May 8 (Bloomberg) -- Albanian Central Bank Governor Ardian Fullani said Europe's poorest country may apply to join the European Union within a decade as foreign investment boosts growth and the government moves toward a market economy.

``This will happen in the next 10 years, for sure,'' said Fullani in an interview at the U.K. Albania Investment Forum in London yesterday. ``Albania has this commitment and is going in the right direction to be a membership candidate.''

The Adriatic nation, which last month was invited to join the North Atlantic Treaty Organization, has lagged behind other former communist states in Eastern Europe in allowing competition into the formerly state-controlled economy. It is working to improve infrastructure and beef up corporate governance to attract more foreign investment, Fullani said.

About 40 percent of the population of 3.6 million have no running water, while ``decrepit'' facilities, power cuts and corruption hamper development, according to the International Monetary Fund. Moody's Investors Service assigned Albania a B1 rating in June 2007, four steps below investment grade.

Foreign direct investment will rise this year to more than the 6 percent of gross domestic product achieved in 2007, Fullani said. The $9 billion economy grew about 6 percent last year and Albania sold 7.8 million euros worth of lek-denominated bonds on the domestic market on Dec. 5.

``Albania is on the map,'' Fullani said. ``There has been a lot of interest from very serious groups of foreign companies'' in energy, banking and tourism, he said, without giving details.

Biggest Challenges

The biggest challenges include modernizing the agricultural industry and making the bond and money markets more attractive, he said.

Higher global food and energy prices are putting pressure on inflation, which accelerated to 4.6 percent in March, according to the Albanian statistics office. The central bank aims to bring price growth back within its target range of 1 percentage point more or less than 3 percent, Fullani said.

The central bank is also ``comfortable'' with the current level of the lek, Fullani said.

Making the lek freely tradable is ``one of the best strategies that we set up at the beginning of the 1990s,'' Fullani said. ``It has been a very good element of easing inflation expectations and pressures from outside.''

To contact the reporter on this story: Svenja O'Donnell in London at sodonnell@bloomberg.net.

Last Updated: May 7, 2008 18:02 EDT