Standard and Poor’s Upgrades Albania’s Debt Rating
“We revised the outlook to stable because we think that the recently concluded International Monetary Fund programme will serve as a policy anchor for fiscal consolidation and support the sustainability of Albania's high government debt,” Standard and Poor’s said in a statement.
“We expect that timely official support and concurrent fiscal consolidation efforts should help reduce refinancing pressure,” it added.
In response to rising macroeconomic imbalances, theAlbanian authorities agreed earlier this year on a 36-month arrangement with the IMF which will provide immediate relief for the government's financing needs, strengthen fiscal institutions, and reduce government deficits, aiming to unlock the country's significant future growth potential by supporting structural reforms.
According to S&P, unpaid bills to contractors are now estimated at 5.3 per cent of GDP, while the general government debt reached 67 per cent of GDP in 2013.
The general government deficit also widened in 2013 to about five per cent of GDP, accompanied by a substantial decline of real GDP growth to 0.7 per cent.
According to S&P, Albania’s poor debt rating reflects its very high general government debt burden, its weak institutional and governance effectiveness and comparatively low per-capita GDP.
On the positive side, the ratings are supported by moderate external indebtedness and an expectation that fiscal consolidation efforts will push government deficits to moderate levels.
After taking office in September 2013, the new centre-left government of Prime Minister Edi Rama announced an ambitious reform agenda.
“If successful, reforms of public administration and the judicial system, alongside...