Euro depreciation in Albania based also on illegitime economic resources

Euro depreciation in Albania based also on illegitime economic resources

  The European Currency lost today another 0.2 points in the exchange market in Tirana from 126.4 to 126.2, further deepening its 5-month weakening of the Albanian lek.

This is the lowest level in 10 years of the euro since 2009 when it was 123 lek.

Economic experts say they are following with concern the phenomenon that is affecting exports and are seeking the causes of the collapse of the euro to unknown sources more than the development of the legitimate economy.

The known economics, Professor Arben Malaj, says to Voice of America the span time of this artificial lowering of euro is relatively long from January to May and is approaching the period when the currencies gets lower because of tourism remittances, and exports should be taken under protection.

"It's a concern because it hits a key sector of the Albanian economy and requires a complex of measures from the Bank of Albania and the finance ministry and business associations. It is compulsory for policy makers and bankers to take all the mitigation measures to ease the export business, because a heavy cost on export business forces them to lower their investments, may lose markets, even in temporary absence, and this deterrent can add social problems, which will still make the economy even worse,"- said Mr. Malaj.

Observers assert that the euro could only weaken by a significant export growth, but this has not happened, exporters have even been severely damaged these five months from the depreciation of the euro.

Neither the money of emigrants has any increase this period, in weakening the euro.

Monitor's Editor-in-Chief, Ornela Liperi, says the price of clean euro is falling because of the entry of euro coming from black economies, because as it is seen from statistics, this phenomenon is not coming from legitimate sources of economy. One of the irregular sources, according to her, are drug euros, which are financing the new building construction boom in Tirana and some other major cities.

In 2017, remittances increased by 3 per cent, but foreign investments fell by 3 per cent, while the trade deficit did not improve.

So no official figures can explain this increase in foreign currency supply, according to Ms. Liperi, the informal economy remains the only source.

"The dilemma is where this currency came from, which is not justified by formal sources. There are data that there is an increased inflow of informal sources, from the planting the hashish since the second half of 2016, its sale and now this money has entered the country through construction. It can be seen freely that there is an increase in construction in Tirana, on the coast and everywhere in the country. These new constructions are beyond the capacities of the real Albanian economy." said Mrs. Liperi.

Official authorities such as the Bank of Albania and the finance ministry have insisted that this is due to the fundamental factors that put the currency in Albania, such as exports, foreign investments, remittances, or external services such as call centers or foreign exchange, Forex - which are being developed recently.

The Bank of Albania launched an attempt to de-euroisize the economy, which caused a short-term psychological pressure on citizens in February.

At the same time, several capital changes have been made by the banks themselves, even those with short effect.

But exporters stated publicly that the devaluation of the euro is destroying their businesses.

Therefore, Mr. Malaj insists on their protection until the events become clearer in the long run.

However, the weakening of the euro brings some benefits to importers, and to those producers who receive raw material in euros, as well as their consumers, because the goods come out on the market at cheaper prices.

Also benefits the people who have credit in euros and income in Lek, and those who collect euros to go on holiday abroad because they can buy euros cheaper. 
Euro depreciation in Albania based also on illegitime economic resources Euro depreciation in Albania based also on illegitime economic resources Wednesday, May 30, 2018 Rating: 5
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