The majority of Albania’s population and economy must be brought under the rule of law before democracy can operate and thrive, the head of the United Nations Development Programme said today.
According to a UNDP-backed study, between 80 and 90 per cent of property and business assets in Albania are extra-legal, or outside the formal economy.
These figures indicate that many people in the country also operate outside the formal legal system, which means they have no access to loans, cannot enforce contracts, and are unable to expand their businesses beyond their personal networks or purchase insurance to guard against risk.
UNDP Administrator Kemal Dervis, attending a meeting with Albanian Prime Minister Sali Berisha and the renowned Peruvian economist Hernando de Soto today in New York, said that “when there is extra-legality, democracy cannot function.”
He praised the Prime Minister for making the fight against extra-legality a priority for both economic growth and the consolidation of democracy.
Albania requested that Mr. de Soto’s Institute for Liberty and Democracy carry out the study, which aims to create a basis for a reform programme that would empower Albanians currently shut out of the formal economy to enter into their country’s financial future. The final report will be submitted to the Government in October.
“The Albanian Government should be congratulated for recognizing the significance of the extra-legal economy, for it courage in responding to this issue head-on and for focusing on it not as a law and order problem, but as an opportunity for economic growth,” Mr. de Soto said.