Remittances management in Albania

Esmeralda Uruci and Iliri Gedeshi

Working paper: 5/2003

CESPI

Introduction

The Albanian transition process from a centralized economy to a market economy, starting at first years of 90s, has been characterized by a huge phenomenon of emigration with a particular peak in 1997-1998 after the Pyramid Scheme collapse. An important brain drain process and a massive migration flow most of it towards Greece and Italy, but also towards USA, Canada and Western European countries in general, has been due to a very scarce job opportunity and a general underdevelopment of the country. Consequently an important remittances flow that constitutes a major source of foreign revenue for Albania, increased. The Albanian Government has been urged, by the International Community (IMF in particular), to create instrument and design policies to manage this currency flow and in particular to explore ways to encourage emigrants to return and to invest remittances for local development. To date, policies channeling remittances through formal structures and promoting saving and investment in the country are still inexistent. The weakness of the financial system and the little productive capacity of Albanian firms entails the almost exclusive use of remittances for the purchase of imported goods, and lessen therefore their potentially positive impact on the local economic system. In the very recent years, Albania Government is grappling with a reform process concerning in particular the banking system and economic privatization. Other reform to be carried out should aim, on one hand, at creating a conducive economic environment (adequate basic infrastructure, good level of access to local markets, local supply and marketing capacity, effective regulatory system), and, on the other hand, at reducing burocracy, eliminating waste and corruption in the public sector.

 

The study describes the remittances flow in Albania and the financial reform process with a particular focus on the banking system reform. It aims at analyzing the existing conditions in Albania to formalize a productive use of remittances and to put forward some cooperation policy proposals. The study is accompanied by an inquiry on emigration and remittances flow regarding the Scutari district and some final recommendations.

 

 

 

 

 

 

 

 

 

 

 

Uruci-Gedeshi.pdf

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