The official mission from the IMF staff has recently concluded its visit to Albania and delivered the following concluding statement:
- The Albanian economy has weathered multiple shocks since 2019 relatively well. Although Albania’s direct exposures to Russia’s war in Ukraine are limited, with twin deficits and high government debt, Albania now faces challenges stemming from soaring international food and energy prices, tighter global financial conditions which are likely to persist, and the economic slowdown in Europe. Prudent policy and vigilance are required to stem rising risks and entrench the positive momentum in the economy.
- Fiscal consolidation, underpinned by a sound Medium-Term Revenue Strategy, is vital for rebuilding room for policy maneuver and reducing demand pressure. Fiscal support should be temporary and targeted to the vulnerable. Strengthening the efficiency and credibility of public finances remains crucial for preserving market confidence and mitigating higher borrowing costs.
- Further monetary tightening is needed to tame inflation. Higher interest rates and the changing landscape of the financial system call for enhanced vigilance to safeguard financial stability.
- Even as Albania grapples with pressing short-term challenges, the authorities need to step up their efforts on structural reforms to lift Albania’s potential for sustainable and inclusive growth.
For more information please visit: https://www.imf.org/en/News/Articles/2022/10/10/ms101022-Albania