Albania has to improve fiscal system, business climate - EBRD

The country should also improve the business environment by giving priority to measures such as simplifying the tax system, enhancing support for micro-small and medium-sized enterprises (MSMEs), ensuring the security of e-government services and increasing the effectiveness of the public-private dialogue, the EBRD said in its Transition Report 2022-2023 on Tuesday.

At the same time, Albania is facing an economic slowdown, as GDP growth decelerated to 2.2% in the second quarter from 6.5% in the first quarter due to lower export and private investment growth.

The EBRD sees Albania's economy growing by 3% in both 2022 and 2023, after expanding by 8.5% in 2021.

"Key risks to the near-term outlook include rising inflation and tightened financing conditions, which dampen household consumption and investment," the lender said.

Albania's policy measures are currently shielding the economy from rising prices, the EBRD noted. Inflation in Albania reached 8.1% in September, but the central bank has raised its key policy rate four times since the start of the year - from 0.5% in March to 2.25% in October.

In terms of energy production, renewables should lead to greater energy security, hence developing the sizeable pipeline of solar and wind projects should be accelerated, the EBRD said.