, Albania is moderately prepared, the country has made good progress, in particular by adopting further implementing legislation and launching an electronic appeals and complaint system. On statistics, Albania is also moderately prepared, it made limited progress on aligning with ESA 2010 standards, faster publication and transmission to Eurostat, but the Population Census Law has been further postponed. Albania is moderately prepared in most areas on financial control, where the country made some progress, notably on public internal financial control and internal audit. Albania is moderately prepared in most of the areas of the internal market, namely the free movement of goods, services and capital, company law and competition policy. The same applies to financial services and to intellectual property law, both chapters where the country has made good progress thanks to the reduction of non-performing loans and to the adoption of legislation on copyright and on industrial property rights. Albania has made some progress with the adoption of a new law on foreigners as well as by fulfilling some of the recommendations of the Moneyval report. However, in the area of competition policy, the State aid authority needs to be made independent and sufficiently resourced. Preparations are at an early stage on consumer and health protection, where the country made limited progress. Albania has achieved a moderate level of preparation in many areas linked to competitiveness and inclusive growth, namely digital transformation and media, taxation, economic and monetary policy, enterprise and industrial policy, education and culture. The same goes for the customs union, where the pan-Euro-Mediterranean area rules of origin are applied, and bodies involved in the fight against smuggling and counterfeit goods are strengthened and cooperate better. The adoption of a tax and criminal amnesty against the advice of the EU and Moneyval could jeopardise progress in this area as well as in the fight against money laundering. Albania has some level of preparation in social policy and employment, and research and innovation. Albania has made some progress in education in particular with the adoption of the new National Strategy for Education and Action Plan 2021- 2026, but progress was limited on the economic and monetary policy. As regards Green Agenda and sustainable connectivity, Albania is moderately prepared on energy, environment and climate change. It has some level of preparation in the areas of transport policy and of trans-European networks and some progress was achieved in developing transport and energy networks. It made progress on civil protection and is ready to join the Union Civil Protection Mechanism. The country has made limited progress in the other areas covered by this cluster and ongoing efforts to address issues with vessels Flag State Control and to align legislation need to continue. Limited progress was made in further aligning the EU acquis on water management, chemicals and environmental crime. The impact of strategic investments on biodiversity and nature protection requires attention. This cluster and the reforms concerned have significant links to Albania's Economic Reform Programme, the Commission's Economic and Investment Plan and the Green Agenda for the Western Balkans endorsed by Albania in December 2020. Albania has some level of preparation in most areas linked to resources, agriculture and cohesion, namely agriculture and rural development, food safety, veterinary and phytosanitary policy, fisheries, and financial and budgetary provisions. It is moderately prepared as regards

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