IMF Says Downside Risks to Albanian Economy Are Increasing

The International Monetary Fund (IMF) said on November 30 that downside risks to Albanian economy are increasing as the country is facing a rising number of coronavirus (COVID-19) infections.
The IMF statement was issued after the Fund’s executive board concluded the first post-programme monitoring review with Albania on November 23, accordong to bne IntelliNews.
In April 2020, the Fund disbursed around US$190.5bn to Albania under the Rapid Financing Instrument, which allowed the country to meet urgent balance of payments needs stemming from the November 2019 earthquake and the COVID-19 pandemic.
In a statement, the IMF praised authorities for responded promptly to the shocks, and macroeconomic and financial stability that have so far been maintained, but noted that the outlook is subject to major uncertainty with risks to the downside. The worsening of the pandemic will affect the economy through weaker tourism, remittances, external demand and FDI, as well as tighter financial conditions.
The IMF projected a 7.5% contraction of the Albanian economy this year and a gradual rebound in 2021 and 2022.
Inflation is expected to remain subdued before reaching the 3% target over the medium term. The average inflation is seen at 1.4% in 2020 and 1.6% in 2021.
Albania’s current account deficit is projected to widen to more than 10% of GDP in 2020, but the IMF said that international reserves are likely to increase slightly, remaining at a comfortable level.
“Albania’s elevated public debt, large rollover needs, growing fiscal risks, and a relatively high level of non-performing loans (NPLs) also present challenges,” the IMF said.
IMF directors underlined that Albanian authorities need to continue supporting the economy in 2021.
“The support should be temporary and targeted, subject to transparency and accountability,” the IMF said.
Albania’s budget balance is seen at 6.8% of GDP in 2020 and 6.1% of GDP in 2021. /argumentum.al