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TIRANA (Albania), December 12 (SeeNews) - Albania's B1 government bond rating incorporates the country's key credit challenges, which relate to its high, albeit declining, government debt ratio, rating agency Moody's said in a recent credit analysis report.
"We expect Albania's government debt ratio to reach around 69% of GDP in 2017," Evan Wohlmann, Assistant Vice President at Moody's, said as quoted in a statement on the report published last week. "It also faces sizeable gross borrowing requirements given its large domestic roll-over needs," she added.
The government continues to rely on liquidity from a domestic banking system with too high non-performing loan ratio to finance itself, the rating agency said.
According to central bank data, the Albanian banking system's NPL ratio stood at 21.4% at the end of October.
However, ongoing administrative and judicial reform efforts should improve the country's business environment, the rating agency also said, adding that the recommendation by the European Commission to open formal EU accession negotiations, conditional on judicial reform implementation, reflects Albania's progress on addressing corruption and advancing public sector reform.
Moody's assesses positively continued progress on Albania's comprehensive power sector reforms, with World Bank support. According to the agency, it will prevent the country from building up new arrears.