Press Release: IMF Approves Third Annual PRGF for Albania

June 30, 2000


The International Monetary Fund (IMF) today approved the third annual arrangement for Albania under the Poverty Reduction and Growth Facility (PRGF)1 in an amount equivalent to SDR 11.76 million (about US$ 15.7 million) to support the government's economic program. The approval included an extension of the commitment period to July 31, 2001, from the original expiration date of May 12, 2001. The first loan under the third annual arrangement, in an amount equivalent to SDR 2.35 million (about US$ 3.1 million) will be available on July 31, 2000, at the request of Albania.

The country's three-year PRGF, originally under ESAF, was first approved in May 1998 and commitments, including an augmentation approved in June 1999, now total an amount equivalent to SDR 45.04 million (about US$ 60.2 million), of which Albania has drawn SDR 33.284 million (about US$ 44.5 million).

The Executive Board approval was on a lapse of time basis, given its recent discussions on June 9, 2000 on the second review of the second annual arrangement (see News Brief No. 00/43) and the Article IV Consultation (see Public Information Notice No. 00/43).

Albania: Selected Economic Indicators
 

1996

1997

1998

1999
       

Est.
   
 

(Percent change)
         

Real GDP

9.1

-7.0

8.0

7.3

Retail prices (avg.)

12.7

32.1

20.9

0.4

Retail prices (end-period)

17.4

42.1

8.7

-1.0
         
 

(In percent of GDP)
         

Fiscal sector

        

Revenues

18.6

16.9

20.3

21.3
         

Expenditures

30.3

29.4

30.7

32.6

Overall balance

11.7

-12.6

-10.4

-11.3

Domestically financed balance 1/

10.6

-10.5

-6.4

-5.2

Public Debt

59.9

68.9

60.1

62.1

Domestic 2/

30.7

35.8

32.9

36.5

External

29.2

33.1

27.2

25.5
         

Monetary indicators

        

Broad money growth (in percent)

43.8

28.5

20.7

22.3

Interest rate (3-mth deposits)

18.5

26.0

16.5

8.5
         
 

(In millions of U.S. Dollars)

External sector

        

Trade balance 3/

-692

-519

-621

-663

(in percent of GDP)

-25.7

-22.7

-20.4

-18.0

Current account balance 4/

-245

-276

-187

-294

Gross international reserves

275

306

384

481

(in months of imports of goods and service)

3.1

3.8

4.2

4.9
         

Memorandum items

        

Nominal GDP (in millions of lek)

224,745

341,716

460,631

506,205

Nominal GDP (in millions of U.S. dollars)

2,422

2,284

3,046

3,676
         

Sources: Albanian authorities and IMF staff estimates and projections.

1/ Excluding privatization revenues.

2/ Including bonds for bank restructuring (Lek 7 bn for 1999; Lek 15 bn for 2000).

3/ For 1999 excluding imports of direct humanitarian aid related to the Kosovo crisis.

4/ Including official transfers.

1On November 22, 1999, the IMF's concessional facility for low-income countries, the Enhanced Structural Adjustment Facility (ESAF), was renamed the Poverty Reduction and Growth Facility (PRGF), and its purposes were redefined. It is intended that PRGF-supported programs will in time be based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners, and articulated in a poverty reduction strategy paper (PRSP). This is intended to ensure that each PRGF-supported program is consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. At this time for the Kyrgyz Republic, work is beginning on a participatory process, including a government sponsored workshop in February, and subsequent to this an interim PRSP will be developed. It is understood that all policy undertakings in the interim PRSP beyond the first year are subject to reexamination and modification in line with the strategy that is to be elaborated in the PRSP. Once completed and broadly endorsed by the Executive Boards of the IMF and World Bank, the PRSP will provide the policy framework for future reviews under this PRGF arrangement. PRGF loans carry an interest rate of 0.5 percent a year, and are repayable over 10 years with a 5 ½-year grace period on principal payments.





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