Press Release: Statement by IMF Deputy Managing Director Murilo Portugal at the Conclusion of a Visit to Albania

May 23, 2007

Press Release No. 07/107
May 23, 2007

Mr. Murilo Portugal, Deputy Managing Director of the International Monetary Fund (IMF), made the following statement on May 22, 2007 in Tirana:

"I am very grateful for this opportunity to visit Albania and want to thank Prime Minister Sali Berisha, Minister of Finance Ridvan Bode, and Bank of Albania Governor Ardian Fullani and other Albanian officials for their gracious hospitality and frank and open discussions.

"Albania has posted a solid growth performance and demonstrated strong ownership of the IMF programs. I have discussed with the authorities how the IMF can continue to support Albania in the future. Apart from meeting with the government and the Bank of Albania, I also met with representatives of parliament, civil society, and media.

"At my meeting with Prime Minister Berisha, I congratulated him on Albania's impressive economic progress since the beginning of transition, with macroeconomic stability now well entrenched, and several years of high noninflationary economic growth. I also expressed our appreciation of the strong ownership of reforms shown by the Albanian authorities. We agreed on the need for further structural reforms to enhance the business climate and attract foreign direct investment. This will be necessary in order to further develop Albania's exports sectors and maintain the current high growth rates also over the medium term. Such reforms, which should enjoy broad-based public support, will need to focus on reducing the informal sector and enhancing governance; improving public institutions, including the judiciary; upgrading infrastructure, in particular the electricity and transportation networks; and completing land registration. Looking ahead, we discussed how the IMF can continue to support Albania, including following the conclusion in 2009 of the current arrangement.

"I also had constructive discussion with Minister Bode and Governor Fullani in their respective areas.

"The IMF supports the government's fiscal policies aimed at achieving a lean but efficient government, with the fiscal deficit and the public debt steadily declining in terms of GDP over the medium term, and with expenditures focusing on priority areas such as education, health, and infrastructure investment. We stand ready to discuss with the government its ambitious agenda for tax reform, bringing the experience of best international practices for a sustained fiscal position. We agree on the importance of further improvements in revenue administration and in debt management, including the use of short-term domestic debt to help develop a secondary market for government securities.

"Albania's inflation expectations are well anchored at low levels, thanks to the credibility, transparency, and professionalism of the Bank of Albania. Looking ahead, strong independent institutions, such as the Bank of Albania, will become the key internal anchors for economic policy making. While the current very high rate of credit growth will entail additional challenges for the Bank of Albania, we are heartened to see that this growth is mainly directed at business investments.

"In closing, I am impressed by the commitment of the government to address the challenges of the Albanian economy, and put the country firmly on the path toward an emerging market economy. The IMF is committed to continue working with Albania to help realize this."


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