7 hours agoIMF, Report: Albania needs structural reforms despite macroeconomic outlook
Periskopi(a year ago)
(a year ago)The International Monetary Fund today released the Albania Report, stressing that during 2024 the Albanian economy is one of the fastest growing economies in Europe based on tourism and prudent macroeconomic policies, but it is facing difficulties such as rapid population aging, migration, low productivity and governance shortcomings. [...]
The report, which came next with the IMF Mission held in November, stresses that despite strong performance, Albania's Brto (GDP) domestic production stands at about a quarter of the level of EU member states.
Despite macroeconomic optimism, considerable structural challenges remain. GDP per capita stands at about one quarter of US and EU levels while rapid aging and migration are taking place. Wide reforms are needed to improve governance, public finance management, increase human capital and productivity to foster a more stable long-term increase of”, the IMF's report on Albania notes.
It says production is much higher now than before COVID-19, thanks to tourism boom. According to the IMF, prudent fiscal policies helped to reduce the apparent reduction of public debt, while lowering inflation rates eased by monetary policies, lowering goods prices on international markets, as well as overloading of money. Trade exchange deficit has also been significantly shrinking.
The IMF estimates that growth prospects are expected to remain strong. Real GDP growth was 3.9 in 2023, but by 2024-29 it is projected to be around 3.5 percent, driven by domestic consumption, tourism and construction, the report says, while by the end of 2024 inflation is expected to be about 2 percent, one point below the Bank of Albania's target.
The report stresses that authorities are expected to exceed their budget target for 2024; from 0.3 per cent of GDP, it is projected that surplus amounts to 0.5 per cent of GDP, while the 2025 budget targets a primary zero balance, while revenues are estimated to be on track, thanks to favourable context and delays in executing capital expenditures.
The IMF estimates that public debt is estimated to be stable in the medium term, and by forecasts of nearly 56 percent at the end of 2024, it is expected to drop to about 50 percent in 2029.
The report estimates systemic weaknesses are present in the financial system, while the banking sector remains liquid and well-capitalised.
The IMF ranks as sources of risk for the economy exposure to large borrowers and banks, the rapid expansion of credit from banks for the real estate sector, which has marked a steady price increase and represents two-thirds of the money-free loans. / VOA
