TIRANA, Jan. 12 – The World Bank has slightly revised downward its economic outlook for Albania for 2015 and 2016 on spillover effects from top trading partners and an ongoing decline in international oil and base metal prices affecting the country’s exports.
In latest Global Economic Prospects report, the World Bank expects the Albanian economy to grow by 2.7 percent in 2015, down from 3 percent in its June forecast, in line with the Albanian government and the IMF.
The forecast for 2016 has also slightly been revised down by 0.1 percent to 3.4 percent while the 2017 economic outlook has been left unchanged at 3.5 percent.
The report expresses concern over Albania’s high level of non-performing loans at 20 percent affecting the country’s financial stability.
Speaking in an interview with local media, Tahseen Sayed, the World Bank country manager for Albania, said Albania should continue its fiscal consolidation path in order to reduce public debt to 60 percent of the GDP in the next four years.
In its 2016 budget, the Albanian government expects to slightly reduce public debt to 70.9 percent of the GDP in 2016, down from a historic high of 73.7 percent at the end of the third quarter of 2015, which is too high and costly for the Albanian public finances.
“The continuation of reforms in the energy and financial sectors and the business climate remain critical for the country’s growth recovery and fiscal stability. Developments in the partner economies and the international commodity prices still pose risks to the country’s external position and revenue growth,” Sayed told the Monitor magazine.
Asked about the drivers of the Albanian economy for 2016, the World Bank country manager said growth is expected to be led by industry and major ongoing infrastructure projects.
“Growth is expected to be led by industry which will benefit from major infrastructure projects already underway, such as the TAP pipeline and the construction of a hydropower plant on the Devoll River. In addition, a general improvement in the business climate and the strengthening of the financial system offer a basis for a greater growth,” she said.
Speaking about the nationwide campaign against informality launched last September, Sayed said the reform will bring benefits not only to government but also to the business community because of setting the playground for fair competition among market players.
“The effects of this reform could further strengthen by increasing transparency and justice in tax procedures and their implementation, by avoiding the frequent changes in tax policies, simplifying the tax framework and modernizing the administration,” she said.
The World Bank is one of the key donors in Albania and has been assisting the Albanian government in key reforms such as the energy sector, in financial stability by tacking the high level of non-performing loans and road infrastructure.
