OREANDA-NEWS. An International Monetary Fund (IMF) mission led by Anita Tuladhar visited Tirana from March 9–22, 2016, to conduct discussions on the seventh review of Albania’s Extended Fund Facility (EFF) Arrangement. At the conclusion of the visit, Ms. Tuladhar made the following statement:

“The IMF team reached staff level agreement with Albania’s authorities on the policies needed to complete the seventh review of the EFF. The country's economic program is broadly on track, with all quantitative performance criteria under the program met and strong implementation of structural reforms, such as in the energy sector. Nevertheless, delays happened in some areas, like the amendment to the organic budget law. Faster implementation of structural reforms, with a focus on property rights, governance, and the judiciary, is critical to strengthen competitiveness, improve the investment climate, and catalyze stronger growth.

“The Fund team expects economic recovery to continue, with GDP growth projected to reach 3.4 percent in 2016, driven mainly by large energy-related foreign direct investment and gradually rising consumer demand. Inflation is expected to stay low at around 1.9 percent, reflecting a decline in oil prices, global disinflationary pressures, and output still below potential.

“The 2016 budget aims for a primary surplus of 0.3 percent of GDP, with fiscal consolidation efforts continuing. Potential revenue shortfalls due to falling oil prices constitute a risk to the budget, and the Albanian authorities should monitor this issue closely and adopt appropriate measures as needed. To sustain fiscal consolidation, it will be necessary to continue broadening the tax base and improving tax compliance. Management of public investment spending, including of PPPs, needs to improve to support growth, reduce fiscal risks, and contribute to medium-term debt sustainability.

“Bank of Albania should continue to keep an accommodative monetary policy stance by lowering the policy rate, consistent with its price stability objective. To strengthen lending to the private sector, the government and Bank of Albania should continue implementing their strategy for resolving non-performing loans, including improved collateral execution. The banking sector remains highly liquid and well capitalized.

“The Executive Board of the IMF is expected to discuss the seventh review in May 2016. Approval of the review would enable the disbursement of SDR 28.65 million (about € 35.94 million). Albania's 36-month EFF arrangement was approved on February 28, 2014 (see Press Release 14/81).”