IMF Staff Concludes Additional Talks on 2019 Article IV Consultation with Albania

IMF News, March 13, 2020

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Canonical URL: IMF Staff Concludes Additional Talks on 2019 Article IV Consultation with Albania

Press Release No. 20/89.
Date of publication: March 13, 2020.
An IMF team led by Mr. Jan Kees Martijn concluded remotely additional discussions with Albania on the 2019 Article IV consultation.
First round of discussions: November 2019.
Reason for additional discussions: after the end-November earthquake, changes in the economic outlook and economic policies required further discussions.
Mission dates: March 9-13, 2020.
Quoted timing reference from staff: “The near-term outlook for the Albanian economy has changed markedly during the past three-and-a-half months.”

Key shocks affecting 2020:
- Earthquake that hit Albania on November 26, expected to dampen growth in 2020 as the adverse impact on economic activity (in particular, tourism) exceeds the positive impact from expected reconstruction efforts.
- Recent global outbreak of the coronavirus (COVID-19) is expected to slow economic growth in 2020 further, and this shock too will hit tourism.
Uncertainty: “The magnitude of the slowdown is highly uncertain at this moment.”

Fiscal:
- After the earthquake, authorities prioritized budget spending on relief and reconstruction, allowing a moderate increase in the fiscal deficit.
- Recommendation to ensure reconstruction projects are governed in a transparent manner, in line with best international practices, and prioritize the most vulnerable.
- Beyond 2020, once current adverse shocks have passed, authorities should build stronger fiscal buffers that will allow for a larger fiscal stimulus to address possible shocks in the future.
- The measures to reduce public debt and to contain fiscal risks proposed in the concluding Statement of November 26, 2019 remain critical.
Health and social support:
- Policies needed to protect people during the COVID-19 outbreak by ensuring that the health sector has sufficient resources and by supporting the most affected.
Monetary:
- “Monetary policy should remain strongly accommodative, to support economic growth.”
Engagement:
- IMF staff: “We stand ready to continue our dialogue with the authorities on measures to help limit the economic impact of the virus.”

Observation on announced initiative:
- A possible voluntary asset disclosure program, as recently announced by the authorities, aimed at reviving the economy would need to be implemented with great caution.
- No specific proposal has been released thus far.
Risks noted from other countries’ experience:
- Such programs can undermine tax compliance if users receive more favorable tax treatment than those who were compliant from the beginning.
- Effective systems must be created first to detect evasion and to prevent opportunities for money laundering and corruption.

IMF Communications Department — media relations contact: PRESS OFFICER: Gediminas Vilkas; Phone: +1 202 623-7100; Email: MEDIA@IMF.org