IMF: 2% growth target for 2014 on track

“Economic growth is projected at around 2 percent this year, boosted by strong growth in exports and petroleum production, clearance of domestic government arrears, and a modest recovery in domestic demand,” says IMF’s Nadeem Ilahi.
TIRANA, Nov. 25 – The IMF is convinced the Albanian economy will achieve its 2 percent growth target for 2014 despite sluggish growth in the first half of the year when the economy is estimated to have grown by only 0.56 percent.
“Economic growth is projected at around 2 percent this year, boosted by strong growth in exports and petroleum production, clearance of domestic government arrears, and a modest recovery in domestic demand. Output still remains below potential, however, and inflation is expected to remain low,” said IMF mission chief for Albania by Nadeem Ilahi at the end of one-week visit which concluded with the award a new Euro 53 million loan tranche as part of a 3-year deal.
“Fiscal performance during the second and third quarters of 2014 was broadly in line with program targets. The authorities remain committed to achieving the fiscal deficit target for 2015 as well as limiting expenditure within the programmed envelope. Despite significant energy-related spending, the 2015 budget is expected to achieve a reduction in public debt as a share of GDP for the first time since 2010,” Ilahi told a press conference.
Albanian Finance Minister Shkelqim Cani said the Albanian government remains committed to reducing public debt, already at around 70 percent of the GDP, and paying accumulated government arrears.
The IMF mission says it supports the authorities’ policy and structural reform efforts and views them as providing a credible basis for restoring economic growth and maintaining macroeconomic and financial stability.
The IMF which is assisting Albania get back to sustainable growth with a renewed three-year deal supported by a Euro 334 million loan to clear accumulated arrears, says fiscal consolidation is proceeding as planned.
The IMF concluded its permanent mission to Albania in January 2009 when relations with the Fund were reduced to an advisory role. The renewed deal also came after the country’s economy sharply slowed down in the past couple of years, with GDP growth at an estimated 0.4 percent in 2013, the lowest in the past 15 years and the forecast for 2014 at 2 percent.
Ambitious reforms, including in the areas of pensions, energy, local government, public administration and the business environment, are essential to support medium-term growth and debt sustainability, notes the IMF.
The International Monetary Fund expects the Albanian economy to strongly recover and public debt to sharply reduce in the next five years. In its latest country report on Albania, the IMF which is assisting the Albanian government boost growth and achieving macroeconomic stability, expects the Albanian economy to recover from an estimated 0.4 percent growth in 2013 to 2.1 percent in 2014, 3.3 percent in 2015 and 4.2 to 4.7 percent from 2016 to 2019.
Public debt, which is estimated to have climbed to 70.5 percent of the GDP in 2013, posing a serious threat to the country’s macroeconomic stability, is expected to further climb to 71.7 percent of the GDP in 2014 before embarking on a downward trend that will take it to 57 percent of the GDP in 2019.