"Albanian economy is not directly affected by Brexit, however, developments in the banking system are being closely monitored, especially the effects on the remittances," the Governor of the Bank of Albania, Gent Sejko declared during the joint press conference with the Minister of Finance Arben Ahmetaj and the head of the IMF Mission to Albania, Anita Tuladhar on Tuesday.
Governor said that the balance of risks related to expected developments remains on the down side. "The expansion of economic activity continues to be decelerated by the unfavourable economic performance in the euro area, which is further complicated by the Brexit, as well as by the behaviour of economic and financial agents, who continue to show reluctance in undertaking long-term business projects," Governor said.
Against this backdrop, he said that the Bank of Albania deems that economic policies and structural reforms should focus on Maintaining and further strengthening the economic and financial stability; Accelerating structural reforms, especially with regard to: improving the legal setting and business climate; encouraging domestic and foreign investments, completing the infrastructure; enhancing productivity; and, improving the labour market; Expanding crediting, to support the country's medium-term development.
Further on, Mr. Sejko said that in the last two weeks we have been engaged in intensive discussions with IMF Mission representatives, in the framework of the review of the IMF arrangement. The discussions focused on: the analysis of the current situation of the Albanian economy and financial system; identification of development prospects and challenges facing Albania; and the policies to be implemented with a view to supporting the country's development.
"The conclusions of our discussions may be summarized in three main points: (i) Economic activity appears upward and the development outlook remains positive. (ii) Yet, the external environment is unfavourable and the Albanian economy continues to face structural weaknesses, which decelerate the pace of growth. (iii) Therefore, the monetary and fiscal policies should continue to generate a prudent economic stimulus, whereas structural reforms should accelerate their pace. In this context, the Bank of Albania deems that the arrangement with the IMF and the measures envisaged as part of the Eighth Review provide a consistent framework for drafting and implementing a programme for the country's development," he said.
Sejko stated that BoA's projections have not changed: the Bank of Albania expects economic activity to improve progressively over the medium-term horizon. This performance will continue to be sustained by stimulating financial conditions and growth of private domestic demand. It will contribute to the improvement of economic and financial equilibriums in Albania and to the return of inflation to target within 2018.
On her part, the head of the IMF Mission Anita Tuladhar said that the IMF is expecting Albania's economic growth to keep improving.
"We foresee the economic growth to reach 3.4% for this year, and that will receive support from foreign investments and from increased internal demand," said Tuladhar, Chief of the IMF mission. But the risks for the economy remain high, especially those coming from external environments. The IMF asked the government to accelerate reforms for the business climate and preserve what they call a positive progress of budget revenues.
Meanwhile, the IMF Mission Chief declared that it's too early to analyze the effects of Brexit on the Albanian economy or in the Eurozone.
The Minister of Finance said that the revenues' performance is progressing well, adding that the government expects an economic increase of 3.4% for 2016.
The Minister declared that the tax and customs procedures for businesses will be facilitated. The Minister of Finance said the government is focusing on decreasing the debt level and that the increase of salaries and pensions is not currently being discussed. Also, the government's promise for the Value Added Tax on tourism will be discussed another time.
According to Ahmetaj, the government is engaged in efforts to reduce public debt. Business will have simplification of tax and customs procedures, while maintaining steady performance of income.