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IMF to visit Romania on 9 May

 - 27.04.2011

The RON firmed marginally on Friday, closing the day at 4.0815/EUR. It continued grinding higher early today and traded past the 12-month high of 4.0775/EUR. Although breaking this threshold could accelerate the gains we doubt this could be the case for today as market players may be more restrained than usual as they return from Easter holiday. IMF review is to start tomorrow with a visit planned to take place to 9 May. The other news making the headlines is that, according to the local press, the executive dropped the 2015 euro-adoption target date in a convergence plan it is to send to the EC. While not mentioning any new target date, the plan reportedly talks of entering ERMII in 2013-2014, not 2012 as previously envisaged. This implicit delay is in line with our expectations, comments from high officials and, judging by the price action, probably also shared by most market participants.

The RON money market was very active on Friday as liquidity needs increased probably on expectations of large budget payments. Cash traded as high as 6% and ON ROBOR fixed at 6.39%, just above the 6.25% key rate. The NBR stepped into the money market and injected RON0.9bn through a 5D repo operation and expectations for further operations are likely to cool any potential gains from current levels. Rates further out the curve (1M, 3M) were not actively traded with the last levels reported being above 5%. After a prolonged period of loose liquidity conditions and only a session with high short-term rates we doubt market players will believe rates are to remain elevated so we favour a static development in rates further out the curve, expecting some softening maybe towards the end of the week.

Source : bne

F.Y.R. of Macedonia Economic Analysis

March 2011 | By Dimitrios Shistohis

POLITICAL RISK - Short-Term Risk Rising

Prime Minister Nikola Gruevski said in February that he and his VMRO-DPMNE-led coalition were ready for early elections. The situation surrounding the call for a new vote has highlighted major weaknesses in Macedonia's democratic institutions, especially with regard to political dialogue. The election announcement came soon after opposition parties, led by the Social Democrats (SDSM), decided to walk out of parliament in response to the freezing of the assets of private TV network A1. The government said the block was imposed due to an investigation into tax fraud, while opposition parties claimed it was a politically motivated attack against media critical of the regime.

Macedonia's short-term political risk rating is 58.1.

 RISK ECONOMIC- Fiscal Discipline Ahead

According to latest Ministry of Finance data, the government was on track to meet its budget deficit target of 2.5% of GDP in 2010. After the first nine months of the year, the general government deficit was estimated to stand at 1.3% of GDP, helped by a 3.3% y-o-y rise in central government revenues (which account for the majority of overall budget receipts). Expenditure by the central government remained relatively modest through the first nine months of the year, rising just 2.9% y-o-y. We retain our own forecast for a general government budget deficit equal to 2.6% of GDP, though acknowledge that the final figure could be marginally smaller than this.

Our short-term economic risk rating for Macedonia is 41.5 this month.

BUSINESS ENVIRONMENT - Foreign Liabilities No Major Threat For Now

We expect gross external debt to rise by an average 10% per year in 2011 and 2012 as the government invests in infrastructure according to its 2011-2013 pre-accession programme. Foreign debt as a percentage of GDP will rise to 72.4% by the end of that period. This marks a significant increase from the 56.6% level registered at end-2009, though we expect the ratio to stabilise in the medium term as headline growth rates gradually return to pre-crisis levels. A strong credit rating (Fitch assigns Macedonia a BB+ sovereign credit rating, one step below investment grade) and slowly improving market conditions should help contain borrowing costs, and we do not see any major risks to Macedonia's ability (or willingness) to pay its foreign obligations.

Macedonia scores 54.4 out of 100 in our business environment rating.

Source BMI

ALBANIA Economic Analysis

March 2011

By Dimitrios Shistohilis

 Growing concerns over inflationary pressures have seen Albania begin its monetary tightening cycle at its March meeting, raising the key repo rate by 25 basis points to 5.25%. We believe that high global commodity prices, continued feed through effects from the depreciation of the lek, and strong demand-side price pressures will see inflation spike higher, spurring further hikes by year end. As such, we are revising our end-2011 rate forecast to 5.75%, from 5.25% previously.

Albania's central bank, the Bank of Albania (BoA), raised its key two week repo rate by 25 basis points (bps) to 5.25% at its policy meeting on March 23, the first rise in the benchmark borrowing rate since November 2007. The rise in rates by the BoA comes on the back of growing concerns over accelerating consumer price inflation and represents the start of a monetary tightening cycle for the country, in our view. Going forward, we expect inflation to continue to ticking higher over the course of the year before moderating somewhat to post a 4.0% year-on-year (y-o-y) rise by end-2011.

Data released by the BoA show the country's consumer price index (CPI), taking a leg upwards in February, rising by 4.4% y-o-y. This is above January's inflation print of 3.3% y-o-y and represents a month-on-month (m-o-m) acceleration of 2.3%. We believe that the bulk of inflationary pressures are being driven by higher commodity import prices and this is belied by the categorical breakdown of the headline CPI. Domestic food prices rose by 6.9% y-o-y, up from 4.4% in January while the cost of transport, which is heavily dependent on the cost of fuel, posted a y-o-y gain of 5.3%. Going forward, with uncertainty in the Middle East and North Africa (MENA) region set to rumble on for the foreseeable future, keeping global commodity prices (especially oil) elevated, and this will continue to push inflation higher in Albania.

We also believe that the headline CPI print is being driven higher by delayed pass through effects from prior depreciation in the value of the Albanian lek versus the euro, against which the Albanian unit lost over 40% since Q308. Since the beginning of 2011, with the euro buoyed by the prospect of the start of the European Central Bank (ECB)'s monetary tightening cycle, the lek has lost a further 1.1% against its single currency counterpart. We believe that the BoA will be keen to stem further depreciation, which would exacerbate cost-push inflationary pressures from global commodity prices, by beginning its rate tightening cycle to support the currency and broadly maintain the interest rate differential between itself and the ECB.

Finally, we believe that greater demand side price pressures due to Albania's robust pace of economic growth will facilitate the BoA's decisions to raise hikes further, and this underpins our end-year rate target of 5.75%. Unlike its regional peers and indeed the bulk of Europe, Albania did not experience a protracted economic downturn, with real GDP contracting by just 0.5% y-o-y over a single quarter in Q409. Albania's economy has since accelerated strongly to post real GDP growth of 4.9% y-o-y in Q310 (the latest period for which data is available) and we estimate the economy grew by 3.7% in 2010. In 2011, we expect even stronger growth from the Albanian economy, forecasting gross domestic product to grow by 5.0% in real terms. Overall, we believe that the potential for rate movements is distinctly skewed towards the upside over the remainder of 2011.

Source BMI

Turkey plans to build nuclear power station in Bulgaria?

- 11.04.2011

Turkey is planning to build a nuclear power station at Igneada, a small town close to the Bulgarian border on the Black Sea coast. No official Bulgarian reaction has yet been recorded, but Internet forums were overwhelmed with alarmed messages regarding the possible consequences of the decision.

Igneada, which lies on the Black Sea coast in the region of Thrace, is the safest location for the plant in terms of earthquake resistance, Turkish officials said, according to a report in Turkish newspaper Hurriyet on Wednesday (6 April).

A nuclear plant at Igneada would be the third such project recently announced by Turkey. Ankara has already approved plans to build two nuclear plants, one in Akkuyu on the Mediterranean and another one at Sinop, on the northern edge of Turkey's Black Sea coast.

Turkey concluded a deal with Russia to build Turkey's first nuclear plant in Akkuyu. The total capacity of the nuclear power plants to be built in Akkuyu and Sinop is expected to be nearly 10,000 megawatts. The second nuclear plant will reportedly be developed by Tokyo Electric Power Co. (TEPCO) and Toshiba. TEPCO gained notoriety after the recent disaster at its Fukushima plant, the Turkish press reports.

Turkey intends to build three nuclear power plants with a total power generation capacity of 15,000 megawatts by 2023, the officials said.

The site planned for the Mediterranean nuclear station is only a couple of dozen miles away from a fault line which geologists fear is in danger of sliding at any time, Hayrettin Kilic, a nuclear physicist who campaigns against atomic power, is quoted by Reuters as saying.

"There are a few proper places for the third nuclear power plant. Igneada seems to be the best one," unnamed officials are quoted as saying.

Turkish Energy Minister Taner Yildiz said no official decision had been taken regarding the location of a third nuclear plant.

"We said our extensive 2023 vision also includes a third nuclear plant. This idea still exists but our main aim is now to conclude negotiations of the first two plants," Yildiz said.

According to the Dnevnik daily, EurActiv's partner in Bulgaria, the planned Turkish plant is located 15km from Rezovo, a village situated on the Bulgarian side of the Black Sea, near the Turkish border.

At the time of publication, 375 readers had commented on Dnevnik's article, voicing concerns about the environmental risks of building a nuclear plant there.

Bulgaria has a 300km-long Black Sea coast, which hosts a myriad of booming tourist resorts. Many posted comments related to concerns that the project will scare tourists away from Bulgaria. Some readers insisted that Sofia should block Turkey's EU bid in retaliation.

Bulgaria has one nuclear power plant, at Kozloduy on the Danube river, and has started building a second one at Belene, also on the river, which constitutes a natural border with Romania. Work at Belene was frozen after the Fukushima disaster pending further security assurances from Russian developer Rosatom.

In Brussels, the European Commission admitted it could not prevent countries from building nuclear power stations in border regions, but highlighted the importance of the "stress tests" which the EU is aiming to put in place to improve nuclear safety after Fukushima.

"That's why we would like to include Turkey and other countries when we develop stress tests," said Marlene Holzner, spokesperson for Energy Commissioner Guenter Oettinger.

Such consultations were seen as useful when discussing plans for new nuclear power plants. It was easier to take measures to comply with the requirements of stress tests than to upgrade such facilities, she added.

Source : bne

Bulgaria has just become the first EU member state to have conducted a population census in 2011

 - 11.04.2011

Bulgaria has just become the first EU member state to have conducted a population census in 2011. The census results have expectedly revealed the scope of Bulgaria's demographic catastrophe – the country's population is declining rapidly, aging rapidly, and continuing to emigrate at a steady rate. Actually, in some ways the census results were better than expected – to the extent that any silver linings can be seen when a country's population declined from 7.9 million to 7.3 million in just 10 years. Examples of those are that Bulgaria's population hasn't gone below 7 million yet, and that there has been a notable increase in the birthrate over the past decade. So the "good news" is that Bulgaria's demographic situation is "only" apocalyptic while many had predicted it would be "hopeless." Of course, there is a really fine line between the two, if any. Bulgaria's demographic condition is unique as it corresponds to its situation as the poorest country in the "rich countries' club."

Štete prošlogodišnjih poplava u Albaniji procenjene na 30 miliona dolara

 - 11.04.2011

Ekonomske štete izazvane poplavama u decembru 2010 godine u severnom distriktu Albanije, Skadru, procenjene su na 30 miliona dolara, izveštava Top-Channel.

Štete na objektima iznosile su 20 miliona dolara. Preostalih 10 miliona se odnose na štetu nanesenu poljoprivrednim područjima.

Οι ζημιές από τις πλημμύρες στην Αλβανία φτάνουν τα 30 εκατομμύρια δολάρια

Οι οικονομικές ζημίες που προκλήθηκαν το Δεκέμβριο του 2010 από τις πλημμύρες στη Shkodra  της Αλβανίας ανέρχονται σε 30 εκατομμύρια δολάρια.

 Από το ποσό αυτό, 20 εκατομμύρια δολάρια ήταν οι ζημιές  σε κατοικίες, ενώ τα υπόλοιπα 10 εκατομμύρια δολάρια ήταν οι γεωργικές ζημιές.

Albania's PM issues order for ban on use of state admin sources in electoral campaign

 - 11.04.2011

In the threshold of the electoral campaign for May 8 local polls, Albania's Prime Minister Sali Berisha issued last week an order for a ban on use of state administration sources in electoral campaign. Albania's prime minister presented the plan to the meeting of the Council of Ministers. While considering the campaign on diet of administration sources, the prime minister said that participation into the activities of the electoral campaign of the prime minister and every other official will be made at the party expenses. The prime minister appreciated that the order is issued at a moment of separation from a written practice. “Every campaign is a new beginning, a great opportunity for every politician and it is a pleasure to have these important novelties in this campaign”, said the prime minister. In function of having this order obeyed, Albania's PM Berisha said that the State Police will be entitled to block official car of every official in the campaign, while the High State Control Office and all the other administrative audits will be asked to take tough controls on all funds so that public money is not diverted by the central or local authority into party rallies and other abuse. Source; Government

ANALYSIS: Privatisation – what does SEE still have to offer?

-EBRD - 12.03.2011

After approximately two decades of transition, privatisation is pretty advanced across the region and more or less complete in many sectors of the economy. Nevertheless, there is still a privatisation agenda of some sort in all SEE countries. The process has largely stalled in the past two years, because of reluctance to bring politically sensitive companies to the market on the one side, and lack of confidence of international investors on the other. However, with modest signs of an economic upturn now apparent, the time may once again be appropriate to reinvigorate the process. This note outlines briefly, on a country-by-country basis, some of the major assets that still remain to be sold, and the current plans (if any) for their sale.

 

Albania The main state-owned assets up for sale in 2011 include Albpetrol Sh.A., the country’s sole extraction company, for which a 100% stake was offered last year but that has failed due to lack of interest – the company is over-staffed and has limited operational capacity. A new tender for INSIG s.c., the state-owned insurance company, was launched in July 2010 but has also failed to attract any investors so far. The authorities are planning to resume its privatisation efforts for both companies this year, and will additionally offer for sale five small hydropower plants with a combined capacity of 81.7 MW, and a number of military facilities. However, no dates have been set.

 

Bosnia and Herzegovina In the Federation of Bosnia-Herzegovina, the government is hoping to raise between €0.5 and €0.8 billion in FDI this year, mainly through the privatisation of state-assets in 11 large companies, all of which had been included in previous privatisation plans. The most prominent companies are Aluminij d.d. Mostar, Energoinvest Sarajevo, the construction company Hidogranja, BH Airlines, and telecoms company HT Mostar. In Republika Srpska, the privatisation plan for 2011 envisages a majority sale of 14 strategic companies, some of which had been offered previously for privatisation. In addition, a considerable number of minority stakes are planned to be sold through the Banja Luka stock exchange.

 

Bulgaria The authorities are planning to offer 11 large state-owned companies for sale in 2011. In early January, the parliament especially endorsed amendments to the privatisation act in order to exclude several companies from the “not-for-sale” list, as per a request by the government in order to increase privatisation revenues. The main focus in 2011 will be the long-expected privatisation of the tobacco producer Bulgartabak Holding, which controls over 50 per cent of the domestic tobacco market. In early 2010, Citigroup Global Markets was selected as the consultant advising in the privatisation process, and the Bulgarian authorities are expecting to raise at least €100 million from the privatisation. A tender is scheduled to be published in the coming weeks. In addition, the state is likely to sell some shares in several power distribution companies and in Bulgaria’s largest defence industry plant, VMZ Sopot. A number of minority shares are also planned to be sold. Another tender (the fourth) is also expected to be published for the bankrupt steel mill Kremikovtsi, in which the state has a 25 per cent share. Lastly, concessions may be offered by the government for the Black Sea port in Burgas and for two regional airports.

Croatia A large number of companies still await privatisation. The state holds a minority stake in over 600 companies, and more than 50% assets in over 60 companies, including major strategic companies such as Hrvatska Postanska Banka (71.8% state-ownership), insurance company Croatia Osiguranje (80.3% state-ownership), the oil company and oil pipeline JANAF (52.2% state-ownership), Croatian Airlines (state-ownership 98.38%) and Hrvatstka Elektorprivreda (state-ownership 100%). In addition, in early March, the government decided to offer for sale 33 enterprises which are currently undergoing bankruptcy proceedings, and plans to sell further assets later on in the year.

The main privatisation issue in the country surrounds the six remaining state-owned shipyards, whose sale or closure is required by the European Commission in order to complete the competition policy chapter of the EU accession negotiations. After a failed attempt to privatise the shipyards in 2009, the authorities launched a second tender in February 2010 which, however, was delayed numerous times. 3.Maj, Brodotrogir and Brodogradjevna Industrija Split received 4 bids, which however, are subject to approval by the European Commission (EC). The sole bid for 3.Maj has already been rejected by the Croatian Privatisation Fund (HEP), citing financial difficulties of the Austrian bidder A-Tec. A third tender is currently under preparation. In late- February 2011, the EC approved the restructuring plan of an interested bidder for Brodosplit, which lays the path for the full privatisation of the company in the coming months.

 

FYR Macedonia In 2010, the authorities resumed their efforts to privatise four major loss-making companies and launched a fifth privatisation tender for the following enterprises: a 65% stake in one of the leading electrical engineering companies in the region, EMO; an 84.4% stake in tobacco producing company Tutunski Kombinat; a 100% stake in the military equipment producer company 11 Oktomri-Eurokompozit and a 75.63% stake in chemical manufacturer Ohis. The tender for all four companies failed due to lack of investors’ interest. It currently remains unclear how the government will respond but a further privatisation attempt seems likely. Furthermore, the government intends to resume its efforts to sell a 49% stake in the state-run postal operator Makedonska Posta. In 2008, a first tender was launched to select a consultant to advice in the privatisation process, which however failed. In a second international tender in spring 2009, international consultancy firm KPMG was selected as advisor, but progress has stalled since then. However, according to recent media reports, KPMG is expected to submit a study on the privatisation prospects in early 2011, upon which the government will decided how to proceed further.

 

Montenegro Although the 2011 privatisation plan has not yet been published, several planned privatisations incorporated in previous privatisation plans are expected to be offered for sale again. These include Montenegro Airlines, in which a 30% stake, combined with a potential acquisition of a majority share within 2 years, is on offer. A first tender failed in late 2010 due to lack of interest, although several investors had bought the tender documents. Furthermore, a tender for the port operator Luka Bar, in which the state holds a 54% share and that has been launched in 2010 but failed due to lack of interest, could be offered again this year. In the railway sector, the government launched a tender for the privatisation of the railway cargo company MonteCargo in 2009, which is likely to be finalised within the coming months. The successful bidder expected to be Romanian rail freight operator GFR. Montenegro railways (zeljeznicki prevoz Crne Gore) has also been put up for sale in 2010, but progress has remained stalled.

 

Romania Privatisations in 2011 may include the following: In February this year, the government launched an international tender for selecting a consultant for the sale of a 9.8% share in the oil and gas company OMV Petrom, which is evaluated at €500 million. Furthermore, the state has offered a 15% stake in the electricity transporter Transelectrica and a 15% stake in gas transporter Transgaz. Offers for a 55% share in the petrochemical plant Oltchim will be collected until the end of 2011, and the government plans to privatise the company in 2012. Finally, in November 2010 the authorities announced to offer its 46% stake in the land-line operator Romtelecom to the majority shareholder, Greek’s OTE, which is expected to make an offer by the end of March. The government is hoping to raise around €1 billion from the privatisation deal. The authorities are further committing themselves to a number of privatisations within the framework of the new IMF SBA (which has been agreed at IMF staff level and is expected to be approved in the coming weeks), which include the sale of the freight transporter CFR Marfa and the national flag carrier Tarom, provided market conditions are favourable. However, considerable uncertainty remains over the government’s plans for the energy sector, particularly its intention to create two vertically integrated “national champions”.

 

Serbia Two large-scale publicly-owned enterprises are expected to be privatised this year. First, Telekom Srbija, where the government has announced plans to sell a 51% stake. The state currently holds a share of 80%, with the remaining 20% owing to Greek’s OTE. In October 2010, it set the floor price at €1.4 billion, but the deadline for interested investors to submit an offer has been delayed several times - currently to the end of March. In early February 2011, OTE announced that it would consider selling its 20% stake, which could mean that the state will only offer 31% of its share. Seven international companies are said to have expressed interest but so far no bids have been submitted. Second, the national airline JAT. After a failed bid in 2008, efforts on restructuring JAT have resumed last year when the government decided to establish a new company to take over JAT’s operations and some assets, for which a strategic partner was needed. In November, Deloitte was selected as consultant in the privatisation process and negotiations on a strategic partnership have started with Turkish Airlines. The authorities are hoping to finalise the privatisation at the end of 2011.

Source; European Bank of Reconstruction and Development

Albania, FYR Macedonia and Montenegro meet to jointly tackle cross-border water issues

 - 06.04.2011

Albanian Prime Minister Sali Berisha received, on Tuesday. the ministers for environment of FYR Macedonia, and Montenegro as well as the representatives of the international organizations (WB, United Nations Environment Programme in Geneva and the Global Water Partnership Organization) who are in Tirana in the framework of cooperation with the Albanian Ministry of Environment, Forestry and Water Administration on issues related to the cross-border waters.   

PM Berisha highlighted the government of Albania assessment of the native water resources, the flora and fauna of the Ohrid, Prespa, Shkodra lakes and water basins. Further on, PM Berisha emphasized that besides the rational exploitation of the water resources there are identified several problems related with flooding risk that several rivers pose and especially the Drini River when there is heavy rainfall not only in the Albanian territory, but even in FYR Macedonia and Montenegro – as it happened last winter.

Therefore, the government of Albania has approved several precautionary measures and is working to adopt them while targeting to create a stabilized situation especially on the Drini River basin and prevent new floods in the future. The government, - said the prime minister- has planned building of the embankment on the Buna River, the building of Shkodra bypass as well as the further improvement of the drainage system all over the area of  Nënshkodra. In this context, work is underway for building of Skavica hydropower plant while it is already signed the agreement with Montenegro on deepening the Buna River bed.

The Albanian prime minister forwarded to the ministers the need of concluding new agreements on cross-border waters to replace the expired agreement with the former Yugoslavia. All the same, PM Berisha said he was ready to support a special project on the Drini River basin by the World Bank and GEF with the respective countries of the region so that to give final solution to the complex problems related with this basin.  

Albanian PM Berisha welcomed the interest of the regional ministers in strengthening further the bilateral and multilateral cooperation with the neighboring countries in the region and the international organizations. Likewise, the prime minister emphasized the need of joint actions and initiatives so that to accelerate finding solutions of mutual interest and launching of concrete actions.

Accompanying the regional ministers to the meeting was the Albanian Minister for Environment Fatmir Mediu. Source; Government

BoA Governor: Albania’s Central Bank Anti-Crisis Measures Effective

 - 07.04.2011

Albania’s banking system successfully dealt with the crisis and is performing well in the post-crisis period, thanks to well-studied interventions from the Bank of Albania. BoA governor Ardian Fullani praised the anti-crisis measures of Albania’s Central Bank during a regional seminary “Legal Aspects of Central Banking” held in Tirana this week, organized by the Bank of Albania in cooperation with the Bank of France. BoA governor Fullani mentioned the lowering of the key interest rate from 2009 and the law on deposit insurance as having a positive effect in the banking system, daily Panorama reports.

Greece's Aktor Official Winner of Albania's Kerraba Tunnel Tender

Ledion Veshi - 06.04.2011

Greece’s Aktor is the official winner of the tender for the construction of the tunnel in the highway that will link Albania’s capital Tirana with the city of Elbasan. The company was listed as winner of the tender in the official bulletin of Albania’s Public Procurement Agency, daily Shekulli reports. 

360 German companies operate in Serbia

EMG - 05.04.2011

360 German companies operate in Serbia, and considerable economic growth in Germany will offer a chance to the Serbian economy through new investments and bigger exports, the Delegation of German Economy for Serbia & Montenegro assessed. Pointing out that Germany saw a sizeable economic growth of 3.6 % in 2010, and another 2.3 % is expected this year, the Delegation said these trends have contributed to the rising interest of German companies to invest abroad.

Bulgaria has had a radically new system for trade mark registration

Marques - 05.04.2011

With effect from 10 March 2011 Bulgaria has had a radically new system for trade mark registration. Under the previous system the Patent Office had a full commitment to make a thorough examination of whether a new mark could be registered.  There were two reasons for refusing a registration of one trade mark were two - absolute and relative. The Patent Office examined whether the applicant's mark was in conformity with the law and satisfied the absolute and relative criteria. If it did not, the Office refused the registration. 

Albanian Government Approves Agreement with IDB on Tirana-Elbasan Highway

Ledion Veshi - 04.04.2011

The Albanian government approved last week the agreement with the Islamic Development Bank on financing the building of Tirana-Elbasan highway. Albanian PM Berisha reiterated that his government considers the building of this road and Kërraba tunnel as a top priority since it will significantly reduce travel time between the two cities and further integrate them into a single market.

Five Western Balkan states aspiring to EU will offer to allow scrutiny of their annual budget plans

Bloomberg - 04.04.2011

Five Western Balkan states aspiring to European Union membership will offer to allow scrutiny of their annual budget plans before they become full members in exchange for possible backing on credit markets. Albania, Bosnia, FYR Macedonia, Montenegro and Serbia will ask for official approval of their spending plans, Serbia’s Deputy Prime Minister Bozidar Djelic said today in Belgrade. If the European Commission deems them sustainable, the countries hope to receive financial guarantees from the bloc when applying for sovereign loans, he said.

and Herzegovin

  B EconomyBbBOSNIA and HERZEGOVINA 's economy

IIn 2008, Heritage Foundation assessed Bosnia and Herzegovina's economy to be 53.7 percent free. This gets Bosnia and Herzegovina an overall world rank of 121 for its free economy status. Out of 41 countries that form the European continent, Bosnia is 38th freest economy.

Economic freedom in Bosnia and Herzegovina

Bosnia and Herzegovina has earned a low rank because of its large government size and weak property rights. On the brighter side, Bosnia provides a high level of trade and financial freedom. Efficient privatization of banking industry is a major feature of Bosnia's economy.

Bosnia and Herzegovina GDP

Estimations put Bosnia's GDP figures at $27.7 billion for 2007. That is a 6 percent growth over Bosnia and Herzegovina's GDP for the previous year. GDP per capita figures stood at around $6,100 in 2007. Services sector accounts for a major portion of Bosnia's GDP followed by industry and agriculture.

Inflation

Between 2004 and 2006, average inflation hovered around 4.5 percent. According to CIA's World Factbook, inflation came down to 1.6 percent in 2007.

Imports and exports

Goods and services worth about $9.947 billion were imported into Bosnia and Herzegovina in 2007. Croatia accounted for a large share of imports into Bosnia. Chemicals, machinery, fuels and foodstuffs were major goods imported by Bosnia in 2007.

§                    Bosnia-Herzegovina Export, Import and Trade

In 2007, Bosnian exports amounted to nearly $4.243 billion. Croatia accounted for more than 20 percent of Bosnian exports. Metals, wood products, and clothing were major commodities exported by Bosnia to other countries.

Weaknesses

Corruption is a big problem in Bosnia and Herzegovina. Business registration processes are particularly vulnerable to corrupt practices. Employment creation is a slow-moving process in Bosnia. It also affects growth in productivity. But the major area of concern for Bosnia is property rights. Unreliable property registrations leave ample scope for judicial disputes that never get settled satisfactorily.

Future of Bosnia and Herzegovina

Bosnia and Herzegovina has to overcome challenges like unemployment, corruption and weak property rights to gain economic strength. But Bosnia scores somewhat better in factors like financial freedom and trade freedom. That offers a platform to Bosnia from where it can move towards economic progress.

ALBANIA            ALBANIA  Economic Forecast

Albania is making progress transitioning to a free market economy, but it is still structural more reminscent of an economy in the Middle East or Africa than of one in Europe.

The Albanian government is also faced with the challenge of lowering the country’s crime rate by introducing reform packages that focus on attracting foreign investments to the bleak economy and create employment opportunities for the population.

Albania GDP Forecast

Albania’s GDP in 2010 decline 2.6 percent to US$ 11.578 billion down from US$ 12.185 billion in 2009. In 2011, Albania’s GDP is expected to grow 3.67 percent to US$ 12.003 billion and up to US$ 15.64 billion in 2015.

Annual increase of foreign workers accounts for about 15 percent of GDP as most of the population consists of people from Italy and Greece. Trade imports and exports are largely fishery, agrarian, farming, and agricultural sectors being responsible for more than 50 percent of employment but only 20 percent of the GDP.

Farming in Albania uses low-technology equipment, limited plots of arable land and lack legal frameworks. Therefore, subsistence farming, along with smaller family owned and operated farms continue to struggle. Attracting foreign investment (FDI) is also a challenge for Albania.

The country has plans in place to improve transmissions lines running from Albania to Montenegro and Kosovo, which will also provide relief to the energy shortage problem Albania experiences with outdated and inadequate energy production capabilities. In addition, Albania is receiving financial aid from the European Union to better the road and railway network.

Albania Unemployment

The population for Albania in 2010 was 3.202 Million, up from 3.186 Million in 2009. Population growth is low, at an average 0.05 percent, only expecting to grow to 3.22 Million in 2011 and to 3.283 Million in 2015.

While Albania undergoes major macroeconomic transformation, substantial improvement has been seen in the economy since 2004, as the country remains among the poorest in the world. Approximately 12.4 percent of the population lives below the poverty line, up from 25.4 percent in 2002.

Albania’s unemployment rate in 2010 was 12.5 percent, expected to drop to 11.50  percent in 2011 and further to 10.5  percent by 2015. New infrastructures and the rise of tourism is making government officials optimistic about improving the unemployment figures.

Albania Inflation Rate & Current Account Balance Forecast

The Inflation Rate in Albania was 3.4  percent in 2010, down from 3.515 percent in 2009, and is expected to drop further to 2.9 percent in 2011 and come up to 3 percent in 2010.

Albania’ Current Account Balance in 2010 was US$ -1.061 Billion, 37.92 percent down from 2009. It’s expected to drop further in 2011 to US$-1.07 Billion but forecasted to improve to US$ -0.761 Billion in 2015 changing 2-10 percent per year between 2010 and 2015.

ROMANIA ECONOMY

http://www.romania-central.com/economy-of-romania/ 

National Bank of Romania makes surprise decision to cut minimum foreign reserve requirements

D.Shistohilis - 01.04.2011

The surprise decision of the National Bank of Romania to cut the minimum foreign reserve requirements ratio on foreign currency-denominated liabilities from 25% to 20%, thereby releasing over one billion euros to banks, is interpreted by bank analysts as a signal encouraging lending and indirectly the economy. In general, foreign currency-denominated loans are seen as an alternative way to support investments and real estate acquisitions.

Romania's central bank left interest rates unchanged at a record low 6.25 pct as expected

D.Shistohilis- 01.04.2011

Romania's central bank left interest rates unchanged at a record low 6.25 percent as expected on Thursday and cut minimum reserve requirements to ease lending and boost the economy.

The central bank said the short-term inflation outlook showed heightened risks mainly due to factors outside its control like food, fuel and government-regulated prices and that it would vigilantly monitor domestic and global economic developments.

Analysts and dealers said the central bank was not likely to cut interest rates any time soon to give the recession-hit economy a shot in the arm, though they had expected a more hawkish tone and the leu eased as a result.

"The more notable thing is that the central bank ... has become increasingly hawkish on inflation concerns. The tone has shifted in recent communications," said Neil Shearing at Capital Economics.

Persistently high inflation due to energy and food costs has prompted several analysts to revise their forecasts and most now see rates remaining unchanged this year, versus previous expectations of cuts.

Romania's economy is still lagging its neighbours after a deep recession and the central bank is torn between cutting rates to kickstart recovery and raising to keep inflation under control and support the leu.

Among its peers in central Europe, Poland is expected to raise rates further next week after a rise in January and the Czech Republic is seen tightening policy later this year. Hungary left borrowing costs on hold on Monday. [ID:nLDE72R0H3]

LOWER RESERVE REQUIREMENTS

The Romanian bank has kept interest rates at a record low since May 2010. A rise in value added tax last July pushed inflation up and it surprised markets in February , quickening to an annual 7.6 percent from January's 7.0 percent due to higher global oil and food prices.

A recent rally in the leu, which has risen some 3 percent against the euro in 2011, will lessen the impact of high imported inflation and could give the central bank more leeway if the move is sustained. The currency fell 0.4 percent on the day, erasing some of those recent gains.

The central bank did however cut minimum reserve requirements on foreign currency liabilities to 20 percent, from the previous 25, a step which supports banks' liquidity and may help lending.

"A cut in the minimum reserve requirement is welcome. It will have a positive impact on hard currency-denominated loans and on interest rates in the banking system which could in turn help the economy," said Melania Hancila, chief economist at Volksbank in Bucharest.

All 14 analysts polled by Reuters saw the bank keeping rates flat at a record low of 6.25 percent in March and May. Only five see cuts ranging from 25 to 75 basis points by the end of the year while eight see rates remaining at current levels in 2011.

Source Reuters - Balkans.com.  

Montenegro's exported goods rose by over 19% in 2010

D.Shistohilis - 01.04.2011

The total foreign trade exchange of Montenegro for the period January - December 2010 was 1 987.7 euro million indicating a growth of 2.9% over the same period last year. Montenegro's exported goods worth 330.4 euro million, which was higher by 19.3% compared to same period last year, and imported to a 657.3 euro million, which was higher by 0.2% over the same period last year.

Half of Albania’s Monetary Wealth Owned by Only Four Percent of Albanians

D.shistohilis - 01.04.2011

Only 4 percent of Albanians own more than half of the country’s monetary wealth, daily Panorama reported Thursday. According to the Bank of Albania, the total amount of deposits in Albanian banks by the end of 2010 was about $7.8 billion. According to Albania’s Deposit Insurance Agency, 55 percent of this amount or $4.3 billion is owned by only 4 percent of depositors.  

Albania's Economic Growth Rate 3.9 Percent in 2010

The Albanian economy grew at an annual rate of 3.9 percent in 2010 compared to the previous year, according to data released Thursday by Albania’s Institute of Statistics. Economic growth for the final three months of 2010 stood at 5.4 percent compared to the same period in 2009. 

By D.Shistohilis -01/04/2011

DOING BUSINESS IN SOUTH EAST EUROPE

Report from the Financial Times

www.ft.com/reports/south-east-europe-2010

Doing Business in Sarajevo, Bosnia and Herzegovina, South East ...

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Albania Experiences FDI Growth in 2010

Ledion Veshi - 28.03.2011

Foreign direct investment in Albania totaled 837 million Euros in 2010. That is an increase of 23 percent from the previous year and also the highest value on record. The value of remittances was 690 million Euro, down 11.9 percent from 2009. The balance of payments was positive in 2010 at 179 million Euros, TV Scan reports.

 Albanian National Food Authority Destroys 20,000 Quintals of Expired Food

Ledion Veshi - 28.03.2011

The Albanian National Food Authority has destroyed 20,000 quintals of products not meeting food safety standards and fined 20 subjects operating in the Albanian market, Scan TV reported Friday. During the last seven months, over 8,000 controls have been carried out throughout the country.