Albania: privatisation push

This week, Albania will attempt to sell state-owned oil company ARMO. It is all part of a privatisation programme that includes the sale of state-owned insurer INSIG, the state-held stakes of Albanian Mobile Communications (AMC) operator, the KESH power monopoly, oil prospector Albpetrol, and fuel dealer Petrolimpex.

ARMO could be interesting to investors due to increased consumption of fuel oil from booming car sales in the country. Albanians were not allowed to own vehicles under the communist dictator Enver Hoxha, but have made up for this since the regime collapsed in the early 1990s. 

Tirana needs to finance a large budget deficit of 7.9% of GDP. Finance Minister Ridvan Bode told parliament in December the "exceptional" 2008 deficit would fund infrastructure projects, such as a road between the Adriatic and neighbouring Kosovo. Earlier this month, the IMF warned that rapid financing of large infrastructure projects might pose overheating and fiscal risks, and called for a 5% budget deficit.

It remains to be seen how much money the government can cobble together; privatisation has had a chequered history so far and the KESH power utility will need fundamental reform to become attractive to investors.