Albania Watch: Socialist Party wins an unprecedented 3rd term

The opinion polls were right in predicting the victory for the incumbent Socialist Party and the prime minister Edi Rama in the elections held on Sunday. The exit polls, released after the polls closed at 19.00, were less so indicating a hung parliament. After more than 90% of the votes were counted the Socialist Party won an unprecedented third election with an absolute majority of 73-74 deputies out of 140, or 48.6% of the total votes.

The opposition Democratic Party has not conceded yet and might challenge the results in different ways. We could face months of protracted battle, but it does not seem to be any path for the opposition to overturn the election.

Anyway, assuming that the results will be held by the courts and the opposition will adopt peaceful ways and accept the results the program of the Socialist Party will be focused on the integration in EU with the first intergovernmental conference expected to be held within 2021. The speed of the opening of the chapters will depend on Albania’s advancement with the reforms as well as the appetite and the public mood of EU countries for further enlargement which we forecast to be still negative in the years to come.

The advancement of political, judicial and economic reforms will be crucial for the country to close the gap with EU in terms of economic prosperity.

The economic program of the Socialist Party focuses on the current vision for the economic development based on the large public investments. It has promised to raise the minimal wage from ALL 30 thousand to ALL 40 thousand by the end of the next election, revise the progressive tax (0% up to ALL 40 thousand and taxation range for the 23% bracket will move up above ALL 200 thousand), support for manufacturers through fiscal facilities and a credit fund of EUR 10 million. In addition, the Prime Minister has declared there will not be a tax cut for large enterprises, currently at 15%.

Infrastructure will be key in the forthcoming years. There are projects for two new airports beside the Kukes airport almost completed. The port of Durres together with that of Vlora, Saranda and Shengjin are four new or renovated ports that will transform the capacities of the country to bring in tourists.

The master plan Port of Durrës was presented during the election campaign and the new tourist port is expected to be the largest in the Balkans, in which the company Emaar Group will invest EUR 2 billion. The government will also focus on the construction of Vlora and Saranda airports.

The transformation of production lines through investments in new technology will be supported, with fiscal incentive for accelerated depreciation. This should ease the tax burden and companies will increase liquidity. There will also a guarantee instrument of 50 million euro for the manufacturing to cover the costs of replacement and transfer to new production lines.

The electoral promises are usually discounted by reality in Albania; therefore it remains to be seen how much can be accomplished in the forthcoming years.