{
  "title": "Press Release: IMF Approves Three-Year ESAF Loan for Albania",
  "publication": "IMF News, May 13, 1998",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9818",
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  "summary": "IMF approved a three-year loan for Albania under the Enhanced Structural Adjustment Facility (ESAF), equivalent to SDR 35.3 million (about US$47 million), to support the government’s 1998-2001 economic program.",
  "publishDate": "1998-05-13",
  "sections": [
    {
      "heading": "Loan approval and financing details",
      "content": "- IMF approved a three-year loan for Albania under the Enhanced Structural Adjustment Facility (ESAF), equivalent to SDR 35.3 million (about US$47 million), to support the government’s 1998-2001 economic program.\n- The first annual loan is equivalent to SDR 11.77 million (about US$16 million), available in two equal semiannual installments; the first installment is available immediately.\n- Albania’s outstanding use of IMF financing currently totals SDR 39.9 million (about US$54 million).\n- Albania joined the IMF on October 15, 1991, and its quota is SDR 35.3 million (about US$47 million)."
    },
    {
      "heading": "Background and recent economic history",
      "content": "- Transition since 1991 produced dramatic swings:\n  - 1992: output dropped to one-half its 1989 level; inflation in triple digits; external current account deficit equivalent to almost two-thirds of GDP.\n  - 1993-95: GDP growth averaged near double digits; single-digit inflation; sharply reduced external imbalances.\n  - 1996: rapid growth supported more by activities related to financial pyramid schemes and election-driven loose fiscal policy.\n  - 1997: collapse of pyramid schemes triggered a deep economic and social crisis, bringing the economy to a standstill.\n- Mid-1997 government adopted a two-stage strategy:\n  - First stage (supported under IMF post conflict emergency assistance): initiated macroeconomic stabilization, rebuilding institutional and administrative capacity, and restarting structural reforms; inflation fell faster than projected, growth resumed, and currency confidence increased.\n  - Second stage: comprehensive medium-term macroeconomic and structural program supported by the ESAF."
    },
    {
      "heading": "Medium-term strategy and the 1998/99 program objectives",
      "content": "- Main objectives over the three-year program:\n  - Achieve sustainable growth of 7-8 percent.\n  - Reduce inflation to about 3 percent by 2001 (levels of Albania’s main trading partners).\n  - Maintain international reserve cover at about 3¾ months of imports of goods and nonfactor services externally.\n  - Bring down the current account deficit to levels consistent with medium-term viability.\n- Fiscal policy targets:\n  - Reduce the domestically financed deficit to about 6½ percent of GDP in 1998 from about 11 percent GDP in 1997.\n  - Gradual reduction to about 3 percent by 2001.\n- Monetary policy stance:\n  - Support inflation targets through appropriate interest rate policy and judicious application of credit ceilings.\n  - Bank of Albania committed to maintaining minimum deposit rates at levels positive in real terms to encourage growth in lek deposits; scope later in 1998 to lower nominal rates as inflation falls and pressure to finance the budget deficit is reduced.\n- Short-term 1998 targets and expectations:\n  - GDP growth targeted at 10 percent in 1998 following an estimated decline of 7.0 percent in 1997.\n  - Inflation anticipated to fall to 10 percent during 1998, from 42.1 percent during 1997.\n  - External current account deficit expected to be the equivalent of 13.8 percent of GDP in 1998, compared with 11.9 percent in 1997, reflecting a pick-up in imports for post-crisis investment and reconstruction.\n  - Exports and private remittances expected to recover more gradually.\n  - Availability of significant external budgetary support will soften the impact of fiscal tightening and allow temporary expansion of the social safety net.\n  - Resumption of investment projects, facilitated by a substantial increase in foreign aid, expected to result in a somewhat higher overall deficit in 1998."
    },
    {
      "heading": "Structural reforms (priorities and measures)",
      "content": "- Pyramid schemes:\n  - Government committed to resolving the pyramid scheme problem with specific measures to prevent recurrence.\n  - Foreign administrators appointed for all companies which operated schemes to accelerate liquidation of assets of the five remaining companies.\n  - An international accounting firm appointed as auditors to assist administrators.\n- Banking sector reform:\n  - Privatize or liquidate state banks; limit lending by state banks in the meantime; place management under the control or supervision of competent advisors.\n  - Ultimate goal: create a banking system based on well-functioning and well-regulated private banks.\n  - A revised Banking System Law has been approved by the Council of Ministers; further legal/regulatory revisions and improvements to banking supervision planned.\n- Other structural priorities:\n  - Enterprise privatization.\n  - Creation of a functioning market in agricultural land.\n  - Reform of public administration, including measures to combat corruption.\n  - Encouragement of remittances and transfers from Albanians living abroad.\n  - Major progress: establishment of an agricultural-land market with passage of a new law and regulations to ease registration and sale of agricultural land."
    },
    {
      "heading": "Addressing social needs and poverty alleviation",
      "content": "- Long-term: lasting alleviation of poverty requires sustained high growth driven by private sector development.\n- Short-term measures enabled by external budgetary support:\n  - Temporary expansion of current social assistance scheme to help the sharply increased number of needy families.\n  - Provide employment through community works.\n  - Accelerated release of budgetary allocations.\n  - Develop guidelines, in cooperation with international agencies, to make greater use of foster care and home care for the elderly."
    },
    {
      "heading": "Risks and implementation challenges",
      "content": "- Principal risks:\n  - Security situation within the country and in the region, with implications for economic confidence and investment prospects.\n  - Steadfast implementation of structural measures is critical."
    },
    {
      "heading": "Albania: Selected Economic Indicators (as presented)",
      "content": "- Real GDP (Percent change):\n  - 1995: 8.9\n  - 1996: 9.1\n  - 1997: -7.0\n  - 1998: 10.0\n  - 1999: 7.0\n  - 2000: 7.5\n  - 2001: 8.0\n- Retail prices (during period) (Percent change):\n  - 1995: 6.0\n  - 1996: 17.4\n  - 1997: 42.1\n  - 1998: 5.0\n  - 1999: 3.0\n- Domestically financed deficit (Percent of GDP):\n  - 1995: 6.6\n  - 1996: 11.0\n  - 1997: 10.9\n  - 1998: 5.2\n  - 1999: 4.2\n  - 2000: 3.2\n- Current account balance, excluding official transfers (deficit -) (Percent of GDP):\n  - 1995: -7.2\n  - 1996: -9.1\n  - 1997: -11.9\n  - 1998: -13.8\n  - 1999: -11.2\n  - 2000: -9.0\n  - 2001: -7.4\n- Gross international reserves (Months of imports of goods and nonfactor services):\n  - 1995: 3.4\n  - 1996: 3.1\n  - 1997: 4.5\n  - 1998: 3.8\n  - 1999: 3.7\n\nSources: Albanian authorities and IMF staff estimates and projections. Estimates marked with “”. Projections marked with “”.\n\nPress Release No. 98/18, May 13, 1998.\n\n---\n\n\n References\n\n- Albania 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/pr9818"
    }
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    "Published: May 13, 1998",
    "IMF approved a three-year loan for Albania under the Enhanced Structural Adjustment Facility (ESAF), equivalent to SDR 35.3 million (about US$47 million), to support the government’s 1998-2001 economic program.",
    "The first annual loan is equivalent to SDR 11.77 million (about US$16 million), available in two equal semiannual installments; the first installment is available immediately.",
    "Albania’s outstanding use of IMF financing currently totals SDR 39.9 million (about US$54 million).",
    "Albania joined the IMF on October 15, 1991, and its quota is SDR 35.3 million (about US$47 million).",
    "Transition since 1991 produced dramatic swings:",
    "Mid-1997 government adopted a two-stage strategy:",
    "Main objectives over the three-year program:",
    "Fiscal policy targets:",
    "Monetary policy stance:",
    "Short-term 1998 targets and expectations:",
    "Pyramid schemes:",
    "Banking sector reform:",
    "Other structural priorities:",
    "Long-term: lasting alleviation of poverty requires sustained high growth driven by private sector development.",
    "Short-term measures enabled by external budgetary support:",
    "Principal risks:",
    "Real GDP (Percent change):",
    "Retail prices (during period) (Percent change):",
    "Domestically financed deficit (Percent of GDP):",
    "Current account balance, excluding official transfers (deficit -) (Percent of GDP):",
    "Gross international reserves (Months of imports of goods and nonfactor services):",
    "[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/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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