From 1945 to 1948 economic and technical assistance was received from Yugoslavia. After the political break between that country and Albania, the Soviet Union assumed the role of major aid donor, and smaller contributions were made by some of the East European Communist states. Since 1961, when the substantial support of the Soviet Union was lost in the wake of the political schism within the Communist world engendered by the Sino-Soviet dispute, Albania has been able to obtain assistance only from the People's Republic of China (Communist China). The readjustment necessitated by the abrupt withdrawal of all Soviet aid and technical advisers was said by Albanian leaders to have retarded economic development by three years.
The extent of aid received in the form of long-term loans, some of which became grants through debt cancellations, is only partially known. The amount of total loan commitments by the Soviet Union in United States dollar equivalents for the period of 1945 through 1961 was estimated by one Western source at US$246 million. Another Western source reported the amount of loans promised by the Soviet Union and the East European Communist states for the 1961-65 period to have been in excess of US$132.5 million. These loans were cancelled in their entirety in the spring of 1961. A partial list of Soviet loan commitments, compiled by a Western student from Soviet economic literature, totaled US$172 million for 1957-61. The actual amount disbursed, however, was much smaller.
Aid deliveries, as reflected in official Soviet statistics, totaled only US$39.4 million for the years 1955-61. Similar information on aid deliveries from 1949 to 1954 was not readily available. Western observers believe that the economic crisis created by the Soviet withdrawal of aid forced Albania to default on the outstanding loans.
Loans granted by East European Communist states and outstanding in 1965 (in terms of United States dollar equivalents) were given by a Soviet source as follows: Bulgaria, US$11 million; Czechoslovakia, US$25 million; East Germany, US$15 million; and Romania, US$7.5 million. Information about repayments of these loans was not available. Only a fraction of the outstanding amounts could have been liquidated through Albania's trade surplus with these countries. Some Western estimates placed the debt to the Soviet Union and East European Communist states at the end of 1968 at a minimum of the equivalent of US$500 to US$600 million.
Economic aid by Communist China dates back at least to late 1954. Stated in United States dollar equivalents, Albania received in that year a grant-in-aid of US$2.5 million and a loan of US$12.5 million. An additional credit of US$13.75 million was made available in early 1959, and a loan of US$123 million for the purchase of industrial equipment during the Third Five-Year Plan (1960-65) was extended in early 1961, after Albania's break with the Soviet Union. Two more loans, for undisclosed amounts, were negotiated in June 1965 and November 1968 to finance the fourth and fifth five-year plans, respectively. In public references to the 1968 loan, Party and government officials gave the impression that it was substantially higher than the loan of US$123-million obtained in 1961. Aid has been provided by Communist China free of interest.
A Western scholar reported unidentified sources to have suggested that the 1965 loan amounted to about US$214 million, a sum substantially in excess of the credits granted up to that time. Another Western source estimated total direct credits for the 1960-68 period to have been more than US$450 million, exclusive of substantial grants. Yet, other Western sources thought at the time, and also in 1970, they had discerned evidence of disappointment on the part of the leadership with the extent of the financial assistance, delays in the supply of machinery, and an unwillingness or inability to supply much-needed consumer goods. The leadership's awareness of the inadequacy of foreign aid in relation to the planned development program has been evidenced, in its appeals for greater productivity, by the high frequency of references to the Party's principle of reliance on the country's own efforts and in its continuing campaign for the utmost economy of resources.
The country's cumulative clearing debt to Communist China on the commodity trading account at the end of 1968 was estimated at roughly US$300 million. This amount did not include the substantial additional costs of assistance in the form of technical advisers who have guided the construction and operation of major industrial projects. Estimates of these costs or of the number of aid technicians in the country were not available.
Foreign Trade
Because of the dearth of domestic resources in relation to the needs for economic development and consumption, foreign trade has consistently shown a negative balance. A marked improvement in this respect has taken place since 1955, even though the absolute deficit has been growing with the rising trade volume. In the 1960s exports covered 60 percent or more of imports, compared with 47 percent in the 1956-60 period and 31 percent in the preceding eleven post-World War II years. This improvement in the trade balance has been achieved through a consistent policy of diversifying domestic production with a view to import substitution, developing all possible resources for the production of exportable goods, improving product quality, and severely restricting domestic consumption. The annual trade deficit in 1967 and 1968 was about 200 million leks.
The volume of trade has been rising quite steadily from 140 million leks in 1950 to 950 million leks in 1968. During this period imports increased from 110 million to 580 million leks, and exports rose from 30 million to 370 million leks. The Fourth Five-Year Plan calls for an increase of 31 percent in total trade over the volume of the preceding five years, including an increase of 36 percent in exports and 28 percent in imports. These figures imply a planned average annual trade volume in the 1966-70 period of 885 million leks, of which 355 million leks were exports and 530 million leks imports. Although the rate of trade expansion during 1966-68 exceeded the target, the export-import ratio was not as favorable as that called for by the plan.