{
  "title": "Press Release: IMF Approves Emergency Post Conflict Assistance for Albania",
  "publication": "IMF News, November 7, 1997",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9751",
  "canonical": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9751",
  "overlayPath": "/en/news/articles/2015/09/14/01/49/pr9751/index.md",
  "summary": "The International Monetary Fund (IMF) approved a credit for Albania equivalent to SDR 8.825 million (about US$12 million) under the IMF’s emergency post conflict assistance to support the government’s economic program for 1997-98.",
  "publishDate": "1997-11-07",
  "sections": [
    {
      "heading": "Summary of Action",
      "content": "- The International Monetary Fund (IMF) approved a credit for Albania equivalent to SDR 8.825 million (about US$12 million) under the IMF’s emergency post conflict assistance to support the government’s economic program for 1997-98.\n- Press Release No. 97/51, November 7, 1997."
    },
    {
      "heading": "Background: 1993–1997 economic trajectory and crisis",
      "content": "- Exceptional progress in 1993-95:\n  - Annual GDP growth averaged 9 percent.\n  - Inflation fell from triple digits to 6 percent.\n  - External imbalances were reduced sharply.\n  - Early privatization in agriculture, retail trade, and small and medium-sized enterprises contributed to strong supply response.\n  - Financial discipline at the budgetary and state enterprise level supported stabilization.\n- Deterioration in 1996 and early 1997:\n  - Transition stalled in 1996.\n  - Election-driven policies raised the budget deficit to 10 ½ percent of GDP.\n  - Annual inflation tripled.\n  - Financial pyramid schemes grew to liabilities, including accrued interest at unrealistically high rates, equivalent to nearly half of GDP.\n  - In March 1997, Albania descended into anarchy and near civil war.\n  - Economic fallout: massive supply disruptions reduced output in construction and industry; loss of wealth in failed financial schemes depressed domestic demand."
    },
    {
      "heading": "The 1997-98 Program: macroeconomic objectives and policy measures",
      "content": "- Primary macroeconomic goal: rapid disinflation and resumption of growth for 1997-98.\n- Key macroeconomic objectives:\n  - Limit the decline of real GDP to 8 percent in 1997 and achieve real growth of about 12 percent in 1998.\n  - Contain the annual inflation rate to the range of 51-54 percent in 1997, and bring it down to 15- 20 percent in 1998.\n  - Keep gross international reserves above the equivalent of 3.5 months of imports through 1998.\n- Fiscal policy targets and instruments:\n  - Limit the domestically financed budget deficit to about 13 percent of GDP in 1997, and to below 10 percent of GDP in 1998.\n  - Measures to achieve fiscal targets:\n    - Restore and then improve tax collection.\n    - Raise tax rates, including a significant increase in the VAT rate.\n    - Exercise expenditure restraint, including a rationalization of the civil service.\n- Monetary policy:\n  - The Bank of Albania will support inflation reduction by maintaining an appropriately tight monetary stance."
    },
    {
      "heading": "Structural Reforms (planned under the program)",
      "content": "- Progress toward privatization or liquidation of two of the three state-owned commercial banks.\n- Winding up the companies that operated pyramid schemes.\n- Civil service reform.\n- Resumption of enterprise privatization.\n- Creation of a functioning agricultural land market."
    },
    {
      "heading": "Addressing Social Needs",
      "content": "- Acknowledgement of severe impoverishment resulting from the crisis.\n- Medium-term poverty alleviation based on achieving high sustainable growth driven by private sector development.\n- Short-term measures:\n  - Temporary support targeted toward the poorest families.\n  - Accelerate disbursements of social assistance.\n  - Introduce public works/community service schemes for social assistance beneficiaries who can work.\n  - Priority attention in the next few months to severe shortages in pharmaceuticals, surgical goods and materials, and equipment for public health services."
    },
    {
      "heading": "The Challenge Ahead: risks and external support needs",
      "content": "- Main risks to the program:\n  - Limited, albeit improving, capacity of the authorities to formulate and implement macroeconomic and structural measures.\n  - Difficulty of projecting key economic variables in uncertain circumstances.\n- Required responses:\n  - Strong commitment of the authorities to policy implementation.\n  - Substantial technical assistance in a broad range of areas.\n- External position and arrears:\n  - Albania’s balance of payments position will remain difficult during the remainder of 1997 and 1998.\n  - Over the longer term, Albania will continue to require substantial external support.\n  - Arrears to Russia and non-Paris Club official bilateral creditors will need to be reconciled and rescheduled."
    },
    {
      "heading": "Albania: Selected Economic Indicators (as presented)",
      "content": "- Real GDP (Percent change):\n  - 1994: 9.4\n  - 1995: 8.9\n  - 1996: 9.1\n  - 1997: -8.0\n  - 1998: 12.0\n- Retail Prices (End of period):\n  - 1994: 15.8\n  - 1995: 6.0\n  - 1996: 17.4\n  - 1997: 51-54.0\n  - 1998: 15-20.0\n- Domestically financed fiscal deficit (Percent of GDP):\n  - 1994: -7.0\n  - 1995: -6.3\n  - 1996: -10.5\n  - 1997: -13.2\n  - 1998: -9.7\n- External current account balance, excluding official transfers (deficit-) (Percent of GDP):\n  - 1994: -14.3\n  - 1995: -7.5\n  - 1996: -9.2\n  - 1997: -8.9\n  - 1998: -14.0\n- Gross official reserves (Months of imports):\n  - 1994: 3.2\n  - 1995: 3.5\n  - 1996: 3.1\n  - 1997: 5.0\n- Sources: Albanian authorities; and IMF staff estimates and projections.\n- Note:  Projections."
    },
    {
      "heading": "IMF Membership and Quota Information",
      "content": "- Albania joined the IMF on October 15, 1991.\n- Albania’s quota is SDR 35.3 million (about US$49 million).\n- Its outstanding use of IMF financing currently totals SDR 32 million (about US$45 million).\n\nPress Release No. 97/51, November 7, 1997 — International Monetary Fund.\n\n---\n\n\n References\n\n- Albania and the IMF\n- Russian Federation and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9751"
    }
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    "Published: November 7, 1997",
    "The International Monetary Fund (IMF) approved a credit for Albania equivalent to SDR 8.825 million (about US$12 million) under the IMF’s emergency post conflict assistance to support the government’s economic program for 1997-98.",
    "Press Release No. 97/51, November 7, 1997.",
    "Exceptional progress in 1993-95:",
    "Deterioration in 1996 and early 1997:",
    "Primary macroeconomic goal: rapid disinflation and resumption of growth for 1997-98.",
    "Key macroeconomic objectives:",
    "Fiscal policy targets and instruments:",
    "Monetary policy:",
    "Progress toward privatization or liquidation of two of the three state-owned commercial banks.",
    "Winding up the companies that operated pyramid schemes.",
    "Civil service reform.",
    "Resumption of enterprise privatization.",
    "Creation of a functioning agricultural land market.",
    "Acknowledgement of severe impoverishment resulting from the crisis.",
    "Medium-term poverty alleviation based on achieving high sustainable growth driven by private sector development.",
    "Short-term measures:",
    "Main risks to the program:",
    "Required responses:",
    "External position and arrears:",
    "Real GDP (Percent change):",
    "Retail Prices (End of period):",
    "Domestically financed fiscal deficit (Percent of GDP):",
    "External current account balance, excluding official transfers (deficit-) (Percent of GDP):",
    "Gross official reserves (Months of imports):",
    "Sources: Albanian authorities; and IMF staff estimates and projections.",
    "Note: * Projections.",
    "Albania joined the IMF on October 15, 1991.",
    "Albania’s quota is SDR 35.3 million (about US$49 million).",
    "Its outstanding use of IMF financing currently totals SDR 32 million (about US$45 million).",
    "[Albania and the IMF](http://www.imf.org/external/country/alb/index.htm)",
    "[Russian Federation and the IMF](http://www.imf.org/external/country/RUS/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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