{
  "title": "Press Release: IMF Executive Board Concludes 2013 Article IV Consultation with Albania",
  "publication": "IMF News, March 19, 2014",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr14109",
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  "summary": "Albania avoided recession after the global crisis but has experienced protracted weakness and widening macroeconomic imbalances.",
  "publishDate": "2014-03-19",
  "sections": [
    {
      "heading": "Economic performance and outlook",
      "content": "- Albania avoided recession after the global crisis but has experienced protracted weakness and widening macroeconomic imbalances.\n- Real GDP growth:\n  - 2013: 0.7 percent (the lowest in more than a decade).\n  - 2009–2012: 3.3, 3.8, 3.1, 1.3 percent respectively.\n- Inflation:\n  - Remained low and largely within the central bank’s 2–4 percent target range.\n  - Consumer Price Index (avg.): 2.3 (2009), 3.5 (2010), 3.4 (2011), 2.0 (2012), 1.9 (2013 (Est.)).\n  - Consumer Price Index (eop): 3.7 (2009), 1.7 (2010), 2.4 (2011).\n- External sector:\n  - Current account balance (including official transfers): -14.1 (2009), -10.0 (2010), -9.6 (2011), -9.3 (2012), -9.0 (2013 (Est.)) percent of GDP.\n  - Trade balance (goods and services): -24.7 (2009), -20.9 (2010), -23.1 (2011), -19.0 (2012), -17.1 (2013 (Est.)) percent of GDP.\n  - External adjustment has started due to oil exports and import compression, but weak external drivers limit sustained reduction."
    },
    {
      "heading": "Drivers of slowdown and constraints",
      "content": "- Contributing factors:\n  - Weak investor confidence.\n  - Bank risk aversion.\n  - Incomplete investment climate reforms.\n- Financial and credit conditions:\n  - Private credit growth: 10.3 (2009), 10.4 (2010), -3.0 (2011).\n  - Broad money growth: 12.5 (2009), 9.1 (2010), 5.0 (2011), 2.9 (2012).\n  - Banks rely almost exclusively on domestic deposits, supporting resilience to eurozone stress.\n  - Non-performing loans (NPLs) have increased considerably, constraining credit growth and pressuring bank profitability."
    },
    {
      "heading": "Fiscal position and public debt",
      "content": "- Fiscal deterioration in 2013 driven by:\n  - Fiscal loosening prior to the 2013 elections.\n  - Accumulation of significant unpaid bills and arrears.\n  - Weak economy and structural factors (notably pensions).\n- Fiscal balances and ratios:\n  - Revenues and grants: 26.0 (2009), 26.1 (2010), 24.9 (2011), 24.0 (2012), 20.1 (2013 (Est.)) percent of GDP.\n  - Tax revenue: 23.6 (2009), 23.7 (2010), 22.7 (2011), 21.6 (2012).\n  - Expenditures: 33.5 (2009), 29.9 (2010), 29.3 (2011), 28.4 (2012), 30.1 (2013 (Est.)) percent of GDP.\n  - Overall balance: -7.4 (2009), -3.8 (2010), -3.6 (2011), -3.5 (2012), -6.2 (2013 (Est.)) percent of GDP.\n  - Primary balance: -4.3 (2009), -0.4 (2010), -0.3 (2011), -2.9 (2012).\n  - Net domestic financing: 1.4 (2009), 5.4 (2010).\n  - Public debt: 59.5 (2009), 58.5 (2010), 60.3 (2011), 62.4 (2012), 70.5 (2013 (Est.)) percent of GDP.\n  - Domestic public debt: 36.1 (2009), 33.3 (2010), 34.2 (2011), 35.5 (2012), 43.7 (2013 (Est.)) percent of GDP.\n  - Unpaid bills and arrears (part of domestic debt): 5.3 percent of GDP (latest available).\n- Memorandum:\n  - Nominal GDP (in billions of lek): 1148.1 (2009), 1222.5 (2010), 1282.3 (2011), 1326.5 (2012), 1357.9 (2013 (Est.))."
    },
    {
      "heading": "Authorities’ program and IMF support",
      "content": "- The authorities requested IMF financial assistance to:\n  - Reverse the upward trend in public debt and lay the ground for its sustained reduction.\n  - Restore banks’ confidence in lending by bringing down NPLs.\n  - Ease constraints on growth through ambitious structural reforms (pensions, energy, public administration, business environment).\n- The program will be supported by an IMF arrangement under the Extended Fund Facility."
    },
    {
      "heading": "Executive Board assessment and policy recommendations",
      "content": "- Overall appraisal:\n  - Directors commended measures to restore fiscal sustainability, safeguard financial stability, and improve the investment climate.\n  - Noted significant risks from underlying imbalances and called for strong and lasting commitment.\n- Fiscal policy recommendations:\n  - Aim to lower the public debt ratio to below 60 percent of GDP in the medium term.\n  - Implement significant further tax and expenditure policy measures, supplementing steps taken in late 2013 and in the 2014 budget.\n  - Support consolidation with extensive public financial management and tax administration reforms.\n  - Adopt a medium-term budget framework or fiscal rule to anchor commitment to the debt target.\n  - Place the burden of fiscal adjustment primarily on revenues, given development needs and the low share of revenues in GDP.\n  - Include pension and energy reforms as key parts of medium–term adjustment.\n  - Reduce the outstanding stock of arrears and establish mechanisms to prevent recurrence; proceed cautiously with payments and employ an external auditor promptly to conduct ex post risk-based audits.\n- Monetary and exchange rate policy:\n  - Commended maintenance of low inflation under inflation-targeting framework.\n  - Saw scope for moderate monetary policy easing to support recovery, provided inflation expectations and financial stability remain well anchored.\n  - Cautioned that further easing could increase risks from high unhedged foreign currency exposure and may be limited by sluggish credit demand and bank risk aversion.\n  - Encouraged removal of exchange restrictions as soon as possible.\n- Financial sector measures:\n  - Urged prompt and comprehensive action to address rising NPLs to boost bank profitability and credit growth.\n  - Recommended removing impediments to collateral execution and loan restructuring, and clearing arrears.\n  - Advised strengthening regulation and supervision of the nonbank financial system, in line with recommendations from the Financial Sector Assessment Program."
    },
    {
      "heading": "Key macroeconomic indicators (selected)",
      "content": "- Real GDP growth (percent): 3.3 (2009); 3.8 (2010); 3.1 (2011); 1.3 (2012); 0.7 (2013 (Est.))\n- Consumer Price Index (avg.): 2.3 (2009); 3.5 (2010); 3.4 (2011); 2.0 (2012); 1.9 (2013 (Est.))\n- Current account balance (including official transfers, percent of GDP): -14.1 (2009); -10.0 (2010); -9.6 (2011); -9.3 (2012); -9.0 (2013 (Est.))\n- Public Debt (percent of GDP): 59.5 (2009); 58.5 (2010); 60.3 (2011); 62.4 (2012); 70.5 (2013 (Est.))\n- Overall balance (percent of GDP): -7.4 (2009); -3.8 (2010); -3.6 (2011); -3.5 (2012); -6.2 (2013 (Est.))\n- Gross international reserves (in months of imports of goods and services): 4.1 (2009); 4.4 (2010); 4.5 (2011)\n\nPress Release No. 14/109 — IMF COMMUNICATIONS DEPARTMENT, March 19, 2014. Executive Board discussion concluded February 28, 2014.\n\n---\n\n\n References\n\n- Albania and the IMF\n- Press Releases\n- PRESS CENTER\n- see Press Release No. 14/81\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr14109"
    }
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    "Published: March 19, 2014",
    "Albania avoided recession after the global crisis but has experienced protracted weakness and widening macroeconomic imbalances.",
    "Real GDP growth:",
    "Inflation:",
    "External sector:",
    "Contributing factors:",
    "Financial and credit conditions:",
    "Fiscal deterioration in 2013 driven by:",
    "Fiscal balances and ratios:",
    "Memorandum:",
    "The authorities requested IMF financial assistance to:",
    "The program will be supported by an IMF arrangement under the Extended Fund Facility.",
    "Overall appraisal:",
    "Fiscal policy recommendations:",
    "Monetary and exchange rate policy:",
    "Financial sector measures:",
    "Real GDP growth (percent): 3.3 (2009); 3.8 (2010); 3.1 (2011); 1.3 (2012); 0.7 (2013 (Est.))",
    "Consumer Price Index (avg.): 2.3 (2009); 3.5 (2010); 3.4 (2011); 2.0 (2012); 1.9 (2013 (Est.))",
    "Current account balance (including official transfers, percent of GDP): -14.1 (2009); -10.0 (2010); -9.6 (2011); -9.3 (2012); -9.0 (2013 (Est.))",
    "Public Debt (percent of GDP): 59.5 (2009); 58.5 (2010); 60.3 (2011); 62.4 (2012); 70.5 (2013 (Est.))",
    "Overall balance (percent of GDP): -7.4 (2009); -3.8 (2010); -3.6 (2011); -3.5 (2012); -6.2 (2013 (Est.))",
    "Gross international reserves (in months of imports of goods and services): 4.1 (2009); 4.4 (2010); 4.5 (2011)",
    "[Albania and the IMF](http://www.imf.org/external/country/alb/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[see Press Release No. 14/81](https://www.imf.org/external/np/sec/pr/2014/pr1481.htm)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](https://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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