TIRANA, March  29  /ATA/ The international rating agency Standard & Poor’s (S&P) confirms for Albania the “B+” rating, as well as  a “stable” outlook, in the latest review dated March 27, 2023.

The news was given by the Minister of Finance and Economy, Delina Ibrahimaj, who emphasized that, “Standard & Poor’s predicts that real GDP growth will slow to 2.4% this year, due to weaker demand from Europe, tighter monetary policy and reduction of the fiscal stimulus. Growth will bounce back to an average of 3%, supported by easing of financial conditions and improvement of global economic activity. The fiscal deficit will shrink to 3.2% of GDP in 2023, in accordance with the government’s commitment to keep up fiscal consolidation and to balance public finances.”

The stable outlook reflects the agency’s view that Albania can continue to manage the indirect economic effects of the Russia-Ukraine conflict.

According to the agency, the assessments are based on Albania’s moderate economic growth outlook and its monetary flexibility through the free exchange rate regime and relatively high foreign exchange reserves. These in particular continue to mitigate possible external shocks. Furthermore, despite the external shocks of recent years that the country has faced, the agency believes that the authorities will return to their fiscal consolidation position, thus reducing the public debt in the coming years.

The agency believes that the authorities will comply with their fiscal rules as defined in the Organic Budget Law (OBL). These fiscal rules stipulate that the government must achieve a primary balance starting in 2024 and target the dropping debt-to-GDP until it falls and remains below 45%. The agency notes that authorities are aiming for a positive primary balance as early as 2023, a year ahead of schedule.

Albania’s banking sector is considered liquid, well-capitalized and profitable. Non-performing loans accounted for 5% of loans in December, compared to a peak of nearly 25% in 2014.

/r.e/sm/