OREANDA-NEWS. The Executive Board of the International Monetary Fund (IMF) yesterday completed the fourth review of Albania’s economic performance under the Extended-Fund Facility (EFF). Completion of the review enables an immediate disbursement of SDR 28.88 million (about €35.9 million), bringing the total disbursements to SDR 123.1 million (about €153.1 million). The decision was taken without a formal meeting.

All end-December 2014 and continuous performance criteria were met, with comfortable margins. All but one structural benchmarks were implemented.

Economic recovery is underway in Albania, but growth remains below potential. High non-performing loans (NPLs) make banks risk-averse, and credit growth remains sluggish despite monetary easing. Program risks emanate from external disinflationary pressures, the complexity of electricity sector reforms, and the need for sustained political commitment to fiscal adjustment.

The authorities should shield the 2015 budget deficit target from the risk of falling oil royalties and external disinflationary pressures. Reducing public debt over the medium term will require political commitment to sustain the significant fiscal consolidation which began in 2014. The central bank’s cautious monetary easing is broadly appropriate. Addressing the high stock of NPLs is crucial for reviving credit. The micro-prudential focus on the fastest-growing segments of the banking system is appropriate. Regulatory gaps in nonbank supervision should be filled promptly. While the early results from the authorities’ ambitious power sector reform have been impressive, sustaining the effort is critical.

The Executive Board approved a 36-month arrangement under the EFF for Albania on February 28, 2014 in an amount equivalent to SDR 295.42 million (about €367.5 million, 492.4 percent of the country’s quota in the Fund).