Architect of Albania’s Economic Miracle

As Albania celebrates the 100th anniversary of its independence, Prime Minister Sali Berisha seems unstoppable in his reform drive. Sali Berisha is by far Albania’s most prominent and longest serving politician in the past 20 years. A former cardiologist, he was elected Chairman of the democratic party in 1991 and from 1992 to 1997 he served as President of Albania, the country’s first noncommunist head of state. He returned as Prime Minister in 2005, leading a coalition of five centre right parties. Four years later, in 2009, he won a second mandate by forming a governing coalition with the Primisist Movement of Integration (LSI).

Now, halfway through Sali Berisha’s second mandate as Prime Minister, Albania continues to enjoy one of the most vibrant economies in Europe, with exports and FDI growing every year. Albania boasts a fl at tax of 10%, is a member of NATO, and aspires to become part of the EU. Despite the global economic crisis, Albania’s government has managed to maintain growth at around 4% and the defi cit at a steady 3.1% with a GDP per capita of US$3,500, a signifi cant increase over the country’s US$200 per capita GDP in 1992. Lonely Planet guidebooks dubbed Albania as the “number one hot country to visit in 2011” while Steve Forbes recently described Sali Berisha as “the architect of Albania’s economic miracle.”

From poverty to prosperity

Discussing Albania’s success story, Sali Berisha says that his country has changed drastically since it first emerged from communism in 1991. Albania has developed from poverty and misery to a middle and upper income country, from a totally isolated and centralised economy to a fully functional free market country, and from hyper collectivisation to a country with the smallest public sector in Europe, where 84% of the GDP comes from the private sector.

Sali Berisha, Prime Minister
Sali Berisha, Prime Minister

The Prime Minister is keen to emphasise that Albania is now a fully functioning democracy, respecting human rights, rule of law and free speech while minority rights and freedom of religion are guaranteed by the country’s constitution. He says, “I am proud to say that from being the most isolated country in the world, Albania today is a member of NATO and aims to become a member of the EU while continuing to serve as a driving force for stability and peace in the region and further, alongside our international partners. Since 2011, our citizens have been able to travel visa free across Europe and the annual number of tourists has grown from 300,000 in 2004 to 3.5 million in 2011, and it will grow again in 2012.”

Lean, efficient public sector

Albania’s economic model has been praised throughout the business world for being entirely based upon the principles of economic freedom, small government, low taxation and respect for the freedoms of the individual. Sali Berisha’s government has achieved a public sector and administration that are 50% smaller than those of most other countries of Albania’s size in the region or elsewhere, and Albania is proud to be regarded as one of the 10 top governments which do not interfere in the economy.

Sali Berisha believes that bold economic and fiscal policies, operative budget cuts and a flat tax of 10% across the board have saved Albania from recession and the global economic crisis. Foreign direct investment in Albania has grown by 316% since 2006 while Albania’s exports have risen by 300% and poverty has fallen by 30% over the same period.

Developing renewable energies

While introducing Albania’s liberal economic model and structural reforms during a recent visit to Paris, Sali Berisha said, “Power is found in freedom” and added that the purpose of his government is to make Albania a ‘green’ country by developing its huge hydropower production potential and agricultural assets. “My ambition is to see Albania as a mini superpower of renewable energy in the region,” the Prime Minister explained.

Regarding FDI, Sali Berisha’s strategy has been to turn Albania into an economic gateway to the region, building on the country’s low cost labour force and highly skilled workers. “Albania’s access to the sea, combined with huge infrastructural investments in recent years, are turning the country into a perfect destination for investors who wish to expand their activities in the Balkans,” he says. In fact, around 80% of Albania’s GDP has gone toward building more than 8,000 km of roads and highways. A brand new highway to Kosovo has now been finished, while the aim for the next two years is to cut travel time from Tirana to any corner of the country by 60% through infrastructure development.

Sali Berisha is proud that Albania offers the lowest fi scal burden in Europe, with a 10% flat tax and extremely easy procedures for opening a new business. Albania has also drastically reduced bureaucratic procedures in order to create a business friendly climate. During all his public appearances, the Prime Minister highlights Albania’s “One-stop shop” and online business registration services, which have helped Albania rank 27% higher than the OECD average in business initiation.

Fighting corruption, promoting transparency

Regarding the fight against corruption, the Prime Minister recently said, “Fighting corruption on a constant basis is the ‘sine qua non’ condition for the consolidation of human rights.” He believes that Albania’s business climate can be improved by increasing transparency across both public and private sectors. Albania’s government has lowered taxes, privatised almost all major state owned enterprises and ensured increased transparency by making Albania the first country in the world to have 100% e-procurements. The result is that budgetary revenues have almost doubled in the past five years.

Albania has one of the youngest populations in the world, with an average age of 29 years old. The country projects a vitality and positive energy that are second to none in Europe. In fact, the Prime Minister believes that Albania’s youthful human resources are among the country’s top attractions for investors and businesses. While offering a low cost labour force, Albania possesses a bright, multilingual, highly skilled, technologically savvy young generation.

Young, multilingual human resources

Sali Berisha is committed to creating new opportunities for Albania’s younger generation. “It is our priority to make sure that after receiving a good standard of education, our youth have the best possible opportunities of employment,” said the Prime Minister during a recent meeting with young people in Tirana. In fact, some years ago, most Albanian young people wanted to leave their country in search of better opportunities abroad, but now Albania is witnessing a positive trend of brain gain. Many Albanian students educated in some of the best universities in the West have chosen to return to Albania to contribute to their country’s development.

Albania today is a solid factor of stability and peace in the Balkans and enjoys a great working partnership with the EU, which the government will continue to work hard to join. Prime Minister Sali Berisha wants to see Albania become a truly developed country, achieving the highest possible standards for its citizens while increasing its renewable energy capacities. His governing coalition aims to turn Albania into a shining example of sustainable development, respecting the environment but at the same time keeping its competitive edge in regional and global markets.