## IMF Staff Concludes a Remote Staff Visit to Albania

_IMF News, June 11, 2021_

## Source details

**Canonical URL:** [IMF Staff Concludes a Remote Staff Visit to Albania](https://www.imf.org/en/news/articles/2021/06/11/pr21172-albania-imf-staff-concludes-a-remote-staff-visit)

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## Bibliographic details
- Published: June 11, 2021

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### Mission overview and macro outlook
- Mission conducted remotely during June 7-11 and led by Ms. Yan Sun.
- Statement notes: "An economic recovery is underway, albeit subject to considerable uncertainty over the evolution of the pandemic."
- Albania’s economic activity in 2020 "contracted by much less than originally expected," reflecting stronger domestic and regional tourism, policy support and earthquake reconstruction, as well as the absence of a second lockdown.
- Growth for 2021 is projected to rebound to 5.3 percent "on the back of the recovery of pandemic-affected sectors and continued earthquake reconstruction."
- Headline inflation has increased on higher international commodity prices but is "still well below the Bank of Albania’s (BoA) target and inflationary pressures have remained subdued."

### Fiscal policy findings and recommendations
- Near-term fiscal policy should "continue to support the recovery through temporary and well-targeted measures subject to transparency and accountability."
- Recommend scaling back "the overly ambitious domestically-financed public investment" to protect priority spending on social protection, healthcare (notably vaccination), and earthquake reconstruction, and to increase contingency buffers.
- The 2021 primary deficit target is Lek 65 billion (about 3.8 percent of GDP) and is judged to "provide ample support to the economy."
- Guidance on additional stimulus: "Additional stimulus should only be considered in case the expected recovery suffers major setbacks."
- Treatment of windfalls: "Any windfall revenues should be saved."
- Medium-term fiscal stance: planned policy initiatives should be "consistent with moving toward a positive fiscal primary balance by 2023 and be supported by a credible medium-term budget framework."
- Specific reform recommendation: "A sound Medium-Term Revenue Strategy should be adopted and implemented as soon as possible."

### Public investment, fiscal risks, and governance
- Priority reforms to pursue with greater vigor:
  - improving public investment management;
  - enhancing monitoring and management of rising fiscal risks, notably from private-public partnerships, state-owned enterprises, and government guarantees.
- Post-earthquake procurement and reconstruction controls:
  - While restrictive tender procedures were "warranted in the immediate aftermath of the earthquake," these should cease.
  - Reconstruction funds should be "subject to adequate public financial management controls."

### Monetary policy and financial sector recommendations
- Support for the BoA’s accommodative monetary policy stance: "inflationary pressures remain subdued and inflation expectations well anchored."
- Banking system assessment: "The banking system has remained liquid and stable."
- Supervision and asset quality:
  - Continued vigilance is required, with particular attention to restructured loans, to enable early detection of any buildup of vulnerabilities.
  - The BoA's decision to end the temporary relaxation of loan classification and provisioning rules is "welcome in this regard."
  - To preserve banks’ capital buffers "until the full impact of the pandemic on their asset quality is known," the BoA should "continue to restrict the distribution of bank dividends."

### Closing
- The statement notes: "This mission will not result in a Board discussion."
- The IMF team "would like to thank the Albanian authorities and our other counterparts for the excellent discussions and collaboration."

*IMF Staff Concludes a Remote Staff Visit to Albania — June 11, 2021*

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## Content in this bundle

- **Ekipi i FMN-së përfundon një vizitë në distancë në Shqipëri**
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  - [Ekipi i FMN-së përfundon një vizitë në distancë në Shqipëri (PDF)](/-/media/files/news/press-release/2021/pr21172-alb-albania-imf-staff-concludes-a-remote-staff-visit-to-albania.pdf){rel="external" type="application/pdf"}
- [Pr1928s (PDF)](/external/lang/serbian/np/sec/pr/2019/pr1928s.pdf){rel="external" type="application/pdf"}

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## References

- [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)

_Source: https://www.imf.org/en/news/articles/2021/06/11/pr21172-albania-imf-staff-concludes-a-remote-staff-visit_