January 25 (SeeNews) - An International Monetary Fund (IMF) team has concluded a visit to Tirana for discussions on Albania's reform performance under the Extended Fund Facility (EFF) arrangement, the IMF said.
“The IMF team reached staff level agreement with Albania’s authorities on the policies needed to complete the ninth and tenth reviews, the last ones, of the country’s EFF," IMF mission leader, Anita Tuladhar, said in a statement late on Tuesday.
According to the IMF, the economic programme remains on track and has achieved its core objectives of correcting large macroeconomic imbalances and boosting economic growth.
"Despite some delays, there is overall good progress in implementing structural reforms," the Fund noted.
Approval of the review by the IMF board will unlock 57.28 million SDR ($77.86 million/72.44 million euro) under the 36-month EEF funding progamme approved in February 2014. The IMF board is expected to discuss the ninth and tenth reviews next month.
Albania's main priorities in the forthcoming period should be to advance structural reforms to improve the business climate, to continue to expand revenue and to ensure debt sustainability, as well as to reduce non-performing loans (NPLs) and to support credit recovery.
"The program has put the economy on its way to sound public finances, financial stability and economic recovery", IMF said. "With the program coming to an end, it will be essential that Albania commits to maintaining its momentum of economic reforms", the Fund added.
Economic growth is expected to have reached 3.4% in 2016 and is forecast to speed up to 4% over the medium term, boosted by large energy projects and pickup in domestic demand, the IMF said.
Inflation is expected to rise gradually from last year's rate of 1.3% until reaching its target rate of 3% by 2018.
The current account gap is expected to widen in 2017 due to the imports needed for the energy projects, from around 12% of the country's gross domestic product (GDP) in 2016 to 13.5% of GDP in 2017-18.
Albania's public debt remains high, at around 70% of GDP. In order to tackle high debt level, the government has set a primary surplus of 0.7% of GDP in the 2017 budget.
According to the IMF, to address the high level of NPLs, which is deterring lending to corporates, Albania has to implement the bankruptcy and private bailiff's laws.
"Structural reforms to enhance the business environment, address infrastructure gaps, and improve labor skills will be crucial to strengthen competitivenes," the IMF pointed out.
The 36-month funding programme envisages the disbursement of a total of SDR 295.42 million (330.9 million euro).