IMF国际货币组织全球-Albania_Second-Post_50页_1mb

Summary of IMF Country Report No. 19/207: Albania

Core Content

The IMF conducted the Second Post-Program Monitoring (PPM) discussions with Albania in 2019, assessing the country's economic developments, risks, and policy priorities. The report highlights Albania's economic performance, its capacity to repay IMF loans, and the challenges it faces in maintaining macroeconomic stability and sustainable growth.

Main Points

Economic Outlook

• Growth in 2018: Strong, driven by record hydropower production, reaching 4.1% real GDP growth, the highest since the global financial crisis.
• 2019 Growth: Expected to slow to 3.5% due to the base effect of 2018's peak and a slowdown in key trading partners.
• Medium-term Outlook: GDP growth is projected to converge to its 4% potential rate, supported by EU growth, increased labor participation, stronger exports (including tourism), and infrastructure investments.
• Inflation: Expected to converge slowly to 3% by 2021 as the output gap narrows and imported inflation from the euro area recovers.
• Current Account Deficit: Projected to narrow further over the medium term due to strong exports and fiscal consolidation.
• FX Reserves: Remain comfortable, at 3.7 billion Euros in 2019, covering 6.8 months of imports and 3.8% of GDP.

Capacity to Repay the Fund

• Albania's capacity to repay the IMF is adequate, with Fund credit outstanding at 2.8% of GDP and 10.4% of gross international reserves in 2018.
• The country has a strong repayment record and macroeconomic stability.
• Fund credit is expected to remain above 200% of quota until November 2019, with debt service peaking at around 0.4% of GDP in 2022.
• The risk of repayment is contained, even under stress scenarios, due to robust reserves and a flexible exchange rate.

Risks and Vulnerabilities

• External Risks: Albania is vulnerable to economic slowdowns in its main trading partners, particularly in the EU, and to exchange rate fluctuations.
• Domestic Risks: High public debt, increasing contingent liabilities, and weaknesses in public institutions and economic governance.
• Weather-Related Risks: Growth is heavily dependent on precipitation, which affects electricity production, the trade balance, and public finances.
• Demographic Challenges: Aging population and emigration of skilled workers could reduce labor supply and productivity over time.
• Financial Sector Risks: Continued consolidation and ownership shift from EU banks raise concerns about financial stability. The AML/CFT framework requires further strengthening.

Policy Recommendations

• Fiscal Reforms: Strengthen the revenue base through tax policy and administration reforms, and accelerate public debt reduction to allow for countercyclical fiscal policies.
• Public Investment Management: Improve the framework for managing public investment and limit risks from PPPs and other contingent liabilities.
• Business Climate: Enhance governance, infrastructure, and skills formation to support higher growth and productivity.
• Energy Sector: Address financial weaknesses and arrears, and continue liberalizing the sector.
• Monetary Policy: Maintain an accommodative stance, with normalization based on data, to support growth while keeping inflation under control.
• Exchange Rate and Reserves: Leverage the flexible exchange rate and ample reserves to absorb shocks and ensure financial stability.

Key Issues

• Growth Vulnerabilities: Growth is sensitive to external shocks and domestic factors like weather and political uncertainty.
• Fiscal Position: Despite a reduction in the fiscal deficit in 2018, it is expected to widen in 2019 due to arrears repayment and tax measures.
• Debt Sustainability: Public debt remains high and is projected to decrease gradually, but contingent liabilities and potential interest rate shocks could pose risks.
• Financial Sector Supervision: Continued strong oversight is needed to ensure that increased bank lending does not threaten financial stability.
• Exchange Rate Risk: The country's reliance on foreign currency and limited diversification in its public debt pose risks, especially in the event of external financing tightening.

Authorities' Views

• The authorities acknowledged the risks to growth and the public finances, including weather-related shocks and vulnerabilities in the energy sector.
• They emphasized the need for further structural reforms, particularly in promoting tourism, improving coordination in the energy sector, and enhancing infrastructure.
• The government expressed confidence in achieving the 3% inflation target by 2020 and expects to manage the fiscal deficit effectively through arrears clearance and improved governance.

Conclusion

The IMF concluded that Albania's capacity to repay is adequate, and its medium-term economic outlook is positive. However, structural reforms and fiscal discipline are critical to addressing vulnerabilities and ensuring long-term stability and growth. The report underscores the importance of improving governance, enhancing the business environment, and strengthening financial sector oversight.