Albanian construction sector faces high debt and money laundering risks

An analysis of the Albanian construction sector reveals a high dependency on suppliers and client receivables rather than formal bank loans. Data from a sample of 163 companies shows that bank debt accounts for only about 5% of assets, while receivables and supplier obligations represent approximately 29% and 20% respectively.

Reports from the Bank of Albania indicate rising financial instability within the sector, with 27% of construction companies reporting debt levels equal to or exceeding their capital. This represents a nearly 10-percentage-point increase from the previous year. While high leverage is common in construction due to upfront costs, recent signals of slowing sales and ongoing investigations by SPAK have raised concerns regarding the sector's ability to meet credit obligations.

Furthermore, investigations by SPAK and warnings from the Financial Intelligence Agency highlight the sector's vulnerability to informal capital. Criminal organizations have reportedly used the construction industry to launder proceeds from narcotics trafficking, sometimes utilizing simple methods such as the physical transport of cash.