Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

ALBANIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of December 31, 2004)

Status Under IMF Articles of Agreement
Article XIVYes.
Exchange Arrangement
CurrencyThe currency of Albania is the Albanian lek.
Exchange rate structureUnitary.
Classification
Independently floatingThe exchange rate of the lek is determined on the basis of supply and demand in the foreign exchange market. The Bank of Albania (BOA) intervenes occasionally in the exchange market only to smooth excessive fluctuations of the exchange rate and to meet foreign currency reserve targets. The BOA calculates and announces the daily average exchange rates for the dollar and 10 other major currencies and the prices of gold and silver. No margins are set between buying and selling rates for the official exchange rate, but commercial banks charge commissions ranging from 0.2% to 2%, depending on the amount, for cashing traveler’s checks. Government transactions are conducted at market rates.
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 payments agreement were suspended in 1992, and the settlement of clearing accounts is awaiting the outcome of negotiations. All contracts denominated and payable in foreign currencies are valid.
Payments arrangements
Clearing agreementsAlbania maintains outstanding balances under inoperative bilateral clearing agreements in nonconvertible currencies with Bulgaria, Cuba, the Czech Republic, the Democratic People’s Republic of Korea, Poland, Romania, the Slovak Republic, and Vietnam. Albania also maintains outstanding balances under inoperative bilateral clearing agreements in convertible currencies with Algeria, Bulgaria, Cuba, the Czech Republic, Egypt, Greece, the Democratic People’s Republic of Korea, Romania, Serbia and Montenegro, the Slovak Republic, and Vietnam.
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 participants, 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.
In accordance with anti–money laundering legislation, banks are required to maintain records of all cash transactions in excess of the equivalent of lek 2 million and on all other transactions in excess of lek 20 million, and to report these to the authority in the MOF responsible for the prevention of money laundering.
International security restrictionsNo.
Payments arrears
OfficialAlbania has outstanding debit balances under inoperative bilateral agreements with Algeria, Cuba, the Czech Republic, Greece, Poland, Romania, Serbia and Montenegro, the Slovak Republic, and Vietnam. An agreement was reached on March 1, 2004 to reschedule arrears to Hungary.
PrivateAlbania has incurred private payments arrears with creditors (banks and companies) in Austria, Belgium, the Czech Republic, Denmark, Germany, Greece, Hungary, India, Italy, the Netherlands, Sweden, Switzerland, Turkey, and the United Kingdom. An agreement was reached to reschedule arrears to private creditors in the former Yugoslav Republic of Macedonia on March 1, 2004.
Controls on trade in gold (coins and/or bullion)
Controls on external tradeResidents and nonresidents may transfer standardized gold and precious metals to and from Albania only through entities specially licensed by the BOA.
Residents and nonresidents are entitled to transfer nonstandardized gold and precious metals to and from Albania subject to documentary requirements regarding the source; the purpose of the transfer; the quantity; and whether the transfer involves the returning of the precious metals and, if so, the form in which they should be returned. There is no requirement for transfers of jewelry for personal use.
Controls on exports and imports of banknotes
On exports
Domestic currencyNatural and juridical persons are allowed to take out up to lek 50,000 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 lek 3.5 million or its equivalent. For export of amounts larger than lek 1 million or its equivalent, a declaration on the source is required.
On imports
Domestic currencyNatural and juridical persons are allowed to import up to lek 50,000 in domestic banknotes and coins. The BOA may authorize larger amounts.
Foreign currencyUpon entering or exiting Albania, resident and nonresident individuals are required to declare cash, traveler’s checks, precious stones or metals, and antiquaries valued at lek 1 million or more.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
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 the equivalent of lek 3.5 million, 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; (3) a declaration that the underlying document has not been used to support previous transactions, which is to be issued by the natural or juridical person wishing to carry out the transaction with the bank; and (4) a customs clearance document (within 3 to 12 months, depending on the settlement of the invoice).
Letters of creditYes.
Import licenses used as exchange licensesYes.
Import licenses and other nontariff measures
Positive listYes.
Open general licensesYes.
Licenses with quotasAutomatic licensing restrictions are applied on fuel products to support the implementation of domestic technical standards.
Other nontariff measuresThe import of the following products is prohibited: (1) dangerous waste, such 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 countries infected with livestock diseases.
Import taxes and/or tariffsExcise taxes on domestic and imported goods are unified. Customs tariffs are applied to the c.i.f. value at rates of zero, 2%, 5%, 10%, and 15%.
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 licensesExport bans apply on copper and articles made thereof; works of art; arms and ammunitions, as well as parts and accessories therefore; and explosives and pyrotechnic products.
Without quotasYes.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersSupporting documents are required for transactions exceeding the equivalent of lek 3.5 million, including on the reasons for the transfer, the source of funds, and the payment of taxes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instrumentsPurchases of these instruments abroad by residents may be conducted through entities licensed by the BOA, subject to documentary requirements. For prudential reasons and money laundering prevention, the BOA monitors and reviews these transactions.
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 securitiesThe regulations governing shares or other securities of a participating nature apply.
On money market instrumentsThe regulations governing shares or other securities of a participating nature apply.
On collective investment securitiesThe regulations governing shares or other securities of a participating nature apply.
Controls on derivatives and other instruments
Sale or issue locally by nonresidentsYes.
Purchase abroad by residentsYes.
Controls on credit operations
Commercial credits
By residents to nonresidentsYes.
Financial credits
By residents to nonresidentsYes.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
Controls on direct investment
Outward direct investmentThe regulations governing capital and money market instruments apply.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsThe regulations governing capital and money market instruments apply.
Purchase locally by nonresidentsControls relate only to the purchase of land.
Controls on personal capital transactionsYes.
LoansThe regulations governing capital and money market instruments apply.
By residents to nonresidentsYes.
To residents from nonresidentsThese transactions are subject only to anti–money laundering regulations.
Gifts, endowments, inheritances, and legacies
To residents from nonresidentsThese transactions are subject only to anti–money laundering regulations.
Provisions specific to commercial banks and other credit institutions
Lending to nonresidents (financial or commercial credits)Lending is subject to capital controls.
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 20% of the bank’s capital for a single currency and 30% for all currencies.
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 2004
Arrangements for payments and receiptsMarch 1. An agreement was reached to reschedule arrears to private creditors in the former Yugoslav Republic of Macedonia.
March 1. An agreement was reached to reschedule arrears to Hungary.

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