December 1 (SeeNews) - The International Monetary Fund (IMF) said it expects Albania's economy to decline 7.5% this year due to the Covid-19 pandemic and the consequences of the 2019 earthquake.
The projection is subject to major uncertainty with downside risks due to the increasing number of new Covid-19 cases in Albania, the IMF said in a concluding statement of its first post-programme monitoring review for Albania on Monday.
"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 Fund said.
Albania also faces other challenges such as increased public debt, large rollover needs, growing fiscal risks and a relatively high level of non-performing loans (NPLs), according to the IMF.
Albania's economy is expected to rebound to a 5.4% growth in 2021 as the shocks subside and reconstruction spending picks up.
"Inflation is expected to remain subdued before converging to the 3 percent target over the medium term. 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," the IMF said.
Albania has benefited from the IMF emergency financial assistance of some $190.5 million disbursed under the Rapid Financing Instrument in April 2020, which allowed the country to meet urgent balance of payments needs stemming from the aftermath of the November 2019 earthquake and the outbreak of the coronavirus pandemic.
In late 2019, a 6.3 magnitude earthquake that hit Albania left 51 people dead and around 3,000 injured.