TIRANA, December 1
The International Monetary Fund’s Executive Board said that after the first Post-Program Monitoring review that the outlook for the Albanian economy is subject to major uncertainty with risks to the downside. The downside risks are increasing along with the increased numbers of new COVID-19 infections in Albania and other European Countries.
“A more severe pandemic would further dampen Albania’s economic outlook, through weaker tourism, remittances, external demand, and FDI, as well as tighter financial conditions,” the IMF says.
Moreover, the report pointed out that Albania’s elevated public debt, large rollover needs, growing fiscal risks, and a relatively high level of non-performing loans (NPLs) also present challenges.
In general, the report highlights that Albania continues to be severely affected by the aftermath of the earthquake and the pandemic.
The economy is expected to contract by 7½ percent in 2020 and rebound gradually in 2021-22 as the shocks subside and reconstruction spending picks up.
The current account deficit is projected to widen to more than 10 percent of GDP in 2020, but international reserves are likely to increase slightly, remaining at a comfortable level
Further on, the Executive Directors commended the Albanian authorities for maintaining macroeconomic and financial stability thus far and welcomed their responses to support lives and livelihoods in response to the November 2019 earthquake and the COVID-19 pandemic.
However, risks have risen stemming from the pandemic, elevated fiscal deficits and public debt, weaknesses in the management of public finances, and a relatively high level of non-performing loans (NPLs) and euroization.
Directors stressed that support for the economy needs to continue in 2021, but should be temporary and targeted, subject to transparency and accountability. They urged the authorities to regularize as soon as possible extraordinary measures in public financial management (PFM) taken during the emergency and to subject reconstruction funds to adequate PFM controls.