On May 27, 2016, the Executive Board of the International Monetary Fund (IMF) completed the seventh review of Albania’s economic performance under a program supported by the Extended Fund Facility (EFF). The completion of the review enables the authorities to draw an additional amount equivalent to SDR 28.65 million (about €36.1 million), bringing total purchases to SDR 209.49 million (about €263.7 million).

The Executive Board approved a 36-month extended arrangement under the EFF for Albania on February 28, 2014 (see Press Release No. 14/81) in an amount equivalent to SDR 295.42 million (about €330.9 million at the time of approval), or 212.1 percent of the country’s current quota in the Fund.

Following the Executive Board discussion, Mr. David Lipton, First Deputy Managing Director and Acting Chair, made the following statement:

“Albania’s economic recovery is gaining strength. The medium-term outlook remains favorable, provided the reform momentum is maintained. The authorities’ strong program ownership and implementation of ambitious and difficult structural and fiscal reforms are commendable. However, other reforms critical for improving the business environment are lagging.

“The authorities’ commitment to press on with fiscal consolidation is crucial, in order to continue lowering fiscal vulnerabilities and ensure debt sustainability. The authorities’ plans to continue focusing their fiscal adjustment efforts on the revenue side are appropriate. The consolidation strategy should aim to broaden the tax base, by limiting tax exemptions and strengthening compliance and revenue administration.

“The authorities’ determination to implement structural fiscal reforms to reduce fiscal risks is encouraging. Strengthening the medium term budgetary framework and public investment management is critical. Fiscal risks from PPPs should be limited by subjecting each to a cost-benefit analysis and by accounting for PPPs transparently in line with international norms.

“The authorities have made impressive progress with arrears clearance at the central government level. The arrears at the local level compiled from the recent stock-taking exercise should be audited and addressed swiftly without introducing moral hazard.

“The authorities’ continued monetary easing is appropriate. Greater exchange rate flexibility would support the monetary policy framework, but should be weighed against financial stability risks. To revive credit to the private sector, it is critical to speed up the implementation of the authorities’ comprehensive NPL strategy, including the approval of the Bankruptcy Law and the Private Bailiffs Law.

“Further structural reforms to improve the business environment would be critical for strengthening Albania’s competitiveness. The focus should be on early implementation of judicial reform, strengthening of property rights, and upgrading infrastructure and education. These steps will help pave the way towards EU accession and sustainable growth.”