IMF urges Albania to protect budget from risk of declining incomes

The International Monetary Fund (IMF) urged Albanian government to protect the budget from the risk of falling income, which comes from drop in oil prices and weak inflation, Albanian Daily News reported on Wednesday.

The IMF noted that the reduction of public debt in the medium term will require political commitment to maintain significant fiscal consolidation course, which started last year.

Albania's medium-term economic prospects remain generally favorable, the IMF said, adding that economic growth will continue to accelerate to 4.5 percent within the next two years, due to the positive effects arising from the reforms, recovery of trading partners and improving confidence in the economy.

But, as noted by the IMF experts, the risks for this scenario remain high. Although it may have had a slight positive effect on the budgets of families, the decline in oil prices may continue to shrink even more investment and production in this sector, the IMF said.

Especially in recent years, the oil sector has been one of the main contributors to growth, amortized by the effects of the crisis. But the decline in production and investment by oil companies may weaken economic growth.

The IMF fears that weaker growth combined with the risks stemming from upcoming elections, may put on a test the government's commitment to reduce debt and maintain fiscal discipline.

In parallel, the IMF said another risk stems from the situation in Greece, which in the case of deterioration will increase negative pressure in the economy. Enditem