The IMF forecasts a 7.5% decline in the Albanian economy this year. It will begin to recover gradually during 2021 and 2022 according to the report published yesterday.
It also predicts that the budget deficit this for the year will reach as much as an additional 10% of the country’s GDP. The forecasts are part of the IMF’s periodic assessment of the country’s economic situation and public finances.
The IMF notes that Albania continues to be affected by the consequences of the earthquake and the pandemic, warning that the deepening of the pandemic could worsen the country’s economic outlook, as it could further weaken tourism, reduce remittances and foreign investment, and bring further financial difficulties.
The IMF points out that rising debt levels, the need to pay off old debt and the level of bad loans in the banking sector could increase financial risks if the pandemic crisis deepens.
The IMF Board of Directors, however, praises the efforts of Albanian companies to maintain financial and economic stability and has welcomed the response of authorities in support of the lives after the November 2019 earthquake and the covid pandemic.
The fund advises authorities to be prepared to increase reliance if this is necessary. They advise that support for the economy continue in 2021, but it should be temporary and well run.
The IMF calls for transparency and accountability in the implementation of reconstruction assistance and pandemic support.
In particular, it requires that reconstruction funds be subject to the rules for the sound management of public finances, and by avoiding the creation of outstanding liabilities for public reconstruction works.