TIRANA, Jan, 13 – The international Monetary Fund expects the Albanian economy to accelerate to 3 percent in 2015 fuelled by a recovery in domestic demand and higher foreign direct investment from the start of the Trans Adriatic Pipeline.
Jens Reinke, the IMF resident representative in Tirana, says the reforms undertaken in the energy and pension system to curb the huge deficit will have positive impacts in 2015.
“The improvement of the business confidence, along with the gradual reduction of macroeconomic imbalances, lower interest rates and a modest recovery in public investments will also help the economy,” he told reporters.
However, poor performance in some Eurozone countries and the declining oil prices for the domestic industry could negatively affect Albania.
“The enforcement of contracts and the property ownership remain key barriers to accelerate growth and welfare. Delays in the implementation of critical structural reforms and the insufficient fiscal consolidation could also reduce investor confidence and growth prospects in the long-run,” says Reinke.
As far as mid-term prospects are concerned, the IMF representative is optimistic growth will gradually accelerate led by stronger productivity as a result of ambitious structural reforms and recovery in top trading partners Italy and Greece. “The European Union integration process could further promote structural reforms and investments.”
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.
Meanwhile, Tahseen Sayed, the World Bank country manager for Albania, says she expects Albania to grow by 3 percent in 2015 if the positive performance in the second half of 2014 will be assisted by big foreign investments such as the Trans Adriatic Pipeline and other investments in the energy sector.
“In order to increase economic benefits from the government fiscal policies, it is very important that the fiscal consolidation is as broad as possible by avoiding inefficient public expenditure and carrying out public investments which support the country’s priorities and reforms improving the business climate,” she says.
The World Bank representative says Albania’s growth accelerated in late 2014 as a result of the improvement in lending, the payment of government arrears and the boost in business confidence.
