From 'stable outlook' to 'positive', Standard&Poors assesses Albania and reaffirms B+

2023-09-23 11:33:55Biznes SHKRUAR NGA REDAKSIA VOX

For the first time since 2016, Standard&Poors agency has assessed Albania's prospects as rising. According to the report of this agency, our country is confirmed from "stable perspective" to "positive". At the same time, the agency has reconfirmed the assessment of the country at "B+".

The "positive outlook" according to the agency reflects its view that the country's fiscal parameters will continue to improve beyond the agency's expectations, through the government's efforts to consolidate public finances. Moreover, despite a slowdown in the country's main trading partner, the EU, the agency predicts that the parameters of Albania's external position may improve more than expected, as the global economy recovers and the Albanian tourism sector continues to expand. .

The agency predicts that after a moderation in growth for this year to 3%, mainly due to lower foreign demand from Europe, growth is expected to regain speed after the current year 2023, relying also on the easing of financial conditions and the increase of global economic activity.

According to the agency, in recent years, Albania has faced a series of shocks, including an earthquake in 2019.

"Despite this, the government has made strong efforts to consolidate public finances. As a result, the agency expects the budget deficit to converge to around 2% of GDP by 2026 and the public debt to be reduced to 58.3% in 2026 from 64.5% resulting in 2022, being in line with the fiscal rules of primary balance and reduction of public debt defined in the Organic Budget Law (OBL). However, the agency notes that fiscal consolidation will also depend on the sustainable recovery of economic growth and the continuation of structural reforms.

The agency notes that inflation has fallen, reaching 4% in August, down significantly from 7.2% in January, and it predicts that inflation will average 4.7% for 2023, then gradually decline to targeted at 3%, also thanks to the strengthening of the lek.

Given Albania's lack of bilateral and geographical disputes, its strong domestic support for the EU and the government's parliamentary majority, which facilitates the passage of reforms, the agency believes the country is well-positioned to advance its bid for EU membership, without major external obstacles.