TIRANA (Albania), March 16 (SeeNews) – The earthquake that hit Albania in November is expected to dampen economic growth in 2020, as the adverse impact on economic activity, especially in tourism, exceeds the positive impact from expected reconstruction efforts, the International Monetary Fund (IMF) said.
In addition, the recent global outbreak of the coronavirus (COVID-19) is expected to slow economic growth in 2020 further, and this shock too will hit tourism, the IMF said in a statement on Friday, after the conclusion of a visit of a Fund mission for remotely additional discussions with Albania on the 2019 Article IV consultation.
The magnitude of the slowdown is highly uncertain at this moment, the IMF added.
In November, the IMF said Albania's economic growth is expected to pick up from 3.0% expected in 2019 to 3.5% in 2020 and 3.7% over the medium term.
“After the earthquake, the Albanian authorities rightly decided to prioritise budget spending on relief and reconstruction efforts, allowing a moderate increase in the fiscal deficit,” the Fund said, adding that it will be important to make sure that reconstruction projects are governed in a transparent manner, in line with best international practices, and prioritise the most vulnerable.
According to the IMF, policies will also be needed to protect people during the COVID-19 outbreak by ensuring that the health sector has sufficient resources and by supporting the most affected.
“Monetary policy should remain strongly accommodative, to support economic growth. We stand ready to continue our dialogue with the authorities on measures to help limit the economic impact of the virus,” the Fund said.
Once the current adverse shocks have passed, the authorities should build stronger fiscal buffers that will allow for a larger fiscal stimulus to address possible shocks in the future, the IMF said, adding that the measures to reduce public debt and to contain fiscal risks proposed in November remain critical.
“A possible voluntary asset disclosure program, as was recently announced by the authorities, aimed at reviving the economy would need to be implemented with great caution. While no specific proposal has been released thus far, experience in other countries has shown that such programs undermine tax compliance if users receive more favorable tax treatment than those who were compliant from the beginning,” the Fund said, adding that in addition, effective systems must be created first to detect evasion and to prevent opportunities for money laundering and corruption.
Albania confirmed nine new cases of the novel coronavirus disease over the weekend, as their number has reached 42, the country’s health ministry said on Sunday.
A magnitude 6.3 earthquake hit Albania on November 26, causing 51 fatalities, leaving 17,000 people displaced, and ultimately affecting more than 200,000 people in 11 municipalities.