The high public debt, increase in non-performing loans, and the absence of new foreign investments are the main problems of the Albanian economy.
In its annual report, international ratings agency Moody’s affirms Albania’s B1 rating. B1 is the lowest security rating but shows a relatively stable outlook.
Some of the main conclusions of the report:
- The first driver for the rating affirmation is Albania’s progress on fiscal consolidation and structural reforms under the recently concluded three-year IMF program, as well as progress in strengthening the quality of institutions in pursuit of EU accession.
- The second factor considered in the affirmation of the rating at B1 – notwithstanding the improvements noted above – is Albania’s low economic strength, which balances improving growth dynamics against small economic size, low competitiveness and relatively low GDP per capita. Albania’s low level of economic diversification compared with its peers weighs on its credit profile.
- The third driver is the still high, albeit declining, debt burden along with still large financing needs reliant on a banking system burdened by high non-performing loans (NPLs).
