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TIRANA (Albania), September 26 (SeeNews) – Albania's improved institutional quality, increased prospects for the start of EU membership talks and solid economic growth prospects support the country's credit profile (B1 stable), Moody's said.
"Albania has made notable progress in strengthening the quality of its institutions, while judicial reforms are positive for potential future EU accession talks," Daniela Re Fraschini, Moody's assistant vice president - analyst and co-author, said in a rating agency’s report on Albania issued on Tuesday.
“Real GDP growth is forecast at around 4% over 2018-19, supported by healthy private consumption and robust investment on the back of major infrastructure projects.”
Over the longer term, Moody's expects Albania's real GDP growth of around 4.0% and for it to remain broad-based, assuming that the reform momentum continues to support major economic sectors like energy, agriculture and tourism.
“Since being granted EU candidate country status in 2014, Albania has made progress in strengthening its institutions, particularly in areas such as public administration, the judicial system, crime and the protection of human rights and property rights,” the ratings agency noted.
Albania's low fiscal strength reflects its elevated debt burden, which stood at just over 70% of GDP at the end of 2017.
Moody's also said it expects government debt to fall to below 70% of GDP by 2019, helped by continued robust economic growth, consolidation efforts and, more recently, exchange rate appreciation.
“The main fiscal risks relate to weather-related electricity imports, and contingent liabilities arising from the energy sector and public private partnerships (PPPs),” the rating agency said, adding that a material decline in public sector debt and further advances in institutional building that improve the business environment and competitiveness would be positive for the credit profile.
“Conversely, negative pressure would stem from a reversal of the fiscal adjustment and a failure to stabilise the public debt-to-GDP ratio, or from reduced political commitment to the institutional and economic reform agenda. Emerging challenges in funding the current-account deficit due to a significant decline in foreign direct investment would also be credit negative.”