TIRANA (Albania), May 22 (SeeNews) – The International Monetary Fund (IMF) said on Tuesday it expects Albania's economy to grow by 3.6% in 2018, slightly lower than the growth rate of 3.7% predicted in April.
Albania's economic growth next year is forecast at 3.7%, the IMF said in a statement following the 2018 first post-programme monitoring discussions concluded on Monday.
This compares to economic expansion of 3.8% in 2019 forecast by the IMF in April.
“Albania is enjoying strong economic growth, but it may not last without a significant push for structural reforms,” the IMF said in the statement, adding that the country is yet to take full advantage of its low labour costs and proximity with the European Union countries due to a difficult business environment that deters investment.
IMF urged the Albanian government to push the reform agenda to lift potential growth and position the country to benefit from potential EU accession.
“Key policy and implementation challenges remain. Public debt remains high. Non-performing loans (NPLs), while declining, continue to affect the overall credit growth, particularly in the corporate sector,” the IMF noted. It added that the state-owned electricity sector needs to be put on a sustainable financial footing and growth-enhancing structural measures need to continue with more vigour.
Addressing fiscal risks posed by the high level of public debt and the related financing needs remains a high priority, the IMF pointed out.
According to the IMF, the ministry of finance and economy should enhance the fiscal recording, and legal, financial and economic analysis of public-private partnership (PPP) projects and ensure proper implementation of the PPP framework.
“The impact of PPPs on the fiscal medium-term budget framework and debt sustainability should be carefully assessed,” the Fund noted.
“Measures to reduce euroization and deepen domestic financial markets are welcome. The flexible exchange rate has been an important stabilizer for the economy and the Bank of Albania has been building a comfortable buffer of foreign reserves to address external shocks.”
The push for legislative and institutional measures to resolve high NPL ratios needs to continue, and further alignment of financial sector regulation with EU standards is needed, the IMF noted.