{
  "title": "IMF Executive Board Concludes 2025 Article IV Consultation with Albania",
  "publication": "IMF News, December 23, 2025",
  "sourceUrl": "https://www.imf.org/en/news/articles/2025/12/23/pr-25442-albania-imf-concludes-2025-article-iv-consultation",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation with Albania and considered and endorsed the staff appraisal without a meeting on a lapse-of-time basis",
  "publishDate": "2025-12-23",
  "sections": [
    {
      "heading": "Overview and Growth Outlook",
      "content": "- Albania enjoys one of the highest growth rates in Europe, low inflation, declining public debt, and strong foreign reserves.\n- Growth projections:\n  - Real GDP growth: 3.5 percent in 2025 and 3.6 percent in 2026.\n  - Post-pandemic average real GDP growth: 4.3 percent.\n- Inflation and external balance:\n  - Headline inflation: projected to increase from 2.2 percent in 2025 to the 3 percent target in the second half of 2026.\n  - Current account deficit: projected at 2.8 percent of GDP in 2025, gradually widening to about 3.5 percent of GDP over the medium term.\n- Drivers:\n  - Growth primarily driven by private consumption and a booming tourism sector.\n  - Direct effects from U.S. tariffs are minimal; indirect effects from global trade measures and uncertainty appear limited so far.\n- Policy context:\n  - The government is advancing reforms to secure EU membership by 2030."
    },
    {
      "heading": "Risks to the Outlook",
      "content": "- External downside risks:\n  - Geopolitical tensions, escalating trade measures, commodity price volatility, and prolonged uncertainty could weaken external demand.\n  - Global financial market volatility and asset price corrections could reduce demand for Albanian sovereign debt and create rollover risks.\n- Domestic downside risks:\n  - A sharper-than-anticipated decline in the working age population could exacerbate labor shortages, fuel inflation, necessitate tighter monetary policy, and dampen growth.\n- Upside potential:\n  - Sustained implementation of the EU reform agenda could boost productivity and growth."
    },
    {
      "heading": "Executive Board Assessment — Key Findings",
      "content": "- Albania is one of the fastest growing economies in Europe, with output well above its pre-pandemic trend due to tourism.\n- Fiscal discipline has led to a significant reduction in public debt; proactive monetary policy has helped bring headline inflation below target.\n- External imbalances have shrunk and foreign reserves are strong; external position assessed as stronger than implied by fundamentals.\n- Structural challenges remain:\n  - Income per capita at just a third of the EU level.\n  - Wide reform gaps in human capital, governance, and business regulation.\n- Near-term outlook positive, but medium-term sustainability requires comprehensive reforms."
    },
    {
      "heading": "Fiscal Policy Recommendations and Assessment",
      "content": "- Fiscal trajectory and risks:\n  - Albania projected to maintain non-negative primary balances in 2025-30, with public debt falling below 50 percent of GDP.\n  - Rising spending pressures from demographic shifts, defense obligations, and climate-related spending, particularly beyond 2030.\n- Staff recommendations to safeguard fiscal buffers:\n  - Growth-friendly revenue reforms—streamline tax expenditures, modernize property tax systems, and enhance tax administration.\n  - Improve spending quality and fiscal transparency.\n  - Use well-targeted social assistance rather than planned monthly pension bonuses to support vulnerable households.\n- Specific risk:\n  - The “Fiscal Peace” Agreement, offering debt cancellation and preferential revaluation of financial statements, risks undermining progress in tax administration and compliance."
    },
    {
      "heading": "Monetary Policy and Exchange Rate Guidance",
      "content": "- Current stance:\n  - Policy rate: 2.5 percent.\n  - Monetary policy stance: close to neutral; inflation expectations and core inflation close to target.\n- Recommendations:\n  - BoA should be ready to quickly respond to evolving market conditions and swiftly adjust monetary stance if second-round wage effects are stronger than expected.\n  - Limit FX purchases to addressing non-fundamental fluctuations.\n  - Allow greater exchange rate flexibility and rely on interest rates for price stability, since sustained exchange rate appreciation is largely driven by fundamentals.\n  - Objectives of the central bank subsidized credit line could be better achieved through targeted fiscal policies and addressing structural issues."
    },
    {
      "heading": "Financial Stability and Prudential Policy",
      "content": "- Key vulnerabilities:\n  - Large-borrower exposures, FX exposures, sovereign exposures, and rapid growth of real estate lending.\n- Priorities and recommendations:\n  - Vigilant monitoring and proactive prudential policymaking.\n  - Enhance capital adequacy compliance and ensure a smooth transition to IFRS.\n  - Recent relaxations in risk-adjusted capital adequacy and large exposure frameworks for strategic transport infrastructure loans are not fully aligned with international standards and warrant reconsideration.\n  - Borrower-based measures for new residential real estate loans are important structural tools; improve data availability for commercial real estate lending.\n  - Move toward a positive neutral rate for the countercyclical capital buffer and finalize the systemic risk buffer framework.\n  - New Albanian development bank requires strong governance and oversight."
    },
    {
      "heading": "Structural Reforms and Governance",
      "content": "- Reforms needed to revive productivity and foster income convergence with the EU:\n  - Improve skills through broader training coverage and education quality.\n  - Create high-quality jobs and boost overall firm productivity.\n  - Enhance the business environment through further governance reforms.\n- Anti-corruption and rule of law:\n  - Stronger preventive legislation and improved monitoring of public administration are essential.\n  - Safeguard SPAK’s operational independence and resources."
    },
    {
      "heading": "Selected Economic Indicators, 2024–30 (selected series)",
      "content": "- Output\n  - Real GDP growth (%): 2024: 4.0; 2025: 3.5; 2026: 3.6; 2027: 3.4; 2028: 3.2; 2029: (not listed); 2030: (not listed)\n- Employment\n  - Unemployment rate (%) 1/ (15-64 years old): 2024: 9.4; 2025: 9.3; 2026: 9.2; 2027: 9.1; 2028: 9.0; 2029: 8.9; 2030: 8.8\n- Prices\n  - Inflation (%, end-period): 2024: 2.1; 2025: 2.4; 2026: 3.0\n- General government finances (percent of GDP)\n  - Revenues (% of GDP): 2024: 28.2; 2025: 29.0; 2026: 29.3; 2027: 29.5; 2028: 29.7\n  - Expenditures (% of GDP): 2024: 28.7; 2025: 30.6; 2026: 31.3; 2027: 31.8; 2028: 32.0; 2029: 31.9\n  - Primary balance (% of GDP): 2024: 1.7; 2025: 0.4; 2026: 0.2; 2027: 0.0\n  - Fiscal balance (% of GDP): 2024: -0.4; 2025: -1.7; 2026: -2.0; 2027: -2.2; 2028: -2.3\n  - Public debt (% of GDP): 2024: 54.5; 2025: 52.7; 2026: 51.6; 2027: 50.8; 2028: 50.0; 2029: 49.3; 2030: 48.7\n- Money and credit\n  - Broad money (% change): 2024: 4.9; 2025: 6.5; 2026: 6.0; 2027: 6.3\n  - Credit to the private sector (% change): 2024: 12.3; 2025: 11.5; 2026: 9.5\n- Balance of payments\n  - Current account (% of GDP): 2024: -2.5; 2025: -2.8; 2026: -2.9; 2027: -3.0; 2028: -3.2; 2029: -3.4; 2030: -3.5\n  - FDI (% of GDP, net): 2024: -5.4; 2025: -5.1; 2026: -5.0; 2027: -4.9; 2028: -4.8\n  - Reserves (months of imports): 2024: 7.0; 2025: 7.5; 2026: 7.4; 2027: 7.3; 2028: 7.2; 2029: 7.1; 2030: 6.9\n  - External debt (% of GDP): 2024: 40.7; 2025: 39.8; 2026: 39.2; 2027: 38.8; 2028: 38.3; 2029: 37.8; 2030: 35.8\n\nSource: IMF Executive Board press release — IMF Executive Board Concludes 2025 Article IV Consultation with Albania.\n\n---\n\n\n References\n\n- Albania and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- www.imf.org/Albania\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/12/23/pr-25442-albania-imf-concludes-2025-article-iv-consultation"
    }
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    "Published: December 23, 2025",
    "Albania enjoys one of the highest growth rates in Europe, low inflation, declining public debt, and strong foreign reserves.",
    "Growth projections:",
    "Inflation and external balance:",
    "Drivers:",
    "Policy context:",
    "External downside risks:",
    "Domestic downside risks:",
    "Upside potential:",
    "Albania is one of the fastest growing economies in Europe, with output well above its pre-pandemic trend due to tourism.",
    "Fiscal discipline has led to a significant reduction in public debt; proactive monetary policy has helped bring headline inflation below target.",
    "External imbalances have shrunk and foreign reserves are strong; external position assessed as stronger than implied by fundamentals.",
    "Structural challenges remain:",
    "Near-term outlook positive, but medium-term sustainability requires comprehensive reforms.",
    "Fiscal trajectory and risks:",
    "Staff recommendations to safeguard fiscal buffers:",
    "Specific risk:",
    "Current stance:",
    "Recommendations:",
    "Key vulnerabilities:",
    "Priorities and recommendations:",
    "Reforms needed to revive productivity and foster income convergence with the EU:",
    "Anti-corruption and rule of law:",
    "Output",
    "Employment",
    "Prices",
    "General government finances (percent of GDP)",
    "Money and credit",
    "Balance of payments",
    "[Albania and the IMF](http://www.imf.org/external/country/alb/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[www.imf.org/Albania](http://www.imf.org/Albania)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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