IMF says that economic growth in Albania is forecasted to be 2% this year

IMF says that economic growth in Albania is forecasted to be 2% this year

Tirana, May 14, 2014/Independent Balkan News Agency

A team of the International Monetary Fund (IMF), led by Nadeem Ilahi, visited Tirana from April 30 to May 13, 2014. The scope of the visit was to hold talks for the first deliberation of the Extended Fund Facility (EFF) agreement.

On Wednesday evening, Mr. Ilahi delivered a news conference in Tirana (photo). He said that IMF team struck a deal with Albanian authorities for the policies needed to finalize the first deliberation of EFF. Ilahi says that all performance criteria and structural points established at the end of March have been met.

Mr. Ilahi said that the economic program of Albania is advancing according to plan. “Following the slowdown in 2013, economic growth this year is forecasted to be 2%, enforced by the constant growth of exports and a modest recovery of domestic demand”.

Illahi added that “production continues to be under potential and inflation is expected to be low”.

Analyzing the economic situation in Albania, Mr. Illahi said: “Fiscal performance has been in line with the forecast in the program for the first quarter of 2014 and the payment of arrears has started to advance. Authorities remain engaged for a further fiscal consolidation in 2015, in order for public debt to continue and go down, also in line with their economic program”.

The IMF senior official said that expectations on inflation seem to be well founded.

He suggested that monetary policy must continue to support economic recovery in accordance to the mandate of the Bank of Albania for the preservation of the stability of prices, but the growth in lending continues to be prevented by the banks’ lack of desire to take risks.

“Authorities have made good progress in preparing a reform strategy in the domain of pensions. We’re expecting for the reform proposal, prepared in collaboration with the World Bank, to help in making sure that the system is made sustainable in the long run”, said Illahi.

Electric energy sector also imposes a big fiscal risk. “There’s an urgent need for reforms, to increase the level of incomes, to keep losses in the distribution system under control and reduce thefts in order to put an end to the dependence of this sector from the state funding”, said the IMF chief.

Besides this, there’s also a need to resolve other fiscal risks that may arise, including those risks that relate to the compensation and return of properties.

IMF mission backs the policies and work of the authorities for the structural reforms, including those that relate to the improvement of business and considers them as a credible basis for the recovery of economic growth and preservation of macro economic and financial stability.

IMF Executive Board is expected to discuss the first deliberation of EFF of Albania at the end of June. The approval of the deliberation would lead to the allocation of 23,55 million SDR (around 26,5 million Euros). The 36 month program in the form of EFF for Albania has been approved on 28 February, 2014. /ibna/