March 25 (SeeNews) - S&P Global Ratings said it has raised its long- and short-term foreign and local currency sovereign credit ratings on Albania for the first time to BB- from B+, while maintaining a stable outlook.
Albania's resilience amid external factors, including a devastating earthquake in 2019 and the global pandemic, as well as indirect effects of geopolitical tensions, shows in a robust growth averaging 5.8% annually over the past three years, S&P said last week.
Narrow budget deficit, at 1.3% of the GDP in 2023 and an estimated 2.2% of the GDP in 2024, proves the government’s fiscal prudence, along with increased tax revenue, and a reduction in net general government debt to an estimated 52% of GDP in 2023 from its peak of 71% in 2020.
Albania's external balance has also improved, bolstered by the accumulation of public sector assets, particularly foreign exchange reserves, and rising tourism sector revenues.
Economic growth is seen to persist, backed by consumer spending, real estate, and the rapidly growing tourism sector. However, growth is expected to slow down slightly to 3.4% in 2024, from 3.7% in 2023.
The ratings are supported by Albania’s relatively high reserves, which provide a buffer against potential external shocks.
The banking sector maintains liquidity and profitability. Non-performing loans (NPLs) decreased to a historic low of 4.7% in February. In December 2023, the sector’s return on equity reached a record-high 17.3%.
As EU accession remains a priority and the political party in force, the Socialist Party, leads 2025 parliamentary elections polls, structural reforms are still needed to achieve EU regulatory aligning.