Albania: Profits transferred abroad

05/04/2013

2012 was one of the most difficult years for the Albanian business. According to the Ministry of Finances, the annual revenues of enterprises shrank with 14.5%, one of the biggest historic reductions.

The deterioration of the financial indicators of foreign companies is result of the reduced sales and the general economic slowdown. But not all businesses are affected. Some of them, especially foreign enterprises that do business in Albania, have had a very lucrative 2012. According to Bank of Albania, foreign companies have transferred 264.3 million EUR abroad, 40% more than last year.

Most of them come from lucrative sectors, such as banking and telecommunication. Others operate through monopolies with concessions and privatized objects.

The massive transfer started in 2007, when foreign businesses transferred only 65.6 million EUR from Albania. One year later it increased five times. The exchange rate started fluctuating and ALL was devaluated towards EUR with 15%.

After 2008, the transferred profits has have remained within the 2..4-4% of the GDP. The historic record was that of 2009, when it reached 400 million EUR. One year later the government was obliged to take loans in the international market, and one of the reasons for this decision was the lack of foreign currency in the economy. Experts say that there are two main reasons why there are more profits being transferred abroad. The first reason is that some of these investments, after several years, now entered the profit collection phase. The second reason is related tot he economic situation, with businesses being more prone to keep their profits rather than investing, due to the reduced buying power in Albania.