During the period under review, January 2015 to January 2017, Albania pursued crucial state-building reforms. The most significant reforms related to the rule of law, which are key conditions for advancing the country’s EU integration. Additionally, the ruling majority undertook important restructuring of the economy, which has begun to deliver.

Regarding reform of the rule of law, the governing actors encountered a deteriorating situation, which was the product of Albania’s long unruly transition. There is substantial evidence that criminals with extensive criminal records are prematurely released from prison, investigations into extensive abuses of public office are suppressed, and judges and prosecutors enjoy extravagant lifestyles (e.g., properties and business shares) that their employment could not support. Reforming the judicial system has been central to a comprehensive package of reforms sponsored by the European Union and United States, and pushed for by the ruling majority. However, well-organized political and institutional actors, who profit from the current system, have used every opportunity to obstruct meaningful progress. Actors opposing the reform are politically linked and keen to protect each other, and will likely continue to undermine the implementation of the reforms.

Nevertheless, the parliament unanimously adopted a series of constitutional amendments in 2016 that promise to change Albania’s institutional system of checks and balances and will affect how Albania’s polity and economy operate. The judicial reforms include the re-evaluation of judges, prosecutors and legal advisers based on their integrity, ethical background and professional competence. The European Union has supported this process by deploying an International Monitoring Operation to Albania. In addition, the parliament has adopted secondary laws that are needed to re-organize the judiciary, and established specialized institutions to fight organized crime and corruption. Additional laws exclude people with a criminal record from holding public office and strengthen the protection of whistle-blowers. Whether these reforms will be implemented, given widespread institutional and political resistance, will largely depend on whether international actors continue to support and supervise the process of implementation, particularly the screening of new institutional structures responsible for implementing the reform.

Regarding economic development, fiscal governance has significantly improved and the fiscal deficit declined from 5% in 2014 to 4% in 2015. A reduction in the budget deficit will gradually reduce the overall level of public debt, although to a lesser extent than was projected for 2017. The economic growth rate has increased during the period under review, contributing to a modest increase in the employment rate. This was due to the government belatedly paying the bulk part of several large public contacts and several major private sector investment projects, such as Devoll Hydro power plant and TAP. However, the macroeconomic policy mix, involving consolidated fiscal and expansionary monetary policies, has not always yielded the expected outcomes due to the euroization of the market, large informal economy, lack of human resource capacity and expertise, and widespread corruption.

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