Statement at the Conclusion of an IMF Mission to Albania

Press Release No. 15/119
March 17, 2015 An International Monetary Fund (IMF) mission led by Nadeem Ilahi visited Tirana during March 4-17, 2015 to conduct discussions on the fourth review of Albania’s Extended Fund Facility (EFF). On the conclusion of the visit, Mr. Ilahi made the following statement:
“Albania's economic program remains on track. The IMF team reached staff level agreement with the authorities on the policies needed to complete the fourth review of the EFF.
“Economic growth is projected to continue its moderate recovery in 2015, reaching around 3 percent, despite the recent floods and a slowdown in the oil sector. Growth will be driven by a sustained recovery in domestic demand, benefiting from low energy prices and interest rates, and a gradual pickup in bank lending. However, output still remains below potential, and along with subdued external pressures, will contribute to inflation staying low.
“Fiscal performance in the fourth quarter 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.
“Monetary policy should continue to be supportive of economic recovery, consistent with the Bank of Albania’s mandate of maintaining price stability. Credit growth is recovering but remains low, affected by high non-performing loans and weaknesses in contract enforcement. We welcome the commitment of the authorities to develop a comprehensive strategy to address the NPL issue with the aim of improving the credit environment.
“Implementation of power sector reform is on track. The reform has been developed in consultation with the World Bank and is central to lowering fiscal risks. Electricity theft, although still high, is being reduced; tariffs have been adjusted: and revenue is increasing; and the state enterprises in the power sector are being reformed.
“The Executive Board of the IMF is expected to discuss the fourth review in the middle of 2015. Approval of the reviews would enable the disbursement of SDR 28.9 million (about €37.4 million). Albania's 36-month EFF arrangement was approved on February 28, 2014. (see Press Release 14/81).”