Chapter

ALBANIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of Albania is the Albanian lek.
Other legal tenderIn special cases, and with prior approval from the Bank of Albania (BOA), foreign exchange may serve as a means of payment.
Exchange rate structureUnitary.
Classification
Independently floatingThe exchange rate of the lek is determined on the basis of supply and demand for foreign exchange. The BOA calculates and announces the daily average exchange rates for the dollar and 22 other major currencies. No margins are set between buying and selling rates for the official exchange rate. Government transactions are conducted at market rates. However, the commercial banks charge commissions ranging from 0.2% to 2%, depending on the amount, for cashing traveler’s checks.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsPayment for all merchandise trade is made in convertible currencies. All transactions under bilateral payment agreements were suspended in 1992, and the settlement of clearing accounts is pending the outcome of negotiations.
Payment arrangements
Bilateral payment arrangements
InoperativeAlbania maintains bilateral payment agreements in non convertible currencies with Algeria, Bulgaria, Cuba, the Czech Republic, Egypt, Hungary, the Democratic People’s Republic of Korea, Poland, Romania, the Russian Federation, and Vietnam. Albania also maintains bilateral payment agreements in convertible currencies with Bulgaria, China, Cuba, the Czech Republic, Greece, the Democratic People’s Republic of Korea, Romania, Turkey, Vietnam, and the Federal Republic of Yugoslavia (Serbia/Montenegro).
Administration of controlThe BOA is vested with the powers to administer exchange controls. The BOA is the only authority that has the right to (1) license, authorize, regulate, supervise, and revoke the licenses of foreign exchange market operations, as well as second tier banks; (2) define the limits of their activities; and (3) regulate and supervise foreign exchange operations and international payments in order to prevent any participant from dominating the market and undermining the value of the lek through speculation.



There is a reporting requirement on banks and exchange dealers for transactions above $15,000 or its equivalent at the exchange rate prevailing on the date the transaction is effected.
International security restrictionsNo.
Payment arrears
OfficialAlbania has arrears on debts with China, Greece, Italy, the Russian Federation, Turkey, and with a number of commercial creditors. Official payment arrears to Italy and the Russian Federation are subject to the July 1998 Paris Club Agreement and their rescheduling awaits the completion of bilateral negotiations.
PrivateYes.
Controls on trade in gold (coins and/or bullion)n.r.
Controls on exports and imports of banknotes
On exports
Domestic currencyNatural and juridical persons are allowed to take out up to lek 100,000 a person in banknotes and coins. The BOA may authorize larger amounts.
Foreign currencyForeign natural persons may take abroad in cash or traveler’s checks foreign exchange in an amount equal to the amount declared when entering the country. Albanian natural or juridical persons are not allowed to export amounts larger than $10,000 or its equivalent. This limit was increased to $25,000 on May 27, 1999.
On imports
Domestic currencyNatural and juridical persons are allowed to import up to lek 100,000 in domestic banknotes and coins. The BOA may authorize larger amounts.
Foreign currencyNatural and juridical persons are allowed to import foreign currency and traveler’s checks up to $10,000 or its equivalent in any other currency.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadResidents—natural or juridical persons—may open and maintain foreign currency-denominated accounts with banks and financial institutions abroad only with the prior approval of the BOA, which may control and monitor transactions effecting such accounts.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsYes.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsFor imports equal to or larger than $5,000 or its equivalent (increased to $10,000 on May 27, 1999), the following documents must be submitted: (1) an application for carrying out the transaction as well as a declaration specifying in detail the nature of the transaction; (2) a contract and an invoice (or a pro forma invoice) issued by the natural or juridical person supplying the goods; and (3) a declaration issued by the natural or juridical person wishing to carry out the transaction with the bank that the underlying document has not been used to support previous transactions.
Letters of creditLCs, bank guarantees, or cash against documents should be used for the payment of imports equal to or in excess of $200,000 or its equivalent.
Import licenses used as exchange licensesYes.
Import licenses and other nontariff measuresThe import of the following products are prohibited: (1) dangerous waste, as toxic corrosives, residual waste from explosives, and radioactive materials; (2) military poisons, chemical weapons, and other strong poisons; (3) narcotics and psychotropic substances; and (4) animal products from infected countries.
Positive listYes.
Open general licensesYes.
Licenses with quotasOn January 1, 1999, automatic licensing restrictions were introduced on fuel products to support the implementation of domestic technical standards.
Import taxes and/or tariffsSince January 1, 1999, excise taxes on domestic and imported goods are unified and the tariff on diesel was increased to 20% from 10% to provide temporary protection to the local petroleum industry while undergoing restructuring. There are four tariff rates, which are applied to the c.i.f. value: zero, 5%, 10%, and 20%. Effective January 1, 2000, the maximum tariff rate was reduced to 18% from 20%.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsAll private and public companies or individuals operating in the export sector are required to repatriate their foreign exchange receipts.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesUntil September 1999, there were export bans on raw hides and skins; metal scraps; copper and articles thereof; works of art, arms and ammunitions, as well as parts and accessories therefor; and explosives and pyrotechnic products. Effective September 30, 1999, the export ban on raw skins and hides and on scrap metals was removed.
Without quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersSupporting documents for transactions exceeding $5,000 are required. Effective May 27, 1999, this amount was increased to $10,000.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital and money market instrumentsPurchases of these instruments abroad by residents require prior approval of the BOA. Trade in these instruments is subject to the control by the Albanian Securities Commission.
On capital market securities
Shares or other securities of a participating nature
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Bonds or other debt securities
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
On money market instruments
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
On collective investment securities
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Controls on derivatives and other instrumentsTransactions in these instruments are subject to the control of the Albanian Securities Commission, but these are not yet regulated.
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsn.r.
Controls on credit operations
Commercial credits
By residents to nonresidentsCommercial banks may not, without the prior approval of the BOA, extend credit to nonresidents, except to banks and other financial institutions.
Financial credits
By residents to nonresidentsCommercial banks may not, without the prior approval of the BOA, extend credit to nonresidents, except to banks and other financial institutions.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
Controls on direct investment
Outward direct investmentOutward direct investments are subject to the prior approval of the BOA.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsPurchases are subject to the prior approval of the BOA.
Purchase locally by nonresidentsThe controls relate only to the purchase of land.
Controls on personal capital movements
Loans
By residents to nonresidentsYes.
Gifts, endowments, inheritances, and legacies
To residents from nonresidentsn.r.
Provisions specific to commercial banks and other credit institutions
Lending to nonresidents (financial or commercial credits)Commercial banks may not, without the prior approval of the BOA, extend credit to nonresidents, except to banks and other financial institutions.
Lending locally in foreign exchangeBOA may impose credit ceilings on outstanding stock of credits for each commercial bank.
Differential treatment of deposit accounts held by nonresidents
Credit controlsYes.
Investment regulations
Abroad by banksYes.
In banks by nonresidentsYes.
Open foreign exchange position limitsThe limit is 10% of the bank’s capital for a single currency and 20% for all currencies. Effective January 12, 1999, these limits were increased to 20% and 30%, respectively.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investorsn.r.
Other controls imposed by securities lawsn.r.
Changes During 1999
Arrangements for payments and receiptsMay 27. The limit of foreign currency exports by Albanian natural and juridical persons was increased to $25,000 from $10,000.
Imports and import paymentsJanuary 1. Excise taxes on domestic and imported goods were unified at rates at least revenue neutral, and the tariff on diesel was increased to 20% from 10% to provide temporary protection for the local petroleum industry while undergoing restructuring.



January 1. Automatic licensing restrictions were introduced on fuel products to support the implementation of domestic technical standards.



May 27. The amount for imports subject to exchange licenses was increased to $10,000 from $5,000.
Exports and export proceedsSeptember 30. The export ban on raw skins and hides, and on scrap metals was removed.
Payments for invisible transactions and current transfersMay 27. The amount for which supporting documents are required was increased to $10,000 from $5,000.
Capital transactions
Provisions specific to commercial banks and other credit institutionsJanuary 12. Open foreign exchange position limits of a bank’s capital for a single currency were increased to 20% from 10% and, for all currencies, to 30% from 20%.
Changes During 2000
Imports and import paymentsJanuary 1. The maximum tariff rate was reduced to 18% from 20%.

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