The exchange rate of the leak, the currency of Albania, is too high against the euro. According to economists, this is due to the laundering of huge amounts of criminal money in the country.
Yes, the Albanian economy did well with growth of about 4 percent in 2018, agrees Selami Xhepa, associate professor of economics at the European University of Tirana. But that is not enough to explain the spectacular appreciation of the currency leak.
A year ago, you still got 134 leakage for one euro, now it is slightly more than 123, or more than 8 percent less. The leak has not been that high in ten years. From 2016, the currency started to gradually increase in value, after the exchange rate hovered around 140 for years. But at the beginning of 2018 it suddenly went fast.
“This is not due to fundamental economic changes. Foreign investment has not increased spectacularly. There is also no big fluctuation in foreign trade, or in the amount that immigrant Albanians send home, ”Xhepa analyzes. "So then there must be a large informal flow of money that results in an increased demand for the leak."
Informal flow of money - that's a fancy term for criminal proceeds outside the country's bookkeeping. Xhepa would rather not burn his fingers as to where that money comes from, but it is well known that Albania is at the heart of the European drug trade. Thanks in part to raids and investigations by the police, it appears that cannabis is grown on a large scale. It is then illegally exported to Western Europe - along with cocaine and heroin, for which Albania is a transit country. “The trade is apparently getting better, and we owe that partly to you,” laughs Xhepa, referring to the transit ports of Rotterdam and Antwerp as the European distribution point for the drugs.
Detained drug lords were also often found to be active in construction, a sector that is still growing strongly in Albania. There they wash their drug proceeds (black euros) white. They need leaks for those construction projects, and that is propelling the course.
The central bank attributes the strong price appreciation to the growth of the economy and the fact that since this year there has been a policy of discouraging the use of the euro. Loans and savings are often taken out and held in euros in Albania, which makes the central bank's interest rate policy, designed to steer inflation, less effective.
Banks are now fined for accepting or lending euros, which also explains part of the increased demand for the leak. “But not everything”, Xhepa emphasizes. The central bank did intervene this summer with an extremely unusual action: it bought euros on a large scale to mitigate the extreme rise in the price of the leak.
Meanwhile, Albanian citizens and companies are dealing with the consequences of the ever increasing course. "For starters, those who depend on money received from emigrated relatives," says Xhepa. Such transactions make up 10 percent of the economy in Albania and are indispensable for many families in the poor country. “Those transfers are in euros. So they now get 10 percent less leaks for that. "
The export sector is also suffering. “All our contracts are in euros, so the rise in the leak rate is directly at the expense of our revenue,” said Alban Zusi, chairman of the Albanian Export Center, an interest group. Albania mainly exports textiles and fruit and vegetables. Zusi: “The margins are not high already. And thanks to the expensive leak, our farmers also have to deal with cheaper imports. ”
Tourism, mainly thanks to the partly untouched coast, an important growth sector, is also suffering. Zusi holds up a pile of paper: letters of fire that he has sent on behalf of his association to the government and the central bank. But they refuse to intervene firmly: Albania has a free exchange rate.
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