Information on livestock numbers is much more sketchy. The dearth of published data and repeated official pronouncements indicate unsatisfactory progress in this farm sector, particularly with regard to the high-priority target for cattle raising. An important cause of this lag has been an acknowledged shortage of fodder. Another major reason has been an officially induced transfer of livestock from individual peasant ownership to the collective and state farms, where it is subject to the much-criticized negligent attitude of the peasants toward state and communal property. About 60 percent of the cattle and sheep and 85 percent of the hogs were kept on state and collective farms in 1969, as against only about 36 and 64 percent, respectively, in 1964.

Collective farm managers and local government officials have blamed the fodder shortage on the diversion of pastures and meadows to the production of bread grains. Statistical evidence indicates that the output of feed grains declined by about 40 percent from the mid-1950s to the mid-1960s but that the loss of fodder from grazing lands and meadows was compensated fourfold through increased production of forage crops. The validity of the explanation offered by the farm and village officials was vigorously denied in the theoretical monthly journal of the Party's Central Committee, which attributed the fodder shortage to a failure by collective farmers to adopt improved methods of crop production and to exploit all available fodder resources. In January 1970 all basic Party organizations in farming areas were urged to eliminate distrust and every conservative idea and harmful tendency that stood in the way of the rapid development of cattle raising and to see to it that the existing gap between the collective farms and private plots was gradually eliminated.

Government efforts to improve livestock breeds and yields through selective breeding, artificial insemination, and better management practices have also been impeded by peasant apathy. Although yields of up to 5,500 pounds of milk per cow were obtained on some state farms in 1966 and yields of about 3,300 pounds to 3,950 pounds on the more efficient lowland collective farms, the average yield of milk per cow on all lowland collective farms in that year was only about 1,750 to 2,200 pounds, and a large number of upland farms obtained even less.

The latest available official Albanian livestock statistics are for the year 1964. Data for 1965 and 1966 have been published by the Food and Agriculture Organization (FAO) of the United Nations. The Fourth Five-Year Plan indicates the numbers planned for some of the livestock categories in 1970 through percentage increases expected to be attained over the numbers in 1965. In the case of cattle, the largest increase by far has been planned for draft oxen—60 percent as against only 12 percent for all cattle—in an effort to reduce a draft power shortage. This increase would inevitably be at the expense of the growth in the numbers of cows and young stock.

The growth of productive livestock herds, excluding draft animals, lagged very substantially in relation to the increase in population, at least through 1966. This has entailed a significant worsening of the initially very meager supply of livestock products. According to estimates published by the FAO, total annual meat production, including all types of meat in terms of carcass weight but excluding edible offals, increased from an average of 40,000 tons in the 1952-56 period to 50,000 tons in 1967. The output in 1967 implies a per capita daily meat availability of only about 2.5 ounces, including bones. A similar situation prevailed with regard to dairy and poultry products because there were only about 75 low-production cows per 1,000 population and one head of inferior poultry per capita.

Total agricultural production, which was planned to increase at an average annual rate of 11.5 percent or from 71 to 76 percent for the five-year plan period as a whole, consistently fell short of the targets in the 1966-69 period and was not likely to attain the 17-percent increase planned for 1970. Thus, for instance, the actual output increase achieved in 1969 was only about 10 percent as against a planned rise of 22.1 percent and in 1968, similarly, about 1.6 as against 12 percent.

This persistent lag in farm output has been extensively and publicly discussed by the leadership, which is intent on raising the general level of performance in agriculture and ensuring an adequate domestic supply of food products. Although some blame has been attached to unfavorable weather conditions, the lag has been ascribed primarily to the reluctance of peasants to adopt modern production techniques, poor farm management, insufficient effort to use available resources to best advantage, widespread indifference and negligence, and an excessive preoccupation with personal interests leading to an irresponsible attitude toward work in the collective sector. These shortcomings were said to exist not only among the peasantry at large but also among Communists, who should be serving as models of responsible behavior. The basic reason that clearly emerges from public discussion is a widespread opposition of peasants to the collectivization of farms and an associated tendency to devote their best efforts to the cultivation of their own private plots.

Impressive evidence on this point is provided by official production statistics for 1964, the latest available on this subject. These data show that output per acre on the small private plots of collective farmers and state farm workers was four times larger than output on state farms and six times larger than that on collective farms. Constituting only 6 percent of the cultivated land, the private plots produced 23 percent of the total farm output. Nevertheless, the leadership has publicly credited the advance in agricultural production to the collectivization of farms.

In 1967 the government proceeded to reduce the size of the private plots, with a view to their eventual elimination, both for ideological reasons and as a means of forcing peasants to devote greater efforts to work on collectivized land. Subsequent steps were taken to transfer to collective ownership some of the livestock allotted to the farm families by the collective farm statute.

This action did not measurably improve agricultural performance. Shortfalls in the production of several important crops, including cotton, tobacco, and rice, were admitted to have occurred both in 1968 and 1969, and the situation in the livestock sector continued to be unsatisfactory. A scaling down of the original production goal for 1970 could therefore not be avoided. The farm output target set by the annual plan for 1970 was 12.5 percent below the minimum and 15 percent below the maximum five-year plan figures for the same year.

INDUSTRY

A few primitive plants producing consumer goods had been built before World War II, but industrial development began only in 1949, when construction was undertaken of a 50,000-kilowatt hydroelectric power station, a textile mill capable of producing 22 million yards of cloth per year, and a sugar mill with an annual capacity of 10,000 tons of sugar. Industrial construction continued under the first and second five-year plans (1951-55 and 1956-60, respectively) during the 1950s, with substantial financial and technical assistance from the Soviet Union. This development was temporarily interrupted in the wake of the political break with the Soviet Union in 1961 but was soon resumed with aid from Communist China (see ch. 6, Government Structure and Political System). The interruption was said by the Albanian leadership to have retarded industrial growth by three years. Disinterested foreign observers, however, reported that the equipment acquired with the aid of Communist China was better suited to the needs of the country and of better quality than that supplied by the Soviet Union.

Among the major industrial projects completed or under construction in 1970 with the assistance of Communist Chinese technicians were: copper, chromium, and iron-nickel mines; an oil refinery at Fier with an annual capacity of 500,000 tons of crude oil, a 225,000-kilowatt hydroelectric power station at Vau i Dejes on the Drin River; a 100,000-kilowatt capacity of 500,000 tons of crude oil; a 225,000-kilowatt/thermal power-plant at Fier; a copper-ore dressing installation and a copper-wire drawing mill; a steel-rolling mill at Elbasan; cement mills at Elbasan and Kruje; large textile combines at Tirana and Berat; and a knit goods factory at Korce.

Of special benefit to agriculture was the construction of a nitrate fertilizer plant at Fier, a superphosphate plant at Lac, and a plant for the manufacture of tractor spare parts at Tirana. A variety of smaller plants were also built for the production of such items as caustic soda, sulfuric acid, rubber products, electrical equipment and light bulbs, footwear, and vegetable oils.

Along with the construction of technologically up-to-date plants, others were built with outdated technology through the lack of construction experience or knowledge of more advanced methods. At the same time, obsolete plants and workshops remained in use. In 1969 these technologically backward plants produced less than half the total output but employed more than half the industrial labor force.

Available information on the structure of industry is ambiguous because of uncertainties regarding the pricing methods underlying the relevant data. According to the official figures for 1967 based on 1966 prices, the food industry accounted for nearly one-third and light industry for almost one-fourth of the total industrial output. The balance of 44 percent was produced by some fourteen or more industry branches, the relative shares of which ranged from 8.0 percent for metalworking and for timber and wood processing to 0.3 percent for the bitumen industry. As a group, six industry branches engaged in oil production and mining contributed about 15 percent of the output. The building materials industry accounted for 5 percent and electric power production, for not quite 4 percent.

The relationship between the output of capital goods and that of consumer goods is equally ambiguous. The share of capital goods in the output of 1968 was officially reported as 55.5 percent, as against 44.5 percent for consumer goods. The apparent discrepancy between the reported shares in total output of consumer goods as compared with the production of the light and food industries may be explained, in part, by the fact that a portion of these industries' output is usually included among capital goods as, for instance, textiles used by the clothing industry and leather used by the shoe industry.

Foreign observers have reported the country's industry to be poorly balanced not only in a technical sense but also in terms of essential domestic needs and the availability of foreign outlets for its products. The metalworking industry, for example, which is limited to the production of automotive and industrial spare parts, apart from a few types of simple agricultural equipment and household utensils, cannot even ensure the maintenance of the existing machinery inventory because it is able to supply only about 60 to 70 percent of the country's needs. Industrial production is substantially oriented toward capital goods and exports, whereas the manufacture of products for domestic consumption continues to be severely restricted.

The leadership is aware of industry's structural shortcomings and is intent on overcoming them through a program involving the reconstruction and modernization of old plants and the concentration of small shops into larger, more efficient specialized units. Progress in this direction, however, has been hampered by inadequate investment resources and by a reluctance of managers and workers to cooperate with this program. It has also been handicapped by a lack of effective planning and by an inability to organize comprehensive studies that would provide a basis for both overall and detailed plans.

Nevertheless, a few plants for the manufacture of machine spare parts and of simple equipment were formed through the concentration of milling machines previously installed in maintenance shops of various enterprises, and a step toward the consolidation of small artisan shops was taken in May 1969 by transforming artisans' cooperatives into state enterprises.

Owing to the lack of prior industrial experience by both managers and labor, industry also suffers from poor organization of production and of the material supply, low labor productivity, and generally inferior quality of product. Extensive discussion of these problems in the official press indicates that government efforts toward reducing the magnitude of these problems are slow in bearing fruit, despite programs for vocational training and intensive campaigns of political indoctrination aimed at generating productive enthusiasm and innovative initiative among workers and managers. A major campaign is being waged to eradicate artisan traditions and to replace them with industrial production line methods. The basic difficulty in achieving greater efficiency lies in the continuing severe shortage of skilled manpower and of personnel with adequate training in the economics and mechanics of industrial production.

Because of the underlying pricing methods, officially reported data on total industrial production in value terms overstate the actual rate of growth attained. Substantial industrial progress is, nevertheless, indicated by physical production data for a number of commodities (see table 12). Since production had started from nothing or from very low levels in the early post-World War II years, the rates of growth in output were substantially higher during the 1950s than in the following decade.

The highest rates of increase during the 1960s, ranging from five to three times the initial volume, were achieved in the production of copper, electric power, and cement. Increases of from 69 to 80 percent were attained for coal, oil, and iron-nickel ore. Production of textiles and footwear grew by more than half, and that of knitwear more than doubled. A substantial advance was also made by the food-processing industry. Least progress was made in the production of cigarettes and bricks—only about 6 to 7 percent—and the output of timber actually declined from 6 million to 5 million cubic feet. Most of the mining output and a substantial share of the food industry production are exported.

Rapid electrification of the country has been a major goal of the leadership. Electrification is intended to meet the needs of industrial development and help attain a higher standard of living in rural areas. A crash program has been underway to bring electric power to every village, even in the remotest areas. This project was originally scheduled to be completed in 1985, but the date has been advanced to November 8, 1971, the thirtieth anniversary of the founding of the ruling Albanian Workers' Party. The program is being carried out by the prevailing method of mass mobilization for voluntary work.

Installed capacity in 1969 was reported to be 210,000 kilowatts, of which 128,000 kilowatts were in thermal powerplants and 82,000 kilowatts in hydroelectric power stations. This capacity reflected a fourfold increase since 1960, a large part of which was accounted for by a single thermal plant of 100,000-kilowatt capacity put into operation in late 1969. The country's hydroelectric power potential has been estimated by Albanian technicians as roughly 3 billion kilowatt-hours per year, half of which is represented by the Drin River. Development of this potential has barely begun. The first major plant on the Drin with a capacity of 225,000 kilowatts is scheduled for completion at Vau i Dejes in 1971, and a second station on that river with a capacity of 400,000 kilowatts is to be built at Fierze during the Fifth Five-Year Plan (1971-75).

Table 12. Industrial Production in Albania, 1960 and 1964-69

Electric power production is reported to have attained in 1968 the level planned for 1970. Output of power rose from 194 million kilowatt-hours in 1960 to 324 million kilowatt-hours in 1965 and almost 800,000 million kilowatt-hours in 1969. The distribution system has also been rapidly extended and in 1969 included about 800 miles of high-tension transmission lines of 35 and 110 kilovolts. Distribution and use of electric power were reported to be very wasteful, with losses as high as 115 million kilowatt-hours in 1969—almost 15 percent of total output. Information on the pattern of electric power consumption has not been published.

FINANCE

Financial operations have been shrouded in secrecy, and little information can be gleaned from the limited published data. These data, nevertheless, reflect some of the leadership's basic economic policies, such as its emphasis on rapidly increasing production while restraining a rise in consumption, its preference for industrial development as against agricultural growth, and its drive to mobilize domestic resources for economic development.

The Budget

Information on budgetary practices is not available, and statistics relating to the budget are incomplete. The relation between three different budgets approved annually by the People's Assembly on recommendation of the Council of Ministers is therefore unclear. There is a state and a national budget and a budget for local government. The budget for local government has been growing slowly in relation to the state-budget—from 16 percent in 1955 to 17 percent in 1960 and 20 percent in 1969 and 1970.

Only about one-fourth of local budgetary revenue is derived from local taxation, which implies a substantial subsidy from the central government budget. The amount of this subsidy is roughly double the usual 7- to 8-percent difference between the state and the smaller national budget. A surmise that the state budget represents an overall budget and that the national budget serves to finance central government activities only is therefore not warranted.

Except for a slight decline in revenues in 1961 and 1963, coincident with the country's political and economic break with the Soviet Union, the annual state budget has been rising steadily to a level of 5.21 billion leks (5 leks equal US$1—see Glossary) in revenues and 5.11 billion leks in expenditures for 1970. By comparison with the budget for 1960, revenues increased by 85 percent and expenditures by 102 percent, with a corresponding decline of 65 percent in the budgetary surplus. On a five-year basis, comparing the Fourth Five-Year Plan with the Third Five-Year Plan, both revenues and expenditures rose by about 40 percent, with a slightly higher increase in revenues.

A relatively greater stringency of funds for budgetary purposes after the break with the Soviet Union is reflected in the planned annual budgetary surplus, a permanent feature since 1946 and a matter of great pride for the leadership. From a level of almost 24 percent in 1950, 15 percent in 1955, and 10 percent in 1960, the surplus dropped to 1.1 percent in 1962 and 1.5 percent in 1963. Despite a slight recovery in subsequent years, except for 1968 when it declined to only 1 percent of revenues, the planned surplus did not again approach its earlier size.

Partial information on sources of revenue is available to 1967. Published statistics listed a turnover tax on all goods produced, deductions from enterprise profits, direct taxes on the population (primarily income taxes), and social insurance premiums. These sources yielded, on an average, 60 percent of the total revenue in the 1960-65 period, and their share rose steeply to 74 percent in 1967. The balance of the revenue, omitted from official statistics, consisted primarily of income from agriculture in the form of compulsory deliveries, proceeds from state farm operations, payments to machine-tractor stations, and taxes.

The most important among the listed revenue sources were the turnover tax and deductions from profits. Together their yields ranged from 50 percent of total revenue in 1960 to almost 69 percent in 1967, but their relative weights changed markedly during this period. In 1960 the turnover tax yielded 40 percent and profit deductions 10 percent of revenue; by 1967 their respective shares were 43 and 26 percent. Social insurance premiums contributed between 3.2 and 4.5 percent, while the yield from direct taxes on the population declined from 2.7 percent in 1960 to less than 1 percent in 1967. In 1969 income taxation was abolished for individuals and for some poor collective farms in hilly and mountainous areas.

The leadership has claimed that the abolition of direct taxes on the population with the concomitant improvement in public welfare was made possible by the country's economic advance based on the Party's correct revolutionary policy, and it contrasted the progressive nature of this measure with an alleged intensification of exploitation and misery of workers in what are officially called imperialist and modern-revisionist countries. This comparison ignores the existence of the turnover tax, which is particularly heavy on consumer goods, and of the enterprise profits deduction, both of which are reflected in the sales price of commodities and, consequently, represent a hidden form of sales taxes. This method of taxation is known to be regressive, in that it takes no account of differences in income and places the heaviest burden on those least able to pay.

The published budget laws usually specify the amount of revenue to be derived from the socialized economy, including collective farms and cooperative enterprises. The proportion of this revenue was reported to have been 85.5 percent in 1960 and from 88 to 89 percent in the 1968-70 period. This information cannot be reconciled with the published revenue statistics, particularly with the data concerning the taxation of noncollectivized farm enterprises, the proceeds from which were reported to be less than 0.5 percent in 1964. The revenue from the nonsocialized sector consists mostly of taxes imposed on the output from personal farm plots of collective and state farm workers and, to a lesser extent, of taxes on some private artisan and other activities still tolerated by the government within narrowly prescribed limits.

Information on budgetary expenditures is also incomplete. Published statistics failed to specify the use of 17.5 percent of the total outlays in the 1960-65 period, and no explanation is readily at hand for the decline of the unallocated residue from that level to between 3 and 4 percent in 1968-70. The published data included outlays for the national economy, social and cultural needs, defense, and administration.

The proportion of total expenditures devoted to social and cultural needs and to defense remained remarkably stable between 1960 and 1970. Annual outlays for these two categories fluctuated, respectively, only from 22.6 to 25.1 percent and from 7.6 to 9.9 percent of total expenditures. The share of administrative expenditures declined steadily during this period from 2.7 to 1.7 percent. Outlays for the national economy were also shown by the published statistics to have been quite stable in the 1960-65 period, with an annual variation of only 2.6 percent. Coincident with the decline and virtual disappearance of the unreported expenditure residue after 1965, however, the share of industry rose sharply from 46 percent in 1965 to more than 64 percent in 1968 and remained above 61 percent through 1970. The reasons for, and the implications of, this change in reporting practice are not known.

An average of 47 percent of the budgetary expenditures in the 1960-67 period was devoted to investment, with annual fluctuations of this category between 39 and 55 percent. The lowest rates of investment occurred in 1962 and 1963 as an aftermath of the abrupt cessation of Soviet aid deliveries. In absolute terms the volume of investment increased from 1.1 billion leks in 1960 to 1.8 billion leks in 1967. Total investment for the years 1966-70 was planned at 6.5 billion leks, an increase of 34 percent over investments in the preceding five-year period. Actual investment in the years 1966-69 was reported to have exceeded the plan for those years by 12 percent. In line with the Party's policy of promoting a rapid growth of the country's productive capacity, from 80 to 82 percent of the investment has been devoted to the construction of facilities for material production.

Industry has received the largest share of investment—48 percent in the 1961-65 period and 50 percent under the plan for 1966-70. On an annual basis, industry's share ranged from a low of 36 percent in 1962 to a high of 61 percent in 1965. The proportion of agricultural investment was much lower—only 15 percent of the total in 1961-65 and less than 19 percent of the total planned for 1966-70. During the first two years of the 1966-70 period, actual investment in agriculture lagged substantially and amounted to only 11.7 and 16.2 percent, respectively. The lack of adequate investments has been a contributing cause of poor agricultural performance. There has been no consistency in the pattern of industrial and agricultural investment. The respective shares of these two sectors in total investment fluctuated widely from year to year in the 1960-67 period. An adequate explanation of the reasons for this fluctuation has not been found.

Investment in housing and for social and cultural purposes has been minimal—8.1 and 3.7 percent, respectively, in the 1961-65 period and 6.1 and 8.1 percent, respectively, under the plan for 1966-70. As in the case of agriculture, actual investment in 1966-67 was substantially below the planned levels and amounted to less than 5 percent for housing and 2 percent for social and cultural needs. This capital starvation has been largely responsible for the dismal housing situation and for the inadequacy of other essential amenities.

Money and Banking

The lek, divided into 100 quintars, is a nonconvertible paper currency with multiple official exchange rates. The basic official rate since August 10, 1965, has been 5 leks for 1 United States dollar, a rate that has no applicability in practice. Up to 1965 the exchange value had been 50 leks per US$1. The change in par value had no economic significance because prices, wages, and all other monetary values were reduced by the same ratio.

There are two types of so-called tourist or support leks. A rate of 12.50 leks per US$1 applies to the official exchange of Western currencies by nonresidents and to support payments received by residents from Western sources. A rate of 7.55 leks per US$1 applies to the exchange by Communist country residents of their national currencies and to support and other noncommercial payments transferred by them from Albania to Communist states. A third variety of official exchange rates consists of the rates used to balance clearing accounts under special trade and payments agreements with Communist countries. An illegal black market rate of about 60 leks per US$1 from early 1968 through early 1969 was reported by reliable sources.

All currency matters are administered by the National Bank jointly with the ministries of finance and trade. Albania is not a member of the International Bank for Reconstruction and Development or of the International Monetary Fund.

Adequate information is not available on the nature of the relationship between the State Bank and the Ministry of Finance or on the bank's financial operations beyond some outdated statistics on credits and savings deposits. As the principal financial institution, the State Bank carries out the financial policies of the Party and government. It issues currency, provides credit to all economic sectors, accepts savings deposits, and serves as the country's treasury. In addition to these functions, the State Bank helps prepare the financial plans for the economy, is called upon to assist enterprises in completing their planned assignments, and is responsible for controlling all economic activities through the use of its financial levers.

In mid-1969 the State Bank was severely criticized for poor performance, particularly its failure to exercise adequate control over unauthorized use of funds and waste of materials by the enterprises it helped to finance. The bank's failure was largely precipitated by uncertainties created through a decentralization of economic authority, decreed by the Party, and a dilution of the bank's control function.

A specialized system of state savings and securities banks was established within the Ministry of Finance in November 1968, for the purpose of mobilizing the population's savings for investment through loans to the state and the sale of its securities. The text of the law that created this institution contained no provision concerning the relation of these new savings and securities banks to the State Bank. Further information on the new banks was not available in mid-1970.

The only available information on the State Bank's financial operations consists of partial data on loans to agriculture and for housing and on the number and amount of savings deposits. The total volume of farm credits, exclusive of credits to state farms for which statistics have not been published, increased from 95 million leks in 1960 to 252 million leks in 1964, including long-term loans of 38 million and 44 million leks, respectively. By 1967 long-term loans had increased to 56 million leks. The statistics do not indicate whether the published data refer to the annual volume of loans granted or to the total amount of outstanding loans. A small fraction of the loans after 1960 was granted to individual peasants for the purchase of livestock.

Loans for housing construction and repair declined drastically from 17 million leks in 1960 to only 7 million leks in 1964. The distribution of the loans between urban and rural areas fluctuated widely, but urban loans predominated by a large margin and constituted from 69 to 93 percent of the total. The number of savings accounts increased from 235,400 in 1960 to 445,000 in 1968, and the volume of deposits rose from 119 million to 247 million leks. Interest paid on these amounts totaled 3.6 million and 4.8 million leks in the respective years, which implies a reduction of the interest rate from about 3.0 to 2.5 percent.

FOREIGN ECONOMIC RELATIONS

Foreign Aid

The country's foreign economic relations have been conditioned by its leadership's economic goals and political persuasion. As a poor, undeveloped country intent on modernizing and expanding its economy at a rapid pace, Albania has had to rely heavily on foreign economic and technical assistance during the post-World War II period. The leadership's extreme Marxist orientation and hostility toward the Western nations have precluded a recourse to non-Communist sources of aid and have made the country entirely dependent upon contributions by other Communist states. But even within the Communist sphere political disagreements have had a disruptive effect on aid arrangements (see ch. 6, Government Structure and Political System).

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.